Interim Results
Proven VCT PLC
29 September 2005
PROVEN VCT PLC
INTERIM REPORT
FOR THE SIX MONTHS ENDED 31 AUGUST 2005
FINANCIAL SUMMARY
Six months ended Six months Year
31 August ended ended
2005 31 August 28 February
2004 2005
Revenue return per share 0.3p 0.6p 1.9p
Total return per share 2.6p 5.4p 14.6p
Dividend per share 3.0p 3.0p 6.5p
Cumulative dividends per share 18.7p 12.2p 15.7p
Net asset value per share 106.3p 100.8p 106.7p
Net asset value plus cumulative dividends per 125.0p 113.0p 122.4p
share
Mid-market price per share 92p 88p 93p
Shareholders' funds (£000) 25,966 22,908 23,998
CHAIRMAN'S STATEMENT
Introduction
I have pleasure in presenting the interim report for your company for the six
months ended 31 August 2005. Despite the wider concerns in the international
economy from the continued conflict in the Middle East and rising oil prices,
the total return on the FTSE All Share Index has increased by 9% during the
period under review. Your company continued to comply with the requirements of
the VCT regulations during the period.
Investment Portfolio
Details of your company's investment activity are provided in the accompanying
Investment Manager's Review. The board has prudently reduced the value of SPC
International to take account of current market circumstances although it
remains optimistic about the longer term prospects for the company.
At 31 August 2005 your company's unquoted and listed portfolio comprised 22
investments at a total cost of £15.0 million and a valuation of £19.0 million.
In addition, your company had net current assets of £7.0 million.
Net Asset Value & Dividends
The net asset value total return per share at 31 August 2005 was 125.0p
comprising a net asset value per share of 106.3p and dividends paid or proposed
of 18.7p. This represents an increase of 2% over the net asset value total
return at 28 February 2005 and an increase of 32% over the initial net asset
value at launch of 95p per share. This compares favourably with the total return
on the FTSE All Share Index from initial listing to 31 August 2005 of just 1.0%.
Your company will be paying an interim dividend of 3p per share for the period.
This will be paid on 4 November 2005 to shareholders on the register at 14
October 2005. In each of the last two years your company has paid out dividends
totalling 6.5p per year, equivalent to a tax free return of 16.25% pa for
investors who took full advantage of available tax reliefs on initial
subscription in 2000.
Share Capital Issues & Buy Backs
During the period your company issued a further 2,863,080 shares representing
the net proceeds of the offers for subscription in the tax years 2004/2005 and
2005/2006.
Your company also purchased 931,477 shares in the market at a total cost of
£900,000, representing a discount of 10% to the net asset value at 28 February
2005. Shareholders are reminded that if they wish to sell their shares in the
company they should contact Downing Corporate Finance.
Prospects
The investment portfolio of your company continues, on the whole, to perform
well, reflecting the underlying quality of the portfolio companies' products and
services, their management teams and the contribution made to the companies by
the investment manager.
Together with the track record of success for the VCT to date and the
availability of new funds for investment, this gives your board grounds to be
confident of the future prospects for your company.
Andrew Davison
29 September 2005
INVESTMENT MANAGER'S REVIEW
Introduction
This review covers the six month period ended 31 August 2005 during which the
net asset value total return of the company increased by 2%. The company
continued to comply with the VCT regulations during the period.
Portfolio Activity
During the period under review we have been proactive about realising value from
the existing portfolio. Several potential new investment opportunities are also
currently under review although no new or follow on investments were made during
the period.
In March, Notability Solutions Limited was sold generating a total return of 2.4
times the initial investment in only two years. In August, Copyright Promotions
Group was sold generating a significant return on the initial investment. We
continue to hold a small portion of loan notes which will be redeemed later this
year. The success of this disposal demonstrates the value added by our
investment executives after the initial investment. We identified the
opportunity to appoint a new Chairman to the board of the company who has worked
with a strong incumbent management team to improve company performance. This has
ultimately provided a strong return for shareholders. On a slightly
disappointing, though not unexpected, note Bond-IT, an investment from 2000,
finally went into liquidation. This has had no current period effect on the net
asset value as the investment was fully provided against.
In the quoted portfolio, further disposals of shareholdings in both Cardpoint
and Miva Inc (formerly FindWhat) were made realising profits of £480,000.
In addition, we are currently at an advanced stage with a number of portfolio
companies on realisation and refinancing strategies which could result in
further profits for shareholders. We are optimistic that some, if not all, of
these will conclude during the current financial year.
Portfolio Valuation
At 31 August 2005 the company's unquoted and listed portfolio comprised 22
investments at a total cost of £15.0 million and a valuation of £19.0 million.
In addition, the company had net current assets of £7.0 million. The increase in
net current assets reflects the realisations described above and the £3.0
million raised from shareholders during the recent fund raising.
The portfolio continues on the whole to perform very well. The board has
increased the valuations for several of the companies, most notably
Mergermarket, which has increased in value by £1.0 million, LFR and Nectar
Taverns. Offsetting this, the board has prudently reduced the value of SPC
International to take account of current market circumstances, although we
remain optimistic for the longer term prospects of the company.
Prospects
The VCT industry has benefited from the £500 million raised either side of the
2005 tax year end. We expect there to be further significant funds raised in the
remainder of the 2005/2006 tax year. This lifts the profile of the industry and
the possible opportunities for both investments and realisations.
We continue to be pleased with the overall performance of the portfolio
companies and of their future prospects. The funds raised by the VCT in the last
two years provide further opportunities for portfolio diversification and we
will look to invest these funds in the coming months. We expect these
investments to be mainly in unquoted companies (as opposed to AIM companies)
where we believe the best potential for strong returns exists and where we can
leverage our expertise of working closely with management to generate further
significant returns for shareholders.
Beringea Limited
29 September 2005
INVESTMENT PORTFOLIO
At 31 August 2005
Book Cost Valuation % of net
assets
£000 £000
Qualifying holdings
Mergermarket Limited 780 2,942 11.3
Espresso Broadband Limited 1,365 2,708 10.4
Nectar Taverns plc 1,000 2,096 8.1
SPC International Limited 1,173 1,788 6.9
Ma Potter's Limited 700 1,755 6.8
LFR plc (t/a Loch Fyne Restaurants) 1,000 1,284 5.0
Ashford Colour Press Limited 1,000 1,261 4.9
UBC Media Group plc * 1,101 1,119 4.3
Chiaros Holdings Limited (t/a TMI) 800 1,064 4.1
Cardpoint plc * 212 599 2.3
Pilat Media Global plc * 250 547 2.1
Zenith Group Limited 853 268 1.0
Oasis Healthcare plc * 670 262 1.0
JVTV Limited 200 200 0.8
Sports Holdings Limited 800 137 0.5
Linguaphone plc 703 99 0.4
VI Group plc * 207 74 0.2
I D Data plc * 262 5 -
GB Industries Limited 1,134 - -
Total qualifying holdings 14,210 18,208 70.1**
Non-qualifying holdings
Baby Innovations S.A. (t/a Steribottle) 604 604 2.4
Miva Inc # (formerly Findwhat.com) 116 89 0.3
Copyright Promotions Group Limited 54 54 0.2
Total non-qualifying holdings 774 747 2.9
Total investment portfolio 14,984 18,955 73.0
Net current assets 7,011 27.0
Shareholders' funds 25,966 100.0
* Investment traded on the Alternative Investment Market ('AIM')
# Investment traded on the US NASDAQ Market
** Expressed as a percentage of the company's net assets at 31 August 2005 as
distinct from total investments (as defined in the Venture Capital Trust
regulations).
UNAUDITED STATEMENT OF TOTAL RETURN (incorporating the Revenue Account)
For the six months ended 31 August 2005
Six months ended
31 August 2005
Revenue Capital Total
£000 £000 £000
Gains/(losses) on investments
- realised - 1,616 1,616
- unrealised - (789) (789)
Income 286 - 286
Investment management fee (95) (286) (381)
Other expenses (94) - (94)
Return on ordinary activities before taxation 97 541 638
Tax (charge)/credit on ordinary activities (14) 14 -
Return on ordinary activities after taxation 83 555 638
Dividends - (732) (732)
Transfers to/(from) reserves 83 (177) (94)
Return per ordinary share
Basic and fully diluted 0.3p 2.3p 2.6p
Six months ended Year ended
31 August 2004 28 February 2005
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Gains/(losses) on investments
- realised - 254 254 - 1,000 1,000
- unrealised - 1,026 1,026 - 2,248 2,248
Income 328 - 328 866 - 866
Investment management fee (73) (218) (291) (152) (456) (608)
Other expenses (96) - (96) (188) - (188)
Return on ordinary activities before taxation 159 1,062 1,221 526 2,792 3,318
Tax (charge)/credit on ordinary activities (28) 28 - (92) 92 -
Return on ordinary activities after taxation 131 1,090 1,221 434 2,884 3,318
Dividends (227) (455) (682) (508) (956) (1,464)
Transfers to/(from) reserves (96) 635 539 (74) 1,928 1,854
Return per ordinary share
Basic and fully diluted 0.6p 4.8p 5.4p 1.9p 12.7p 14.6p
All revenue and capital items in the above statement are from continuing
operations. Other than shown above, the company had no recognised gains and
losses. The company has only one class of business and derives its income from
investments made in shares and securities and from bank deposits.
UNAUDITED BALANCE SHEET
At 31 August 2005
31 August 31 August 28 February
2005 2004 2005
£000 £000 £000
Fixed assets
Investments - unquoted 16,260 15,973 18,171
Investments - AIM quoted 2,606 3,742 3,234
Investments - other listed 89 770 268
18,955 20,485 21,673
Net current assets 7,011 2,423 2,325
Net assets 25,966 22,908 23,998
Capital & reserves
Share capital 1,221 1,137 1,125
Reserves 24,745 21,771 22,873
Equity shareholders' funds 25,966 22,908 23,998
Net asset value per share 106.3p 100.8p 106.7p
UNAUDITED CASH FLOW STATEMENT
For the six months ended 31 August 2005
Six months Six months ended Year
ended 31 August ended
31 August 2004 28 February
2005 £000 2005
£000 £000
Net revenue from operating activities
Net revenue from ordinary activities before tax 97 159 526
Decrease/(increase) in debtors 146 (31) (176)
Increase/(decrease) in creditors 7 30 56
Capitalised interest receipts - - (175)
Management fees charged to capital (286) (218) (456)
Net cash outflow from operating activities (36) (60) (225)
Financial investment
Purchases of investments - (443) (787)
Sales of investments 3,076 1,410 2,809
Net cash inflow from financial investment 3,076 967 2,022
Corporation tax paid - - -
Equity dividends paid (787) (760) (1,439)
Net cash inflow before financing 2,253 147 358
Financing
Issue of ordinary shares 3,097 1,054 1,054
Share issue expenses (137) (58) (58)
Purchase of ordinary shares for cancellation (943) (149) (328)
Net cash inflow from financing 2,017 847 668
Increase in cash in period 4,270 994 1,026
Analysis of cash balance
At start of period 3,129 2,103 2,103
Net cash inflow for the period 4,270 994 1,026
At end of period 7,399 3,097 3,129
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1 The unaudited interim financial statements for the six months ended
31 August 2004 and 31 August 2005 do not constitute statutory accounts within
the meaning of Section 240 of the Companies Act 1985 and have not been delivered
to the Registrar of Companies. The results for the year ended 28 February 2005
have been extracted from the financial statements for that year, which have been
delivered to the Registrar of Companies; the auditors' report on those financial
statements under Section 235 of the Companies Act 1985 was unqualified.
2 True and fair override
The company is no longer an investment company within the meaning of Section 266
of the Companies Act 1985, having revoked investment company status in July 2004
in order to pay a capital dividend. However, the company continues to conduct
its affairs as a venture capital trust for taxation purposes under s842AA of the
Income and Corporation Taxes Act 1988.
The financial statements are prepared in accordance with applicable accounting
standards and with the Statement of Recommended Practice 'Financial Statements
of Investment Trust Companies' (SORP). This is consistent with the presentation
adopted in previous periods. Ordinarily, the absence of Section 266 status would
require the company to adopt a different presentation of the accounts than that
recommended by the SORP. However, the directors consider it appropriate to
continue to present the accounts in accordance with the SORP. The departure has
no effect on the total return or balance sheet.
3 The financial information contained in this interim report has been
prepared on the basis of the accounting policies set out in the Annual Report
2005. Unquoted investments are valued in accordance with International Private
Equity And Venture Capital Valuation Guidelines These guidelines were issued in
March 2005 and have been endorsed by the British Venture Capital Association.
AIM quoted investments are valued at mid market prices discounted, where
necessary, to reflect any lack of liquidity.
4 Returns per ordinary share are based on 24,214,531 ordinary shares,
being the weighted average number of shares in issue during the period. There
were 24,422,115 ordinary shares in issue at 31 August 2005.
5 Earnings for the period should not be taken as a guide to the results
for the full year.
6 The directors will be paying a dividend of 3p per share for the period
ended 31 August 2005 to be paid on 4 November 2005 to shareholders on the
register at 14 October 2005.
7 Copies of the Interim Report will be mailed to shareholders and are
available from the Registered Office of the company at 39 Earlham Street, London
WC2H 9LT.
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