Interim Results

Eurovestech PLC 17 December 2002 EMBARGOED - NOT TO BE RELEASED UNTIL 07.00 A.M. ON 17th December, 2002 EUROVESTECH PLC ('Eurovestech' or 'the Company') Interim Results for the six months ended 30 September 2002 Summary of Results • A negative return of 17.4 per cent on opening shareholders' funds, which compares favourably against a fall in the Techmark 100 Index of 46 per cent. over the same period. • Net asset value of £7.7 million (3.4p per share). Net funds of £2.0 million. Pre-tax loss before investment provisions of £227,963. Retained loss after provisions of £1.5 million. • Trading performances at key investee companies exceeds expectations. • Recent investment focus on undervalued listed special situations, providing increased visibility of shorter-term returns to shareholders. Richard Bernstein, Chief Executive of Eurovestech plc, commenting on the results, said: 'The business environment in which Eurovestech operates has continued to be difficult. Nevertheless our strategy is delivering both a maturing portfolio of exciting enterprises operating in very high growth markets and the opportunity to use our current surplus funds to capitalise on attractive shorter-term special situations.' Further Enquiries: Eurovestech plc Tel: 020 7491 0770 Richard Bernstein, Chief Executive Chairman's Statement I wrote to you last in September 2002 and commented on the extent to which a progressively tougher business and funding environment was bearing heavily on investor sentiment. These conditions have persisted during the period under review and have led us to write down three unquoted investments that were minor stakes in companies. Our loss on operations before write down on investments amounted to £227,963. After taking account of provisions on investments, Eurovestech's pre-tax loss was £1,514,848, which resulted in a negative return of 17.4 per cent on opening shareholders' funds, which compares favourably against a fall in the Techmark 100 Index of 46 per cent. over the same period. Portfolio Review Despite the write down in the value of the portfolio, we are encouraged by its overall performance. In particular, we are pleased with the progress made by our three key investee companies, Boxmind Limited ('Boxmind'), Magenta Corporation Limited ('Magenta') and Cjudge Limited ('Cjudge'). Let me review them for you: Boxmind Boxmind is the Oxford based e-learning publisher and consultancy. The company has made solid progress in terms of growing revenues in its core education market. We are pleased to report that last week, Boxmind secured an important initial order from the National Academy of Gifted and Talented Youth, set up by the Department of Education and Skills. Whilst our view remains that the further commercialisation of Boxmind's proprietary content is its key objective, we have also been encouraged by the company's ability to secure additional revenues from the sale of its internally developed production software. For example, the Amateur Rowing Association is currently producing videos to train elite athletes using Boxmind's Enlighten software. Last month, the company completed development of a new product called Flashpoint, which translates Powerpoint slides into macromedia flash enabling flash to become a viable web content tool. Early customer feedback is very positive. In September 2002, we announced that Boxmind received third-party funding from an existing investor of £300,000 with Eurovestech investing £260,000 at this time. We currently hold a 41 per cent. stake of Boxmind's fully diluted share capital, at a carrying value of £3.9 million. Magenta Magenta develops intelligent software agent technology, which enables a negotiating process to be automated, based on certain decision criteria input by the parties concerned. Magenta's real-time business applications encompass the high growth area of supply chain event management. Magenta was founded by Professor George Rzevski, who is Emeritus Professor, Department of Design and Innovation, The Open University. In the period under review, Magenta secured several project-based sales and reached operational break-even on a cash flow basis. We are now keen to see Magenta accelerate its development capabilities and are therefore in advanced discussions with Magenta, in order to provide additional funding so that the company will be in a position to meet the anticipated demand of its addressable markets. Cjudge Cjudge, the Paris-based online market research company, has delivered a performance significantly in excess of our expectations. Client wins have included Aventis, McCann Relationship Marketing, Taylor Nelson Sofres Secodip and T-Online Club Internet. Eurovestech is also pleased to report that Cjudge's AutomateSurvey has been successfully launched in the United Kingdom via a distribution partner. In the period under review, Eurovestech invested €60,000 and agreed to invest a further €60,000 based on the company achieving its sales forecasts for October and November. We are pleased to announce that these targets have been exceeded and we have now increased our shareholding to 70 per cent. of Cjudge's issued share capital. Other investments Mykindaplace has consolidated its position as the leading internet site for teenage girls in the UK, with traffic to the site doubling in 2002. Mykindaplace now has 550,000 unique users. This success has translated into growing revenues, with blue chip clients including GlaxoSmithKline and L'Oreal. New revenue streams have also been formed away from core advertising, by providing interactive content to third parties and mobile revenues, with Vodafone recently become a Mykindaplace customer. In the period under review, Tevet Process Control Technologies Limited ('Tevet') successfully completed a $3 million strategic investment round. Eurovestech invested $100,000 in this round of funding, which follows an initial $300,000 investment in October 2000. Tevet has developed a measurement system for measuring, monitoring and controlling production parameters for the manufacture of silicon wafers. Although the semiconductor market remains depressed, Tevet's enabling technology is aimed at enhancing productivity and is being well received by industry majors. In May 2002, Jan Leschly, former Chief Executive of SmithKline Beecham plc joined the board of D-Pharm Limited as Chairman. In November 2002, Lynx Photonic Networks Limited announced the delivery of the first wideband switching capability on a PLC switching subsystem feature, which now allows for the switching of wavelengths from 1,265 to 1,610nm. During the period under review, £1.29 million has been charged to the profit and loss account to reflect write downs in the value of the investment portfolio and provisions have been established against the value of three of our investee companies; Easy Business Limited ('Easy Business'), ITM Communications Limited ('ITM') and Adflash Limited ('Adflash'). The carrying value of both Easy Business and ITM have been written down to £nil, resulting in a total charge of £229,000. In both cases our shareholdings were relatively small, with a six per cent. interest in Easy Business and a 0.4 per cent. stake in ITM. We are disappointed by the pace of commercial development at Adflash. To date, we have been unable to play a sufficiently active role in the development of the business and despite the company securing growing licence revenues, currently being cash flow neutral and continuing to have longer term potential, in its current phase, we feel it prudent to provide in full against its £510,000 carrying value. Our cost of investment was £150,000. Eurovestech owns 3.8 per cent. of Adflash's share capital. The balance of the charge to the profit and loss account of £548,000 relates to a decline in the value of listed investments over the period. Since 30th September, 2002 the value of this element of the portfolio has increased by approximately £300,000. Investment in Knowledge Support Systems Group plc ('KSS') At 30th September, Eurovestech held 7.4 per cent. of the share capital of KSS and on 8th November, 2002 we disclosed an increase in our holding to 9.1 per cent. Eurovestech acquired its interest between June and November 2002 at an average cost of 15.3p per share, because we believe that the KSS share price was at a significant discount to its prospective net cash position. The interim results of KSS to 30th June, 2002 show net funds of £22.6 million. This amount, together with the future receipt of £1 million from an insurance claim relating to the death of the founder Professor Singh, is equivalent to just under 32p per share. Eurovestech can now confirm that it has held meetings with KSS's management and technology personnel in order to assess both strategic options and the issue of surplus capital. Eurovestech is currently awaiting the conclusion of KSS's own strategic review, which is expected shortly. We believe that this investment provides our shareholders with greater visibility than those in our unquoted portfolio. Charitable donations The Company announces that it has today issued 200,000 new ordinary shares divided equally between The Trinity Hospice, Clapham and The Douglas House Hospice, Oxford. The Company hopes its policies and actions will encourage other companies to support charities in this way. Application has been made for 200,000 new ordinary shares in the Company to be admitted to AIM and it is expected that dealings in these shares will commence on 3rd January, 2003. Richard Bernstein, Chief Executive of the Company, has paid the £2,000 nominal value of the ordinary shares to facilitate their issue. In addition, Richard Bernstein has gifted 200,000 existing ordinary shares from his personal shareholding divided equally between the same charitable organisations. As a result, he now owns 57,510,000 ordinary shares, representing 25.5 per cent. of the issued share capital of the Company. Prospects As you can see, we are concentrating on the companies in the Eurovestech portfolio, providing them with financial, managerial and strategic help and driving them toward individual success and the resultant success of Eurovestech. Opportunities abound in this uncertain time and we have maintained and protected our ability to pursue them. However, we understand the very great difference between companies that seem to be cheap and are, in fact, just less expensive. This ensures that we look selectively and carefully at new investments. Richard Grogan Chairman Unaudited Consolidated Profit and Loss Account For the six months ended 30 September 2002 Note Six months Six months Year ended ended ended 30 September 30 September 2001 31 March 2002 (unaudited) 2002 (unaudited) (audited) Turnover 64,009 110,750 230,063 -------- -------- -------- Gross profit 64,009 110,750 230,063 Administrative expenses (319,884) (287,071) (729,718) -------- -------- -------- Operating loss (255,875) (176,321) (499,655) Income from other fixed and current asset 6,091 3,514 - investments Other interest receivable and similar income 26,842 96,213 172,066 Interest payable and similar charges (5,021) (1,321) (2,031) Amounts written off investments (1,286,885) - - -------- -------- -------- Loss on ordinary activities before taxation (1,514,848) (77,915) (329,620) Tax on loss on ordinary activities - (255) - -------- -------- -------- Retained loss on ordinary activities after tax (1,514,848) (78,170) (329,620) ======== ======== ======== Fully diluted and basic loss per share (pence) 2 (0.675)p (0.035)p (0.147)p ======== ======== ======== Unaudited Consolidated Balance Sheet At 30 September 2002 At At At 30 September 30 September 31 March 2002 2001 2002 (unaudited) (unaudited) (audited) £ £ £ £ £ £ Fixed assets Tangible assets 16,172 49,931 26,463 Investments 5,683,301 8,535,213 6,533,189 -------- -------- -------- 5,699,473 8,585,144 6,559,652 Current assets Debtors 257,697 431,719 580,714 Investments 1,209,810 82,521 309,422 Cash at bank and in hand 767,306 3,956,574 2,312,468 ------ -------- -------- 2,234,813 4,470,814 3,202,604 Creditors: amounts falling (221,854) (196,306) (422,628) due within one year -------- -------- -------- Net current assets 2,012,959 4,274,508 2,779,976 -------- -------- -------- Total assets less current 7,712,432 12,859,652 9,339,628 liabilities ======== ======== ======== Capital and reserves Called up share capital 2,254,966 2,229,000 2,241,887 Share premium account 7,634,583 7,614,799 7,622,412 Revaluation reserve - 3,297,474 5,654 Profit and loss account (2,177,117) (281,621) (530,325) -------- -------- -------- Shareholders' funds 7,712,432 12,859,652 9,339,628 ======== ======== ======== Unaudited Consolidated Cash Flow Statement For the six months ended 30 September 2002 Note Six months Six months Year ended ended ended 30 September 30 September 2001 31 March 2002 (unaudited) 2002 (unaudited) (audited) Net cash outflow from operating activities 3 (50,018) (781,882) (885,146) -------- -------- -------- Returns on investments and servicing of finance Interest received 26,842 96,213 172,066 Interest paid (5,021) (1,321) (2,031) Dividends received 6,091 3,514 - -------- -------- -------- Net cash outflow from returns on investments and 27,912 98,406 170,035 servicing of finance -------- -------- -------- Taxation - (255) - -------- -------- -------- Capital expenditure and financial investment Purchase of tangible fixed assets - (15,281) (15,925) -------- -------- -------- Net cash outflow from capital expenditure and - (15,281) (15,925) financial investment -------- -------- -------- Acquisitions Purchase of fixed asset investments (662,545) (563,739) (1,843,605) Sale of fixed asset investments 385,426 279,374 269,025 -------- -------- -------- Net cash outflow from acquisitions and disposals (277,119) (284,365) (1,574,580) -------- -------- -------- Management of liquid resources Purchase of current asset investments (5,909,390) (1,609,712) (4,497,201) Sale of current asset investments 4,866,461 2,602,992 5,308,372 Gain on disposal of current assets (228,258) - (160,258) -------- -------- -------- Net cash (outflow)/inflow from management of liquid (1,271,187) 993,280 650,913 resources -------- -------- -------- Financing Issue of shares 25,250 16,000 36,500 Expenses paid in connection with share issues - - - -------- -------- -------- Net cash inflow from financing 25,250 16,000 36,500 -------- -------- -------- (Decrease)/Increase in cash 4 (1,545,162) 25,903 1,618,203 ======== ======== ======== NOTES TO THE UNAUDITED INTERIM CONSOLIDATED ACCOUNTS For the six months ended 30 September 2002 1. BASIS OF PREPARATION The results for the six months ended 30 September 2002, which are unaudited, have been prepared in accordance with applicable accounting standards and under the historical cost convention. The financial information set out in this document does not comprise the statutory accounts of the Company within the meaning of section 240(5) of the Companies Act 1985. BASIS OF CONSOLIDATION The group financial statements consolidate those of the Company and of its subsidiary undertaking. The results of the subsidiary undertaking have been included for the whole period from the date of incorporation on 1 April 2002 until 30 September 2002. Profits or losses on intra-group transactions are eliminated in full. On establishment of the subsidiary, all of the subsidiary's assets and liabilities which existed at the date of acquisition were recorded at their values reflecting their consideration at that date. 2. LOSS PER ORDINARY SHARE The calculation of the loss per share is based on the loss on ordinary activities for the six month period ended 30 September 2002 of £1,514,848 and the weighted average number of ordinary shares in issue during the period, being 224,542,367. 3. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES Six months Six months Year ended ended ended 30 September 30 September 31 March 2002 2001 2002 (unaudited) (unaudited) (audited) Operating loss for the period (1,542,760) (176,321) (499,655) Depreciation of tangible fixed assets 10,291 11,684 20,454 Loss on sale of tangible fixed assets - - 15,341 Loss/(Profit) on sale of investments 73,323 (188,705) (72,819) Decrease/(increase) in debtors 323,017 (273,895) (422,890) (Decrease)/increase in creditors (200,774) (151,899) 74,423 Exchange difference on consolidation - (2,746) - Unrealised loss on investments 1,286,885 - - -------- -------- -------- Net cash outflow from operating activities (50,018) (781,882) (885,146) ======== ======== ======== 4. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS Six months Six months Year ended ended ended 30 September 30 September 31 March 2002 2001 2002 (unaudited) (unaudited) (audited) (Decrease)/increase in cash in the period (1,545,162) 25,903 1,618,203 Cash (outflow)/inflow from current asset 1,271,187 (877,814) (650,913) investments -------- -------- -------- Change in net funds resulting from cash (273,975) (851,911) (2,269,116) flows Other non-cash items (370,799) - - -------- -------- -------- Movement in net funds in the period (644,774) (851,911) (2,269,116) Net funds at the beginning of the period 2,621,890 4,891,006 4,891,006 -------- -------- -------- Net funds at the end of the period 1,977,116 4,039,095 2,621,890 ======== ======== ======== 5. ANALYSIS OF CHANGES IN NET FUNDS - UNAUDITED At Cash flow At 1 April £ 30 September 2002 2002 £ £ Cash in hand and at bank 2,312,468 (1,545,162) 767,306 Current asset investments 309,422 900,388 1,209,810 -------- -------- -------- 2,621,890 (644,774) 1,977,116 ======== ======== ======== 6 DividendS No dividend is proposed for the six months ended 30 September 2002. 7 COPIES OF THE INTERIM FINANCIAL STATEMENTS Copies of the interim financial statements will be sent to shareholders and copies are available on request from the Company's registered office at 29 Curzon Street, London W1Y 7AE. This information is provided by RNS The company news service from the London Stock Exchange

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