Mobeus I&g 2 Regulatory News (MIG)

8 Jul 2005 16:51

Matrix Venture Fund VCT PLC08 July 2005 Matrix Venture Fund VCT plc Preliminary Results for the year ended 30 April 2005 Objective The objective of Matrix Venture Fund VCT plc ("Matrix Venture Fund") is toprovide private investors with an attractive return from a portfolio ofinvestments in companies whose products or services depend, to a significantextent, on the application of technology, including: • internet and e-business; • information technology; and • telecommunications and media. Venture Capital Trust Status Matrix Venture Fund has satisfied the requirements as a Venture Capital Trustunder section 842AA of the Income and Corporation Taxes Act 1988, and theDirectors intend to conduct the business of the Company so as to continue tocomply with that section. Performance Summary 30 April 2005 30 April 2004 Net asset value per Ordinary Share 92.10p 94.09p Net assets £11,808,068 £12,260,703 Revenue and dividend Loss per Ordinary Share (0.76)p (0.47)p Dividend per Ordinary Share - - Chairman's Statement It is a pleasure to present the preliminary results of Matrix Venture Fund forthe year ended 30 April 2005. Results for the year ended 30 April 2005 The total return (after tax) attributable to the Ordinary Shareholders was aloss of £(298,352) (2004: gain of £3,866,431) and the net asset value perOrdinary Share as at 30 April 2005 was 92.10 pence compared with 94.09 pence asat 30 April 2004. The after tax revenue loss before net capital losses was(0.76) pence per Ordinary Share for the year ended 30 April 2005 (2004: (0.47)pence). Investment Company Status The Company revoked its investment company status on 7 July 2005 and this changewill enable the Fund to make distributions out of the capital gains that havestarted to be realised as the portfolio matures. Dividend The Board will not be recommending a final dividend for the year ended 30 April2005 as the revenue account had a negative balance at the year-end. Followingthe realisation of sit-up Limited, the Directors propose to pay an interimdividend of in the order of 6p per Ordinary Share (the payment and the timing ofsuch payment are subject to certain regulatory and accounting issues that needto be resolved). Overview There have been significant changes to the investment and fundraisingenvironment since the initial fundraising five years ago. The Fund's performancecompares favourably with the TechMARK All-Share index over the same period andshould be seen in the context of a very challenging environment for technologycompanies generally. The Board believes that Shareholders would benefit from abroadening of the investment strategy beyond the historical focus exclusively onthe technology and media sectors. Considering investment propositions across allsectors should lead to an increase in investment activity and, by focusing onprofitable and established businesses, enable the Fund to benefit from a greaterproportion of income generating investments. This in turn should enable the Fundto deliver a more steady stream of dividend payments to Shareholders. It is pleasing to note further exits from the Fund as it continues to mature. Wehave now fully realised our investment in sit-up Limited which was sold, justafter the year-end, to Telewest Global Inc. in a transaction that returned £2.8min cash to the Fund. In total, the exit generated a money multiple of just over3.3x on the amount invested. In July 2004, Espotting Media (UK) Limited wasacquired by FindWhat.com for shares (the combined entity has now been renamedMiva Inc.). The Fund has partially realised its holding, recouping 94% of theoriginal cost and still holds a large proportion of the shares received in Miva.The share price of Miva has declined substantially in value since theacquisition was completed and the Manager is monitoring the position closely. Wehave also made a partial realisation from our investment in ClearspeedTechnology plc, selling 38% of our holding for 2.8x the original cost. The portfolio continues to show encouraging signs and a number of companies havethe potential to benefit from increased levels of merger and acquisitionactivity. Details of the current venture capital portfolio as at 30 April 2005are given in the Venture Capital Fund Adviser's Report below. As at 30 April 2005, £9,375,139 had been invested in 17 companies. Two newinvestments were completed in the financial year. Together, these 17 investmentsrepresent an aggregate investment of 75.7% of the net funds raised under theoriginal public offer. As at 30 April 2005, Shareholders' funds were £11,808,068after deducting net capital losses of £173,631. The investments held by theCompany have been valued in accordance with the British Venture CapitalAssociation guidelines. The investments that are quoted on AIM and the moneymarket securities are carried at market value. Conclusion In March last year, Matrix Private Equity, the Venture Capital Fund Adviser,became a much larger VCT business following the merger with GLE DevelopmentCapital (now Matrix Private Equity Partners Limited) and the addition of itsexperienced VCT fund management team. One of Matrix Private Equity's investment directors, Helen Sinclair, has decidedto leave the company. Helen has assisted in the management of the Company'sinvestments from its inception and I would like to take the opportunity to thankher for her valuable contribution. The Board has considered carefully how to maximise the benefit of thissignificant additional resource, how to position the Fund in order to deliver asteady flow of high quality and income generating investments and in particular,how to provide the right platform to raise further funds via a C Share issue aspreviously approved by Shareholders. The Board believes these objectives will bebest achieved by broadening the investment strategy beyond the technology sectorto encompass a more generalist investment approach with an increased ability toinvest in established and profitable businesses. A Circular describing the changes recommended by the Board and setting out theproposals in detail, together with a notice of an EGM, is being sent toShareholders in conjunction with this report and Shareholders are advised toconsider these proposals carefully. I would like to take this opportunity to thank all Shareholders for theircontinuing support of the Company and I very much hope to have the pleasure ofwelcoming you to the Annual and Extraordinary General Meetings to be held on 11August 2005. Michael Cumming Chairman 8 July 2005 Venture Capital Fund Adviser's Report The Venture Capital Fund Matrix Private Equity Limited advises the Company in respect of investments madewithin the Venture Capital Fund. During the year ended 30 April 2005, the teamreceived and evaluated over 360 investment proposals, from which Matrix VentureFund made two new investments in Clearspeed Technology plc and GyroInternational Limited, at a total cost of £951,600. We are pleased that there have been a number of successful exits from theportfolio. In July 2004, Espotting Media (UK) Limited was acquired, primarilyfor shares, by Nasdaq listed FindWhat.com (now renamed Miva Inc.). The Fund hasrealised just over 16% of its holding in Miva to date for £581,382 (against aninvestment cost of £612,323). The remaining holding in Miva therefore largelyrepresents the profit from the original investment although the share price hasdeclined significantly since the deal completed. We are monitoring the companyand the share price closely. The Fund also took advantage of a strong marketpost float to sell 38% of the Clearspeed holding to recover the original cost ofthe investment. Again, cash receipts of £215,135 against an original investmentcost of £201,600 means that our remaining holding largely represents the profitfrom the original investment. The third exit was sit-up Limited following itsacquisition by Telewest Global Inc. for cash just after the year-end. This hasbeen a very successful investment for the Fund generating an overall internalrate of return of 37% and £3.09m in cash was realised from an investment thatcost £925,104. During the year we have revalued our investment in FootFall upwards followingcontinued strong trading and early indications of interest from potential tradepurchasers. We have also written down our investment in Monactive Limited dueto the company trading below forecast. The current investment portfolio of the Company as at 30 April 2005 is detailedbelow. Award International Holdings plc Award provides its client base with promotional goods and services designed toincrease brand awareness among consumers and to support their marketingcampaigns. The company floated on AIM in March 2004 raising £2.25m to provideworking capital to facilitate growth. The performance of the business has beenbelow expectations and this is reflected in the share price performance postfloat. Results from the latest audited accounts for the 16 months ended 30 September2004: turnover £4,208,931; profit before tax £6,573; net assets £1,709,875. % of Fund's Date of investment Amount invested Valuation % of equity held net assets March 2004 £250,000 £56,250 7.69% 0.47% Callserve Communications Limited The company provides internet telephony services or Voice over Internet Protocol("VolP") from PCs to telephones. The Fund invested as part of a syndicateraising £7.3m to finance the roll-out of the service. The company has reducedits cost base and continues to generate significant revenues but has not yetachieved sustained profitability. Results from the latest audited accounts for the 9 months ended 31 December2003: turnover £6,347,166; loss before tax £510,453; net liabilities £4,321,490. % of Fund's Date of investment Amount invested Valuation % of equity held net assets October 2000 £300,000 £150,000 0.76% 1.27% Clarity Commerce Solutions plc The company provides Electronic Point of Sale ("EPOS") solutions, CustomerRelationship Management ("CRM") products and services to the UK hospitality andleisure markets. It floated on AIM in July 2000, raising £2.5m primarily toincrease its marketing activities and acquire two small complementarybusinesses. The company has continued to be acquisitive and has raised £2.6mvia rights issues in the last few years to finance acquisitions. The businesscontinues to grow and is now profitable. Results from the latest audited accounts for the year ended 31 March 2004:turnover £13,325,000; profit before tax £511,000; net assets £9,021,000. % of Fund's Date of investment Amount invested Valuation % of equity held net assets July 2000/ £510,552 £472,055 4.00% 4.00% August 2003 Clearspeed Technology plc Clearspeed is an innovative parallel-processing semiconductor business whichfloated on AIM in July 2004 raising £10.2m to finance further productdevelopment. The Fund invested £201,600 on the float and, following a strongshare price performance, sold 39% of its holding for £215,135 in February 2005. Results from the latest audited accounts for the year ended 31 December 2004:turnover £247,000; loss before tax £4,028,000; net assets £9,015,000. % of Fund's Date of investment Amount invested Valuation % of equity held net assets July 2004 £124,954 £275,056 0.40% 2.33% Flightstore Group plc Flightstore raised £3m in March 2002 to develop an interactive shoppingexperience on aircraft using existing seatback entertainment systems, with theFund investing £750,000. The Company floated on AIM in December 2003 at whichpoint the Fund realised approximately two thirds of its holding for £594,920.The balance of the holding was subject to a lock-in period. The share price hasfallen significantly since the float, in an illiquid market, as the corebusiness has failed to perform. Results from the latest audited accounts for the year ended 31 December 2003:turnover £274,112; loss before tax £1,020,176; net assets £819,802. % of Fund's Date of investment Amount invested Valuation % of equity held net assets March 2001 £254,586 £24,711 3.16% 0.21% FootFall Limited FootFall provides business performance information that is derived from themonitoring and analysis of pedestrian traffic flow in shopping centres andretail outlets. The company raised £2.65m from a syndicate of investors in June2002. The company has traded strongly post investment and has started toattract significant interest from potential trade purchasers. Results from the latest audited accounts for the year ended 31 March 2004:turnover £5,168,660; profit before tax £410,219; net assets £3,209,845. % of Fund's Date of investment Amount invested Valuation % of equity held net assets June 2002 £750,000 £1,211,250 5.76% 10.26% Gyro International Limited Gyro is an established brand communications agency that providesbusiness-to-business direct marketing services to technology and financialservices companies. The company raised £3m in February 2005 to buy out one ofthe founders and to provide growth capital. Results from the latest audited accounts for Gyrogroup plc for the year ended 31October 2004 (excluding the US operations): turnover £9,021,288; profit beforetax £707,152; net assets £21,419. % of Fund's Date of investment Amount invested Valuation % of equity held net assets February 2005 £750,000 £750,000 6.75% 6.36% Magicalia Limited Magicalia has established a network of eight community websites focussed onenthusiast-based activities. It also has a growing online contract publishingbusiness whereby the company licenses its technology platform to existing onlinepublications. The company raised £1.1m from a syndicate of investors in March2001. The business continues to trade well with strong growth in revenues. 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. % of Fund's Date of investment Amount invested Valuation % of equity held net assets March 2001 £400,000 £400,000 12.73% 3.39% Miva Inc. (formerly FindWhat.com) FindWhat.com has now renamed itself Miva Inc. as it fully integrates a singlebrand around the businesses it has acquired. In July 2004, Miva acquiredEspotting Media, in which the Fund originally invested, primarily for shares.Miva is a Nasdaq listed company that develops and provides performance-basedmarketing solutions for online businesses. The share price of Miva has beenvolatile and has declined significantly from £10.92 when the merger wasannounced to £4.41 at 30 April 2005. The Fund took advantage of a temporarilystrong market to sell just over 18% of its available holding in October 2004.In conjunction with the cash consideration received on the merger, cash receivedby the Fund to date is £581,382 against an original investment cost of £612,323.The residual valuation of the Fund's holding is based on the share price at 30April 2005. Results from the latest audited accounts for the 12 months ended 31 December2004: turnover $169,470,000; profit before tax $27,718,000; net assets$287,679,000. % of Fund's Date of investment Amount invested Valuation % of equity held net assets December 2001/ August £487,833 £681,882 2.40% 5.78% 2002/ September 2003 Monactive Limited Monactive is a leading provider of software asset management tools. The companyraised £1.75m from a syndicate of investors in March 2001, and a further£500,000 in January 2003. The investment has been revalued downwards on thebasis of impairment due to underperformance against budget. Results from the latest audited accounts for the year ended 31 July 2004:turnover £966,442; loss before tax £350,914; net liabilities £1,911,422. % of Fund's Date of investment Amount invested Valuation % of equity held net assets March 2001/ £642,857 £256,000 13.60% 2.17% January 2003 Recite Limited The company provides a managed service combining content, software platform andtraining that improves the effectiveness of sales forces of IT and telecomsvendors. The Fund invested as part of a £1.6m transaction. The companycontinues to trade profitably. Results from the latest audited accounts for the year ended 30 April 2004:turnover £2,387,825; profit before tax £107,258; net assets £102,093. % of Fund's Date of investment Amount invested Valuation % of equity held net assets September 2003 £1,000,000 £1,478,322 25.20% 12.52% sit-up.com Limited The company is one of the UK's leading TV retail groups. sit-up's live tvchannels, bid tv and price-drop tv, provide innovative and interactive auctionshopping formats. The Fund initially invested £500,000 as part of a £2.2msyndicate. A further £150,000 was provided when the business raised over £5m ofexpansion capital in March 2001 and £250,000 was invested in March 2002 as partof a £1.65m loan syndicate. The loan was subsequently repaid. The businessraised approximately £5m of development capital in July 2002 and the Fundinvested £24,443 as part of that round. At the time of the original investment,the company was pre-revenue but since then it has grown its revenues to inexcess of £200m in 2004 and is substantially profitable. In May 2005, TelewestGlobal Inc. acquired sit-up in an all cash deal for approximately £194m. TheFund has realised just over £2.8m in cash as a result, representing a verypositive internal rate of return of 37%, representing a money multiple of 3.3x. Results from the latest audited accounts for the year ended 31 December 2004:turnover £206,123,000; profit before tax £11,245,000; net assets £16,579,000. % of Fund's Date of investment Amount invested Valuation % of equity held net assets October 2000/ £679,338 £2,803,404 1.59% 23.74% February 2001/ July 2002 Statement of Total ReturnYear ended 30 April 2005 Year ended 30 April 2005 Revenue Capital Total £ £ £ Gains and losses on investments - (14,968) (14,968) Income 187,898 - 187,898 Investment management fees (61,546) (184,639) (246,185) Other expenses (225,097) - (225,097) ------------ ----------- ------------ Return on ordinary activitiesbefore taxation (98,745) (199,607) (298,352) Tax on ordinary activities - - - ---------- --------- --------- Return attributable to equity Shareholders (98,745) (199,607) (298,352) Dividends in respect of equity shares - - - ------------ ------------ ------------Transfer (from)/to reserves (98,745) (199,607) (298,352) ------------ ------------ ------------ Return to Shareholders per OrdinaryShare: (0.76)p (1.54)p (2.30)p 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 activitiesbefore 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 (from)/to reserves (61,289) 3,927,720 3,866,431 ------------ ------------ ------------ Return to Shareholders per OrdinaryShare: (0.47)p 29.94p 29.47p The Statement of Total Return incorporates the profit and loss account of theCompany. All revenue and capital items in the Statement of Total Return derive fromcontinuing operations. The Company has only one class of business and derives its income frominvestments in shares, securities, loans and bank deposits. Balance SheetAs at 30 April 2005 30 April 2005 30 April 2004 £ £ Fixed AssetsVenture capital investments 8,558,929 8,296,473Money market investments 1,858,823 1,861,794 ------------ ------------ 10,417,752 10,158,267 Current AssetsDebtors and prepayments 61,491 111,559Cash at bank 1,474,386 2,133,539 ------------- ----------- 1,535,877 2,245,098 Creditors: amounts falling due withinone year (145,561) (142,662) ----------- ----------- Net current assets 1,390,316 2,102,436 ------------- -------------Net assets 11,808,068 12,260,703 ------------- ------------- Capital and reservesCalled up share capital 128,209 130,310Capital redemption reserve 3,597 1,496Cancelled share premium account 12,009,435 12,163,718Capital reserve - realised (1,099,543) (621,505)Capital reserve - unrealised 925,912 647,481Revenue reserves (159,542) (60,797) ------------ -------------- 11,808,068 12,260,703 ------------ ------------- Net asset value per Ordinary Share 92.10p 94.09p Cash Flow StatementYear ended 30 April 2005 Year ended Year ended 30 April 30 April 2005 2004 £ £Net cash outflow from operating activities (230,608) (193,083) TaxationUK corporation tax paid - - ----------- -----------Net cash outflow (230,608) (193,083) ----------- ----------- Capital expenditure and financialinvestmentPurchase of investments - equities and loan stock (952,574) (2,073,407)Disposals of equities and loan stock 675,341 1,489,050 ------------- -------------Net cash outflow from investing activities (277,233) (584,357) DividendsEquity dividends paid - (66,994) ------------ -----------Net cash outflow before financingand liquid resource Management (507,841) (844,434) Management of liquid resourcesMovement in money market and investments 2,971 (218,409) FinancingPurchase of own shares (154,283) (63,442) ----------- -----------Net cash outflow from financing (154,283) (63,442) ----------- -----------Net cash outflow for the year (659,153) (1,126,285) ------------ ----------- Notes to the financial statements for the year ended 30 April 2005 1 Return per Ordinary Share The revenue return per Ordinary Share is based on the net loss from ordinaryactivities after taxation of £98,745 (2004: loss of £61,289) and on 12,963,176(2004: 13,118,408) Ordinary Shares, being the weighted average number ofOrdinary Shares in issue during the year. The capital return per Ordinary Share is based on net realised capital gains of£19,254 (2004: gain of £586,017), net unrealised capital losses of £218,861(2004: gain of £3,341,703) and 12,963,176 (2004: 13,118,408) Ordinary Shares,being the weighted average number of Ordinary Shares in issue during the year. 2. Net asset value per Ordinary Share Net asset value per Ordinary Share is based on net assets at the end of theyear, and on 12,820,098 Ordinary Shares (2004: 13,031,004), being the number ofOrdinary Shares in issue on that date. 3. The financial information set out in these statements does notconstitute the Company's statutory accounts for the years ended 30 April 2005and 30 April 2004 but is derived from those accounts. Statutory accounts for theyear ended 30 April 2004 have been delivered to the Registrar of Companies andthose for year ended 30 April 2005 will be delivered following the Company'sAnnual General Meeting. The auditors have reported on those accounts: theirreports were unqualified and did not contain statements under Section 237 (2) or(3) of the Companies Act 1985. 4. The Annual Report will be circulated by post to all Shareholdersshortly and copies will be available thereafter to members of the public fromthe Company's registered office. 5. The Annual General Meeting will be held at 10.00 am on Thursday 11August 2005 at the offices of Matrix Group Limited, One Jermyn Street, LondonSW1Y 4UH. END This information is provided by RNS The company news service from the London Stock Exchange