Interim Results
Finsbury Emerging Biotechnology Tst
30 November 2005
NEWS RELEASE
To: City Editors
For immediate release
30 November 2005
Finsbury Emerging Biotechnology Trust PLC
Interim Results for the six months ended 30 September 2005
Financial Highlights 30 September 31 March % Change
2005 2005
Shareholders' Funds £32.8m £30.4m* +7.9
Net Asset Value per Ordinary share 119.2p 101.2p* +17.8
Share price 110.5p 91.3p +21.0
Discount 7.3% 9.8% -
NASDAQ Biotechnology Index (sterling
adjusted) 444.6 344.3 +29.1
FTSE All-Share Index (total return) 3,071.9 2,704.5 +13.6
* Restated for IFRS (see note 5)
No interim dividend is proposed.
The following are attached:
• Chairman's Statement
• Consolidated Income Statement
• Consolidated Statement of Changes in Equity
• Consolidated Balance Sheet
• Consolidated Cash Flow Statement
• Notes to the Interim Financial Statements
For further information please contact:
Alastair Smith, Close Finsbury Asset Management Limited 020 7426 6240
Tracey Lago, Close Finsbury Asset Management Limited 020 7426 6219
Sven Borho, OrbiMed Advisors LLC 020 7426 6290
Jo Stonier, Quill Communications 020 7763 6976
CHAIRMAN'S STATEMENT
The six months under review have seen a number of important changes to your
Company. At the Extraordinary General Meeting held on 19 May 2005 shareholders
approved a change of name of the Company and a change in the investment policy
to broaden the geographical universe in which the Company can invest to a
worldwide one and to focus the investment portfolio on emerging biotechnology
companies, defined as those companies with a market capitalisation of less than
US$3 billion. The Company has now adopted the NASDAQ Biotechnology Index as its
benchmark, and it was subsequently agreed that the index should be sterling
adjusted with effect from the same date.
In conjunction with the move to a global mandate your Board appointed OrbiMed
Capital LLC as Investment Adviser to the Company and entered into new Management
and Investment Advisory agreements with effect from 19 May 2005. OrbiMed Capital
is a New York based investment management business, which specialises in
pharmaceutical and biotechnology investment and has over US$5billion of funds
under management.
Investment Performance
The Company's net asset value ("NAV") per share increased from 101.2p to 119.2p,
an increase of 17.8% over the six months to 30 September 2005. This compared
with an increase in the Company's benchmark index, the NASDAQ Biotechnology
Index (sterling adjusted) of 29.1%. This underperformance against the benchmark
index arose during the period prior to the adoption of the global mandate and
the new benchmark index.
Over the period 19 May 2005 to 30 September 2005 the NAV per share rose by
19.7%, which compares to a rise in the NASDAQ Biotechnology Index (sterling
adjusted) of 19.2%, an outperformance of some 0.5% in a period when the
investment portfolio underwent significant re-alignment.
Share Price Performance
During the six month period to 30 September 2005, the share price increased by
21.0% from 91.3p to 110.5p resulting in a narrowing in the discount of the share
price to NAV per share from 9.8% to 7.3%.
As part of the proposals put to shareholders the Board has committed to protect
a share price discount to NAV per share at a maximum of 6.0%. Share buy backs
are used to effect the discount protection mechanism and are used if there is an
excess of supply over demand for the Company's shares in the secondary market.
In view of the volatility of the NAV per share it is possible for the share
price discount to move to a level slightly wider than 6.0% as was the case as at
30 September 2005. This does not however affect in any way your Board's
commitment to provide liquidity to shareholders at a 6.0% discount when
necessary.
Results and Dividend
The total return for the six months ended 30 September 2005 was 17.50p per share
(year to 31 March 2005: as restated, loss of 10.18p, six months to 30 September
2004: loss of 17.22p). This was made up of a revenue loss of 1.52p per share
(year to 31 March 2005: as restated, loss of 1.41p, six months to 30 September
2004: loss of 0.47p) and a capital gain of 19.02p per share (year to 31 March
2005: as restated, loss of 8.77p, six months to 30 September 2004: loss of
16.75p).
The investments making up the Company's investment portfolio typically provide
little, if any, income and accordingly no interim dividend has been declared
(2004: nil).
CHAIRMAN'S STATEMENT (continued)
International Accounting Standards
Your Company is required to adopt international accounting standards for the
year ending 31 March 2006 and accordingly these interim accounts are presented
under the new format.
Review and Outlook
The past six months have been very positive for biotechnology stocks with new
products providing support to earnings and revenue growth. Your Board believes
that biotechnology stocks will continue to prosper with new therapeutic advances
and various product approvals likely to occur in late 2005. Additionally, merger
and acquisition activity is strong and continues to support rising valuations.
Your Board believes that the long term investor in this sector of the market
will be well rewarded.
John Sclater
Chairman
Consolidated Income Statement
For the six months ended 30 September 2005
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended 31 March 2005
30 September 30 September
2005 2004
Restated (see Restated (see
note 6) note 5)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
---------------------------------------------------------------------------------------------------
Investment
Income
Investment
income (note 2) 9 - 9 47 - 47 75 - 75
---------------------------------------------------------------------------------------------------
Other income 10 - 10 12 - 12 20 - 20
(note 2)
---------------------------------------------------------------------------------------------------
Total income 19 - 19 59 - 59 95 - 95
Gains and
losses on
investments
Gains/(losses)
on investments
held at fair
value through
profit or loss - 5,777 5,777 - (4,850) (4,850) - (2,249) (2,249)
Expenses
Management
fees (note 3) - (505) (505) - (190) (190) - (391) (391)
Other expenses (436) - (436) (196) - (196) (508) - (508)
Finance costs (2) (21) (23) (3) - (3) (8) - (8)
---------------------------------------------------------------------------------------------------
(Loss)/profit
before tax (419) 5,251 4,832 (140) (5,040) (5,180) (421) (2,640) (3,061)
---------------------------------------------------------------------------------------------------
Taxation - - - (2) - (2) (2) - (2)
---------------------------------------------------------------------------------------------------
(Loss)/profit
for the period (419) 5,251 4,832 (142) (5,040) (5,182) (423) (2,640) (3,063)
---------------------------------------------------------------------------------------------------
Earnings/(loss)
per Ordinary
share (note 1) 17.50p (17.22)p (10.18)p
===================================================================================================
The total column of this statement represents the Group's Income Statement,
prepared in accordance with IFRS. The revenue return and capital return columns
are supplementary to this and are prepared under guidance published by the
Association of Investment Trust Companies. All items in the above statement
derive from continuing operations.
All income is attributable to the equity holders of Finsbury Emerging
Biotechnology Trust PLC, the parent company. There are no minority interests.
Consolidated Statement of Changes in Equity
For the six months ended 30 September 2005
(Unaudited)
Six months ended 30 September 2004
Restated (see note 6)
Ordinary Share Special Capital Capital Retained Total
Capital Reserve Redemption Reserve Earnings
Reserve
£'000 £'000 £'000 £'000 £'000 £'000
------------------------------------------------------------------------------------------------------
For the six
months ended
30 September
2004
Balance at 31
March 2004 7,525 21,679 - 5,054 (746) 33,512
Net loss for
the period - - - (5,040) (142) (5,182)
------------------------------------------------------------------------------------------------------
Balance at 30
September 2004 7,525 21,679 - 14 (888) 28,330
------------------------------------------------------------------------------------------------------
(Audited)
Year ended 31 March 2005
Restated (see note 5)
Ordinary Share Special Capital Capital Retained Total
Capital Reserve Redemption Reserve Earnings
Reserve
£'000 £'000 £'000 £'000 £'000 £'000
----------------------------------------------------------------------------------------------------------
For the year
ended
31 March
2005
Balance at 31
March 2004 7,525 21,679 - 5,054 (746) 33,512
Net loss for
the period - - - (2,640) (423) (3,063)
----------------------------------------------------------------------------------------------------------
Balance at 31
March 2005 7,525 21,679 - 2,414 (1,169) 30,449
----------------------------------------------------------------------------------------------------------
(Unaudited)
Six months ended 30 September 2005
Ordinary Share Special Capital Capital Retained Total
Capital Reserve Redemption Reserve Earnings
Reserve
£'000 £'000 £'000 £'000 £'000 £'000
----------------------------------------------------------------------------------------------------------
For the six
months ended
30 September
2005
Balance at 31
March 2005* 7,525 21,679 - 2,414 (1,169) 30,449
Buyback of
Ordinary
shares (653) (2,512) 653 - - (2,512)
Net
profit/(loss)
for the period - - - 5,251 (419) 4,832
----------------------------------------------------------------------------------------------------------
Balance at 30
September 2005 6,872 19,167 653 7,665 (1,588) 32,769
----------------------------------------------------------------------------------------------------------
* Restated
Consolidated Balance Sheet
as at 30 September 2005
(Unaudited) (Audited)
Restated (see Restated (see
(Unaudited) note 6) note 5)
30 September 30 September 31 March
2005 2004 2005
£'000 £'000 £'000
--------------------------------------------------------------------------------
Non-current assets
Investments held
at fair value
through profit
or loss 33,610 28,315 30,403
Current assets
Taxation
recoverable 1 3 3
Prepayment and
accrued income 50 11 36
Cash and cash
equivalents 329 198 301
--------------------------------------------------------------------------------
380 212 340
--------------------------------------------------------------------------------
Total Assets 33,990 28,527 30,743
Current liabilities
Purchase for
future
settlement 870 - -
Bank overdraft 3 - -
Accruals 348 197 294
--------------------------------------------------------------------------------
1,221 197 294
--------------------------------------------------------------------------------
Net assets 32,769 28,330 30,449
--------------------------------------------------------------------------------
Equity
Ordinary share
capital 6,872 7,525 7,525
Special reserve 19,167 21,679 21,679
Capital
redemption
reserve 653 - -
Capital reserve 7,665 14 2,414
Retained
earnings (1,588) (888) (1,169)
--------------------------------------------------------------------------------
Total Equity 32,769 28,330 30,449
--------------------------------------------------------------------------------
Net asset value
per Ordinary
share (note 4) 119.20p 94.12p 101.16p
--------------------------------------------------------------------------------
Consolidated Cash Flow Statement
for the six months ended 30 September 2005
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended
30 September 30 September 31 March 2005
2005 2004
£'000 Restated (see Restated (see
note 6) note 5)
£'000 £'000
--------------------------------------------------------------------------------
Net cash outflow from
operating activities (903) (303) (712)
Net cash inflow from
investing activities 3,541 455 990
--------------------------------------------------------------------------------
Net cash inflow before
financing 2,638 152 278
Net cash outflow from
financing activities (2,512) - -
--------------------------------------------------------------------------------
Net increase in cash
and cash equivalents 126 152 278
Cash and cash
equivalents at start
of period 301 54 54
Realised loss on
foreign currency (101) (8) (31)
--------------------------------------------------------------------------------
Cash and cash
equivalents at period
end 326 198 301
================================================================================
Notes to the Interim Financial Statements
1. Earnings/(loss) per Ordinary share
The earnings/(loss) per Ordinary share figure is based on the net profit for the
six months of £4,832,000 (six months ended 30 September 2004: £5,182,000 loss;
year ended 31 March 2005: £3,063,000 loss) and on 27,612,514 (six months ended
30 September 2004 and year ended 31 March 2005: 30,100,000) Ordinary shares,
being the weighted average number of Ordinary shares in issue during the period.
2. Income
(Unaudited) (Unaudited) (Audited)
30 September 30 September 31 March
2005 2004 2005
£'000 £'000 £'000
--------------------------------------------------------------------------------
Investment income 9 47 75
Bank interest 10 5 13
Underwriting income - 7 7
--------------------------------------------------------------------------------
Total 19 59 95
--------------------------------------------------------------------------------
3. Investment Management Fees
(Unaudited) (Unaudited) (Audited)
30 September 30 September 31 March
2005 2004 2005
£'000 £'000 £'000
--------------------------------------------------------------------------------
Periodic fee 345 163 336
Performance fee 96 - -
Irrecoverable VAT thereon 64 27 55
--------------------------------------------------------------------------------
Total 505 190 391
================================================================================
4. Net Asset Value per Ordinary share
The Net Asset Value per Ordinary share is based on the net assets attributable
to equity shareholders of £32,769,000 (six months ended 30 September 2004:
£28,330,000 as restated; year ended 31 March 2005: £30,449,000 as restated) and
on 27,490,000 (six months ended 30 September 2004: 30,100,000; year ended 31
March 2005: 30,100,000) Ordinary shares, being the number of Ordinary shares in
issue at the period end.
At 30 September 2005 there were 27,490,000 Ordinary shares in issue (30
September 2004: 30,100,000; 31 March 2005: 30,100,000). During the six months
ended 30 September 2005 the Company repurchased 2,610,000 of its own issued
Ordinary shares in the market for cancellation (six months ended 30 September
2004: nil; year ended 31 March 2005: nil). The cost of the share buy-backs,
including stamp duty, amounted to £2,512,000 (six months ended 30 September
2004: nil; year ended 31 March 2005: nil).
Notes to the Interim Financial Statements (continued)
5. (a) Restatement of balances as at 31 March 2005
At 1 April 2005 the Company adopted International Financial Reporting Standards.
In accordance with IFRS 1 (First Time Adoption of International Financial
Reporting Standards) the following is a reconciliation of the results as at 31
March 2005, previously reported under the applicable UK Accounting Standards and
the SORP, to the restated IFRS results.
(Audited) Effect of Restated
Previously transition 31 March
reported to IFRS 2005
31 March 2005
£'000 £'000 £'000
--------------------------------------------------------------------------------
Investments
(see note 1
below) 30,492 (89) 30,403
Current assets 340 - 340
Creditors:
amounts falling due
within one year (294) - (294)
--------------------------------------------------------------------------------
Net assets 30,538 (89) 30,449
================================================================================
Equity
Ordinary share capital 7,525 - 7,525
Special reserve 21,679 - 21,679
Capital redemption reserve - - -
Capital reserve - realised 3,772 - 3,772
Capital reserve - unrealised/
revaluation reserve (1,269) (89) (1,358)
Retained earnings (1,169) - (1,169)
--------------------------------------------------------------------------------
30,538 (89) 30,449
================================================================================
Note to the reconciliation
1 Investments (excluding derivatives) are classified as held at fair value under
IFRS and are carried at bid prices which total their fair value of £30,403,000.
Previously, under UK GAAP, they were carried at mid prices.
5. (b) Reconciliation of the Statement of Total Return to the Income Statement
for the year ended 31 March 2005
Under IFRS the Income Statement is the equivalent of the Statement of Total
Return as reported previously.
2005 EPS Impact
£'000 pence
--------------------------------------------------------------------------------
Loss on Ordinary activities (3,079) -
Change from mid to bid basis at 31 March 2004 (see
note 1 below) 105 0.35
Change from mid to bid basis at 31 March 2005 (see
note 1 below) (89) (0.30)
--------------------------------------------------------------------------------
Net loss per Income Statement (3,063) 0.05
================================================================================
Note to the reconciliation
1 The portfolio valuation at 31 March 2004 and 31 March 2005 is required to be
valued at fair value under IFRS. These values differ from the previous valuation
by £105,000 and £89,000 respectively.
Notes to the Interim Financial Statements (continued)
5. (c) Reconciliation of the Cash Flow Statement for the year ended 31 March
2005
(Audited) Effect of Adjusted Cash
Previously transition Flows 2005
reported to IFRS
Cash Flows 2005
£'000 £'000 £'000
--------------------------------------------------------------------------------
Net cash outflow from
operating activities (705) (7) (712)
(see note 1 below)
Returns on investments
and servicing of finance (8) 8 -
(see note 1 below)
Taxation (see note 1 below) 1 (1) -
Net cash inflow from
financial investment 990 - 990
--------------------------------------------------------------------------------
Net cash inflow before
financing 278 - 278
--------------------------------------------------------------------------------
Increase in cash 278 - 278
================================================================================
Note to the reconciliation
1 Servicing of finance and taxation have now been analysed within operating
activities.
6. (a) Restatement of balances as at 30 September 2004
At 1 April 2004 the Company adopted International Financial Reporting Standards.
In accordance with IFRS 1 (First Time Adoption of International Financial
Reporting Standards) the following is a reconciliation of the results as at 30
September 2004, previously reported under the applicable UK Accounting Standards
and the SORP, to the restated IFRS results.
(Unaudited) Effect of Restated
Previously transition 30 September
reported to IFRS 2004
30 September
2004
£'000 £'000 £'000
--------------------------------------------------------------------------------
Investments
(see note 1 below) 28,388 (73) 28,315
Current assets 212 - 212
Creditors: amounts
falling due
within one year (197) - (197)
--------------------------------------------------------------------------------
Net assets 28,403 (73) 28,330
================================================================================
Equity
Ordinary share capital 7,525 - 7,525
Special reserve 21,679 - 21,679
Capital redemption reserve - - -
Capital reserve - realised 7,042 - 7,042
Capital reserve - unrealised/
revaluation reserve (6,955) (73) (7,028)
Retained earnings (888) - (888)
--------------------------------------------------------------------------------
28,403 (73) 28,330
================================================================================
Note to the reconciliation
1 Investments (excluding derivatives) are classified as held at fair value under
IFRS and are carried at bid prices which total their fair value of £28,315,000.
Previously, under UK GAAP, they were carried at mid prices.
Notes to the Interim Financial Statements (continued)
6. (b) Reconciliation of the Statement of Total Return to the Income Statement
for the period ended 30 September 2004
Under IFRS the Income Statement is the equivalent of the Statement of Total
Return as reported previously.
2004 EPS Impact
£'000 pence
--------------------------------------------------------------------------------
Loss on Ordinary activities (5,214) -
Change from mid to bid basis at 31 March 2004 (see
note 1 below) 105 0.35
Change from mid to bid basis at 30 September 2004
(see note 1 below) (73) (0.24)
--------------------------------------------------------------------------------
Net loss per Income Statement (5,182) 0.11
================================================================================
Note to the reconciliation
1 The portfolio valuation at 31 March 2004 and 30 September 2004 is required to
be valued at fair value under IFRS. These values differ from the previous
valuation by £105,000 and £73,000 respectively.
6. (c) Reconciliation of the Cash Flow Statement for the six months ended 30
September 2004
(Unaudited) Effect of Adjusted Cash
Previously transition Flows 2004
reported to IFRS
Cash Flows 2004
£'000 £'000 £'000
--------------------------------------------------------------------------------
Net cash outflow from
operating activities (301) (2) (303)
(see note 1 below)
Returns on investments
and servicing of finance
(see note 1 below) (4) 4 -
Taxation (see note 1 below) 2 (2) -
Net cash inflow from
financial investment 455 - 455
--------------------------------------------------------------------------------
Net cash inflow before
financing 152 - 152
--------------------------------------------------------------------------------
Increase in cash 152 - 152
================================================================================
Note to the reconciliation
1 Servicing of finance and taxation have now been analysed within operating
activities.
7. (a) Restatement of balances as at 31 March 2004
At 1 April 2005 the Company adopted International Financial Reporting Standards.
In accordance with IFRS 1 (First Time Adoption of International Financial
Reporting Standards) the following is a reconciliation of the results as at 31
March 2004, previously reported under the applicable UK Accounting Standards and
the SORP, to the restated IFRS results.
Notes to the Interim Financial Statements (continued)
7. (a) Restatement of balances as at 31 March 2004 (continued)
(Audited) Effect of Restated
Previously transition 31 March 2004
reported to IFRS
31 March 2004
£'000 £'000 £'000
--------------------------------------------------------------------------------
Investments
(see note 1 below) 33,748 (105) 33,643
Current assets 331 - 331
Creditors:
amounts falling due
within one year (462) - (462)
--------------------------------------------------------------------------------
Net assets 33,617 (105) 33,512
================================================================================
Equity
Ordinary share capital 7,525 - 7,525
Special reserve 21,679 - 21,679
Capital redemption reserve - - -
Capital reserve - realised 8,079 - 8,079
Capital reserve - unrealised/
revaluation reserve (2,920) (105) (3,025)
Retained earnings (746) - (746)
--------------------------------------------------------------------------------
33,617 (105) 33,512
================================================================================
Note to the reconciliation
1 Investments (excluding derivatives) are classified as held at fair value under
IFRS and are carried at bid prices, which total their fair value of £33,643,000.
Previously, under UK GAAP, they were carried at mid prices.
8. Comparative Information
The financial information contained in this interim report does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. The
financial information for the six months ended 30 September 2005 and 2004 has
not been audited.
The information for the year ended 31 March 2005 has been extracted from the
latest published audited financial statements and restated to comply with IFRS.
The audited financial statements for the year ended 2005 have been filed with
the Registrar of Companies. The report of the auditors on those accounts
contained no qualification or statement under section 237(2) or (3) of the
Companies Act 1985.
- ENDS -
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