TRI Capital Ltd - Chairman’s Report - March 2009
If 2007 was one of consolidation then 2008 was clearly a year of progress for TRI Cap and its members, with a considerable increase in the number and value of deals done and fundings completed.
In headline terms our members supported four new companies to the value of £474k which, together with co-funders, brought the amount invested during the year to nearly £2m. TRI Cap members invested a further £670k in seven existing investments. With co-funders, this brought investment during the year in support of our growing portfolio of businesses to £6m.
Together with investments in previous years, the total invested by TRI Cap members since inception is £3.3m, which is boosted to an impressive £12.4m when co-funders are included. We were delighted to welcome new investments in Turnbull & Scott, Factonomy, Exterity and Biopta, and to provide increased financial support for Lab 901, Ectopharma, GSS, Syntropharma, Lamellar, Touchbionics and Antoxis. While during the year we lost one investment and the investment in Intrallect was exchanged for shares in Leading Software, the majority of our businesses appear to be progressing satisfactorily,
Organisation
2008 started with the decision to advertise for a suitably qualified Investment Manager to strengthen the overall management of the business. We were fortunate to acquire the services of Kathy Greenwood who, thanks to generous financial support provided by LINC, started working with us at the beginning of June. The quality of Kathy’s professional approach to the issues of angel investment and her detailed knowledge of the sector has been of considerable benefit to our activities in the second half of a very busy investment year. TRI Cap also continues to enjoy very active support from Andy Purves and others in the Andy Purves Ltd office, and for this we are most grateful.
Finance
As a result of the higher level of investment activity, turnover for the year increased from £114k to £187k (64%) and, in spite of some increase in costs, a profit of £43k was achieved before a minimal tax charge. While this result, and the consequent strengthening of the balance sheet, was welcome it has to be seen in the light of the substantial assistance provided by LINC in covering all of Kathy Greenwood’s costs and other direct financial support.
Membership
We are also grateful for the continued strong support of our Core and Club members. Membership communications through our website have been much improved during the year, much thanks to Stuart Richardson, Eileen Prior of Prior PR and staff at Andy Purves Ltd, and this is an area in which we can expect further helpful developments. The Board was also greatly encouraged by the positive response from members to the membership ‘Survey of Investment Intentions’ which took place in November. The positive response and direction provide by the responses of more than 90% of the membership was extraordinarily valuable as an aid to planning the direction of our future investment.
Linkages and Advisors
TRI Cap does not operate in isolation and the Board has successfully encouraged the creation of links with other angel groups and associated organisations. The most important of these perhaps is with the Scottish Enterprise Co-investment Fund (SCIF) which has continued to co-fund many of our investments and fundings on a significant scale. We have also benefited from co-funding agreements during the year including Archangels, Braveheart, Barwell, HVC and Sigma, (to mention but some) and continue to be grateful for the cooperative spirit in which these arrangements are conducted. We pay tribute to the continuing excellent service provided to TRI Cap by Stuart Hendry and his legal colleagues at MBM Commercial.
We remain concerned about the ever increasing cost of professional transactional fees, and are pleased to see that this element of angel activity is to be investigated by Nelson Gray and others under the auspices of LINC.
Social Activities
As has been said before membership of TRI Cap is not solely about investing, and your Board seeks to leaven the pain of lengthy monthly meetings with a round of social activities for those who wish to be involved. In April some members and wives joined Joe Scott-Plummer in supporting the Princess Royal’s Trust for Carers Race Day at Kelso Races. Then in June we supported Francis Hamilton and the Borders Book Festival. September saw another Golf challenge match at the Roxburghe Golf club. Finally after our December Meeting members and their spouses were kindly entertained at the lovely home of Francis and Catherine Hamilton in Melrose: this was followed by our customary enjoyable dinner for Andy Purves and colleagues, giving us an opportunity to thank them for all their hard work during a busy year.
The Year Ahead
It seems likely that the present world wide recession will have an impact on performances going forward, and that there will be calls from some investee companies for additional funding. During this year we expect to have an increasing focus on improving the support and hopefully, therefore, the performance of our investee companies in any way we can and where appropriate. We also hope to encourage further cooperation between these companies, especially in the area of Life Sciences where there should be significant potential mutual interest.
Here I should also mention the part played by Club member Gerry McGettigan who plays an important role as the TRI Cap Life Sciences ‘Czar’ in overseeing the activities of our LS businesses and also in explaining in simple terms the highly technical activities in which many of them are involved and which most find difficult to understand. The membership survey encouraged us to believe that we should still be looking for some new deals, albeit funding of our existing portfolio was to be a priority. In practice we have got off to a brisk start with new fundings agreed for Centeo and one other. Others will surely follow – there remains no lack of opportunity.
Robert Dick - Chairman