RNS Number:7143I
Talisman First Venture Cap Tst PLC
28 November 2007
Talisman First Venture Capital Trust PLC
Interim Announcement for the six months ended 30 September 2007 (unaudited)
The Directors announce the unaudited Interim Results for the six months ended 30
September 2007.
Highlights
* Increase of 3.9% in Net Asset Value ("NAV") since 30 September 2006
and a reduction of 5.6% since 31 March 2007.
* NAV of 50.3p per share ("pps") at 30 September 2007; compared to 48.4
pps at 30 September 2006 and 53.3pps at 31 March 2007.
* 17 significant unlisted and AIM investments made during the period
under review.
* Disposals generated net realised gain of #26,000 during the period
under review.
Performance
The NAV at 30 September 2007 was 50.3pps compared with 48.4pps as at 30
September 2006 and 53.3pps as at 31 March 2007. An increase of 3.9% has been
achieved over the year although a reduction of 5.6% has occurred in the
six-month period. The AIM/PLUS portfolio fell by 7.6% over the six months to 30
September 2007, which compares to a decrease in the FTSE AIM All-share Index of
2.5% for the same period.
However, since the change of Manager in March 2005, the performance of the AIM/
PLUS portfolio has seen a positive contribution of 32.6% overall, including an
increase of 35.3% from realisations, compared to a 2.6% rise in the FTSE AIM
All-share Index over the same period.
There is no venture capital trust index with which to compare the overall
performance of the Company and comparison with the FTSE AIM All-share Index is
becoming less relevant as the proportion of the portfolio invested in unlisted
entities has increased.
Unlisted investments held by Talisman First Venture Capital Trust are valued in
accordance with the International Private Equity and Venture Capital Valuation
Guidelines. Investments which are traded on the Alternative Investment Market
(AIM) or a recognised stock exchange are valued at their bid price.
Dividends
The Board is not proposing the payment of a dividend. The reserves position has
improved since the appointment of Aberdeen Asset Managers, but it is likely to
be some time before dividends are paid.
Co-investment
Talisman First Venture Capital Trust has co-invested with other funds managed by
the Aberdeen Asset Management Group in a number of investments and expects to
continue to do so. The advantage of this arrangement is that, by investing
together, the funds are able to underwrite a wider range and size of transaction
in more mature companies with more experienced management teams than they would
if they were investing on an individual basis. In addition, the Manager's staff
co-investment scheme has continued to co-invest alongside the Company in each
investment made during the period.
Regulatory changes
The overall VCT market declined by approximately two thirds in the year to 5
April 2007, which reflected the changes to the VCT regulations announced in the
last two Budgets. For funds raised after 5 April 2006, new restrictions on the
size of company in which VCTs can invest, where those investments are to be
treated as qualifying, were introduced. The regulations introduced in the 2007
Budget are particularly onerous in this regard, focussing on the maximum number
of employees in addition to placing a limit on the amount which can be raised
under venture capital schemes by the investee company. However, those new 2007
regulations do not affect the money raised originally by the Company, which can
continue to invest in the same scale and type of company that has helped drive
recent performance improvement.
Investment activity
We are pleased to report on a period when the strategy of investing in an
increasing number of unlisted companies capable of paying a yield continued. In
addition, new holdings were acquired in AIM and PLUS quoted companies and this
element of the portfolio continued to be actively traded as circumstances
allowed. During the six months to 30 September 2007, four new unlisted
investments were made together with a second round of investment in one existing
company and twelve significant AIM investments. A total of #726,000 was invested
during the six-month period. At 30 September 2007, the investment portfolio
consisted of forty-nine active unlisted and AIM/PLUS investments having a total
cost of #3.8 million.
The following investments were made during the reporting period:
Investment Date Activity Cost Website
Unlisted #'000
Adler & Allan June 2007 Handling, transport, clean-up 50
www.adlerandallan.co.uk
Holdings and disposal of oil and sewage
based waste.
Cyclotech May 2007 Provider of services to the 50 www.cyclotech.com
energy sector.
Darwen Group September Manufacturer of buses. 50 www.elcb.co.uk
2007
Funeral Services June 2007 Operator of funeral director 40 No website available.
Partnership businesses.
MS Industrial April 2007 Provider of industrial cleaning 74 www.msis.uk.com
Services and waste management services
to the oil and industrial
sectors.
Other unlisted investment 27
Total unlisted investment 291
AIM/PLUS
Bglobal April 2007 Provider of smart meters 25
www.bglobalmetering.com
allowing the remote reading of
electricity and gas meters.
Craneware September Provider of billing software to 35 www.craneware.com
2007 the US healthcare market.
DM April 2007 Direct marketing group 50 www.dmplc.com
specialising in the gathering
of consumer data.
Essentially July 2007 Sports marketing, media 49
www.essentiallygroup.com
Group management and professional
services group.
eXpansys April 2007 Seller of mobile and wireless 25 www.expansys.com
technology products over the
internet.
Formation Group June 2007 Provider of wealth management 50
www.formationgroupplc.com
and related professional
services.
Mount June 2007 Manufacturer, stockist and 49
www.mountengineering.com
Engineering distributor of engineering
products for a wide range of
industrial markets.
SDI Group June 2007 Specialist in the design, build 25 www.sdigroup.com
and support of automated
warehouse handling systems
within the retail distribution
sector.
Smart Identity September Developer of identity 25
www.smartidentity.co.uk
2007 management solutions.
St Helen's April 2007 Provider of corporate advisory 25
www.sthelenscapital.com
Capital services.
Universe Group April 2007 Provider of managed services 40
www.universe-group.co.uk
and solutions for petrol and
other retailers.
Worthington May 2007 Installation and maintenance of 33
www.worthington-nicholls.co.uk
Nicholls Group air conditioning units in the
hotel and retail markets.
Other AIM/PLUS investment 4
Total AIM/PLUS investment 435
Total investment 726
Portfolio developments
Unlisted investments
The unlisted portfolio now consists of fifteen active investments all of which,
with the exception of two, were purchased since the change of Manager, including
five in the period under review. It is standard practice for new unlisted
holdings to be valued at cost immediately following investment and for some time
thereafter until increased profitability justifies an increased valuation; for
all but one of the new investments this was the case. The exception is Homelux
Nenplas where an increased valuation based on expected profitability has been
adopted resulting in an increase of #15,000 in the value of the holding. In
addition to this unrealised gain, deferred consideration of #4,000 was paid
following the finalisation of the completion accounts for EIG (Investments)
following its sale earlier in the year. The total gain on the investment is now
#52,000 on the initial cost of #50,000. The new investments are trading in line
with expectations.
AIM/PLUS investments
During the reporting period, a total of #431,000 was invested in eleven new
holdings and one further substantial investment in an existing investee company.
The AIM/PLUS portfolio has continued to be actively managed during the reporting
period, resulting in net realised gains over cost of #22,000; details of these
transactions can be found in the table below. This includes a realised loss of
#75,000 on Fairground Gaming Holdings which completed its liquidation during the
reporting period. This outcome was known before 31 March 2007, the previous year
end, and the value of the investment had been fully provided for at that time.
This loss did not, therefore, further affect the NAV.
Realised gains were achieved for the six-month period totalling #22,000 which
are shown in the table below. However, these were offset by unrealised losses
against the valuations as at March 2007 amounting to #185,000 which were
sustained when the market became more unstable towards the end of the reporting
period. While substantial increases in valuation were achieved in a number of
AIM quoted investments, notably Hambledon Mining (#18,000) and Litcomp
(#20,000), and on Associated Network Solutions (#77,000) and St Helen's Capital
(#14,000), which are both traded on the PLUS market, these were offset by
reductions in the valuation of Brulines (Holdings) (#12,000), Gold Frost
(#10,000), Imprint (#31,000) and Worthington Nicholls Group (#236,000). The
reduction in Worthington Nicholls Group followed a trading statement, at the end
of June, which did not meet market expectations and the share price fell by 35%.
Since then, the company issued a further trading statement in mid August and a
further announcement in September after which the share price fell further to
the extent that the price at 30 September 2007 was only 14% of that on 31 March
2007. Management changes have followed these announcements, with further action
being sought by a group of institutional shareholders, including clients of the
Manager.
Realisations
The following table shows all sales from the investment portfolio made by the
Company during the reporting period:
Year acquired Complete/ partial Cost of shares Sales
Realised gain
exit disposed of proceeds
/(loss)
Unlisted #'000 #'000
#'000
EIG (Investments) 2005 Deferred - 4
4
consideration
AIM/PLUS
Bglobal 2007 Complete 25 27
2
Cohort 2006 Partial 31 45
14
Eleco 2006 Complete 10 12
2
eXpansys 2007 Partial 17 21
4
Fairground Gaming Holdings 2006 Complete 75 -
(75)
Inspicio 2005 Complete 29 50
21
K3 Business Technology 2007 Complete 50 64
14
Group
Neutrahealth 2005 Partial 21 24
3
Velosi 2006 Complete 43 56
13
Zetar 2005 Complete 21 36
15
Other AIM/PLUS disposals 16 25
9
Total AIM/PLUS disposals 338 360
22
Total portfolio disposals 338 364
26
Risk and uncertainties
The Board has reviewed the principal risks and uncertainties facing the Company
in the second half of its financial year and these are unchanged from those that
it faced at the start of the year. The Directors ensure that the Manager closely
monitors the Company's compliance with the venture capital trust regulations at
all times, in particular the 70% test. The Company had a qualifying level of 86%
at the period end, well above the required threshold. In order to minimise the
Company's exposure to investment risk, the Manager has built a portfolio of
investments in unlisted and AIM quoted companies across a diverse range of
industrial sectors in the United Kingdom.
Outlook
During the first half of 2007, the Company has invested in a number of new
transactions which offer significant medium-term return potential in a
continuation of the strategy of investing in yielding unlisted investments.
These new investee companies have all traded in line with their forecasts and
offer the prospect of substantial capital gains over the course of the next
three to five years.
The strategy applied by the Manager is to use its extensive UK network to
identify suitable private companies and invest the majority of the portfolio in
private equity transactions which offer growth potential and a healthy running
yield, in conjunction with an actively managed AIM/PLUS portfolio primarily
focused on new companies seeking an IPO on that market. AIM and PLUS quoted
investments are traded out as soon as market liquidity permits, providing the
opportunity for early capital gains. Going forward, the Manager believes that
this dual approach on AIM/PLUS and private equity provides the optimum medium to
long-term return model for VCT investors.
Talisman First Venture Capital Trust PLC
Summary of Portfolio Performance
Six months to 30 September 2007
Opening Purchases Sales Realised Unrealised gain
Closing Total
valuation proceeds gain over over opening
gain/
31 March opening valuation
valuation
2007 valuation 30
Sept 2007 (loss)
#'000 #'000 #'000 #'000 #'000
#'000 #'000
Legacy portfolio
Unlisted 220 - - - -
220 -
PLUS 326 - - - 77
403 77
AIM 144 - - - (4)
140 (4)
Total legacy 690 - - - 73
763 73
portfolio
Investments made after the appointment of Aberdeen Asset Managers
Unlisted 527 291 4 4 12
830 16
PLUS - - - 18
68 18
50
AIM 1,365 385 360 40 (273)
1,157 (233)
Total new 1,892 726 364 44 (243)
2,055 (199)
portfolio
Total portfolio* 2,582 726 364 44 (170)
2,818 (126)
*Total portfolio excludes items classified as "other investments" in the
Investment Portfolio Summary below.
Talisman First Venture Capital Trust PLC
Investment Portfolio Summary
As at 30 September 2007
% of
% of
equity held
Book cost Valuation % of net equity
by other
Investment # # assets held
clients*
Unlisted
Adler & Allan Holdings 50 50 1.9 0.2
40.8
Camwatch 75 75 2.8 1.4
42.0
Countcar 2 2 0.1 0.6
26.0
Cyclotech 50 50 1.9 0.7
19.3
Darwen Group 50 50 1.9 1.4
20.3
Enpure Holdings 50 50 1.9 0.2
79.4
Fotolec Technologies 250 135 5.0 4.2
-
Funeral Services Partnership 79 79 3.0 0.8
31.2
Homelux Nenplas 50 94 3.5 0.8
44.2
ID Support Services Holdings 74 74 2.8 0.8
32.5
Isle of Wight Cable & Telephone 222 - - 1.9
-
Company
Lime Investments 64 64 2.4 2.5
77.5
Martel Instruments Holdings 75 75 2.8 1.1
32.3
MS Industrial Services 74 74 2.7 1.3
43.8
Oliver Kay Holdings 70 70 2.6 0.4
19.6
Spectral Fusion Technologies 202 84 3.1 4.8
-
Trading account 25 24 0.9 -
-
Total unlisted 1,462 1,050 39.3
AIM/PLUS
Associated Network Solutions 193 403 15.1 3.2
-
Autoclenz 45 35 1.3 0.3
1.4
Avanti Communications Group 25 19 0.7 -
1.4
Award International Holdings 3 2 0.1 1.3
30.4
Bank Restaurant Group 150 33 1.2 0.9
-
Brulines (Holdings) 47 51 1.9 0.2
1.0
Cohort 21 27 1.0 0.1
0.2
Concateno 114 142 5.3 0.2
2.3
Craneware 35 42 1.6 0.2
2.5
Datong Electronics 47 40 1.5 0.3
1.7
Debts.co.uk 51 27 1.0 0.1
0.3
DM 47 47 1.8 0.2
1.3
Essentially Group 49 48 1.8 0.9
7.2
eXpansys 8 8 0.3 -
0.3
Flightstore Group 100 2 0.1 -
-
Formation Group 50 57 2.1 0.1
0.3
Gold Frost 43 27 1.0 0.2
1.2
Hambledon Mining 40 77 2.9 0.1
0.2
Hasgrove 49 58 2.2 0.2
1.9
Imprint 52 17 0.6 -
0.5
Individual Restaurant Company 38 54 2.0 0.1
1.1
Interactive Digital Solutions 368 - - 7.7
-
Invocas 25 23 0.9 0.1
0.3
Leisure & Gaming 43 5 0.2 0.1
0.6
Litcomp 50 92 3.4 -
4.9
Lo-Q 194 52 1.9 1.3
-
Mattioli Woods 7 16 0.6 -
0.2
Mount Engineering 49 46 1.7 0.3
2.9
Neutrahealth 9 10 0.4 0.1
1.8
SDI Group 25 26 1.0 0.1
0.9
Smart Identity 25 29 1.1 3.3
23.3
Sport Media Group 41 40 1.5 0.1
1.0
St Helen's Capital 25 39 1.5 1.1
8.1
Universe Group 40 40 1.5 0.5
2.1
Work Group 101 97 3.6 0.5
2.8
Worthington Nicholls Group 105 37 1.4 0.2
1.4
Total AIM/PLUS 2,314 1,768 66.2
Other investments
Net current liabilities/cash (148) (148) (5.5)
Total assets 3,628 2,670 100.0
*Other clients of the Aberdeen Asset Management Group.
Talisman First Venture Capital Trust PLC
Income Statement
Six months to 30 September 2007 (unaudited)
Revenue Capital Total
#'000 #'000 #'000
Gains/(losses) on investments
realised - 50 50
unrealised - (176) (176)
Investment income and deposit income 46 - 46
Investment management fees (11) (46) (57)
Performance fees (2) (9) (11)
Other expenses (10) (1) (11)
Net return/(loss) on ordinary 23 (182) (159)
activities before taxation
Tax on ordinary activities - - -
Return/(loss) attributable to Equity 23 (182) (159)
Shareholders
Return per Ordinary Share (pence) 0.4 (3.4) (3.0)
(Note 3)
Talisman First Venture Capital Trust PLC
Income Statement
Six months to 30 September 2006 (unaudited)
Revenue Capital Total
#'000 #'000 #'000
Gains/(losses) on investments
realised - 98 98
unrealised - (126) (126)
Investment income and deposit 22 - 22
income
Investment management fees (57) - (57)
Performance fees - - -
Other expenses (16) - (16)
Net return/(loss) on ordinary (51) (28) (79)
activities before taxation
Tax on ordinary activities - - -
Return/(loss) attributable to (51) (28) (79)
Equity Shareholders
Return per Ordinary Share (pence) (1.0) (0.4) (1.4)
(Note 3)
Talisman First Venture Capital Trust PLC
Income Statement
Year to 31 March 2007 (audited)
Revenue Capital Total
#'000 #'000 #'000
Gains/(losses) on investments
realised - (192) (192)
unrealised - 529 529
Investment income and deposit 48 - 48
income
Investment management fees (114) - (114)
Performance fees - (46) (46)
Other expenses (42) - (42)
Net return/(loss) on ordinary (108) 291 183
activities before taxation
Tax on ordinary activities - - -
Return/(loss) attributable to (108) 291 183
Equity Shareholders
Return per Ordinary Share (pence) (2.0) 5.5 3.5
(Note 3)
The total column of this statement is the Profit and Loss Account of the Company.
The accompanying Notes are an integral part of the Financial Statements.
Talisman First Venture Capital Trust PLC
Reconciliation of movements in Shareholders' funds
Six months to Six months to
30 September 2007 30 September 2006
Year to
31
March 2007
(unaudited) (unaudited)
(audited)
#'000 #'000
#'000
Opening Shareholders' funds 2,829 2,646
2,646
Return/(loss) attributable to Equity (159) (79)
183
Shareholders
Closing Shareholders' funds 2,670 2,567
2,829
Talisman First Venture Capital Trust PLC
Balance Sheet
30 September 30 September
31 March
2007 2006
2007
(unaudited) (unaudited)
(audited)
#'000 #'000
#'000
Fixed assets
Investments 2,818 2,244
2,618
Current assets
Debtors 37 60
9
Cash and overnight deposits 56 300
300
93 360
309
Creditors
Amounts falling due within one year 241 37
98
Net current (liabilities)/assets (148) 323
211
Net assets 2,670 2,567
2,829
Capital and reserves
Called up share capital 2,655 2,655
2,655
Share premium 2,389 2,389
2,389
Capital reserves - realised (418) (76)
(412)
Capital reserves - unrealised (958) (1,437)
(782)
Revenue reserve (998) (964)
(1,021)
Net assets attributable to Equity 2,670 2,567
2,829
Shareholders
Net Asset Value per Ordinary Share (pence) 50.3 48.4
53.3
The accompanying Notes are an integral part of the Financial Statements.
Talisman First Venture Capital Trust PLC
Cash Flow Statement
Six months to
Six months to 31 September 2006
Year to
30 September 2007
31 March 2007
(unaudited) (unaudited)
(audited)
#'000 #'000
#'000
Reconciliation of operating profit/(loss) to net
cash inflow from operating activities
Net revenue from ordinary activities before tax 23 (51)
(108)
Expenses charged to capital (56) -
(46)
(Increase)/decrease in debtors (28) 121
172
Increase/(decrease) in creditors 143 (54)
7
Net cash inflow from operating activities 82 16
25
Taxation - -
-
Financial investment
Purchase of investments (755) (1,008)
(1,984)
Sale of investments 429 982
1,949
Net cash outflow from financial investment (326) (26)
(35)
Equity dividends paid - -
-
Decrease in cash (244) (10)
(10)
Reconciliation of net cash flow to movements in
net funds
Decrease in cash for the period (244) (10)
(10)
Net funds at the start of the period 300 310
310
Net funds at the end of the period 56 300
300
The accompanying Notes are an integral part of the Financial Statements.
Talisman First Venture Capital Trust PLC
Notes to the Financial Statements
1. Accounting policies
The financial information for the six months to 30 September 2007 and the six
months to 30 September 2006 comprises non-statutory accounts within the meaning
of Section 240 of the Companies Act 1985. The financial information contained in
this report has been prepared on the basis of the accounting policies set out in
the Annual Report and Financial Statements for the year ended 31 March 2007.
The results for the year ended 31 March 2007 are extracted from the full
accounts for that year, which received an unqualified report from the Auditors
and have been filed with the Registrar of Companies.
In prior accounting periods, 100% of the investment management fees were charged
through the revenue account, with performance fees being charged 100% against
realised capital reserves to reflect the basis on which they had been
calculated. For the current financial year, the Board has decided to charge
expenses to realised capital reserves where a connection with the maintenance or
enhancement of the value of the Company's investments can be demonstrated. In
this respect, the Board has decided to allocate 80% of the investment management
fee, performance fee and finance costs of borrowing to realised capital
reserves, with the remainder being charged to revenue in order to reflect the
Company's investment policy and the Board's expectations for the long-term
balance of returns, in the forms of capital gains and income respectively.
2. Statement of changes in equity
Share Capital Capital reserve Revenue reserve
reserve - - unrealised
premium realised
account
#'000 #'000 #'000 #000
At 31 March 2007 2,389 (412) (782) (1,021)
Gains on sales of - 50 - -
investments
Net decrease in value of - - (176) -
investments
(Loss)/profit on ordinary - (56) - 23
activities
At 30 September 2007 2,389 (418) (958) (998)
3. Returns per Ordinary Share
Six months to Six months to
Year to
30 September 2007 30 September 2006
31 March 2007
#'000 #'000
#'000
The returns per Ordinary Share are based
on the following figures:
Revenue return 23 (51)
(108)
Capital return (182) (28)
291
Total return (159) (79)
183
Weighted average number of Ordinary 5,309,102 5,309,102
5,309,102
Shares in issue
Revenue return per Ordinary Share 0.4p (1.0p)
(2.0p)
Capital return per Ordinary Share (3.4p) (0.4p)
5.5p
Return per Ordinary Share (3.0p) (1.4p)
3.5p
The NAV per Ordinary share has been calculated using the number of Ordinary
Shares in issue at 30 September 2007 of 5,309,102.
Talisman First Venture Capital Trust PLC
Directors' responsibility statement
The implementation of the EU Transparency Obligations Directive and the
associated amendments to the rules laid down by the UK Listing Authority require
the Directors to confirm their responsibilities in relation to the preparation
and publication of the Interim Management Report and Financial Statements.
The Directors confirm that, to the best of their knowledge:
* the Financial Statements for the six months ended 30 September 2007 have
been prepared in accordance with applicable accounting standards and with
the Statement of Recommended Practice "Financial Statements of Investment
Trust Companies" ("the SORP") issued in December 2005;
* the Interim Management Report includes a fair review of the information
required by DTR 4.2.7R in relation to the indication of important events
during the first six months, and of the principal risks and uncertainties
facing the Company during the second six months, of the year ending 31
March 2008; and
* the Interim Management Report includes adequate disclosure of the
information required by DTR 4.2.8R in relation to related party
transactions and any changes therein.
Copies of this announcement will be available to the public at the registered
office of the Company, One Bow Churchyard, Cheapside, London; at the office of
Aberdeen Asset Management PLC, 149 St Vincent Street, Glasgow; and, in due
course, on the website of Aberdeen Asset Management PLC at
www.aberdeen-asset.com. A full copy of the Interim Report and Financial
Statements will be printed and issued to Shareholders.
On behalf of the Board
Aberdeen Asset Management PLC
Secretary
28 November 2007
This information is provided by RNS
The company news service from the London Stock Exchange
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