Final Results

Matrix Venture Fund VCT PLC 22 June 2004 Matrix Venture Fund VCT plc Preliminary Results for the year ended 30 April 2004 Objective The objective of Matrix Venture Fund VCT plc ("Matrix Venture Fund") is to provide private investors with an attractive return from a portfolio of investments in companies whose products or services depend, to a significant extent, on the application of technology, including: • Internet and e-business • Information technology • Telecommunications and media Venture Capital Trust Status Matrix Venture Fund has satisfied the requirements as a Venture Capital Trust under section 842AA of the Income and Corporation Taxes Act 1988, and the Directors intend to conduct the business of the Company so as to continue to comply with that section. Performance Summary 30 April 2004 30 April 2003 Net asset value per Ordinary Share 94.09p 64.39p Net assets £12,260,703 £8,457,714 Revenue and dividend Earnings per Ordinary Share (0.47)p 0.51p Dividend per Ordinary Share - 0.51p Chairman's Statement It is a pleasure to present the fourth annual report and financial statements of Matrix Venture Fund. You will remember that the public offer launched on 10 May 2000 at 100 pence per share and raised £12,388,237 (net). Results for the year ended 30 April 2004 The results for the year ended 30 April 2004 are set out in the following pages. The total return (after tax) attributable to the Ordinary Shareholders was £3,866,431 (2003: £(717,678)) and the net asset value per Ordinary Share at 30 April 2004 was 94.09 pence compared with 64.39 pence for the year ended 30 April 2003. Dividend The Board will not be recommending a final dividend as the revenue account has a negative balance. The after tax revenue return before net capital losses was (0.47) pence per Ordinary Share for the year to 30 April 2004 (2003: 0.51 pence). Overview The fourth financial year of activity has seen a continued high volume of proposals being received and evaluated by the Company's Venture Capital Fund Advisers, Matrix Private Equity Limited. The portfolio has started to mature and it is pleasing to note the first successful exits from the fund. We have now made a full realisation from our investment in Centurion plc, at an increase in value of around 80%. We also successfully floated one of our start up investments Flightstore Group plc, on AIM in December 2003 retaining part of our holding. Finally, the merger of Espotting Media (UK) Limited with FindWhat.com is on track and is going through SEC filings. As at 30 April 2004, £8,499,524 had been committed to 15 companies. Three new investments were completed in this financial year, and follow-on funding has been provided to two portfolio companies. Together, these investments represent an aggregate investment of 68.6% of the net funds raised under the public offer. As at 30 April 2004, the capital reserves showed a capital base of £12,260,703, including a cumulative capital gain of £25,976. I am encouraged by the ongoing trading performance of the portfolio generally. In particular we have re-valued Sit-up.com Limited (Sit-up) and FootFall Limited (Footfall) due to strong revenue growth. Details of the current venture capital portfolio as at 30 April 2004 are given in the Venture Capital Fund Adviser's Report. The investments held by the Company have been valued in accordance with the British Venture Capital Association guidelines. We will, in any event, always follow a consistent and prudent valuation policy. The investments that are quoted on AIM and the money market securities are carried at market value. Conclusion With the benefit of hindsight the Fund was not raised at a propitious time given the technology crash that followed the fundraising in 2000. However, despite the high prices paid by many venture capitalists in 2000 and 2001 for technology investments and the subsequent deterioration in the market conditions for technology companies, the Board believes that the Fund Manager has built a robust group of investments, which are, in the main, making very good progress. A resolution to create a new class of C Ordinary Shares was approved at the Extraordinary General Meeting held on 26 March 2004. The Board continues to discuss with its advisors the timing of such a fund raising. I would like to take this opportunity to thank all shareholders for their continuing support of the Company and I very much hope to have the pleasure of welcoming you to the Annual General Meeting on 6 September 2004. Michael Cumming Chairman 22 June 2004 Venture Capital Fund Adviser's Report The Venture Capital Fund Matrix Private Equity Limited advises the Company in respect of investments made within the Venture Capital Fund. During the year ended 30 April 2004, the team received and evaluated over 450 investment proposals, from which Matrix Venture Fund made three new investments into Recite Limited, Award International Holdings plc and Centurion plc at a total cost of £1.75m. As part of our strategy of supporting the growth of our investee companies, we recommended two further investments of £260,552 into Clarity Commerce Solutions plc and $100,000 (£62,323) into Espotting. During the year we have revalued our investments in Sit-up and FootFall upwards following continued strong trading. We have also, in these accounts, written down our investment in Monactive Limited due to the company trading significantly behind its original budget. However, it is pleasing to note that Monactive has made significant progress in the last 12 months under the stewardship of a new Chairman. This was the fourth period in which funds were available for investment in qualifying companies for VCT purposes. The current investment portfolio of the Company as at 30 April 2004 is detailed below. Award International Holdings plc Award provides its client base with promotional goods and services designed to increase brand awareness among consumers and to support their marketing campaigns. The company floated on AIM in March 2004 raising £2.25 m to provide working capital to facilitate growth. Results from the latest audited accounts for the year ended 30 September 2003: turnover £3,504,000; profit before tax £185,000; net assets £71,000. Date of investment Amount invested Valuation % Equity/ % of net assets Voting Rights March 2004 £250,000 £231,250 7.69% 1.89% Callserve Communications Limited The company provides internet telephony services or Voice over Internet Protocol ("VolP") from PCs to telephones, worldwide. Using software which is pre-installed or downloaded from the company's website, a telephone caller can use the internet to route a telephone call at a much reduced cost. Matrix Venture Fund invested as part of a syndicate raising £7.3m to finance the roll-out of the service and facilitate partnering arrangements with software and hardware providers. Results from the latest audited accounts for the year ended 31 March 2003: turnover £9,293,000; loss before tax £3,960,000; net liabilities £4,324,000. Date of investment Amount invested Valuation % Equity/ % of net assets Voting Rights October 2000 £300,000 £150,000 0.76% 1.22% Clarity Commerce Solutions plc The company provides EPOS (electronic point of sale) solutions, Customer Relationship Management ("CRM") products and services to the UK hospitality and leisure markets. It floated on AIM in July 2000, raising £2.5m primarily to increase its marketing activities and acquire two small complementary businesses. The company has continued to be acquisitive and has raised £2.6m via rights issues in the last few years to finance acquisitions. The business has grown substantially in the last year and is now trading profitably before amortisation of goodwill. Results from the latest audited accounts for the year ended 31 March 2003: turnover £7,263,000; loss before tax £315,000; net assets £7,749,000. Date of investment Amount invested Valuation % Equity/Voting % of net assets Rights July 2000/August 2003 £510,552 £504,486 4.52% 4.11% Espotting Media (UK) Limited Espotting is one of Europe's leading providers of performance-based advertising through search engines, allowing advertisers to bid against each other for key words in order to achieve prominence in search engine results. Espotting has raised three rounds of funds in December 2001, August 2002, and September 2003 to finance working capital and an expansion of the business into Europe. Matrix Venture Fund has invested £612,000 in total. The company has continued to grow rapidly since our investment. Espotting is in the final stages of completing its acquisition by Nasdaq listed FindWhat.com. Results from the latest audited accounts for the 9 months ended 31 December 2003: turnover $75,941,000; loss before tax $9,207,000; net liabilities $28,356,000. Date of investment Amount invested Valuation % Equity/ Voting % of net assets Rights December 2001/ £612,323 £2,365,028 2.4% 19.29% August 2002/ September 2003 Flightstore Group plc Flightstore uses existing seatback entertainment systems to create an airline branded, electronic and interactive magazine experience containing branded retailers and advertisers on long haul flights. It raised £3m in March 2002. The company floated on AIM in December 2003 at which point the Fund realised approximately two thirds of its holdings for cash. Results from the latest audited accounts for the 9 months ended 30 September 2003: turnover £186,433; loss before tax £774,761; net assets £45,041. Date of investment Amount invested Valuation % Equity/ Voting % of net assets Rights March 2001 £254,586 £372,259 3.16% 3.04% FootFall Limited FootFall provides business performance information that is derived from the monitoring and analysis of pedestrian traffic flow in shopping centres and retail outlets. The company raised £2.65m from a syndicate of investors in June 2002. The company has traded strongly post investment and is currently profitable. Results from the latest audited accounts for the year ended 31 March 2003: turnover £3,342,000; loss before tax £1,742,083; net assets £2,450,010. Date of investment Amount invested Valuation % Equity/ Voting % of net assets Rights June 2002 £750,000 £1,000,000 5.76% 8.16% Magicalia Limited Magicalia has established a network of community websites focused on enthusiast-based participation sports. It also has a growing online contract publishing business whereby the company licenses its technology platform to existing online publications. The company raised £1.1m from a syndicate of investors in March 2001. The business continues to trade well and revenues are growing strongly. Results from the latest audited accounts for the year ended 31 December 2003: turnover £652,699; loss before tax £173,459; net assets £366,664. Date of investment Amount invested Valuation % Equity/ % of net assets Voting Rights March 2001 £400,000 £400,000 12.73% 3.26% Monactive Limited Monactive is a leading provider of software asset management tools, having developed products based on innovative server-based approach (i.e. using resident agents on PCs) to monitor technology including automatic recognition, and a client-based rather than software usage. The company raised £1.75m from a syndicate of investors in March 2001, and a further £500,000 in January 2003. Results from the latest audited accounts for the year ended 31 July 2003: turnover £865,776; loss before tax £792,351; net liabilities £1,585,051. Date of investment Amount invested Valuation % Equity/ % of net assets Voting Rights March 2001/ £642,857 £405,000 13.6% 3.30% January 2003 Recite Limited The company provides a managed service combining content, software platform and training that improves the effectiveness of sales forces of IT and Telecoms vendors. Matrix Venture Fund invested as part of a £1.6m transaction. The company has continued to trade profitably. Results from the latest audited accounts for the year ended 30 April 2003: turnover £2,333,061; profit before tax £481,343; net assets £102,093. Date of investment Amount invested Valuation % Equity/ % of net assets Voting Rights September 2003 £1,000,000 £1,478,322 25.2% 12.06% Sit-up.com Limited The company provides interactive broadcasting material for digital TV and the internet. The first service is Bid-up.TV, the UK's first interactive TV-based auction site. Bid-up.TV auctions create an opportunity for manufacturers and distributors to sell a wide range of products across Sky, Telewest and other platforms. Last year the company launched Price-drop.TV which has proved a successful falling-price auction format. Matrix Venture Fund initially invested £500,000 as part of a £2.2m syndicate. A further £150,000 was provided when the business raised over £5m of expansion capital in February 2001 and £250,000 was invested in March 2002 as part of a £1.65m loan syndicate. This loan has now been repaid. The business raised approximately £5m of development capital in July 2002 and Matrix Venture Fund invested £24,443 as part of that round. The business continues to show strong annualised growth. Results from the latest audited accounts for the year ended 31 December 2003: turnover £118,870,000; loss before tax £787,000; net assets £9,361,000. Date of investment Amount invested Valuation % Equity/ % of net assets Voting Rights October 2000/ £678,677 £1,390,128 1.59% 11.34% February 2001/ July 2002 Statement of Total Return Year ended 30 April 2004 Year ended 30 April 2004 Revenue Capital Total £ £ £ Gains and losses on investments - 4,082,514 4,082,514 Income 190,764 - 190,764 Investment management fees (51,598) (154,794) (206,392) Other expenses (200,455) - (200,455) ------------ ----------- ------------ Return on ordinary activities before taxation (61,289) 3,927,720 3,866,431 Tax on ordinary activities - - - ---------- --------- --------- Return attributable to equity shareholders (61,289) (3,927,720) 3,866,431 Dividends in respect of equity shares - - - ------------ ------------ ------------ Transfer to/(from) reserves (61,289) 3,927,720 3,866,431 ------------ ------------ ------------ Return to shareholders per Ordinary Share: (0.47)p 29.83p 29.36p Year ended 30 April 2003 Revenue Capital Total £ £ £ Gains and losses on investments - (680,522) (680,522) Income 349,189 - 349,189 Investment management fees (39,785) (119,353) (159,138) Other expenses (227,921) - (227,921) ------------ ----------- ------------ Return on ordinary activities before taxation 81,483 (799,875) (718,392) Tax on ordinary activities (14,396) 15,110 714 ---------- --------- --------- Return attributable to equity shareholders 67,087 (784,765) (717,678) Dividends in respect of equity shares (66,994) - (66,994) ------------ ------------ ------------ Transfer to/(from) reserves 93 (784,765) (784,672) ------------ ------------ ------------ Return to shareholders per Ordinary Share: 0.51p (5.96)p (5.45)p The Statement of Total Return incorporates the profit and loss account of the Company. All revenue and capital items in the Statement of Total Return derive from continuing operations. The Company has only one class of business and derives its income from investments in shares, securities, loans and bank deposits. Balance Sheet As at 30 April 2004 30 April 2004 30 April 2003 £ £ Fixed Assets Venture capital investments 8,296,473 3,626,615 Money market investments 1,861,794 1,643,385 ------------ ------------ 10,158,267 5,270,000 Current Assets Debtors and prepayments 111,559 77,363 Cash at bank 2,133,539 3,259,824 ------------- ----------- 2,245,098 3,337,187 Creditors: amounts falling due within one year (142,662) (149,473) ----------- ----------- Net current assets 2,102,436 3,187,714 ------------- ------------- Net assets 12,260,703 8,457,714 ------------- ------------- Capital and reserves Called up share capital 130,310 131,360 Capital redemption reserve 1,496 446 Cancelled share premium account 12,163,718 12,227,160 Capital reserve - realised (621,505) (959,815) Capital reserve - unrealised 647,481 (2,941,929) Revenue reserves (60,797) 492 ------------ -------------- 12,260,703 8,457,714 ------------ ------------- Net asset value per Ordinary Share 94.09p 64.39p Cash Flow Statement Year ended 30 April 2004 Year ended Year ended 30 April 30 April 2004 2003 £ £ Net cash (outflow)/inflow from operating activities (193,083) 55,156 Taxation UK corporation tax paid - (3,948) ----------- ----------- Net cash (outflow)/inflow (193,083) 51,208 ----------- ----------- Capital expenditure and financial investment Purchase of investments - fixed income securities - (2,613,686) Purchase of investments - equities and loan stock (2,073,407) (1,018,448) ------------- ------------- (2,073,407) (3,632,134) ------------- ------------- Disposals of fixed income securities - 7,615,686 Disposals of equities and loan stock 1,489,050 250,000 ------------- ------------- Net cash (outflow)/inflow from investing activities (584,357) 4,233,552 Dividends Equity dividends paid (66,994) (177,938) ------------ ----------- Net cash (outflow)/inflow before financing and liquid resource management (844,434) 4,106,822 Management of liquid resources Movement in money market and other deposits (218,409) (832,406) Financing Purchase of own shares (63,442) (29,271) ----------- ----------- Net cash outflow from financing (63,442) (29,271) ----------- ----------- Net cash (outflow)/inflow as at 30 April 2003 (1,126,285) 3,245,145 ------------ ----------- The management of liquid resources relates to money market investments. In the prior period the Company held gilts and bonds primarily as investments and not as liquid resources. Accordingly, movements in the holdings of these investments were shown within investing activities in the Cash Flow Statement rather than within management of liquid resources. Notes to the Financial Statements Year ended 30 April 2004 1 Dividends 2004 2003 £ £ Ordinary Shares - 66,994 (0.51p per share) ----------------------- ----------------------- 2 Return per Ordinary Share The revenue return per Ordinary Share is based on the net loss from ordinary activities after taxation of £61,289 (2003: revenue of £67,087) and on 13,118,408 (2003: 13,168,879) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year. The capital return per Ordinary Share is based on net realised capital gains of £713,310 (2003: losses £149,833), net unrealised capital gains of £3,214,410 (2003: loss £634,932) and 13,118,408 (2003: 13,168,879) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year. 3 Net asset value per Ordinary Share Net asset value per Ordinary Share is based on net assets at the end of the year, and on 13,031,004 Ordinary Shares (2003: 13,136,004), being the number of Ordinary Shares in issue on that date. 4. The financial information set out in these statements does not constitute the Company's statutory accounts for the years ended 30 April 2004 and 30 April 2003 but is derived from those accounts. Statutory accounts for the year ended 30 April 2003 have been delivered to the Registrar of Companies and those for the year ended 30 April 2004 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts: their reports were unqualified and did not contain statements under Section 237 (2) or (3) of the Companies Act 1985. 5. The Annual Report will be circulated by post to all shareholders shortly and copies will be available thereafter to members of the public from the Company's registered office. 6. The Annual General Meeting will be held on 6 September 2004 at the offices of Matrix-Securities Limited, Gossard House, 7-8 Saville Row, London W1S 3PE. END This information is provided by RNS The company news service from the London Stock Exchange

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