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6 Dec 2006 14:53
TRIVEST VCT PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2006
CHAIRMAN'S STATEMENT
I am pleased to present the preliminary results of the Company for the year ended 30 September 2006.
Despite the slight fall in the net asset value per share during the year,largely due to a slightly disappointing technology sector, the performance ofthe portfolio continues to provide encouragement. This year capital gains haveagain been realised which has resulted in the Board proposing to pay toShareholders an interim capital distribution of 3.00 pence per share in respectof the year ending 30 September 2007. The Board expects to be able to pay asimilar capital distribution at the end of the current financial year. Futurecapital distributions will depend on a number of factors including the level ofrealisations from the portfolio. This capital distribution is in addition tothe proposed final dividend for the year ended 30 September 2006 of 0.75 penceper share to be paid from income.
Economic background
During the last six months, the FTSE 100 Index rose by 1.63% and the FTSEAll-Share Index rose by 1.74% whilst the FTSE AIM Index fell by 14.9%. Duringthis same period, the AIM new issue market has been largely dormant with manyIPO prices being substantially lower at the end of the period compared with thebeginning of the year.On the investment side there is no shortage of equity and debt providerslooking for good propositions, and competition to finance such situationscontinues to remain strong. However, the dormancy in the AIM new issue markethas inevitably made divestment for portfolios, such as TriVest, more difficultat this time. Looking ahead in the short term, it appears that the markets mayhave temporarily learned to live with the current global security position, theprospect of continuing high energy prices and the possibility of a return tohigher inflation and interest rates.
Net asset value
At 30 September, 2006, the Company's Net Asset Value (NAV) per share was 112.89pence (2005: 122.53 pence as restated). The Company, including the proposedfinal income dividend of 0.75 pence per share and the proposed capitaldistribution of 3.00 pence per share referred to above, will have distributeddividends of 12.45 pence per share since the Company's launch. This totalreturn since launch (including these dividends) of 121.59 pence compares withthe initial NAV (after the launch expenses of the issue) of 94.5 pence pershare.
TriVest's portfolio
At present, Matrix Private Equity Partners LLP (MPEP) manage some 52% of theportfolio with Foresight Venture Partners (Foresight) managing 41% and NovaCapital Management Limited (Nova) the balance. By market sector, the portfoliois dominated by investments in technology companies at 47%, with manufacturingcompanies at 24%, media at 12%, construction and building materials at 9% andthe balance in a variety of other sectors. When the portfolio is considered bystage of development, it comprises 51% invested in MBO / MBI situations, 32% inAIM quoted stocks, 16% in development capital companies and 1% in early stageinvestments.The last year has been a relatively quiet period for the Foresight portfolio,probably reflecting the state of activity in the AIM market, although theunderlying investments in the portfolio continue to work hard to create value.Wire-e (held in the books with a value of ‚£500,000) was sold in May 2006 for ‚£120,000 cash, together with an equity investment in Rapide Communication (thenew vehicle for the Wire-e business) representing 6.7% of the business andvalued at ‚£80,000 at the time of the sale. In Monactive, Administrators wereappointed on 16 June 2006 and the company's assets were sold to CentennialSoftware Limited.Within the MPEP portfolio, in April 2006 new investments of ‚£361,000 and ‚£389,000 were made respectively into Blaze Signs, a signwriter, and VSI, a groupof associated businesses that specialises in developing and marketing 3Dsoftware. In June 2006 new investments of ‚£500,000 were made into BritishInternational, a supplier of helicopter services, and ‚£292,000 into PastaKing,a food and equipment supplier to the food service and educational markets. InMay 2006 a further investment of ‚£126,000 was made into BBI. Importantly, inSeptember 2006 Secure Mail Services was sold to Candover Partners Limited forinitial proceeds of ‚£4.1 million as part of a deal valuing SMS at ‚£40 million.This has resulted in an uplift to the Interim valuation of ‚£1.0 million and acapital gain to the portfolio of ‚£2.9 million. The Hunter Rubber Company, whichhad previously been written down to nil, went into Administration on 10 April2006. There remains some expectation of receiving a small payment from theAdministrators in due course. After the year-end, Brookerpaks has redeemed infull its unsecured loan of ‚£445,000.
Within the Nova portfolio, NexxtDrive continues to move ahead with the development of its fuel efficiency products while it waits for an opportune moment to seek a public listing.
Capital account
The element of return due to capital movements for the year in the Profit andLoss Account has contributed a loss of ‚£3,115,302 (2005: profit of ‚£16,826,289as restated). This is attributable to three main factors. First, the portfoliossuffered net unrealised losses in the year of ‚£4,074,141 (2005: profit of ‚£16,221,200 as restated), due to some substantial declines in the value ofseveral quoted investments, most notably Sarantel and Oxonica, and severalunquoted investments, particularly Aquasium Technology. It should be noted thatthese three had been major contributors to last year's unrealised gains.However, these losses were mitigated by some healthy unrealised gains in otherunquoted investments, principally Youngman Group, Original Additions (BeautyProducts) and Image Source Group, where strong trading performance warrantedincreased valuations. Secondly, and partly off-setting these losses, realised gains of ‚£1,583,855(2005: ‚£1,080,192 as restated) were achieved principally from the sale ofSecure Mail Services, which generated further gains in the year of ‚£1,532,032,and realised a total gain of ‚£2,892,250 over original cost.
A full analysis of all unrealised gains and losses by investment for the year is shown in the Investment Portfolio Summary below.
Finally, 75% of the fund management fees were deducted from capital returns, which, after tax relief, were ‚£597,945 (2005: ‚£475,103) due to the higher levels of net assets managed this year.
Revenue account
The revenue return after tax for the year rose by ‚£17,223 from last year to ‚£342,931. As a result, revenue return per share is 0.86 (2005: 0.80) of a pennyper share, thereby remaining broadly constant.Total income fell by ‚£27,893, caused by three principal factors. First, thefurther investment in qualifying holdings this year consequently reduced theincome from the OEIC money market funds (used to hold the Company's liquidityuntil invested in qualifying investments) by ‚£159,054. Against this, there hasbeen an increase of ‚£85,888 in loan stock interest receivable, itselfreflecting further loan stock investments of ‚£2.7 million made by the MPEPportfolio over the past year. Finally, dividends from qualifying holdings alsorose by ‚£32,582.DividendsThe Company's revenue return per Ordinary Share was 0.86 pence per share (2005:0.80 pence per share as re-stated). As noted above, your Board will berecommending a final dividend of 0.75 pence per Ordinary Share in respect ofthe year under review at the Annual General Meeting to be held on 31 January2007. The Board also proposes to pay an interim capital dividend of 3.00 penceper Ordinary Share in respect of the year ending 30 September 2007. Thedividends will be paid on 15 February 2007 to shareholders on the Register
on12 January 2007.Dividend Investment SchemeWe are again offering Shareholders the opportunity to re-invest these dividendsinto shares of the Company at the NAV per share as at 31 December 2006(adjusted for the income and capital dividends totalling 3.75 pence per share).Board members have once again indicated that they will be doing so to theextent of their full entitlement. Shareholders who have not yet joined thescheme and who wish to receive the proposed dividends as shares should completethe form to be circulated with the Full Annual Report or the Summary AnnualReport as appropriate. Shareholders should return the Form to Capita Registrarsat the address given on the form so as to arrive by 31 January 2007 to ensurethat they qualify to participate in the Scheme in respect of these dividends.Copies of the rules relating to the scheme are available on request from theCompany Secretary or can be downloaded from the Company's website:www.trivestvct.co.uk.
Valuation policy
The Company has adopted several new Financial Reporting Standards. Theseinclude FRS 25 (Financial Instruments: Disclosure and Presentation) and FRS 26(Financial Instruments: Measurement), which require that investments are statedat fair value and impact the Company's valuation policy. To this end, theCompany has applied the International Private Equity Venture Capital Valuation(IPEVCV) guidelines for the first time, which are broadly similar to thepreviously applied British Venture Capital Association guidelines in respect ofunquoted investments. However, these guidelines also require that quoted stocksare valued at closing bid price, rather than mid-market price as appliedpreviously, which has caused a reduction in the opening net asset value asrestated of ‚£483,352. Last year's figures have been restated for this change asrequired by FRS 26.Share buy-backs
During the year ended 30 September 2006, the Company continued to implement itsbuy-back policy and, accordingly, bought back 1,100,000 Ordinary Shares(representing 2.8%) of the shares in issue at the period end) at a total costof ‚£1,033,750 (net of expenses). These shares were subsequently cancelled
bythe Company.Investor Allstars 2006 AwardsAt the recent Investor Allstars 2006 Awards ceremony, I am delighted to informyou that MPEP won the award for the second year running for the Venture CapitalTrust Manager of the Year based in no small measure upon the performance ofTriVest. The judging panel commented "Matrix is one of the few VCs that hassuccessfully defended its title¢â‚¬¦¢â‚¬¦What differentiated Matrix (from otherfinalists) was the quality of the exits they achieved." Foresight VenturePartners, another of our Investment Managers, was also a finalist in thiscategory.
This has been another busy and positive year for the Board. The Board is pleased with the progress that the portfolio overall has made to date and looks forward to its continued development. Once again I would like to take this opportunity to thank Shareholders for their continued support.
Colin Hook
Chairman
UNAUDITED PROFIT AND LOSS ACCOUNT
for the year ended 30 September 2006
30 September 2006 (Unaudited)
30 September 2005 (restated)
Revenue Capital Total Revenue Capital Total ‚£ ‚£ ‚£ ‚£ ‚£ ‚£ Net unrealised - (4,074,141) (4,074,141) - 16,221,200 16,221,200 (losses)/gains on investments Net gains on - 1,583,855 1,583,855 - 1,080,192 1,080,192 realisation of investments Costs of investment - (27,071) (27,071) - - - transactions Income 1,135,895 - 1,135,895 1,163,788 - 1,163,788 Investment (233,097) (699,292) (932,389) (193,717) (581,150) (774,867)management fees Other expenses (458,520) - (458,520) (537,493) - (537,493) ------------- --------------- ---------------
------------- --------------- ---------------
Profit on ordinary 444,278 (3,216,649) (2,772,371) 432,578 16,720,242 17,152,820 activities before taxation Tax on ordinary (101,347) 101,347 - (106,870) 106,047 (823)activities Profit on ordinary 342,931 (3,115,302) (2,772,371) 325,708 16,826,289 17,151,997 activities after taxation for the financial year ------------ --------------- ---------------
------------ --------------- ---------------
Basic and diluted 0.86p (7.84)p (6.98)p 0.80p 41.25p 42.05preturn per share: Dividends paid Final dividend for - - - 515,996 - 515,996 the year ended 30 September 2004 Final dividend for 300,780 - 300,780 - - - the year ended 30 September 2005 Interim dividend - 1,003,852 1,003,852 - - - for the year ended 30 September 2006 300,780 1,003,852 1,304,632 515,996 - 515,996
All revenue and capital items in the above statement derive from continuing operations.
No operations were acquired or discontinued in the period.
UNAUDITED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 30 September 2006
30 September 2006 (Unaudited) 30 September 2005 (restated) Total Total ‚£ ‚£ (Loss)/profit on (2,772,371) 17,151,997 ordinary activities after taxation ========= Effect of changes (483,352) in accounting policy arising from the introduction of FRS 26 --------------- Total recognised (3,255,723) 17,151,997 (losses)/gains since last annual report ========= =========
UNAUDITED NOTE OF HISTORICAL COST PROFITS AND LOSSES
for the year ended 30 September 2006
30 September 2006 (Unaudited) 30 September 2005 (restated) Total Total ‚£ ‚£ (Loss)/profit on (2,772,371) 17,152,820 ordinary activities before taxation Add/(less) 4,074,141 (16,221,200)unrealised losses/ (gains) on investments (Less)/add (4,059,632) 350,156 realisation of revaluation (losses)/gains of previous years --------------- -------------- Historical cost (2,757,862) 1,281,776 (loss)/profit on ordinary activities before taxation --------------- ------------ Historical cost (4,062,494) 765,780 (loss)/profit for the year after taxation and dividends UNAUDITED BALANCE SHEETas at 30 September 2006 30 September 2006 (Unaudited) 30 September 2005 (restated) ‚£ ‚£ ‚£ ‚£ ‚£ ‚£ Non-current assets Investments at fair 35,405,032 38,740,570 value Current assets Debtors and 936,772 1,386,381 prepayments
Current investments 5,969,440 6,345,873 Cash at bank 2,027,094 2,926,233 ------------- --------------- 8,933,306 10,658,487 Creditors: amounts falling due within one year Other creditors 43,064 34,617 Accruals 144,996 159,721 ------------- --------------- (188,060) (194,338) ------------- --------------- Net current assets 8,745,246 10,464,149 ========= ========= Net assets 44,150,278 49,204,719 ========= ========= Capital and reserves Called up share 391,099 401,574 capital Share premium 60,974 - account Capital redemption 27,441 16,441 reserve Special reserve 25,025,881 32,211,804 Capital reserve - 12,618,828 12,633,337 unrealised Capital reserve - 5,298,692 3,410,294 realised Revenue reserves 727,363 531,269 ========= ========= 44,150,278 49,204,719 ========= =========
Net asset value per Ordinary 112.89p 122.53pShare basic and diluted
UNAUDITED RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 30 September 2006
2006 2005 (Unaudited) ‚£ ‚£ Opening shareholders' funds 49,204,719 33,445,230 (previously ‚£49,386,890 before prior year adjustment of ‚£ 182,171 ) Net share capital bought back in (1,038,937) (878,317)the year Net share capital subscribed for 61,499 - in the year (Loss)/profit for the year (2,772,371) 17,151,997 Dividends paid in the year (1,304,632) (514,191) --------------- --------------- Closing shareholders' funds 44,150,278 49,204,719 ======== ========UNAUDITED CASH FLOW STATEMENT
for the year ended 30 September 2006
Year ended 30 September Year ended 30 September 2005 2006 (Unaudited) Operating activities ‚£ ‚£ ‚£ ‚£ Investment income 972,767 1,105,903 received Other income received 7,812 - Investment management (932,389) (774,866) fees paid Other cash payments (488,253) (426,129) ------------- ------------ Net cash outflow from (440,063) (95,092)operating activities Taxation UK Corporation tax paid - (25,279) Investing activities Acquisition of (2,410,773) (3,660,979) investments
Disposal of investments 3,857,334 2,885,804
-------------- -------------- 1,446,561 (775,175) Equity Dividends Payment of equity (1,304,632) (514,191)dividends --------------- ------------- Cash outflow before (298,134) (1,409,737)financing and liquid resource management Management of liquid resources Decrease in monies held 376,433 581,068 pending investment Financing Issue of Ordinary 61,499 - shares
Purchase of own shares (1,038,937) (878,317)
------------- ------------- (977,438) (878,317) Decrease in cash for (899,139) (1,706,986)the year ======== =========INVESTMENT PORTFOLIO SUMMARYas at 30 September 2006Investment Portfolio Summary % of Cost at Valuation Valuation portfolio at at 30-Sep-06 30-Sep-05 30-Sep-06 by value Foresight Venture Partners Oxonica plc 2,136,763 8,780,297 7,245,512 20.46% Specialist in the design,
manipulation and engineering of properties of materials at the
nano-scale SmartFOCUS Group plc 700,000 1,899,292 1,856,969 5.24%
Provider of analytic software to support targeting and execution of
marketing campaigns Camwood Limited 1,028,181 1,780,937 1,669,520 4.72%
Provider of software repackaging
services Aquasium Technology Limited 700,000 2,067,997 1,059,610 2.99%
Business engaged in the design, manufacturing and marketing of bespoke electron beam welding and
vacuum furnace equipment Sarantel plc 1,670,252 3,729,170 798,621 2.26%
Developer and manufacturer of antennae for mobile phones and
other wireless devices Alaric Systems Limited 595,803 595,763 595,763 1.68%
Software developer and provider of support services in the credit/
debit card authorisation and payments market ANT plc 462,816 472,749 393,958 1.11%
Provider of embedded browser/email software for consumer electronics
and Internet appliances Aigis Engineering Solutions 272,120 333,320 333,320 0.94%Limited Specialist blast containment materials company DCG Datapoint Group Limited 312,074 312,074 311,853 0.88%
Design, supply and integration of
data storage solutions Mondas plc 1 600,000 450,183 238,255 0.67% Provider of e-business technologies
Rapide Communication Limited 2 379,983 250,000 66,667 0.19%
Mobile phone software company
Monactive Limited (in 339,285 160,667 0 0.00%administration)
Provider of software management
tools that monitor usage of software versus licences held Other investments in the portfolio 0 15,000 Nil 0.00%3 9,197,277 20,847,449 14,570,048 41.14%
Matrix Private Equity Partners LLP HWA Limited (trading as Holloway 69,105 3,219,023 3,348,323 9.47%White Allom)
Refurbishment, restoration and construction of notable public buildings and top-end residential dwellings in and around London
Image Source Group Limited 1,000,000 2,618,253 3,232,667 9.13%
Royalty free picture library
Original Additions (Beauty 1,000,000 2,301,687 3,127,944 8.83%Products) Limited
Manufacturer and distributor of
beauty products Youngman Group Limited 1,000,000 0 2,368,418 6.69%
Manufacturer of ladders and access
towers BBI Holdings plc 496,119 731,910 1,227,231 3.47%
Manufacturer of gold conjugate for the medical diagnostics industry
Tottel Publishing Limited 514,800 514,800 759,048 2.14%
Publisher of specialist legal and
taxation titles Letraset Limited 1,000,000 487,737 622,737 1.76%
Manufacturer and worldwide distributor of graphic art
products Brookerpaks Limited 500,000 1,033,058 621,555 1.76%
Importer and distributor of garlic and vacuum-packed vegetables to supermarkets and the wholesale
trade Ministry of Cake Limited 721,280 721,280 556,169 1.57%
Manufacturer of desserts and cakes for the food service industry British International Holdings 500,000 n/a 500,000 1.41%Limited
Helicopter service operators
VSI Limited 388,842 0 388,842 1.10%
Provider of software for CAD and
CAM vendors Blaze Signs Holdings Limited 360,969 n/a 360,969 1.02% Manufacturer and installer of signs Campden Media Limited 334,880 n/a 334,880 0.95%
Magazine publisher and conference
organiser PastaKing Holdings Limited 292,405 0 292,405 0.83%
Manufacturer and supplier of fresh
pasta meals Vectair Holdings Limited 215,914 0 215,914 0.61% Designer and distributor of washroom products SectorGuard plc 150,000 128,571 150,000 0.42% Provider of manned guarding,
mobile patrols and alarm response
services B G Consulting Group Limited/ 1,153,976 125,000 128,344 0.36%Duncary 4 Limited Technical training business Inca Interiors Limited 350,000 300,562 50,000 0.14%
Design, supply and installation of
quality kitchens to house developers FH Ingredients Limited 403,303 403,303 0 0.00%
Processor of frozen herbs for the food manufacturing industry
Secure Mail Services Limited 0 2,590,494 0
0.00%
Specialist, secure credit card
delivery business Other investments in the portfolio 1,316,482 Nil Nil 0.00%3 11,768,075 15,175,678 18,285,446 51.66%
Nova Capital Management Limited
Tikit Group plc 500,000 882,607 960,868 2.71%
Provider of consultancy, services and software solutions for law
firms Biomer Technology Limited 137,170 753,836 753,837 2.14%
Developer of biomaterials for
medical devices NexxtDrive Limited 600,000 412,500 468,750 1.32% Developer of transmissions
technologies for applications in the automotive, construction and
industrial sectors I-DOX plc 737,625 668,500 366,083 1.03% Provider of document storage systems 1,974,795 2,717,443 2,549,538 7.20% Total 22,940,147 38,740,570 35,405,032 100.00%
1 Data for Mondas includes Blue Curve Limited, acquired during the year.
2 Data for Rapide Communication includes Wire-e Limited, acquired during the year.
3 Other investments in the portfolio comprises The Hunter Rubber CompanyLimited (in administration) and Stortext-FM Limited/Stortext (DO) Limited inthe MPEP portfolio and Broadreach Networks Limited, in the Foresight portfoliowhich have all been valued at nil.
Notes
1. In accordance with the policy statement published under "Management and Administration" in the Company's Prospectus dated 13 October 2000, the Directors have charged 75% of the investment management expenses to capital reserve.
2. With effect from 1 October 2005, the Company has adopted the following Financial Reporting Standards (FRS):
FRS 21 (Events after the Balance Sheet Date) - Interim dividends paid by theCompany are accounted for in the period in which they are paid and finaldividends are accounted for when approved by shareholders. Previously, theCompany accrued dividends in the period in which the net income, to which thosedividends related, was accounted for.FRS 25 (Financial Instruments: Disclosure and Presentation) and FRS 26(Financial Instruments: Measurement) -The Company has designated itsinvestments as being measured at "fair value through profit and loss". The fairvalue of quoted investments is deemed to be the bid value of these investmentsat the close of business on the relevant date.
The corresponding amounts in this announcement are restated in accordance with these new policies.
Non-current investments which are not quoted are stated at Directors' best estimate of fair value, in accordance with IPEVCV guidelines.
The Company has also adopted FRS 22 (Earnings per Share), FRS 23 (The effectsof changes in foreign exchange rates) and FRS 28 (Corresponding amounts), noneof which give rise to prior year adjustments.
The Company has chosen not to adopt the accounting requirements of FRS 20 (accounting for share based payments), as the incentive agreement with the Investment Managers existed before the date from which FRS 20 became applicable.
3. The basic revenue return per Ordinary Share is based on the net revenue from ordinary activities after taxation of ‚£342,931 (2005: ‚£325,708) and on 39,694,960 (2005: 40,786,094) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year.
4. The basic capital return per Ordinary Share is based on net realised and unrealised capital losses of ‚£2,490,286 (2005: ‚£17,301,392 as restated) and net capital costs (including investment management fees) of ‚£625,016 (2005: ‚£ 475,103) and on 39,694,960 (2005: 40,786,094) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year.
5. The above financial information comprises non-statutory accounts within themeaning of section 240 of the Companies Act 1985. The financial information forthe year ended 30 September 2005 has been extracted from published accounts(except as restated) for the year ended 30 September 2005 that have beendelivered to the Registrar of Companies and on which the report of the auditorswas unqualified.6. The Company revoked its investment company status on 30 November 2005 whichmeans that it is now able to make capital distributions from realised profitswhen previously it could only pay dividends from income.7. The Company proposes to pay a final dividend from income of 0.75 pence(2005: 0.75 pence) per share in respect of the year ended 30 September 2006.The Board also intends to pay an interim capital dividend of 3.00 pence perOrdinary Share in respect of the year ending 30 September 2007. The dividendswill be paid on 15 February 2007 to Shareholders on the Register on 12 January2007.
8. The Annual General Meeting will be held at 11.00 am on 31 January 2007 at One Jermyn Street, London SW1Y 4UH.
TRIVEST VCT PLC