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. This information is provided by RNS The company news service from the London Stock Exchange

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