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 of
the portfolio continues to provide encouragement. This year capital gains have
again been realised which has resulted in the Board proposing to pay to
Shareholders an interim capital distribution of 3.00 pence per share in respect
of the year ending 30 September 2007. The Board expects to be able to pay a
similar capital distribution at the end of the current financial year. Future
capital distributions will depend on a number of factors including the level of
realisations from the portfolio. This capital distribution is in addition to
the proposed final dividend for the year ended 30 September 2006 of 0.75 pence
per share to be paid from income.
Economic background
During the last six months, the FTSE 100 Index rose by 1.63% and the FTSE
All-Share Index rose by 1.74% whilst the FTSE AIM Index fell by 14.9%. During
this same period, the AIM new issue market has been largely dormant with many
IPO prices being substantially lower at the end of the period compared with the
beginning of the year.
On the investment side there is no shortage of equity and debt providers
looking for good propositions, and competition to finance such situations
continues to remain strong. However, the dormancy in the AIM new issue market
has inevitably made divestment for portfolios, such as TriVest, more difficult
at this time. Looking ahead in the short term, it appears that the markets may
have temporarily learned to live with the current global security position, the
prospect of continuing high energy prices and the possibility of a return to
higher inflation and interest rates.
Net asset value
At 30 September, 2006, the Company's Net Asset Value (NAV) per share was 112.89
pence (2005: 122.53 pence as restated). The Company, including the proposed
final income dividend of 0.75 pence per share and the proposed capital
distribution of 3.00 pence per share referred to above, will have distributed
dividends of 12.45 pence per share since the Company's launch. This total
return since launch (including these dividends) of 121.59 pence compares with
the initial NAV (after the launch expenses of the issue) of 94.5 pence per
share.
TriVest's portfolio
At present, Matrix Private Equity Partners LLP (MPEP) manage some 52% of the
portfolio with Foresight Venture Partners (Foresight) managing 41% and Nova
Capital Management Limited (Nova) the balance. By market sector, the portfolio
is dominated by investments in technology companies at 47%, with manufacturing
companies at 24%, media at 12%, construction and building materials at 9% and
the balance in a variety of other sectors. When the portfolio is considered by
stage of development, it comprises 51% invested in MBO / MBI situations, 32% in
AIM quoted stocks, 16% in development capital companies and 1% in early stage
investments.
The last year has been a relatively quiet period for the Foresight portfolio,
probably reflecting the state of activity in the AIM market, although the
underlying 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 (the
new vehicle for the Wire-e business) representing 6.7% of the business and
valued at �80,000 at the time of the sale. In Monactive, Administrators were
appointed on 16 June 2006 and the company's assets were sold to Centennial
Software 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 group
of associated businesses that specialises in developing and marketing 3D
software. In June 2006 new investments of �500,000 were made into British
International, a supplier of helicopter services, and �292,000 into PastaKing,
a food and equipment supplier to the food service and educational markets. In
May 2006 a further investment of �126,000 was made into BBI. Importantly, in
September 2006 Secure Mail Services was sold to Candover Partners Limited for
initial 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 a
capital gain to the portfolio of �2.9 million. The Hunter Rubber Company, which
had previously been written down to nil, went into Administration on 10 April
2006. There remains some expectation of receiving a small payment from the
Administrators in due course. After the year-end, Brookerpaks has redeemed in
full 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 and
Loss Account has contributed a loss of �3,115,302 (2005: profit of �16,826,289
as restated). This is attributable to three main factors. First, the portfolios
suffered 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 of
several quoted investments, most notably Sarantel and Oxonica, and several
unquoted investments, particularly Aquasium Technology. It should be noted that
these three had been major contributors to last year's unrealised gains.
However, these losses were mitigated by some healthy unrealised gains in other
unquoted investments, principally Youngman Group, Original Additions (Beauty
Products) and Image Source Group, where strong trading performance warranted
increased 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 of
Secure 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 penny
per share, thereby remaining broadly constant.
Total income fell by �27,893, caused by three principal factors. First, the
further investment in qualifying holdings this year consequently reduced the
income from the OEIC money market funds (used to hold the Company's liquidity
until invested in qualifying investments) by �159,054. Against this, there has
been an increase of �85,888 in loan stock interest receivable, itself
reflecting further loan stock investments of �2.7 million made by the MPEP
portfolio over the past year. Finally, dividends from qualifying holdings also
rose by �32,582.
Dividends
The 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 be
recommending a final dividend of 0.75 pence per Ordinary Share in respect of
the year under review at the Annual General Meeting to be held on 31 January
2007. The Board also proposes to pay an interim capital dividend of 3.00 pence
per Ordinary Share in respect of the year ending 30 September 2007. The
dividends will be paid on 15 February 2007 to shareholders on the Register on
12 January 2007.
Dividend Investment Scheme
We are again offering Shareholders the opportunity to re-invest these dividends
into 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 the
extent of their full entitlement. Shareholders who have not yet joined the
scheme and who wish to receive the proposed dividends as shares should complete
the form to be circulated with the Full Annual Report or the Summary Annual
Report as appropriate. Shareholders should return the Form to Capita Registrars
at the address given on the form so as to arrive by 31 January 2007 to ensure
that 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 the
Company 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. These
include FRS 25 (Financial Instruments: Disclosure and Presentation) and FRS 26
(Financial Instruments: Measurement), which require that investments are stated
at fair value and impact the Company's valuation policy. To this end, the
Company has applied the International Private Equity Venture Capital Valuation
(IPEVCV) guidelines for the first time, which are broadly similar to the
previously applied British Venture Capital Association guidelines in respect of
unquoted investments. However, these guidelines also require that quoted stocks
are valued at closing bid price, rather than mid-market price as applied
previously, which has caused a reduction in the opening net asset value as
restated of �483,352. Last year's figures have been restated for this change as
required by FRS 26.
Share buy-backs
During the year ended 30 September 2006, the Company continued to implement its
buy-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 cost
of �1,033,750 (net of expenses). These shares were subsequently cancelled by
the Company.
Investor Allstars 2006 Awards
At the recent Investor Allstars 2006 Awards ceremony, I am delighted to inform
you that MPEP won the award for the second year running for the Venture Capital
Trust Manager of the Year based in no small measure upon the performance of
TriVest. The judging panel commented "Matrix is one of the few VCs that has
successfully defended its title**What differentiated Matrix (from other
finalists) was the quality of the exits they achieved." Foresight Venture
Partners, another of our Investment Managers, was also a finalist in this
category.
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 42.05p
return 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 SHEET
as 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 122.53p
Share 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 SUMMARY
as at 30 September 2006
Investment 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 Company
Limited (in administration) and Stortext-FM Limited/Stortext (DO) Limited in
the MPEP portfolio and Broadreach Networks Limited, in the Foresight portfolio
which 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 the
Company are accounted for in the period in which they are paid and final
dividends are accounted for when approved by shareholders. Previously, the
Company accrued dividends in the period in which the net income, to which those
dividends related, was accounted for.
FRS 25 (Financial Instruments: Disclosure and Presentation) and FRS 26
(Financial Instruments: Measurement) -The Company has designated its
investments as being measured at "fair value through profit and loss". The fair
value of quoted investments is deemed to be the bid value of these investments
at 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 effects
of changes in foreign exchange rates) and FRS 28 (Corresponding amounts), none
of 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 the
meaning of section 240 of the Companies Act 1985. The financial information for
the year ended 30 September 2005 has been extracted from published accounts
(except as restated) for the year ended 30 September 2005 that have been
delivered to the Registrar of Companies and on which the report of the auditors
was unqualified.
6. The Company revoked its investment company status on 30 November 2005 which
means that it is now able to make capital distributions from realised profits
when 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 per
Ordinary Share in respect of the year ending 30 September 2007. The dividends
will be paid on 15 February 2007 to Shareholders on the Register on 12 January
2007.
8. The Annual General Meeting will be held at 11.00 am on 31 January 2007 at
One Jermyn Street, London SW1Y 4UH.
END
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