Foresight Ent Regulatory News (FTF)

11 Jun 2007 07:00

Foresight 4 VCT PLC11 June 2007 Summary • Net asset value per share as at 28 February 2007 was 101.5p (compared to 104.6p as at 28 February 2006 and 98.7p as at 31 August 2006). • An interim dividend of 2.5p per share was paid on 15 December 2006 (30 December 2005: 5.0p). • £7,524,000 of new share capital was raised during the year. • Nine new investments totalling £5.875m were made during the period: £750,000 in Ixaris Systems (electronic payment services); £400,000 in The Bunker Secure Hosting (high security IT managed service hosting), £825,000 in Auctioning4u (leading electronic auction facilitator), £450,000 in AIM listed Probability plc (mobile phone gaming), £400,000 in SkillsMarket (managing CV data for recruitment agencies), £850,000 in Aim-listed ZOO Digital Group plc (iDVD Authoring Software), £1000,000 in UTarget (Online advertising Services), £200,000 in Sindicatum Carbon Capital (generates, sells and trades Carbon Credits by capturing greenhouse gas (GHG) emissions in China) and £1,000,000 in Closed Loop London (recycling food-grade plastics). • Two realisations were achieved during the year, namely the sale of the business and assets of EnSeal Systems and the sale of The Casella Group's Measurement Division, together realising £598,000 in cash. Following its sale to Invitrogen in October 2004, DNA Research Innovations successfully achieved its final, seventh milestone, generating £925,000 in cash. A partial sale of 100,000 shares in Aim-listed Oasis Healthcare plc realised £14,000. • The Company invested £527,000 in follow-on funding rounds in two portfolio companies, namely EnSeal Systems (£77,000) before it was sold and Nomad Software (£450,000). Chairman's Statement Introduction I am pleased to report that your Company has continued to build on recentprogress during the year under review, successfully raising new capital andpursuing an active new investment programme. Reflecting recent investmentgains, an interim dividend of 2.5p per share was paid to shareholders on 15December 2006. Through the offer for subscription which closed on 5 April 2006, a total of£11,270,000 was successfully raised, of which £7,524,000 was raised in thecurrent year. These new funds are now being invested to take advantage of thestrong deal flow being generated by Foresight Venture Partners, the Company'sManager. The performances of a number of portfolio companies continued to improve,reflecting growing demand and strong sales pipelines, most notably NomadSoftware, EQOS, Adeptra, and Snell & Wilcox. Nomad Software is now enjoyingincreasing demand for its market leading debit and prepaid card processingservices while its original CORTEX card authorisation software business isperforming strongly. EQOS and Adeptra are enjoying growing sales of theire-procurement software and automated alert services respectively, the latter inparticular winning more contracts from major financial institutions in the USA,UK and now Europe. Trilogy is also enjoying increasing demand for its IP basedcommand and control communication system, Mercury, particularly from the defenceand Homeland Security sector in the USA. Snell & Wilcox, a leading manufacturerof broadcast electronics, also continues to see improved demand generating salesin excess of £36 million in its financial year to 31 March 2006. Regrettably, Healthgain entered into administration during the year after adecline in sales precipitated by the loss of a number of its sales teams causedirrecoverable cashflow problems. Investment activity The level of new investment activity was high during the year, with nine newinvestments being made totalling £5.875m: £750,000 in Ixaris Systems; £400,000in The Bunker Secure Hosting; £825,000 in Auctioning4U; £450,000 in Probabilityplc; £400,000 in SkillsMarket; £850,000 in ZOO Digital Group plc; £1,000,000 inUTarget Limited; £200,000 in Sindicatum Carbon Capital; and £1,000,000 in ClosedLoop London. Ixaris Systems Ltd operates a pre-paid electronic payment service integratedwith the VISA network for uses including international money transfer and onlinegambling. The Bunker Secure Hosting Ltd builds, hosts and manages high availability ITdata centres and platforms for companies and public bodies (including topfinancial, telecoms and web-centric companies) with particular focus on highlevels of physical and digital security. The company owns and leases 41,500square feet of high specification space mainly underground in ex-militarynuclear command centres at Ash, Greenham Common and Bawdsey. Auctioning4u Ltd is the UK's leading electronic auction facilitator. WithAuctioning4u acting as an outsourced consignment agent, companies, governmentorganisations, charities and individuals can sell unwanted items, collectables,return items or excess stock via eBay, Amazon or other electronic auctionplatforms - anonymously - without the hassle of writing descriptions, digitallyphotographing the goods, monitoring the auction process, dealing with paymentsand shipping and running the risk of non payment. Probability plc is an Aim-listed market leader in mobile phone gaming,particularly offering casino games on mobile phones, a market which is nowemerging and is expected to achieve significant growth. SkillsMarket Ltd manages CV data for recruitment agencies, outsourcing what isan important but troublesome task. It creates economies of scale because thedata it manages for each agency is common to many others, i.e. one candidate isknown to many agencies. The service is highly automated, using a mix ofproprietary and third-party software. ZOO Digital Group plc is an Aim-listed supplier of DVD-authoring software tofilm studios and post-production firms and to publishers and developers ofinteractive games on DVD (iDVDs). Authoring is the process of transferring videoand audio content to DVD and adding menus and links to allow consumers tonavigate the content. UTarget Ltd is the UK market leader in serving online 'subsite' advertising,which is the delivery of a full-page web advert behind the active web browserand visible only when the browser is closed. Online advertising is currentlythe fastest growing sector in advertising. Sindicatum Carbon Capital Ltd seeks to generate, sell and trade Carbon Creditsby developing and financing suitable projects for capturing greenhouse gas (GHG)emissions, principally in emerging markets such as China. The carbon tradingmarket is expected to exceed $150 billion by 2010, up from $10 billion in 2005. Closed Loop London Ltd is a business at the leading edge of plastics recyclingin the UK. The company is initially focused on producing food grade recycledPET (polyethylene terephthalate), although is likely to expand into a broaderrange of products and services. The latter includes offering large corporationsthe ability to source, collect and then recycle their packaging materials in aclosed loop - hence the Company's name. PET is the clear plastic used in overof 50% of soft drinks bottles, with over 300,000 tonnes used per annum in the UKwith none currently recycled as food grade. During the year, £527,000 was invested in follow-on funding rounds in twoportfolio companies, namely EnSeal Systems (£77,000) and Nomad Software(£450,000). The loans advanced to EnSeal Systems were repaid during August andSeptember 2006 following a sale of the company's business and assets to a largeUS corporation. In April 2006 Nomad raised £1.25 million and a further £1million in February 2007 by way of secured loans to support Nomad ProcessingServices' continuing sales growth and secure increasing numbers of new customermandates for its debit and prepaid card processing services. During the year to 28 February 2007, upward revaluations were made to seveninvestments totalling £2,031,000, largely as a result of improved tradingperformances. These included EQOS (£142,000), Adeptra (£237,000) and NomadSoftware (£1,161,000). Provisions totalling £2,054,000 were made against theprevious valuations of five companies, principally Healthgain (£1,260,000) as itwent into administration and VectorCommand (£388,000) reflecting poorer thanexpected performance. Realisation activity In May 2006, The Casella Group sold its sole remaining business, CasellaMeasurement Ltd to Ideal Industries Inc. This disposal enabled Casella toredeem a significant part of its shareholder loans, including £203,000 toForesight 4. In August 2006, the business and assets of EnSeal Systems weresold to a large US corporation. At completion, Foresight 4 received £395,000 inthe form of loan repayments, along with the entitlement to $300,000 held inescrow till April 2008. Additionally, after the first anniversary ofcompletion, Foresight 4 will be entitled to 10% of all sales of EnSeal Systems'related technologies for the following three year period. A partial realisationof 100,000 shares in Oasis Healthcare realised proceeds of £14,000 in theperiod. Excellent progress was made with DNA Research's earn out during the year withthe final seventh milestone being achieved, generating the maximum cash receiptsunder the earn out of £1.6 million. The sale, originally in October 2004, ofDNA Research Innovations to Invitrogen Corporation of the USA realised a totalof £3.1 million, compared with the original cost of investment of £1m. Balance Sheet The net asset value per share as at 28 February 2007 was 101.5p compared to104.6p as at 28 February 2006 and 98.7p as at 31 August 2006. Valuation policy Investments held by the Company have been valued in accordance with theInternational Private Equity and Venture Capital (IPEVC) guidelines developed bythe British Venture Capital Association and other organisations under whichinvestments are valued, as defined in the guidelines, at "fair value".Ordinarily, unquoted investments will be valued at cost for the 12 monthsfollowing the date of acquisition as the most suitable approximation of fairvalue unless there is an impairment in value during the period. Quotedinvestments and investments traded on AIM and PLUS (formerly OFEX) are valued atthe bid price as at 28 February 2007. The portfolio valuations are prepared byForesight Venture Partners and are subject to approval by the Board. Dividend The Company paid an interim dividend of 2.5p per Ordinary Share for the yearended 28 February 2007 on 15 December 2006. The Company's dividend policy is todistribute to shareholders income earned and capital gains realised as soon asis practicable. The Board is not recommending a final dividend for the year to 28 February 2007(2006: nil). Purchase of own shares It continues to be the Company's policy to consider repurchasing shares whenthey become available in order to provide liquidity for the Company's shares.During the period, the Company repurchased 335,000 shares at a cost of £304,000,during the year. Outlook The market in which Foresight 4 operates continues to be buoyant in terms ofpotential new investment opportunities as evidenced by the volume of newinvestments completed during the year and the current deal flow being reviewedby Foresight Venture Partners. Furthermore, merger and acquisition activityremains buoyant and Foresight Venture Partners will continue to activelyinvestigate liquidity opportunities within the portfolio. Annual General Meeting The Company's Annual General Meeting will take place on 3 July 2007. I lookforward to welcoming you at the meeting, which will be held in London. Peter DicksChairman8 June 2007 For further information please contact: Foresight Venture Partners, Tel: 01732 471800Teather & Greenwood, Tel: 020 7426 9000 Unaudited Profit and Loss Accountfor the year ended 28 February 2007 2007 2006 £'000 £'000 Investment income and deposit interest 541 158Investment management fees (588) (371)Other expenses (249) (259)Unrealised gain/(loss) on revaluation of 3,081 (1,363)investments Operating gain/(loss) 2,785 (1,835) (Loss)/gain on realisation of investments (2,917) 3,064 (Loss)/profit on ordinary activities before (132) 1,229taxation Tax on ordinary activities - - (Loss)/profit on ordinary activities after (132) 1,229taxation Balance transferred (from)/to reserves (132) 1,229 (Loss)/ profit on earnings per share (0.6)p 9.5p All items in the Profit and Loss Account derive from continuing operations. No operations were acquired or discontinued in the period. The Company has only one class of business and derives its income frominvestments made in shares, securities and bank deposits. Income frominvestments is recognised on an accruals basis. Unaudited Reconciliation of Movement in Shareholders' Fundsfor the year ended 28 February 2007 2007 2006 £'000 £'000 Opening shareholders' funds 16,566 12,185Net proceeds from share issues 7,113 4,447Shares repurchased in the year (304) (605)(Loss)/profit for the year (132) (1,229)Dividend (562) (690) Closing shareholders' funds 22,681 16,566 Unaudited Balance Sheetat 28 February 2007 2007 2006 £'000 £'000 Non-current assetsAssets held at fair value through profit or loss - 15,110 9,288investments Current assetsDebtors 289 1,575Money market and other deposits 7,335 4,209Cash 9 1,611 7,633 7,395 Creditors: amounts falling due within one year (62) (117) Net current assets 7,571 7,278Net assets 22,681 16,566 Capital and reservesCalled-up share capital 224 158Share premium account 9,176 2,132Capital redemption reserve 1,820 1,817Profit and loss account 11,461 12,459 Equity shareholders' funds 22,681 16,566 Net asset value per ordinary share 101.5p 104.6p Unaudited Cash Flow Statementfor the year ended 28 February 2007 2007 2006 £'000 £'000Cash flow from operating activitiesInvestment income received 89 181Deposit and similar interest received 412 6Investment management fees paid (652) (259)Secretarial fees paid (68) (61)Other cash payments (239) (1,639) Net cash outflow fromoperating activities and returns on investment (458) (1,772) Taxation - - Returns on investment and servicing of financePurchase of unquoted investments and investments (5,652) (2,527)quoted on AIMNet proceeds on sale of unquoted investments 598 5,758Net proceeds on deferred consideration 925 720Net proceeds on sale of quoted investments 14 45Loan guarantee called (150) -Repurchase of own shares (304) (513) Net capital (outflow)/inflow from financial investment (4,569) 3,483 Equity dividends paid (562) (690) Net cash (outflow)/inflow before financing and liquid resource (5,589) 1,021management Management of liquid resourcesMovement in money market and other deposits (3,126) (4,165) (3,126) (4,165)FinancingProceeds of fund-raisings 7,524 4,768Expenses of fund-raisings (411) (321) 7,113 4,447 (Decrease)/increase in cash (1,602) 1,303 Reconciliation of net cashflow to movementin net cash(Decrease)/increase in cash for the period (1,602) 1,303Net cash at start of period 1,611 308 Net cash at end of period 9 1,611 Reconciliation of operating loss to net cash flow from operating activitiesOperating gain/(loss) 2,785 (1,835)Unrealised (losses)/gain on investments (3,081) 1,363(Decrease)/increase in creditors (56) 18Increase in debtors (106) (1,318) Net cash outflow from operating activities (458) (1,772) Notes 1. The unaudited preliminary results have been prepared on the basis of accounting policies set out in the statutory accounts of the Company for the year ended 28 February 2007. All investments held by the Company are classified as 'fair value through profit and loss'. For investments actively traded in organised financial markets, fair value is generally determined by reference to Stock Exchange market quoted bid prices at the close of business on the balance sheet date. Unquoted investments have been valued in accordance with the International Private Equity and Venture Capital Valuation guidelines. Quoted investments are stated at bid prices. 2. These are not statutory accounts in accordance with section 240 of the Companies Act 1985 and are neither audited nor reviewed. The full audited accounts for the year ended 28 February 2006, which were unqualified, have been lodged with the Registrar of Companies. No statutory accounts in respect of any period after 28 February 2006 have been reported on by the Company's auditors or delivered to the Registrar of Companies. 3. Copies of the Annual Report will be mailed to shareholders and will be available for inspection at the Registered Office of the Company at ECA Court, South Park, Sevenoaks, Kent TN13 1DU. 4. The number of shares in issue at 28 February 2007 was 22,356,506 ordinary shares (2006: 15,840,149 ordinary shares). 5. The earnings per ordinary share is based on the loss from ordinary activities after taxation of £132,000 (2006: profit of £1,229,000) and on 22,047,046 (2006: 12,950,960) ordinary shares being the weighted average number of ordinary shares in issue during the year. 6. The Company paid an interim dividend of 2.5p per ordinary share on 15 December 2006 (30 December 2005: 5.0p per ordinary share). The Board is not recommending a final dividend for the year ended 28 February 2007. 7. The Annual General Meeting will be held at 12.30pm on 3 July 2007 at One Jermyn Street, London SW1Y 4UH END This information is provided by RNS The company news service from the London Stock Exchange