RNS Number:1169S
Proven VCT PLC
14 November 2003
ProVen VCT plc
Interim Statement Six Months ended 31 August 2003
Financial Summary
Six months Six months Year ended
ended ended
28 February
31 August 31 August
2003
2003 2002
Revenue return per share 0.1p 1.0p 1.2p
Total return per share 13.2p (8.3)p (16.1)p
Dividend per share - 1.0p 1.0p
Cumulative dividend per share 5.7p 5.7p 5.7p
Net asset value per share 84.6p 79.1p 71.4p
Net asset value plus cumulative dividend per 90.3p 84.8p 77.1p
share
Mid-market price per share 65p 40p 65p
Shareholders' funds (#000) 18,488 17,358 15,639
CHAIRMAN'S STATEMENT
I have pleasure in presenting the interim report for the six months ended 31
August 2003. During this time, UK stock markets made significant gains from
their low point during March and venture capital activity showed signs of
continued improvement. Beringea, the investment manager, continued to attract a
strong flow of investment opportunities and to work closely with existing
portfolio companies.
At 31 August 2003, the Company had a qualifying investment total of 87%,
comfortably ahead of the 70% required by the Venture Capital Trust regulations.
Investment Portfolio
During the period your Company made two new investments to the portfolio and
made follow-on investments in two existing companies, totalling #2.1 million.
Since the end of August, a further follow-on investment of #92,000 has been
made. In addition, the Company realised #307,000, at cost, of its AIM
investments. Further details of these investments and realisations are provided
in the investment manager's review.
During the period to 31 August 2003, the value of funds under management
increased by 18% compared to rises of 28% in the FTSE AIM Index and 17% in the
FTSE All Share Index. At 31 August 2003, the Company's unquoted and AIM
portfolio comprised 25 companies at a total cost of #17.5 million and a
valuation of #16.8 million. During the period the AIM portfolio rose in value
by 79%. All AIM investments, with one exception, performed strongly ahead of
the AIM Index. The value of the unquoted portfolio rose by 6% which is largely
the result of recent investments being valued at cost.
The Company benefited from a revaluation of its unquoted investment in Espotting
Media, following the company agreeing terms to merge with FindWhat.com, a US
NASDAQ listed company. Even allowing for the risk that the transaction does not
proceed, Espotting has made significant progress since our investment which, the
directors believe, justifies its valuation in this report. In addition, the
board accepted the investment manager's recommendations and increased the
valuations for Espresso Broadband, Ashcol, Linguaphone and Copyright Promotions
Group, and made a further provision against Horncastle Industries.
Net Asset Value and Interim Dividend
The unaudited net asset value per share at 31 August 2003 was 84.6p. This
represents an increase of 18% over the net asset value at 28 February 2003.
As I mentioned in my statement in the Annual Report, future dividends are likely
to be substantially dependent upon future realised capital profits. Given the
relatively small realisations to date, the board does not recommend the payment
of a dividend for the period under review.
Share Buy Backs
Shareholders are reminded that the Company is authorised to make market
purchases of its own shares. In the period under review, the Company
purchased 69,300 shares in the market at a cost of #41,000, representing a
discount of 17% to the net asset value at 28 February 2003. Any shareholder
wishing to sell shares should contact Downing Corporate Finance.
Board Change
On 16 May 2003, Gordon Power resigned from the board. Gordon has had a very
positive effect on both our new and existing investments and we are fortunate
that he is to continue to take an interest in some of our investments.
Alexander Spiro Jr. was appointed a non-executive director of the Company at the
same time. Mr Spiro is a senior managing director of Beringea LLC, the
investment manager's US parent company.
Prospects
ProVen VCT is effectively fully invested with cash resources being used largely
to fund developments in portfolio companies and meet running costs of the
Company where these are not met through income from portfolio companies. Future
new investments, and dividends as outlined earlier, are likely to be dependent
upon successful realisations of existing investments, the timing of which cannot
be predicted with any certainty. However, the upswing in the markets and
improving hopes for the economy are reflected in the portfolio and the board
retains its positive view on the future prospects for the Company and the
generation of tax free returns for its shareholders.
Andrew Davison
14 November 2003
INVESTMENT MANAGER'S REVIEW
Introduction
This review covers the six month period ended 31 August 2003 during which the
climate for venture capital activity showed continued signs of improvement. As
we stated in our annual report to 28 February 2003, our focus has been on
maximising value from the existing portfolio of companies, although we have
taken the opportunity to complete new and follow-on investments where
opportunities have arisen. The qualifying investment total at 31 August 2003
was 87%, and at the date of this report 86%, providing comfortable headroom over
the 70% required by the Venture Capital Trust regulations.
New Investment and Portfolio Activity
In the six months under review, a total of #1.75 million was invested in two new
companies and a further #344,000 in follow-on investments. These investments
are discussed below.
Zenith Group Limited
Television production company
In March 2003, ProVen VCT invested #800,000 alongside other Beringea managed
funds in the management buyout of this leading independent television production
company. Zenith's successes include Inspector Morse, Byker Grove and SM:tv Live
/CD:uk.
SPC International Limited
Hardware support services
SPC specialises in the repair and refurbishment of electronic equipment in the
IT, banking and retail sectors. ProVen VCT invested #950,000 in June 2003 in a
secondary buyout from another private equity company.
Cardpoint plc
Independent ATM operator
ProVen VCT invested a further #250,000 in the heavily oversubscribed Placing &
Open Offer in June 2003. This raised funds of #6 million to enable Cardpoint to
acquire the ATM estate of Securicor Corporation.
Espresso Broadband Limited
Development & delivery of educational material to schools
Proven VCT invested a further #94,000 as part of its ongoing commitment to
Espresso. The company has made substantial progress in the last year. A
further #92,000 was invested in September 2003.
Realisations
We took the opportunity to take profits from part of the Company's holdings in
Cardpoint and Centurion Electronics. A loss was made on the disposal of part of
the Company's holding in ID Data.
In June 2003, the management of Sport Entertainment & Media Group (SEM) offered
27.5p to existing shareholders to take SEM into private ownership. The
transaction was concluded in July 2003 and ProVen VCT converted its holding into
ordinary shares in the new company, Sports Holdings Limited.
Since 31 August 2003, we have taken advantage of further rises in the share
prices of Cardpoint and Centurion Electronics and taken additional profits. In
total, the VCT has now realised capital profits of almost #200,000 in Centurion
Electronics and over #130,000 in Cardpoint whilst still holding 40% and 83%
respectively of its original holdings in these companies.
Portfolio Valuation
At 31 August 2003, the Company's unquoted and AIM portfolio comprised 25
companies at a total cost of #17.5 million and a valuation of #16.8 million. In
addition, the Company had listed fixed interest investments of #1.4 million.
In total, the Company's unquoted and AIM portfolio increased in value by 23%
over the six months to 31 August 2003, compared to a rise of 28% in the FTSE AIM
index over the same period.
The Company's AIM portfolio increased in value by #2.5 million or 79%. All the
Company's AIM stocks, with one exception, performed strongly ahead of the AIM
index.
The Company's unquoted portfolio increased in value by #600,000 or 6%. This in
part reflects the increase in stock markets which has affected quoted PE
multiples, and therefore the value of investments valued on this basis, and also
the strong performance of specific portfolio companies. Many investments are,
however, relatively recent and valued at cost.
The Company benefited from a revaluation of its investment in Espotting Media UK
Limited as outlined in the Chairman's Statement. The board of directors have
also accepted our recommendations to increase the value of the Company's
investments in Espresso Broadband, Ashcol, Linguaphone, and Copyright Promotions
Group following improved performance. Offsetting this, we have taken a further
provision against the Company's investment in Horncastle Industries to reflect
continued underperformance from one of its divisions.
Prospects
We continue to invest time in our existing portfolio companies and seek
attractive exit/investment opportunities, whilst at the same time ensuring
continued compliance with the Venture Capital Trust regulations. Whilst it is
too early to predict an outcome for individual investments, the progress made by
stock markets in general and our portfolio companies in particular, gives us
grounds to be cautiously optimistic about the long term prospects for the
Company as a whole.
Beringea Limited
14 November 2003
INVESTMENT PORTFOLIO
At 31 August 2003
Book Cost Valuation % of net
assets
#000 #000
Qualifying holdings
Cardpoint plc * 1,136 1,893 10.2
UBC Media Group plc * 1,101 1,389 7.5
Ashcol Limited 1,000 1,127 6.1
LFR plc (t/a Loch Fyne Restaurants) 1,000 1,000 5.4
Nectar Taverns Plc 1,000 1,000 5.4
Notability Solutions Limited 1,000 1,000 5.4
SPC International Limited 950 950 5.1
Espresso Broadband Limited 1,146 885 4.8
Zenith Group Limited 800 800 4.3
mergermarket Limited 780 780 4.2
Oasis Healthcare plc * 670 740 4.0
Ma Potter's Limited 700 700 3.8
Linguaphone Group plc 605 605 3.3
Horncastle Industries Limited 1,001 600 3.3
Pilat Media Global plc* 315 585 3.2
Centurion Electronics plc* 137 369 2.0
Sports Holdings Limited 800 361 2.0
Chiaros Holdings Limited (t/a TMI) 800 280 1.5
VI Group plc* 250 180 1.0
Transcomm plc* 380 97 0.5
ID Data plc* 262 27 0.1
Bond iT Limited 500 0 0.0
Total qualifying holdings 16,333 15,368 83.1**
Non-qualifying holdings
Espotting Media (UK) Limited 333 626 3.4
Copyright Promotions Group Limited 266 582 3.1
Baby Innovations S.A. (t/a Steribottle) 594 178 1.0
Total non-qualifying holdings 1,193 1,386 7.5
Total venture capital investments 17,526 16,754 90.6
Listed fixed interest investments 1,434 1,431 7.8
Total investments 18,960 18,185 98.4
Net current assets 303 1.6
Shareholders' funds 18,488 100.0
* Investment traded on the Alternative Investment Market ('AIM')
** Expressed as a percentage of the Company's net assets at 31 August 2003 as
distinct from total investments (as defined in the Venture Capital Trust
regulations) which are the basis for the calculation of the qualifying
investment totals referred to in the Chairman's Statement.
UNAUDITED STATEMENT OF TOTAL RETURN (incorporating the Revenue Account)
For the six months ended 31 August 2003
Six months ended 31 Six months ended 31 Year ended 28
August 2003 August 2002 February 2003
Revenue Capital Total Revenue Capital Total Revenue Capital Total
#000 #000 #000 #000 #000 #000 #000 #000 #000
Gains/(losses) on investments
- realised - (81) (81) - (628) (628) - (761) (761)
- unrealised - 3,078 3,078 - (1,275) (1,275) - (2,790) (2,790)
Income 181 - 181 440 - 440 662 - 662
Investment management fee (43) (130) (173) (57) (171) (228) (105) (315) (420)
Other expenses (114) - (114) (119) - (119) (222) - (222)
Return on ordinary activities before 24 2,867 2,891 264 (2,074) (1,810) 335 (3,866) (3,531)
taxation
Tax (charge)/credit on ordinary - - - (53) 34 (19) (67) 67 -
activities
Return on ordinary activities after 24 2,867 2,891 211 (2,040) (1,829) 268 (3,799) (3,531)
taxation
Dividends - - - (219) - (219) (219) - (219)
Transfers to/(from) reserves 24 2,867 2,891 (8) (2,040) (2,048) 49 (3,799) (3,750)
Return per ordinary share
Basic and fully diluted 0.1p 13.1p 13.2p 1.0p (9.3)p (8.3)p 1.2p (17.3)p (16.1)p
The revenue column of this statement is the profit and loss account of the
Company. 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 2003
31 August 31 August 2002 28 February 2003
2003
#000 #000 #000
Fixed assets
Investments - unquoted 11,474 5,577 8,671
Investments - AIM quoted 5,280 3,756 3,213
Fixed interest 1,431 6,537 2,629
18,185 15,870 14,513
Net current assets 303 1,488 1,126
Net assets 18,488 17,358 15,639
Capital & reserves
Share capital 1,092 1,097 1,096
Reserves 17,396 16,261 14,543
Equity shareholders' funds 18,488 17,358 15,639
71.4p
Net asset value per share 84.6p 79.1p
Notes
1. The unaudited interim financial statements for the six
months ended 31 August 2003 and 31 August 2002 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 2003 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. The financial information contained in this interim report
has been prepared on the basis of the accounting policies set out in the Annual
Report 2003. Unquoted investments are valued in accordance with British Venture
Capital Association (BVCA) valuation guidelines. New guidelines were issued by
the BVCA in June 2003. AIM quoted investments are valued at mid market prices
discounted, where necessary, to reflect any lack of liquidity. The Directors do
not believe a discount is appropriate at this time.
3. Returns per ordinary share are based on 21,893,566
ordinary shares, being the weighted average number of shares in issue during the
period. There were 21,848,155 ordinary shares in issue at 31 August 2003.
4. Earnings for the period should not be taken as a guide to
the results for the full year.
5. Copies of the Interim Report will be mailed to
shareholders and are available from the Registered Office of the Company at
17-18 Henrietta Street, London WC2E 8QH.
UNAUDITED CASH FLOW STATEMENT
For the six months ended 31 August 2003
Six months Six months Year
ended ended Ended
31 August 31 August 28 February
2003 2002 2003
#000 #000 #000
Net revenue from operating activities
Net revenue from ordinary activities before tax 24 265 335
Decrease in debtors 47 36 43
Decrease in creditors (23) (38) (55)
Management fees charged to capital (130) (171) (315)
Net cash (outflow)/inflow from operating (82) 92 8
activities
Financial investment
Purchases of investments (3,662) (5,957) (12,549)
Sales of investments 3,479 6,720 13,003
Net cash (outflow)/inflow from financial (183) 763 454
investment
Corporation tax paid - - (78)
Equity dividends paid - (285) (504)
Net cash (outflow)/inflow before financing (265) 570 (120)
Financing
Purchase of ordinary shares for cancellation (41) - (17)
Net cash outflow from financing (41) - (17)
(Decrease)/increase in cash in period (306) 570 (137)
Analysis of cash balance
At start of period 360 497 497
Net cash (outflow)/inflow for the period (306) 570 (137)
At end of period 54 1,067 360
This information is provided by RNS
The company news service from the London Stock Exchange
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