Interim Results
TriVest VCT PLC
29 May 2002
TriVest VCT Plc
Interim Results for the six month period to 31st March 2002
Chairman's Statement
I am pleased to present the Company's Interim Report for the six months to 31
March, 2002. This is also my first Report to you since becoming Chairman in
February of this year.
We already have a diversified portfolio of 22 companies together with several
other interesting investment proposals currently being assessed. The Board is
pleased to announce that TriVest is approximately half way towards its target of
investing between 80 and 90 per cent. of the net funds raised in the October
2000 fundraising in qualifying holdings by September 2003 (the deadline required
by the Inland Revenue).
The underlying climate for venture capital transactions has inevitably been
influenced by the less than ideal conditions for listed securities. Stock
markets have been subject to a number of political and economic uncertainties
which has, in turn, resulted in a reduced 'deal flow' in the venture capital
sector. A rise in business failures both within the United Kingdom and elsewhere
in the world has contributed to a substantially more wary approach by private
equity investors. In response, entrepreneurs have been obliged to moderate their
expectations both in terms of the availability of capital and the valuation
placed on their businesses. This may yet work to the advantage of TriVest VCT
plc, which is not fully invested.
Since the end of the last financial year, our three venture capital managers
have made a number of additional investments to the Company's portfolio. GLE
have added Inca Holdings Limited; LICA have added DriveTec (UK) Limited,
Stortext Group Limited and The Good Book Guide Limited and VCF have added Alaric
Systems Limited, Aquasium Technology Limited, Blue Curve Limited, Sarantel
Limited and SmartFOCUS Holdings Limited. A brief description of each of these
investments is set out below.
Regrettably, this period has also brought its first corporate casualties with
the value of a number of investments being written down to zero. The Board has
deemed it prudent to adopt a conservative valuation policy which has meant that,
in total, £4.7 million has been written off the value of the portfolio since the
year end. LeSac Limited and Machinery and Automated Systems Technology Limited
('MAST') have both found trading conditions extremely difficult and as a result
LeSac is currently in administration and MAST is being liquidated. We remain
hopeful that we may realise some value from these investments, but in the
meantime, we have adopted the most conservative approach of valuing both
holdings at zero. Again over the last year, iDesk experienced a sustained fall
in demand for outsourced call-centre services. Despite a thorough re-appraisal
of its activities and a major cost cutting exercise, trading losses have
exhausted the company's cash reserves and it was placed in administrative
receivership in April 2002. This investment has also been valued down to nil.
At Zynergy, its Rights Issue launched towards the end of last year closed on 21
December 2001, having raised the necessary £1 million minimum subscription
(including an investment by TriVest of £489,530). The Offer continues with KBC
Peel Hunt as Broker with the aim of raising a maximum of £4.5 million. In view
of the difficulties we believe that Zynergy is experiencing raising the
necessary additional capital in this funding climate, the Board has deemed it
prudent to write down TriVest's equity and loan stock investments to nil
although it is hoped that the company will survive and be able to realise value
from a sale of its technology.
Finally, the Board has also felt it prudent to write down its investment in
Heritage Image Partnership Limited in view of this company's plans to achieve a
merger or sale.
Shareholders approved the cancellation of the share premium account of the
Company at the Annual General Meeting held on 13 February 2002. This
cancellation was sanctioned by the court on 1 May 2002 and became effective on 9
May 2002. A special reserve, the cancelled share premium account, has been
created by the cancellation of share premium. The Company may use this reserve
to fund buy-backs of ordinary shares as and when considered by the Board to be
in the best interest of the shareholders.
At 31 March, 2002, revenue reserves available for distribution to shareholders
were £531,998. As previously, the Board does not propose to declare an interim
dividend but expects to be able to propose a final dividend for the year to 30
September 2002. The net asset value was 81.28p (94.8p at 31 March 2001) and the
total return per share was (0.107p) (0.304p at 31 March 2001).
Colin Hook, Chairman
28 May 2002
Investments made in the six month period ended 31 March 2002
GLE Development Capital
Inca Holdings Limited
Based in Ashford, Inca Holdings is the holding company for a group which
specialises in the design, supply and installation of contract kitchens to house
developers. Trading since investment, whilst marginally behind the original
business plan, shows a strong profit performance. The company's order book is
at record levels with over 50 per cent. of next year's budget promised or
contracted.
LICA Development Capital Limited
The Good Book Guide Ltd
The Good Book Guide is a well-respected brand offering, mainly English readers,
regular editorial reviews and the opportunity to purchase books by mail order
and over the internet, often at discounted pricing. Since acquisition from the
Administrators the company has undergone a restructuring to reduce costs,
improve distribution, leverage off its editorial content and seek new
distribution channels. A new and experienced management team has been recruited
and the company is broadly trading in line with its original business plan at
the time of acquisition.
DriveTec (UK) Limited
DriveTec was established to exploit a portfolio of innovative technologies in
the transmissions sector for applications in the automotive, construction and
industrial sectors. The company now has a complete and experienced management
team in place. One of the technologies that the company is developing is the
Electro-mechanical Power Split (EPS) gearbox which has the potential to reduce
fuel consumption and carbon emissions by between 20 and 40 per cent. of a
standard stepped-gearbox. DriveTec is planning to launch a pre-production
prototype in a Ford Mondeo Estate as soon as Autumn 2002.
Stortext Group Limited
Based in Edinburgh, Stortext specialises in digital scanning and document
storage. It is a service business, deploying and customising software products
to client-specific service requirements. The technology exploits two major
developments in business automation: the growth in digital storage due to
proliferation of electronic documents; and the increasing outsourcing of related
software applications.
VCF Partners
Aquasium Technology Limited
Aquasium is engaged in the design, manufacture and marketing of bespoke electron
beam welding and vacuum furnace equipment. The company was formed by a
Management Buy-In team who acquired two businesses from Smiths Group plc.
Electron beam welding is a reliable and efficient method of joining together a
wide range of metals, producing clean, high integrity joints. Vacuum furnaces
are used in hardening, tempering and brazing applications. The company,
together with its predecessors, has over forty years experience in both of these
areas. Its products are used in the processes of a wide range of manufacturing
industries including automotive, electronics, medical, power generation and
aerospace.
Blue Curve Limited
Blue Curve sells software to investment banks and fund managers to automate the
production and distribution of research information. Analysis is a key to
customer retention for investment banks but it is also a major cost. The
company's software cuts costs and is therefore in demand, particularly when
investment banks spending is under pressure. The company had sold 10 licences
to blue chip companies at the time of TriVest's investment in October 2001.
SmartFOCUS Holdings Limited
SmartFOCUS provides analytic software to enable accurate targeting and execution
of marketing campaigns. The company which was formed in 1988 is an established
solution provider in this area with 300 customers forming a wide customer base
spread across financial services, retail, marketing services and other
consumer-driven sectors. SmartFOCUS adds value to its customers' marketing
campaigns by linking with multiple databases, returning query results in seconds
and presenting the results in an easily understandable graphic way.
Alaric Systems Limited
Alaric specialises in the development, sale, distribution and support of
payments systems software including systems for electronic payments
authorisation and e-commerce integration. The company is also involved in the
use of mathematical modelling techniques for payments and other fraud detection.
Sarantel Limited
Sarantel owns proprietary antenna technology with applications in mobile phone
and other wireless devices. The company's technology delivers major performance
benefits over traditional antennae.
Investment Portfolio Summary
Date of initial Total cost Valuation at % of
investment of investment 31-Mar-02 portfolio
Unaudited by value
GLE Development Capital Limited
T J Brent Limited December 2000 £900,000 £900,000 2.68%
Specialist contractor to the water utility sector
Letraset Limited June 2001 £500,000 £500,000 1.49%
(Formerly Creative Opportunities Ltd)
Manufacturer and distributor of graphic art
products
Inca Holdings Ltd * October 2001 £350,000 £350,000 1.04%
Supplier of quality kitchens
£1,750,000 £1,750,000
--------------- ---------------
LICA Development Capital Limited
Trident Publishing Limited (formerly Picalee May 2001 £705,000 £705,000 2.10%
Limited)
Publisher - Maritime sector
i-documentsystems group plc December 2000 £517,625 £687,505 2.05%
Electronic Document Management
The Good Book Guide Ltd * November 2001 £680,000 £680,000 2.03%
Multi-channel book retailer
DriveTec(UK) Limited * November 2001 £500,000 £500,000 1.49%
Innovative technology in the transmissions sector
Watkins Books Limited March 2001 £500,000 £500,000 1.49%
Supplier of books in Alternative Sciences, Health,
Philosophy and related sectors
Tikit Group plc June 2001 £517,624 £497,826 1.48%
Provider of consultancy, services and software
solutions for law firms
Stortext Group Limited September 2001 £380,435 £154,170 0.46%
Integrated outsourced document storage business
LeSac Limited (1) February 2001 £1,500,000 £0 0.00%
Manufacturer of plastic packaging for
powder/granular products and liquids
Machinery & Automated Systems Technology February 2001 £1,000,000 £0 0.00%
Limited (MAST)
Development of LeSac's third generation packaging
machinery
Zynergy Group Limited (2) February 2001 £1,789,530 £0 0.00%
Commercialises new materials for medical devices
--------------- ---------------
£8,090,214 £3,724,501
VCF Partners
ANT Limited July 2001 £1,000,000 £900,000 2.68%
Provider of embedded browser/email software for
consumer electronics and Internet appliances
Aquasium Technology Limited * October 2001 £500,000 £500,000 1.49%
Design, manufacture and marketing of bespoke
electron beam welding and vacuum furnace
equipment
Blue Curve Limited * October 2001 £500,000 £500,000 1.49%
Software for automating the production and
distribution of research information by banks and
fund managers
SmartFOCUS Holdings Limited * December 2001 £500,000 £500,000 1.49%
Provider of analytic software to support targeting
and execution of marketing campaigns
Alaric Systems Ltd * February 2002 £400,000 £400,000 1.19%
Software development, implementation and support
in the credit/debit card authorisation and
payments
market
Heritage Image Partnership Limited March 2001 £300,000 £100,000 0.30%
Internet Image Library
Monactive Limited (formerly Xpert Client March 2001 £250,000 £250,000 0.75%
Systems Limited)
Software Asset Management
Sarantel Limited * March 2002 £172,840 £172,840 0.52%
Antennae for mobile phones and other wireless
devices
iDesk plc November 2000 £250,000 £0 0.00%
Technical Help Desks
--------------- ---------------
£3,872,840 £3,322,840
--------------- ---------------
Investment Managers' Totals £13,713,054 £8,797,341
--------------- ---------------
Fixed Interest Securities 25,229,440 24,744,772 73.77%
--------------- ---------------
TOTAL £38,942,494 £33,542,113 100.00%
--------------- ---------------
* New investment made in the six month period ended 31 March 2002.
1 An additional investment of £500,000 was made in LeSac Limited during the
period.
2 Additional investments totaling £489,530 were made in Zynergy Group Limited
during the period.
Unaudited Statement of Total Return
(incorporating the Revenue Account of the Company for the six months ended 31st
March 2002)
Six months to 31st March 2002
(unaudited)
Notes Revenue Capital Total
£ £ £
Realised gains and losses on investments - (118,664) (118,664)
Unrealised gains and losses on investments - (4,617,484) (4,617,484)
Income 1,083,884 - 1,083.884
Investment management fees 3 (117,476) (352,427) (469,903)
Other expenses (252,427) - (252,427)
------------- ------------- -------------
Return on ordinary activities before 713,981 (5,088,575) (4,374,594)
taxation
Tax on ordinary activities (221,956) 99,397 (122,559)
------------- ------------- -------------
Return attributable to equity shareholders 492,025 (4,989,178) (4,497,153)
Dividends in respect of equity shares - - -
------------- ------------- -------------
Transfer to reserves 492,025 (4,989,178) (4,497,153)
------------- ------------- -------------
Return per share 5 0.012p (0.119)p (0.107)p
------------- ------------- -------------
Period to 31st March 2001
(unaudited)
Notes Revenue Capital Total
£ £ £
Realised gains and losses on investments - - -
Unrealised gains and losses on investments - 63,709 63,709
Income 374,689 - 374,689
Investment management fees 3 (56,396) (169,187) (225,583)
Other expenses (134,303) - (134,303)
------------- ------------- -------------
Return on ordinary activities before 183,990 (105,478) 78,512
taxation
Tax on ordinary activities (48,480) (33,837) (14,643)
------------- ------------- -------------
Return attributable to equity shareholders 135,510 (71,641) 63,869
Dividends in respect of equity shares - - -
------------- ------------- -------------
Transfer to reserves 135,510 (71,641) 63,869
------------- ------------- -------------
Return per share 5 0.645p (0.341)p 0.304p
------------- ------------- -------------
Period to 30th September 2001
(audited)
Notes Revenue Capital Total
£ £ £
Realised gains and losses on investments - 112,584 112,584
Unrealised gains and losses on investments - (782,897) (782,897)
Income 1,240,092 - 1,240,092
Investment management fees 3 (168,395) (505,183) (673,578)
Other expenses (373,105) - (373,105)
------------- ------------- -------------
Return on ordinary activities before 698,592 (1,175,496) (476,904)
taxation
Tax on ordinary activities (157,001) 101,037 (55,964)
------------- ------------- -------------
Return attributable to equity shareholders 541,591 (1,074,459) (532,868)
Dividends in respect of equity shares (501,618) - (501,618)
------------- ------------- -------------
Transfer to reserves 39,973 (1,074,459) (1,034,486)
------------- ------------- -------------
Return per share 5 1.670p (3.320)p (1.650)p
------------- ------------- -------------
Unaudited Balance Sheet
As at 31st March 2002
Notes 31st March 2002
(unaudited)
£ £
Fixed Assets
Investments 7 33,542,113
--------------
33,542,113
Current Assets
Debtors and prepayments 695,170
Other assets -
Cash at Bank 134,129
-----------
829,299
Creditors: amounts falling due within one year (393.462)
------------
Net current assets 435,837
--------------
Net assets 33,977,950
--------------
Capital and reserves 8
Called up share capital 418,015
Share premium account 39,091,574
Capital reserve - realised (663,256)
Capital reserve - unrealised (5,400,381)
Revenue reserves 531,998
--------------
Equity shareholders' funds 33,977,950
--------------
Net asset value per share 81.28p
Notes 31st March 2001
(unaudited)
£ £
Fixed Assets
Investments 7 22,507,333
--------------
22,507,333
Current Assets
Debtors and prepayments 442,813
Other assets -
Cash at Bank 12,962,032
--------------
13,404,845
Creditors: amounts falling due within one year (4,697,503)
--------------
Net current assets 8.707,342
--------------
Net assets 31,214,675
--------------
Capital and reserves 8
Called up share capital 329,058
Share premium account 30,821,748
Capital reserve - realised (135,350)
Capital reserve - unrealised 63,709
Revenue reserves 135,510
--------------
Equity shareholders' funds 31,214,675
--------------
Net asset value per share 94.80p
Notes 30th September 2001
(audited)
£ £
Fixed Assets
Investments 7 16,034,927
--------------
16,034,927
Current Assets
Debtors and prepayments 515,195
Other assets 1,730,436
Cash at Bank 21,315,917
--------------
23,561,548
Creditors: amounts falling due within one year (1,121,372)
--------------
Net current assets 22,440,176
--------------
Net assets 38,475,103
--------------
Capital and reserves 8
Called up share capital 418,015
Share premium account 39,091,574
Capital reserve - realised (291,562)
Capital reserve - unrealised (782,897)
Revenue reserves 39,973
--------------
Equity shareholders' funds 38,475,103
--------------
Net asset value per share 92.04p
Summarised Cash Flow Statement
Six months Period Period
31st March 31st March 30th September
2002 2001 2001
(unaudited) (unaudited) (audited)
£ £ £
Operating activities
Net revenue on activities before taxation 713,981 183,990 698,592
Taxation deducted at source on investment income (102,274) - (7,698)
Capitalised management fees (352,427) (169,187) (505,183)
Decrease/(Increase) in debtors (179,975) (442,813) (515,195)
Increase/(Decrease) in creditors (338,577) 4,682,860 571,488
------------- ------------- -------------
Net cash inflow/(outflow) from operating activities (167,272) 4,254,850 242,004
Equity dividends paid (501,618) - -
Acquisitions and disposal of investments (22,243,334) (22,443,624) (16,705,240)
Management of liquid resources 1,730,436 - (1,730,436)
Financing - 31,150,806 39,509,589
------------- ------------- -------------
(Decease)/Increase in cash for the period (21,181,788) 12,962,032 21,315,917
Reconciliation of net cash flow to movement in net debt
(Decrease)/Increase in cash for the period (21,181,788) 12,962,032 21,315,917
Net funds at the start of the period 21,315,917 - -
------------- ------------- -------------
Net funds at the end of the period 134,129 12,962,032 21,315,917
------------- ------------- -------------
Unaudited Notes to the Financial Statements
1. The revenue column of the statement of total return is the profit and loss
account of the Company.
2. All revenue and capital items in the above statement of total return derive
from continuing operations.
3. In accordance with the policy statement published under 'Management and
Administration' in the Company's prospectus dated 13th October 2000, the
Directors have charged 75 per cent. of the investment management expenses
to the capital reserve. This is in line with the Board's long-term split of
returns from the investment portfolio of the company.
4. Earnings for the six months to 31st March 2002 should not be taken as a
guide to the results for the full year.
5. Basic return per Ordinary Share is based on the net revenue on ordinary
activities after taxation and is based on a weighted average of 41,801,516
Ordinary Shares (31st March 2001: 21,000,380).
6. The financial information for the six months ended 31st March 2002 and the
period ended 31st March 2001 has not been audited. The accounting policies
used by Trivest VCT plc in preparing this interim report are consistent
with those used in preparing the statutory accounts for the period ended 30
September 2001.
The information for the period ended 30th September 2001 does not comprise
full financial statements within the meaning of Section 240 of the
Companies Act 1985. The financial statements for the period ended 30th
September 2001 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.
7. Summary of investments during the period
Fixed Traded Unlisted
interest on AIM or traded
securities on OFEX
£ £ £
Cost/Valuation at 30th September 2001 8,020,000 1,144,927 1,533,992
Purchases at cost 28,111,900 17,625 2,398,287
Sales - proceeds (10,858,896) - -
- realised gains/(losses) (43,464) - -
Increase/(decrease) in unrealised gains/(losses) (484,668) 22,778 (1,830,794)
--------------- --------------- ---------------
Cost/Valuation at 31st March 2002 24,744,872 1,185,330 2,101,485
--------------- --------------- ---------------
Book cost at 31st March 2002 25,229,440 1,035,249 4,767,279
Unrealised gains/(losses) at 31st March 2002 (484,668) 150,081 (2,665,794)
--------------- --------------- ---------------
24,744,772 1,185,330 2,101,485
--------------- --------------- ---------------
Gains on investments
Realised gains/(losses) based on historical cost (118,664) - -
Less amounts recognised as unrealised loss in previous (75,200) - -
years
------------ ------------ ------------
Realised gains/(losses) based on carrying value at 30th (43,464) - -
September 2001
Net movement in unrealised appreciation/(depreciation) (484,668) 22,778 (1,830,794)
in the period
--------------- ------------ ---------------
Gains/(Losses) on investments for the period ended 31st (528,132) 22,778 (1,830,794)
March 2002
------------ ------------ ---------------
7. Summary of investments during the period
(continued)
Preference Qualifying Total
Shares Loans
£ £ £
Cost/Valuation at 30th September 2001 - 5,336,008 16,034,927
Purchases at cost 100,000 2,474,518 33,012,230
Sales - proceeds - - (10,858,896)
- realised gains/(losses) - - (43,464)
Increase/(decrease) in unrealised gains/(losses) - (2,400,000) (4,692,684)
--------------- --------------- ---------------
Cost/Valuation at 31st March 2002 100,000 5,410,526 33,542,113
--------------- --------------- ---------------
Book cost at 31st March 2002 100,000 7,810,526 38,942,494
Unrealised gains/(losses) at 31st March 2002 - (2,400,000) (5,400,381)
--------------- --------------- ---------------
100,000 5,410,526 33,542,113
--------------- --------------- ---------------
Gains on investments
Realised gains/(losses) based on historical cost - - (118,664)
Less amounts recognised as unrealised loss in previous - - (75,200)
years
------------ ------------ ------------
Realised gains/(losses) based on carrying value at 30th - - (43,464)
September 2001
Net movement in unrealised appreciation/(depreciation) - (2,400,000) (4,692,684)
in the period
--------------- ------------ ---------------
Gains/(Losses) on investments for the period ended 31st - (2,400,000) (4,736,148)
March 2002
------------ ------------ ---------------
8. Capital & reserves
Called up Share Realised Unrealised
share premium capital capital Revenue
capital account reserve reserve reserve Total
£ £ £ £ £ £
At 1st October 418,015 39,091,574 (291,562) (782,897) 39,973 38,475,103
2001
Profit/(loss) on - - (43,464) - - (43,464)
disposal of
investments
Change in - - - (4,692,684) - (4,692,684)
unrealised
investment
valuation
Realisation of - - (75,200) 75,200 - -
previously
unrealised
depreciation
Capitalised - - (253,030) - - (253,030)
management fees
less tax charge
Retained net - - - - 492,025 492,025
revenue reserve
for the period
---------- -------------- ------------- -------------- ----------- -------------
At 31st March 2002 418,015 39,091,574 (663,256) (5,400,381) 531,998 33,977,950
---------- -------------- ------------- -------------- ---------- -------------
9. A copy of these interim results will be posted to shareholders shortly.
Further copies can be obtained, free of charge, from the Company's
registered office: Gossard House, 7-8 Savile Row, London, W1S 3PE.
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