Interim Results
TriVest VCT PLC
27 May 2005
TRIVEST VCT PLC
Interim Results for the six months ended 31 March 2005
Chairman's Statement
I am pleased to present the Company's Interim Report for the six months ended 31
March 2005.
During the six-month period ended 31 March 2005 the FTSE 100 index rose 5.8%,
the FTSE All-Share index rose 9.2%, and the AIM index rose 18.4%, reflecting
relatively high institutional liquidity, and an increased willingness to invest
in earlier stage, higher risk investments. The AIM new issue market was active,
and as a result successful flotations from the Foresight portfolio were
achieved.
On the investment side there is no shortage of equity or debt providers looking
for good propositions, and competition to finance such situations is strong.
Looking ahead, it is not clear whether the market characteristics set out above
will continue or remain unaffected by the fiscal outfall of the UK election, the
prospect of higher energy prices, and the possibility of higher inflation and
interest rates. Reflecting this, the IPO market has, in the last few weeks,
become more risk averse, and share prices in small cap stocks more volatile.
Portfolio
The portfolio during this period has enjoyed strong growth with the net asset
value per share rising to 103.67p, an increase of 29.55% over the period. This
is a gratifying result for the Board and a credit to the Investment Managers.
Within the Foresight portfolio, there were several notable highlights with three
IPOs. The first of these was SmartFOCUS Group plc, which floated on AIM on 20
October 2004 at 9p. TriVest invested a further £200,000 as part of this
flotation. As at 31 March 2005 the price per share had increased to 9.5p. As at
26 May 2005 this had risen to 12.63p. Sarantel Group plc was the next investment
to float, also on AIM, on 2 March 2005 at 82p per share. TriVest invested
£200,000 as part of an £18m placing on flotation and subsequently sold 60,000
shares at 129p per share. As at 31 March 2005 the price per share was 105p. ANT
plc floated on AIM on 16 March 2005 at 126p per share. TriVest sold 900,000
shares on flotation to realise gross proceeds of £1.13m, retaining 656,596
shares with a valuation of approximately £1.2m (cost: £0.46m). The share price
of ANT on 31 March 2005 was 184.5p but it had fallen back to 142.5p as at 26 May
2005. Further investments of £100,000 and £28,181 into Blue Curve Limited and
Camwood Limited were agreed on 1 March 2005 and 16 March 2005 respectively.
During the period TriVest made further investments into Oxonica Limited
totalling £459,374 as part of a re-structuring and rights issue in anticipation
of a possible flotation on AIM.
Within the Matrix Private Equity Partners (MPEP) portfolio, HWA Limited, trading
as Holloway White Allom (HWA), continues to trade very successfully. The
Investment Manager expects this strong performance to continue. The board of HWA
has decided to distribute the company's surplus cash by way of a capital
distribution. Since the period end TriVest has received £1.16m, with a further
payment of £250k expected by 30 June without suffering any dilution. New
investments of £514,800 and £403,303 were made respectively into Tottel
Publishing Limited, a specialist law and tax publisher, in October 2004 and F H
Ingredients Limited, a processor of fresh herbs, in February 2005.
Within the Nova portfolio, Stortext Group Limited merged with another company,
FM Image Management Limited, on 5 April 2005 to create Stortext-FM Limited, a
provider of document management services.
Board of Directors
You will recall from one of my earlier reports that I referred to Helen
Sinclair's intention to resign from the Board due to a possible perceived
conflict of interests resulting from her directorship of Matrix Private Equity
Partners Limited. Helen has now signalled her intention to leave MPEP in the
near future. In which event, no potential conflict of interest will arise and,
accordingly, I am delighted to advise you that the Board has invited Helen to
remain as a Director.
Revenue Account
At 31 March 2005, revenue reserves available for distribution to shareholders
were £323,870. 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 2005. The net asset value per share as at 31 March 2005 was
103.67p (76.57p as at 31 March 2004) and the total return per share was 23.32p
(4.00p as at 31 March 2004).
Share buy-backs
During the six months ended 31 March 2005, the Company bought back 544,959
Ordinary Shares (representing 1.34% of the shares in issue at the period end) at
a total cost of £384,537 (net of expenses). These shares were subsequently
cancelled by the Company.
Colin Hook,
Chairman
27 May 2005
Investment Portfolio Summary
as at 31 March 2005
Valuation
at 30 Valuation
Total cost September Additional at 31 March
at 31 March 2004 investments 2005
2005 audited in the period unaudited
£ £ £ £
Foresight Venture Partners
Sarantel Group plc 1,611,752 2,156,625 200,000 4,775,156
Antennae for mobile phones and other
wireless devices
Oxonica Limited 2,136,763 1,677,389 459,374 4,601,627
Specialist in the design, manipulation
and engineering of properties of
materials at the nano-scale
ANT Limited 462,816 1,323,106 - 1,198,288
Provider of embedded browser/email
software for consumer electronics and
internet appliances
SmartFOCUS Group plc 700,000 893,333 200,000 1,127,317
Provider of analytic software to
support targeting and execution of
marketing campaigns
Camwood Limited 1,000,000 1,000,000 - 1,000,000
Provider of software repackaging
services
Aquasium Technology Limited 600,000 600,000 - 600,000
Design, manufacture and marketing of
bespoke electron beam welding and
vacuum furnace equipment
Alaric Systems Limited 588,059 588,059 - 588,059
Software development, implementation
and support in the credit/debit card
authorisation and payments market
Broadreach Networks Limited 1,143,000 1,143,000 - 514,400
Public access WLAN and fixed line
Internet Service Provider
Blue Curve Limited 500,000 396,666 - 396,666
Software for automating the production
and distribution of research
information by banks and fund managers
Datapoint Consulting Group Limited 250,000 250,000 - 250,000
Design, supply and interrogation of
data
storage solutions
Wire-e Limited 500,000 250,000 - 250,000
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
Broadreach Train Services Limited 107,000 107,000 - 107,000
Public access WLAN and on-train
Internet Service Provider
Aigis Engineering Solutions Limited 50,000 50,000 - 50,000
Specialist blast containment company
Other investments in the portfolio 1 250,000 0 - 0
---------------- ---------------- ---------------- ----------------
10,238,675 10,653,927 859,374 15,677,262
Matrix Private Equity Partners
Limited
HWA Limited (trading as Holloway 138,319 2,198,247 - 3,648,566
White Allom)
Specialist contractor in the high-
value residential and heritage
property refurbishment market
Special Mail Services Limited 1,340,077 651,786 36,506 2,210,669
Specialist, secure credit card
delivery
business
Brookerpaks Limited 500,000 1,140,503 - 1,602,491
Importer and distributor of garlic and
vacuum-packed vegetables
Image Source Group Limited 1,000,000 1,041,902 - 1,591,019
Royalty free picture library
Original Additions (Beauty Products) 1,000,000 1,000,000 - 1,000,000
Limited
Manufacturer and distributor of beauty
products
Letraset Limited 1,000,000 967,367 - 951,187
Manufacturer and distributor of
graphic
art products
BBI Holdings Limited 369,890 393,500 - 668,950
Manufacturer of gold conjugate for the
medical diagnostics industry
Tottel Publishing Limited2 514,800 n/a 514,800 514,800
Specialist law and tax imprint
The Hunter Rubber Company 500,000 500,000 - 427,326
Limited
Manufacturer of wellington boots,
safety footwear and diving suits
F H Ingredients Limited2 403,303 n/a 403,303 403,303
Processor of fresh herbs to produce a
frozen product used by food processing
companies in the production of ready
meals
Inca Interiors Limited 350,000 100,000 - 367,630
Supplier of quality kitchens to house
developers
B G Consulting Group Limited 1,000,000 125,000 - 125,000
Technical training business and
outplacement careers consultancy
---------------- ---------------- ---------------- ----------------
8,116,389 8,118,305 954,609 13,510,941
Nova Capital Management Limited
Tikit Group plc 517,624 623,912 - 795,651
Provider of consultancy services
and software solutions for law firms
IDOX plc 737,625 764,000 - 604,833
Developer of products for document,
content and information
management
DriveTec(UK) Limited 500,000 408,570 - 408,570
Developer of patented transmission
technology
Watkins Books Limited 500,000 112,500 - 30,000
Supplier of books on alternative
sciences, health, philosophy and
related subjects
Biomer Technology Limited 50,000 50,000 - 50,000
Developer of biomaterials for
medical devices
Stortext-FM Limited 380,435 14,827 - 0
Integrated outsourced digital
document storage business
Other investments in the portfolio 1 3,988,529 0 - 0
---------------- ---------------- ---------------- ----------------
6,674,213 1,973,809 - 1,889,054
---------------- ---------------- ---------------- ----------------
Total 25,029,277 20,746,041 1,813,983 31,077,257
---------------- ---------------- ---------------- ----------------
1 Other investments in the portfolio comprises those investments that have
been valued at nil and from which the Directors only expect to receive
small recoveries (iDesk plc in the Foresight portfolio and Le Sac Limited,
Trident Publishing Limited and Zynergy Group Limited in the Nova portfolio).
2 New investment made in the six month period ended 31 March 2005. Please
see the Chairman's Statement and the Investment Managers' review for
further details.
Investment Managers' Review
Foresight Venture Partners
During the six months under review and following the period end, a number of
unquoted holdings in the portfolio have either been the subject of Initial
Public Offerings (IPOs) to the AIM market or have been the subject of
preliminary approaches from potential purchasers or merger partners.
SmartFOCUS Group plc was admitted to the AIM market during October 2004 at a
valuation of 9p per share. At the same time, TriVest took the opportunity to
invest a further £200,000 into the company. At the period end, this holding was
valued at an approximate 61% increase on cost. The company provides software to
enable accurate targeting and execution of marketing campaigns.
Sarantel Group plc was admitted to the AIM market on 2 March 2005 at 82p per
share raising a total of £18 million to fund its ongoing expansion. Its
miniature antennae are used in mobile phones and personal digital assistants
offering location-based services through navigation satellites. TriVest made a
small addition to its existing holding (243,902 shares at 82p per share) at IPO
and subsequently disposed of 60,000 shares at 129p per share. The company was
trading at 105p per share at 31 March 2005.
ANT plc is a leading provider of embedded application software and support for
the broadband TV, hospitality and consumer electronics markets. ANT software has
been extensively deployed by customers throughout the world including Thomson,
Pace, Philips, Amino, Sagem and Samsung. ANT is now the preferred set top box
browser supplier for Alcatel's Open Media Suite, which is deployed in more IPTV
networks than any other middleware solution. The company was admitted to the AIM
market on 16 March 2005 at 126p per share and is currently trading at a
significant premium to its initial listing price. TriVest took the opportunity
to realise 900,000 shares at the time of the IPO, making a significant gain on
cost.
Oxonica Limited engineers the properties of materials at the nano-scale level
for application in fuel additives, UV protection and other products. Demand has
been encouraging for the company's products and Stagecoach has now rolled out
the fuel additive product globally. Boots has incorporated the UV protection
product into a sunscreen material in a Spring 2005 facial product range. TriVest
took up its rights on a further investment round and invested £459,374 into the
company during January 2005 as part of a £2.6m fund raising round. Oxonica is
considering an IPO on the AIM market.
Matrix Private Equity Partners Limited
The last six months has been a period of continued strong progress for the
portfolio as well as continuing new investment activity. In October 2004,
following closely behind the investment in Original Additions, TriVest supported
the MBO of Tottel Publishing, a specialist legal and taxation publisher, with
funding of £514,800. In February 2005, £403,303 was invested in the MBO of FH
Ingredients, a processor and distributor of frozen herbs to the food processing
industry. All of these recent investments are performing well.
A number of other investments have maintained their strong performance,
particularly HWA, Brookerpaks and Image Source, whilst Special Mail Services has
returned to significant profitability after a period of rapid change and
expansion. Inca Interiors has benefited from a resumption in housebuilding
activity and Letraset and Hunter have expanded into new product areas. BG
Consulting Group, which continues to suffer from poor revenues, disposed of its
outplacement business to a management team during the period. BBI's share price
has advanced strongly and stands at a significant premium to the flotation price
of 47p per share.
The valuation of the portfolio has again grown, reflecting its overall strength
and profitability, and now stands at 166% of current cost (31 March 2004: 124%).
Nova Capital Management Limited
There are nine investments in the portfolio as of 31 March 2005. 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.
Tikit, an AIM-listed company, specialising in providing consultancy services and
software solutions to law firms, has increased by 30% in value over the last six
months. This has arisen because of strong organic growth and the acquisition of
three smaller companies. IDOX (formerly i-documentsystems group) had a small
decline in value but we remain optimistic about its longer-term prospects.
Biomer is a company concerned with the development of novel polymers for product
applications in cardiovascular and other interventional medical devices. In
November the company announced it had signed an exclusive licensing agreement
with an American Corporation for sales of its ZyTarTM polymers. Other
development work appears to be progressing satisfactorily.
Recent increases in fuel prices and government requirements to lower CO2
emissions, is forcing automotive manufacturers to consider alternative
technologies, particularly relating to hybrid car developments. DriveTec's
patented electric power split transmission and related concepts are well placed
to provide low cost solutions to both conventional and hybrid vehicles and are
beginning to generate more serious interest in the industry. A new Executive
Chairman, formerly a main board director of a major OEM, was appointed by the
company in March.
In April, after the period end, Stortext merged with F-M Image Management, both
companies providing outsourced document services. The combined business will
have a turnover of circa £7m in its first year of operation, which will enable
it to tender for larger contracts, which were beyond the reach of the individual
businesses.
Unaudited Statement of Total Return
(incorporating the Revenue Account of the Company for the six months ended 31
March 2005)
Six months to 31 March 2005
(unaudited)
Revenue Capital Total
£ £ £
Realised gains/(losses) on investments - 355,867 355,867
Unrealised gains on investments - 9,331,433 9,331,433
Income 553,515 - 553,515
Investment management fees (87,446) (262,337) (349,783)
Other expenses (305,892) - (305,892)
----------------- ----------------- -----------------
Return on ordinary activities before taxation 160,177 9,424,963 9,585,140
Tax on ordinary activities (41,868) 41,868 -
----------------- ----------------- -----------------
Return attributable to equity shareholders 118,309 9,466,831 9,585,140
Dividends in respect of equity shares 1,805 - 1,805
----------------- ----------------- -----------------
Transfer to/(from) reserves 120,114 9,466,831 9,586,945
----------------- ----------------- -----------------
Return per share 0.29p 23.03p 23.32p
Six months to 31 March 2004
(unaudited)
Revenue Capital Total
£ £ £
Realised gains/(losses) on investments - (19,813) (19,813)
Unrealised losses 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/(from) reserves 279,706 1,387,869 1,667,575
----------------- ----------------- -----------------
Return per share 0.67p 3.33p 4.00p
Year to 30 September 2004
(audited)
Revenue Capital Total
£ £ £
Realised gains/(losses) on investments - 666,281 666,281
Unrealised losses on investments - 2,774,109 2,774,109
Income 1,163,180 - 1,163,180
Investment management fees (152,171) (456,512) (608,683)
Other expenses (441,468) - (441,468)
----------------- ----------------- -----------------
Return on ordinary activities before taxation 569,541 2,983,878 3,553,419
Tax on ordinary activities (155,369) 131,914 (23,455)
----------------- ----------------- -----------------
Return attributable to equity shareholders 414,172 3,115,792 3,529,964
Dividends in respect of equity shares (515,996) - (515,996)
----------------- ----------------- -----------------
Transfer to/(from) reserves (101,824) 3,115,792 3,013,968
----------------- ----------------- -----------------
Return per share 0.99p 7.48p 8.47p
Unaudited Balance Sheet
as at 31 March 2005
31 March 31 March 30 September
2005 2004 2004
(unaudited) (unaudited) (audited)
£ £ £
Fixed Assets
Investments 31,077,257 19,351,200 20,746,041
--------------- --------------- ---------------
31,077,257 19,351,200 20,746,041
Current Assets
Debtors and prepayments 420,799 469,952 424,795
Other assets 9,716,441 7,907,096 7,926,941
Cash at bank 1,329,476 4,517,022 4,633,219
--------------- --------------- ---------------
11,466,716 12,894,070 12,984,955
Creditors: amounts falling due within one year (314,252) (300,786) (699,268)
--------------- --------------- ---------------
Net current assets 11,152,464 12,593,284 12,285,687
--------------- --------------- ---------------
Net assets 42,229,721 31,944,484 33,031,728
--------------- --------------- ---------------
Capital and reserves
Called up share capital 407,347 417,170 412,797
Capital redemption reserve 10,668 845 5,218
Special reserve 38,388,923 39,044,534 38,777,875
Capital reserve - realised (2,949,067) (4,420,260) (3,215,081)
Capital reserve - unrealised 6,047,980 (3,683,091) (3,152,837)
Revenue reserves 323,870 585,286 203,756
---------------- --------------- ---------------
Equity shareholders' funds 42,229,721 31,944,484 33,031,728
---------------- --------------- ---------------
Net asset value per share 103.67p 76.57p 80.02p
Unauditied Summarised Cash flow Statement
As at 31 March 2005
Six months to Six months to Year to
31 March 31 March 30 September
2005 2004 2004
(unaudited) (unaudited) (audited)
£ £ £
Operating activities
Net revenue on activities before taxation 160,177 338,059 569,541
Interest receivable converted into an investment (36,506) - -
Capitalised fees (262,337) (220,029) (449,002)
Decrease/(increase) in debtors 81,008 (165,258) (120,101)
Increase in creditors 51,772 38,883 11,377
-------------- -------------- --------------
Net cash (outflow)/inflow from operating activities (5,886) (8,345) 11,815
Equity dividends paid (514,191) (521,838) (521,838)
Taxation paid - - (96,917)
Acquisitions of investments (1,778,732) (1,963,127) (4,589,395)
Disposals of investments 1,094,310 45,372 3,151,097
Management of liquid resources (1,789,500) (1,156,387) (1,176,231)
Financing (309,744) (15,317) (281,976)
-------------- -------------- --------------
Decrease in cash for the period (3,303,743) (3,619,642) (3,503,445)
-------------- -------------- --------------
Reconciliation of net cash flow to movement in net debt
Decrease in cash for the period (3,303,743) (3,619,642) (3,503,445)
Net funds at the start of the period 4,633,219 8,136,664 8,136,664
-------------- -------------- --------------
Net funds at the end of the period 1,329,476 4,517,022 4,633,219
-------------- -------------- --------------
NOTES
1. Earnings for the six months to 31 March 2005 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 41,109,734 Ordinary Shares (31 March 2004:
41,716,959).
2. The financial information for the six months ended 31 March 2005 and the
six months ended 31 March 2004 has not been audited. The information for
the year ended 30 September 2004 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 2004 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: One Jermyn Street, London SW1Y 4UH.
END
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