Interim Results
TriVest VCT PLC
27 May 2004
TRIVEST VCT PLC
Interim Results for the 6 months ended 31 March 2004
Investment Objective
The objective of TriVest VCT plc ('TriVest') is to provide investors with an
attractive return, by maximising the stream of dividend distributions from the
income and capital gains generated from a diverse and carefully selected
portfolio of investments.
The fund invests in companies at various stages of development. In some
instances this includes investments in new and secondary issues of companies,
which may already be listed on the Alternative Investment Market ('AIM') or
OFEX.
As a multi-manager VCT the Fund combines the specialist investment skills and
industry knowledge of three independent management teams, each specialising in
different sectors of the economy to select its investments.
Chairman's Statement
I am pleased to present the Company's Interim Report for the six months ended 31
March 2004.
Portfolio
Equity stock markets in the United Kingdom last year enjoyed sharp rises.
Further increases are anticipated this year, as the economic recovery in the UK
appears to gather pace. Some areas of the economy in which we have invested have
already enjoyed some improvements and these more favourable economic conditions
are beginning to show through in the financial results of several investee
companies. It is difficult, nevertheless, to predict the short-term outlook for
the portfolio. I remain more confident for the portfolio's medium term outlook.
On 31 March 2004 agreement was reached, subject to approval by the Financial
Services Authority ('FSA'), for GLE Development Capital Limited (GLE) to be
acquired by Matrix Group Limited and, subsequent to this, GLE changed its name
to Matrix Private Equity Partners Limited (MPEP) on 5 April 2004. Within the
MPEP managed component of the portfolio, a number of the companies are
progressing well. HWA Limited (trading as Holloway White Allom) and TJ Brent
Limited both deserve mention in this respect. In recognition of its strong
historic and continuing good performance, HWA's valuation has been written up to
£2,575,067. On 30 April 2004, HWA redeemed the Company's entire holding of
Cumulative Preference Shares together with a 20% redemption premium. TJ Brent
has enjoyed another year of revenue and profit growth and there is a strong
prospect of early repayment of a large proportion of TriVest's loan stock
investment within the short term. In January 2004, TriVest made an investment of
£500,000 into The Hunter Rubber Company Limited (a wellington boot manufacturer)
and invested a further £178,571 into Special Mail Services Limited, a company,
which has recently secured a major contract to distribute passports with the
Passport Agency. A new investment of £369,890 into AIM listed BBI Holdings
plc, a developer and manufacturer of rapid test diagnostic products, has been
made since the period end.
Tikit Group plc recently announced increased profits which resulted in an uplift
in its share price. Elsewhere in the Nova portfolio, Watkins Books Limited sold
its loss making publishing division and a full provision has been made against
its valuation. Small recoveries have also been made from the disposal of the
businesses and assets within The Good Book Guide Limited and Trident Publishing
Limited. A further investment of £220,000 into i-documentsystems group plc has
been made since the period end.
In March 2004, VCF invested £250,000 into DCG Datapoint Group Limited (formerly
Datapoint Consulting Group Limited), a company specialising in the design,
supply and integration of data storage solutions. During the period, further
investments of £777,356, £250,000 and £7,200 were made in Oxonica Limited,
Broadreach Networks Limited and ANT Limited respectively. A further investment
of £52,000 has been approved for Sarantel Limited, which merged with Heritage
Image Partnership Limited on 3 October 2003 when TriVest invested a further
£79,815.
Board of Directors
Following the recent announcement by Matrix Group Limited, referred to above,
that it had reached agreement to acquire the whole of the issued share capital
of GLE, Helen Sinclair offered her resignation as a Director of the Company in
order to avoid any potential conflicts of interest. It is with considerable
regret that the Board has felt it necessary to accept her resignation but has
agreed with her that it is in the best interests of all concerned if her
resignation only takes effect when a suitably qualified replacement can be
found.
Revenue Account
At 31 March 2004, revenue reserves for the period available for distribution to
shareholders were £279,706. As in previous years, the Board does not propose to
declare an interim dividend but expects to be able to propose a final dividend
for the year ended 30 September 2004. The net asset value per share as at 31
March 2004 was 76.57 pence (76.10 pence as at 31 March 2003) and the total
return per share was 4.00 pence ((0.97) pence as at 31 March 2003).
Share buy-backs
During the six months ended 31 March 2004, the Company bought back 30,000
Ordinary Shares (representing 0.07% of the shares in issue at the period end) at
a total cost of £15,240 (net of expenses). These shares were subsequently
cancelled by the Company.
Colin Hook, Chairman
26 May 2004
Investment Portfolio Summary
as at 31 March 2004
Valuation
at 30 Valuation
Total cost September Additional at 31 March
at 31 March 2003 investments 2004
2004 audited in the period unaudited
£ £ £ £
Matrix Private Equity Partners
Limited
HWA Limited (trading as Holloway 1,000,000 1,811,687 - 2,575,067
White Allom)
Specialist contractor in the high-
value residential and heritage
property refurbishment market
T J Brent Limited 900,000 1,557,950 - 1,722,230
Specialist contractor to the water
utility sector
Letraset Limited 1,000,000 1,098,050 - 1,098,050
Manufacturer and distributor of
graphic art products
Brookerpaks Limited 500,000 500,000 - 1,095,802
Importer and distributor of garlic and
vacuum-packed vegetables
Image Source Group Limited 1,000,000 1,000,000 - 1,000,000
Royalty free picture library
Special Mail Services Limited 1,303,571 562,500 178,571 651,786
Specialist, secure credit card
delivery business
B G Consulting Group Limited 1,000,000 1,000,000 - 599,799
Technical training business and
outplacement careers consultancy
The Hunter Rubber Company
Limited* 500,000 n/a 500,000 500,000
Manufacturer of wellington boots,
safety footwear and diving suits
Inca Interiors Limited 350,000 300,000 - 119,367
Supplier of quality kitchens to house
developers
---------------- ---------------- ---------------- ----------------
7,553,571 7,830,187 678,571 9,362,101
Nova Capital Management Limited
i-documentsystems group plc 517,625 458,333 - 406,250
Developer of products for document,
content and information
management
Watkins Books Limited 500,000 112,500 - -
Supplier of books on alternative
sciences, health, philosophy and
related subjects
DriveTec(UK) Limited 500,000 417,750 - 417,750
Developer of patented transmission
technology
Tikit Group plc 517,624 521,738 - 593,477
Provider of consultancy, services
and software solutions for law firms
Biomer Technology Limited 50,000 50,000 - 50,000
Developer of biomaterials for
medical devices
Stortext Group Limited 380,435 18,079 - 18,079
Integrated outsourced digital
document storage business
Other investments in the portfolio 3,988,529 50,000 - -
---------------- ---------------- ---------------- ----------------
6,454,213 1,628,400 - 1,485,556
VCF Partners
Sarantel Limited 1,255,220 1,175,405 79,815 1,255,220
Antennae for mobile phones and other
wireless devices
Camwood Limited 1,000,000 1,000,000 - 1,000,000
Provider of software repackaging
services
Oxonica Limited 1,677,389 900,033 777,356 1,677,389
Specialist in the design, manipulation
and engineering of properties of
materials at the nano-scale
Aquasium Technology Limited 600,000 600,000 - 600,000
Design, manufacture and marketing of
bespoke electron beam welding and
vacuum furnace equipment
SmartFOCUS Holdings Limited 500,000 500,000 - 500,000
Provider of analytic software to
support targeting and execution of
marketing campaigns
Broadreach Networks Limited 500,000 250,000 250,000 500,000
Public access WLAN and fixed line
Internet Service Provider
ANT Limited 1,097,200 490,500 7,200 1,323,106
Provider of embedded browser/email
software for consumer electronics and
Internet appliances
Alaric Systems Limited 557,413 557,413 - 557,413
Software development, implementation
and support in the credit/debit card
authorisation and payments market
Blue Curve Limited 500,000 396,666 - 396,666
Software for automating the production
and distribution of research
information by banks and fund
managers
DCG Datapoint Group Limited* 250,000 n/a 250,000 250,000
Design, supply and interrogation of
data
storage solutions
Wire-e Limited 500,000 225,000 - 225,000
Provider of mobile data
communication services
Monactive Limited 339,285 218,749 - 218,749
Provider of software asset management
tools that monitor usage of software
versus licences held
Other investments in the portfolio 250,000 95,000 - -
---------------- ---------------- ---------------- ----------------
9,026,507 6,408,766 1,364,371 8,503,543
---------------- ---------------- ---------------- ----------------
Total 23,034,291 15,867,353 2,042,942 19,351,200
---------------- ---------------- ---------------- ----------------
* New investment made in the six month period ended 31 March 2004
Investment Managers' Review
Matrix Private Equity Partners Limited
(formerly GLE Development Capital Limited)
During the period an additional amount of £178,571 was invested in Special Mail
Services as part of a £1 million funding round raised to finance the operation
of a major new contract. An investment of £500,000 was made in January to
support the management buy in/buy out of The Hunter Rubber Company, the
Dumfries-based manufacturer of wellington boots, safety footwear and diving
suits.
The other investments in the portfolio have performed well overall, although
Inca has continued to suffer from delays in site completions and BG Consulting
Group has yet to see evidence of material upturn in demand for its training and
outplacement services. However, TJ Brent has again demonstrated strong
performance and is showing further growth in profits. Similarly HWA enjoyed a
particularly successful year and has begun 2004 in similar fashion with a large
order book. In April 2004 the company made early redemption of TriVest's
redeemable preference share investment and paid a maiden ordinary share
dividend.
Brookerpaks has also seen a highly profitable first full year since the MBO and
as a result TriVest's investment valuation now shows a significant increase
above cost. The early performance from Image Source has been encouraging.
The increasing maturity of the portfolio is demonstrated by a growing yield and
return of TriVest's investment gearing. This will provide re-investment
opportunities to broaden still further the portfolio, the valuation of which now
stands at 124% of cost.
Nova Capital Management Limited
There are six remaining investments in the portfolio following the sale of The
Good Book Guide in December 2003. No new investments were made in the portfolio
in the period under review. The emphasis of Nova's work has been on value
improvement within the existing financial resources of each company unless there
is clear evidence that new investment will make a very significant difference.
The two AIM-listed investments, Tikit and i-documentsystems, provided a 2%
increase in value during the six months. Both companies continue to experience
limited liquidity in the market for their shares. However, Tikit announced
sales for 2003 up 16% to £9.56 million and profit before tax and goodwill
amortisation up 81% to £1.18 million. i-documentsystems announced sales up 48%
at £4.47 million for the year to 31 October 2003 with losses before tax sharply
reduced to £0.6 million compared with £1.48 million in the previous year. The
company believes it is well positioned as a provider of software, information
and managed services to local government. Both companies are showing encouraging
trends of profitability and it is to be hoped that the market will begin to
recognise this.
Biomer has been successful in raising a further £1.3 million of equity at a
price which is 4.67 times that at which TriVest invested £50,000 in January
2003. The success of the fund-raising is a positive indication of the progress
the company has made since TriVest's investment.
DriveTec is continuing to make progress on the development of its EPS torque
management system and its new type of supercharger (Supergen 2). Negotiations
are advancing to provide significant third party funding for the latter project.
Both Stortext and Watkins Books have been successful in eliminating costs from
their businesses to enable each company to return to profitability but more time
is required to establish that profits can be made on a recurring basis. In the
meantime it has been considered prudent to increase the provision on Watkins
Books to 100%.
The Good Book Guide had a requirement for significant additional funding which
was not matched by prospects for growth and profitability once that new funding
was in place. Accordingly, following a lengthy sale process the company was sold
for net proceeds of £30,700 compared with the valuation of £50,000 in the last
audited accounts.
VCF LLP (VCF)
Fourteen technology investments have been made by VCF Partners to date, with one
new investment made since September last year. In March 2004, £250,000 was
invested in DCG Datapoint Group, a designer and integrator of data storage
solutions for large corporates.
A further investment of £777,356 was made in nanotechnology company, Oxonica, in
January 2004. VCF led this further £4 million investment round which again
included strategic investor, BASF. The company continues to make progress in
the sunscreen and fuel additive markets both in the UK and the Far East.
A further investment was also made to Broadreach Networks alongside Intel and
other investors. This commitment was made at the time of the original
investment in February 2003. Broadreach is making excellent progress in terms of
penetrating the on-train WiFi access market.
Sarantel acquired the entire issued share capital of Heritage Image Partnership
Limited ('HIP') in October 2003 resulting in a cash injection of £850,000 for
Sarantel. TriVest was issued 228,448 new shares in Sarantel in respect of their
original holding in HIP.
Unaudited Statement of Total Return
(incorporating the Revenue Account of the Company for the six months ended 31
March 2004)
Six months to 31 March 2004
(unaudited)
Revenue Capital Total
£ £ £
Realised losses on investments - (19,813) (19,813)
Unrealised gains on investments - 1,585,905 1,585,905
Income 631,001 - 631,001
Investment management fees (73,343) (220,029) (293,372)
Other expenses (219,599) - (219,599)
----------------- ----------------- -----------------
Return on ordinary activities before taxation 338,059 1,346,063 1,684,122
Tax on ordinary activities (58,353) 41,806 (16,547)
----------------- ----------------- -----------------
Return attributable to equity shareholders 279,706 1,387,869 1,667,575
Dividends in respect of equity shares - - -
----------------- ----------------- -----------------
Transfer to reserves 279,706 1,387,869 1,667,575
========== ========== ==========
Return per share 0.67p 3.32p 4.00p
Six months to 31 March 2003
(unaudited)
Revenue Capital Total
£ £ £
Realised losses on investments - (30,099) (30,099)
Unrealised losses on investments - (499,118) (499,118)
Income 771,282 - 771,282
Investment management fees (99,918) (299,755) (399,673)
Other expenses (206,198) - (206,198)
----------------- ----------------- -----------------
Return on ordinary activities before taxation 465,166 (828,972) (363,806)
Tax on ordinary activities (110,328) 69,706 (40,622)
----------------- ----------------- -----------------
Return attributable to equity shareholders 354,838 (759,266) (404,428)
Dividends in respect of equity shares - - -
----------------- ----------------- -----------------
Transfer to/(from) reserves 354,838 (759,266) (404,428)
========== ========== ==========
Return per share 0.85p (1.82)p (0.97)p
Year to 30 September 2003
(audited)
Revenue Capital Total
£ £ £
Realised losses on investments - (261,901) (261,901)
Unrealised losses on investments - (1,270,291) (1,270,291)
Income 1,457,698 - 1,457,698
Investment management fees (193,129) (579,389) (772,518)
Other expenses (451,401) - (451,401)
----------------- ----------------- -----------------
Return on ordinary activities before taxation 813,168 (2,111,581) (1,298,413)
Tax on ordinary activities (243,207) 182,120 (61,087)
----------------- ----------------- -----------------
Return attributable to equity shareholders 569,961 (1,929,461) (1,359,500)
Dividends in respect of equity shares (521,837) - (521,837)
----------------- ----------------- -----------------
Transfer to/(from) reserves 48,124 (1,929,461) (1,881,337)
========== ========== ==========
Return per share 1.37p (4.63)p (3.26)p
Unaudited Balance Sheet
as at 31 March 2004
31 March 31 March 30 September
2004 2003 2003
(unaudited) (unaudited) (audited)
£ £ £
Fixed Assets
Investments 19,351,200 31,333,564 15,867,353
------------- ------------- -------------
19,351,200 31,333,564 15,867,353
Current Assets
Debtors and prepayments 469,952 495,328 304,694
Other assets 7,907,096 323,051 6,750,709
Cash at bank 4,517,022 25,197 8,136,664
------------- ------------- -------------
12,894,070 843,576 15,192,067
Creditors: amounts falling due within
one year (300,786) (408,005) (767,194)
------------- ------------- -------------
Net current assets 12,593,284 435,571 14,424,873
------------- ------------- -------------
Net assets 31,944,484 31,769,135 30,292,226
------------- ------------- -------------
Capital and reserves
Called up share capital 417,170 417,470 417,470
Capital redemption reserve 845 545 545
Special reserve 39,044,534 39,059,851 39,059,851
Capital reserve - realised (4,420,260) (1,679,210) (3,267,224)
Capital reserve - unrealised (3,683,091) (6,641,815) (6,223,996)
Revenue reserves 585,286 612,294 305,580
------------- ------------- -------------
Equity shareholders' funds 31,944,484 31,769,135 30,292,226
------------- ------------- -------------
Net asset value per share 76.57p 76.10p 72.56p
Unauditied Summarised Cash flow Statement
as at 31 March 2004
Six months to Six months to Year to
31 March 31 March 30 September
2004 2003 2003
(unaudited) (unaudited) (audited)
£ £ £
Operating activities
Net revenue on activities before taxation 338,059 465,166 813,168
Capitalised fees (220,029) (326,574) (586,899)
(Increase)/decrease in debtors (165,258) 174,095 364,729
Decrease in creditors 38,883 (39,555) 9,687
-------------- -------------- --------------
Net cash (outflow)/inflow from operating activities (8,345) 273,132 600,685
Equity dividends paid (521,838) (731,009) (731,009)
Taxation paid - - (232,355)
Acquisitions of investments (1,963,127) (15,979,053) (18,230,872)
Disposals of investments 45,372 14,129,815 30,825,561
Management of liquid resources (1,156,387) 2,328,107 (4,099,551)
Financing (15,317) (13,820) (13,820)
-------------- -------------- --------------
(Decrease)/increase in cash for the period (3,619,642) 7,172 8,118,639
-------------- -------------- --------------
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash for the period (3,619,642) 7,172 8,118,639
Net funds at the start of the period 8,136,664 18,025 18,025
-------------- -------------- --------------
Net funds at the end of the period 4,517,022 25,197 8,136,664
-------------- -------------- --------------
NOTES
1. Earnings for the six months to 31 March 2004 should not be taken as a
guide to the results for the full year. Basic return per Ordinary Share is
based on the net revenue on ordinary activities after taxation and is based on a
weighted average of 41,716,959 Ordinary Shares (31 March 2003: 41,761,519).
2. The financial information for the six months ended 31 March 2004 and
the six months ended 31 March 2003 has not been audited. The information for the
year ended 30 September 2003 does not comprise full financial statements within
the meaning of Section 240 of the Companies Act 1985. The financial statements
for the year ended 30 September 2003 have been filed with the Registrar of
Companies. The auditors have reported on these financial statements and that
report was unqualified and did not contain a statement under Section 237(2) of
the Companies Act 1985.
3. A copy of these interim results will be sent to shareholders and
further copies can be obtained free of charge from the Company's registered
office: Gossard House, 7-8 Savile Row, London W1S 3PE.
END
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