Final Results

BioScience VCT plc 29 April 2005 BioScience VCT plc 29 April 2005 Preliminary Results for the year ended 31 December 2004 Financial highlights (figures as at 31 December 2004): 2004 2003 Net assets £6,299,000 £6,911,000 Net revenue before tax £(6,000) £48,000 (Loss)/revenue return per share* (0.1)p 0.5p Net asset value per share 82.9p 93.9p Mid-market share price at end of year 80p 70p * based on weighted average of 7,535,445 shares in issue in 2004. The Chairman of BioScience VCT plc, Dr Paul Nicholson, included the following points in his statement to shareholders: I am pleased to present my third annual report to shareholders in BioScience VCT. Investment policy As I have stressed in my previous statements, we follow a rigorous investment approach that is designed to identify companies that we believe combine a high quality management team with a strong scientific heritage. During 2004, we made investments into several unquoted companies and one AIM-listed company, as well as adding to our stake in one of our existing investments. The fund did not make as many investments in 2004 as had been anticipated, despite considering a large number of opportunities. Our team met with the management teams of 34 companies, of which we invested into 4 companies. A number of others are still under consideration for investment. The principal reason for the deliberately cautious approach to concluding investments was that, whilst the UK stock market as a whole was buoyant in 2004, many unquoted healthcare companies suffered from the dearth of institutional investor interest, a situation which may not change in the near future. The Board took the view during 2004 that it was crucial when considering potential investments that the future funding needs of potential investee companies formed an important part of the assessment process. The Board has therefore sought to focus the fund in the following way: • Seek to ensure that potential investee companies are raising sufficient funds to meet their needs for a reasonable period of time • Seek to invest alongside co-investors who have sufficient investable funds to make a meaningful contribution to future potential funding rounds • Examine funding opportunities into companies that are at the pre-IPO stage of development • Ensure that investee companies are being run from the outset of investment by the fund with a specific focus on the likely exit for investors through a trade sale of the company or an IPO. Net Asset Value ('NAV') The NAV at 31 December 2004 was 82.9p, a fall of 11p when compared with the equivalent figure at the end of 2003. The reduction in the NAV was caused primarily by a revaluation of two of our unquoted investments. One of the revaluations was due to the impact of a follow-on round of financing that was carried out at a valuation that was significantly lower than our previous investment. The other revaluation was made in order to take a prudent approach given the poor funding environment for unquoted biotech companies. Under British Venture Capital Association rules for valuing investments into unquoted companies, we are obliged to value the whole of our investment at the share price used in the most recent third-party funding round. The net revenue loss for 2004 was £6,000. The reduction in the revenue return compared with 2003 was driven by the fall in interest income that was earned as funds continued to be moved out of the money markets into investments. The directors do not propose the payment of a dividend for 2004. In the short-term, it is likely that the availability of dividend payments will be restricted by the limited income that is generated by the Company's portfolio of investments. However, in the medium-term, we will seek to realise capital gains from investment disposals for distribution to shareholders. In order to allow the Company to distribute capital gains to shareholders, the directors will dispense with the Company's investment company status at the appropriate time. This will not have any impact on VCT status. Share price The company's mid-market share price stood at 80p at the end of 2004 and, as is normal with a VCT in the first few years, there have been only a small number of transactions in the shares. We will be asking shareholders at the annual general meeting to renew the board's powers to purchase shares in the market for cancellation. This should assist the marketability of the shares and help prevent the shares from trading at a wide discount to NAV. During 2004, we repurchased 3,000 shares for cancellation at a price of 75p and 3,000 shares at a price of 70p. The Board is also seeking your authority to renew the shareholder approval to issue further shares up to 10% of the existing share capital. However, we do not anticipate any immediate use of this authority. Share premium account In addition, we are also asking shareholders to approve the cancellation of part of the share premium account. In order to do this, providing shareholders approve the necessary resolution at the AGM, we will seek approval from the High Court to make the change to our balance sheet structure. The cancellation of the share premium account will allow us to continue making share buybacks which at present are restricted by the limited availability of distributable reserves. VCT qualifying status The company's compliance with the Inland Revenue's conditions for VCT approval is monitored by the Board. As a result of the limited availability of investment opportunities during 2004 into companies that the Board believed had the appropriate combination of attractive prospects, a sensible valuation, and a suitable future funding profile, the company has placed a sum of money into a non-interest bearing account in order to meet with those VCT regulations which require that 70% of investments are in qualifying companies at the end of the company's third accounting period. (Money on non-interest bearing account is not considered to be an investment for these purposes). However, we have been advised that as a result of this, the VCT could be infringing certain other VCT regulations. Your Board and our advisers are presently discussing the matter with the Inland Revenue and we are confident that the current situation will be rectified shortly. We will provide shareholders with an update as soon as we are in a position to do so. Prospects The general environment for investing in bioscience companies in the UK has been characterised in recent months by a comparatively limited availability of capital. Despite the large number of early-stage bioscience companies, the relatively small number of investors who are active at present in the bioscience sector means that the ability for bioscience companies to secure access to sufficient capital on reasonable terms to meet their ongoing needs is often difficult. As described above, the consequence of this is that when examining investment opportunities for BioScience VCT, we have a particular focus on a particular company's likely requirements for further investment in the future. We are evaluating a number of potential investment opportunities and expect to conclude several of these in the near future. Dr Paul Nicholson Chairman Statement of Total Return (incorporating the Revenue Account) For the period ended 31 December 2004 Year ended 31 December 2004 Year ended 31 December 2003 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000 Realised gains on investments - - - - 35 35 Unrealised (loss)/gains on investments - (677) (677) - 117 117 Income 222 - 222 229 - 229 Investment management fee (52) (157) (209) (50) (150) (200) Other expenses (176) - (176) (131) - (131) ------ ----- ----- ----- ----- ----- Return on ordinary activities before tax (6) (834) (840) 48 2 50 Tax on ordinary activities - - - (9) 9 - ------ ----- ----- ------ ----- ----- Return on ordinary activities after tax (6) (834) (840) 39 11 50 Dividends - - - (37) - (37) ------ ----- ----- ------ ----- ----- Transfer (from)/to reserves (6) (834) (840) 2 11 13 ------ ----- ----- ------ ----- ----- Return per share (0.1)p (11.1)p (11.2)p 0.5p 0.2p 0.7p Balance sheet 31 December 2004 31 December 2003 £000 £000 £000 £000 Fixed asset investments 1,387 857 Current assets Investments - 5,969 Debtors 210 9 Cash at bank 4,742 243 ------ ------ 4,952 6,221 Creditors (amounts falling due within one year) (40) (167) ------ ------ 6,054 Net current assets 4,912 ------ ------ Net assets 6,299 6,911 ------- ------- Called-up equity share capital 3,798 3,679 Share premium 3,422 3,312 Capital redemption reserve 5 2 Capital reserve - realised (365) (208) - unrealised (553) 124 Revenue reserve (8) 2 ------- ------- Total equity shareholders' funds 6,299 6,911 ------- ------- Net asset value per share 82.9p 93.9p Cash flow statement For the period ended 31 December 2004 31 December 2004 31 December 2003 £000 £000 £000 £000 Net cash outflow from operating (454) (74) activities Financial investment: Purchase of investments (1,207) (617) Sale of investments - 50 ----- ----- Net cash outflow from financial investment (1,207) (567) Net cash inflow from management of liquid resources: Decrease in cash deposits 5,969 565 Dividends paid - equity (37) (54) Net cash inflow/(outflow) before 4,271 (130) financing Financing: Issue of ordinary shares 244 183 Share issue expenses (12) (9) Repurchase of ordinary shares (4) (3) ----- ------ Total financing 228 171 ------ ------ Increase in cash resources 4,499 41 ------ ------ Investment Portfolio Summary As at 31 December 2004 Investments 31 December 2004 Total cost Carrying value £000's Unlisted investments Scancell Ltd 500 375 Insense Technologies Ltd 100 100 Angel Biotechnology Ltd 450 119 DxS Ltd 263 263 Purely Proteins Ltd 300 300 AIM-listed investments Cobra Biomanufacturing plc 136 64 Dawmed Systems plc 101 72 Evolutec Group plc 75 74 Listed investments GTC Biotherapeutics Inc 15 20 1,940 1,387 The above summary of results for the period ended 31 December 2004 does not constitute statutory financial statements within the meaning of Section 240 of the Companies Act 1985 and has not been delivered to the Registrar of Companies. Statutory financial statements will be filed with the Registrar of Companies in due course; the auditors' report on those financial statements under S235 of the Companies Act 1985 is unqualified and does not contain a statement under S237(2) or (3) of the Companies Act 1985. A copy of the full annual report and financial statements for the period ended 31 December 2004 is expected to be posted to shareholders shortly and will be available to the public at the registered office of the company at Kett House, Station Road, Cambridge, CB1 2JY. This information is provided by RNS The company news service from the London Stock Exchange

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