Foresight Ent Regulatory News (FTF)

31 Oct 2007 08:19

Foresight 4 VCT PLC31 October 2007 Announcement of half-yearly financial results for the six months ended 31 August2007. This announcement constitutes the Half-yearly Financial Report and copiescan also be accessed via www.foresightvct.com. Foresight 4 VCT plc (the 'Company'), which invests in fast-growing unquotedtechnology-based companies in the United Kingdom, today announces thehalf-yearly financial results for the six months ended 31 August 2007. ThisHalf-yearly Financial Report was approved by the Board on 30 October 2007. Summary• Net Asset Value per share as at 31 August 2007 was 103.2p (comparedto 101.5p as at 28 February 2007 and 98.7p as at 31 August 2006).• An interim dividend of 5.0p per share to be paid on 28 December 2007.• Four new investments totaling £2,147,000 were made in TFC Europe(£500,000), Iskra Wind Turbines (£750,000), O-Gen (UK) (£630,000) and GlobalImmersion (£267,000).• Eight follow-on investments totaling £1,270,000 were made in TrilogyCommunications (£325,000), The Bunker Secure Hosting (£227,000), Auctioning4u(£196,000), Adeptra (£47,000), Advanced Visual Technology (£25,000), ZOO Digital(£300,000), SkillsMarket (£140,000) and alwaysON (£10,000)• Proceeds of £539,000 realised from the sale of the remaining holdingin Oasis Healthcare plc Chairman's Statement I am pleased to report that your Company has continued to build on recentprogress during the six months under review, is continuing an active newinvestment programme as well as realising both legacy and more recentinvestments from within the portfolio. Reflecting recent investment gains, I ampleased to announce that an interim dividend of 5.0p per share will be paid toshareholders on 28 December 2007. Although Foresight 4's holding in Oasis Healthcare was relatively small, whencombined with the holdings of other Foresight VCTs, Foresight Group funds heldover 10% of Oasis' share capital, enabling significant influence to be exertedon the sales process and ultimately in achieving a particularly attractive finaloffer. In my report 12 months ago, Oasis was valued at 28p per share but wassold during July for 94p per share, generating proceeds of approximately£539,000 for Foresight 4. Foresight 4 invested £200,000 in the management buy-out of Covion Holdings inMay 2005. This was the first new investment by your Company following ForesightGroup's appointment as Investment Manager in July 2004. In the period since theinvestment was made, Covion has grown its turnover from £10 million per annum toa current annualised rate in excess of £30 million. Subsequent to the periodend, Covion was sold to Balfour Beatty for total proceeds of £33 million ofwhich Foresight 4 will receive some £850,000 over 4 times its originalinvestment of £200,000. The performance of a number of portfolio companies continued to improve,reflecting growing demand and strong sales pipelines, most notably NomadPayments, Adeptra and Trilogy. Nomad Payments is now enjoying increasing demandfor its market leading debit and prepaid card processing services while NomadCORTEX, the original card authorisation software business is performingparticularly strongly. Adeptra is enjoying growing sales for its automatedalert services, in particular winning more contracts from major financialinstitutions in the USA, UK and now Europe. Trilogy is also enjoying increasingdemand for its IP based command and control communication system, Mercury,particularly from the defence and Homeland Security sectors in the USA. Auctioning4u has refocused its business away from the consumer market towardsdeveloping its own specialist online auction platforms, the first of whichToyMart (serving the collectible toy market) is making good progress and,additionally, it is selling its ClockWorx workflow software suite to otheronline product resellers. Investment activity The level of new investment activity remained high during the six months underreview, with four new investments being made totalling £2,147,000: £500,000 inTFC Europe; £750,000 in Iskra Wind Turbines; £630,000 in O-Gen (UK); and£267,000 in Global Immersion. TFC Europe supplies and designs injection moulded technical fasteners and ringand spring products to customers across a wide range of industries, includingaerospace, automotive, hydraulics and petrochemicals. Iskra Wind Turbines is a Loughborough based manufacturer of tree-sized windturbines, typically 5.4m rotor diameter on a 12m high tower. The company hasdeveloped a high efficiency turbine suitable for volume manufacture that has thebest price/performance of any tree-sized turbine currently commerciallyavailable. O-Gen's business is to develop, build, own and operate plants which convertorganic matter into combined heat and power ("CHP"). The market is driven bygovernment regulation and incentives, specifically landfill tax which iscurrently £24 per tonne increasing at £8 per tonne per annum and is drivingwaste operators towards cheaper and more efficient methods of waste disposal.The electricity generated from processing the organic matter will be sold to theNational Grid and as a renewable energy source attracts Renewable ObligationCertificates ("ROCs") which generate further revenue. According to UKlegislation, 10% of power generated in the UK must be from renewable sources by2010 compared to 4% generated currently. Global Immersion, a management buy out completed in July, designs and installssophisticated projection systems in planetariums and immersive theatresWorldwide and provides related maintenance services. During the period, £1,270,000 was invested in follow-on funding rounds in eightportfolio companies, namely Trilogy Communications (£325,000), ZOO Digital(£300,000), The Bunker Secure Hosting (£227,000), Auctioning4u (£196,000),SkillsMarket (£140,000), Adeptra (£47,000), Advanced Visual Technology (AVT)(£25,000) and alwaysON (£10,000). ZOO Digital (AIM listed) raised furthercapital to fund a significant acquisition, which should help the company achievetraction in its target markets, particularly the USA. More recent investmentsTrilogy, The Bunker, Auctioning4u and Skillsmarket required follow-on fundingrounds as they continued to develop their product offerings following Foresight4's original investment. The Adeptra fundraising was to support theirtransition to a direct sales model and support strong growth (sales increasedfrom $8.8 million in 2005 to $12 million in 2006), including winning their first3 mainland European customers. Realisations In July 2007, the Company's entire holding in Oasis Healthcare was sold,realising proceeds of £539,000 or 94p per Oasis Share. The sale of Oasis toDuke Street Capital followed several bids and counter bids from partiesinterested in buying Oasis' expanding portfolio of dental practices andrepresents a significant premium to the share price of 28p per share just 12months ago. On 17 October 2007, the Company sold its entire holding in Covion to BalfourBeatty, which returned proceeds of £850,000 on an original investment of£200,000 made just over two years ago, in May 2005. Net Asset Value The net asset value per share as at 31 August 2007 increased to 103.2p (compared to 101.5p as at 28 February 2007 and 98.7p as at 31 August 2006). Dividend The Company's dividend policy is to aim to distribute to shareholders a steadyflow of dividends from income and realised capital gains. Reflecting recent realised gains, the Board has declared an interim dividend of5.0p per share for the year ending 28 February 2008 to be paid on 28 December2007. The ex-dividend date will be 19 December 2007 and the record date will be21 December 2007. 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 31 August 2007. The portfolio valuations are prepared byForesight Group and are subject to approval by the Board. Share Issues and Share Buybacks The Board is pleased to announce its intention to issue a prospectus (linkedwith other Foresight VCTs) for each to raise up to £2.5 million in the currentand next tax years. This will enable your Company to remain an active investorin the current market and take advantage of new opportunities currently beingreviewed by Foresight Group. 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 405,167 shares at a cost of £363,000. Change of Name The Investment Manager changed its name from Foresight Venture Partners toForesight Group on 1 October 2007. Outlook The market in which Foresight 4 operates continues to be encouraging in terms ofpotential new investment opportunities, as evidenced by the volume of newinvestments completed during the period and the current deal flow being reviewedby Foresight Group. Furthermore, merger and acquisition activity continues tobe buoyant as witnessed by the realisations noted above. To date, there hasbeen no significant fallout from the recent credit crunch on the levels ofmerger and acquisition activity at the smaller end of the market in whichForesight 4 operates and with that in mind, Foresight Group will continue toactively pursue potential realisations from within the portfolio. Peter DicksChairman30 October 2007 Descriptions of Top Ten Investments by Value Nomad Payments Ltd is a leading provider of innovative card processing services and card paymentprocessing software based in London. Nomad Payments provides outsourced cardprocessing services for issuers of debit and prepaid cards and is a leader inthe latter emerging but fast growing market in the UK and Europe. Nomad CORTEXsupplies sophisticated retail payments software and systems used in handlingpayments via debit and credit cards and ATMs, principally to retail banks inCentral and Eastern Europe, Africa and the Middle East. Nomad continues to winmore customers and launch more prepaid card programmes. VectorCommand Ltd is a globally recognised authority on incident command and continues to secureorders for its core Fire Simulation and Training suites. Thirty-six UK FireBrigades and eight Australian Fire Authorities have deployed the system, andother users are based in Europe, the USA, Canada and the West Indies. Thecompany is expanding its product portfolio and the introduction of multi-agencyEmergency Management tools has led to sales growth over the last 12 months,especially overseas and further growth is expected in the USA through its USpartner. Eqos Ltd develops and markets e-collaboration and CRM (customer relationship management)software for business to business transactions, principally sold to major UKretailers for improving the efficiency of their supply chains. A significantproportion of annual sales revenue comes from repeat orders from existingcustomers but annual sales growth depends on winning a small number of ordersfrom new customers. Following the establishment of a US sales office, goodprogress has been made in winning orders from major retailers in the USA. ZOO Digital Group plc supplies authoring software and services to film studios and post-productionfilms and to publishers and developers of interactive games on DVD. Authoring isthe process of transferring video and audio content to DVD and adding menus andlinks to allow consumers to navigate the content. In August 2007, ZOO acquiredthe authoring business of Scope Seven, providing the group with a base near itskey customers in California and a broader service offering. UTarget plc UTarget is the UK market leader in serving the UK online advertising market,specialising in video advertising. The company is now serving in excess of 9million video ads per month including for blue chip clients such as BMW. Thecompany is also the UK market leader in online subsite advertising whereby fullpage ads are served behind the active browser. Closed Loop London Ltd is the first plant in the UK to recycle waste PET plastic bottles into foodgrade packaging material. Following a £12m private and public sector fundingissue led by Foresight Venture Partners, the 35,000 tonne capacity plant will bebuilt in Dagenham and is expected to be fully operational during the first halfof 2008. Advanced Visual Technology Ltd develops and markets retail space management software and interactive hand-heldmobile store planners and now has 50 customers worldwide including Tesco, WHSmith, Barclays and HMV in the UK and Office Depot, Staples and KMart in theUSA. Its products deliver impressive financial improvements for customers. Thecompany continues to win new customers worldwide while the prospects for thesale of the new hand-held planner are promising. Trilogy Communications Ltd is a world-class supplier of Audio Communications and Infrastructure equipmentto the broadcast, defence, emergency management and commercial and industrialsectors. Trilogy has a reputation for innovative design, ease of operation andreliability. The company's products and systems are used in more than 40countries around the world and excellent progress is being made with US defencecontractors which generates significant strategic value for the business. Auctioning4U Ltd through Auctioning4U, companies, individuals and government organisations cansell items via eBay, Amazon or other electronic auction platforms - anonymously- without the inconvenience of writing descriptions, digitally photographing thegoods, monitoring the auction process or dealing with payments and shipping.Auctioning4U has developed the first of its own specialist auction sites Toymart(addressing the collectable toy market) utilising its proprietary Clockworxworkflow software. Covion Holdings Ltd provides total facilities management services ('TFM'), or in its terminology 'Facilities Infrastructure Services' ('FIS'), to private sector clients in theoffice and industrial sectors. Covion manages all the client's facilities andsubcontracts specific services where necessary. It seeks to form unique andclose partnerships with its clients in the form of joint executive boards towhich its site-based FIS manager reports. Key clients are Britvic, Logica,Anglian Windows and Sara Lee. The Covion business was sold to Balfour BeattyGroup on 17 October 2007, realising £855,000 of proceeds for Foresight 4 againstthe original investment cost of £200,000 and 31 August 2007 valuation of£808,294. Investment Summary 31 August 28 February Amount 2007 Valuation Amount 2007Investment invested Valuation Methodology Invested Valuation Nomad Payments Ltd 1,769,968 2,347,047 Discounted revenue 1,769,968 2,347,047 multipleVectorCommand Ltd 1,468,750 1,550,400 Price of recent 1,468,750 1,550,400 funding roundEqos Ltd 1,050,000 1,152,011 Discounted revenue 1,050,000 1,152,011 multipleAuctioning4u Ltd 1,021,000 1,021,000 Cost 825,000 825,000ZOO Digital Group plc 1,150,000 1,108,590 Bid price 850,000 808,590Utarget plc 1,000,000 1,000,000 Cost 1,000,000 1,000,000Closed Loop London Ltd 1,000,000 1,000,000 Cost 1,000,000 1,000,000Advanced Visual Technology Ltd 2,032,183 939,730 Discounted revenue 2,007,183 939,730 multipleTrilogy Communications Ltd 825,000 825,000 Cost 500,000 500,000Covion Holdings Ltd 200,000 808,294 Discounted offer 200,000 536,370 proceedsSkillsMarket Ltd 539,998 762,220 Price of recent 399,998 399,998 funding roundIskra Wind Turbines Ltd 750,000 750,000 Cost - -Ixaris Systems Ltd 750,000 750,000 Cost 750,000 750,000O-Gen UK Ltd 630,000 630,000 Cost - -The Bunker Secure Hosting Ltd 626,768 626,768 Cost 400,000 400,000TFC Europe Ltd 500,000 500,000 Cost - -Oled-T Ltd 1,010,000 441,701 Discounted revenue 1,010,000 441,701 multipleSnell & Wilcox (UK) Ltd 839,137 413,525 Discounted revenue 839,137 538,274 multipleProbability plc 450,000 307,894 Bid price 450,000 219,079Aigis Blast Protection Ltd 275,000 275,000 Cost 275,000 275,000Global Immersion Ltd 266,666 266,666 Cost - -Infrared Integrated Systems Ltd 250,005 250,005 Cost 250,005 250,005Adeptra Ltd 1,283,272 245,098 Discounted revenue 1,235,900 363,021 multiplealwaysON Group Ltd 210,070 210,070 Cost 200,000 200,000Sindicatum Carbon Capital Ltd 200,063 210,040 Price of recent 200,063 210,040 funding roundThe Casella Group Ltd 774,291 171,052 Discounted offer 774,291 171,052 proceedsHealthgain Solutions Ltd 1,299,989 - Nil Value 1,299,989 -Oasis Healthcare plc - - Sold 276,607 232,349Signum Technologies Ltd 1,254,000 - Nil Value 1,254,000 -Grand Total 23,426,160 18,562,111 20,285,891 15,109,667 Responsibility Statement The Directors have chosen to prepare the financial statements for the Company inaccordance with United Kingdom Generally Accepted Accounting Practice ('UKGAAP') In preparing these summarised financial statements for the period to 31 August2007, we the Directors, confirm that to the best of our knowledge: (a) the summarised set of financial statements has been prepared in accordancewith the pronouncement on interim reporting issued by Accounting StandardsBoard; (b) the interim management report includes a fair review of the informationrequired by DTR 4.2.7R (indication of important events during the first sixmonths and description of principal risks and uncertainties for the remaining six months of the year); (c) the summarised set of financial statements give a true an fair view inaccordance with UK GAAP of the state of affairs of the Company and of the profitand loss of the Company for that period and comply with UK GAAP and CompaniesAct 1985 and; (d) the interim management report includes a fair review of the informationrequired by DTR 4.2.8R (disclosure of related parties' transactions and changestherein). The Half-yearly Financial Report has not been audited or reviewed by theauditors. By order of the Board Peter DicksChairman30 October 2007 Unaudited Profit and Loss Accountfor the six months ended 31 August 2007 6 Months to 6 Months to Year to 31 August 2007 31 August 2006 28 February 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Investment income and deposit interest 243 261 541Investment management fees (336) (287) (588)Other expenses (135) (130) (249)Unrealised gain/(loss) on revaluation of 312 (1,354) 3,081investments Operating profit/(loss) 84 (1,510) 2,785 Gain/(loss) on realisation of investments 262 216 (2,917) Profit/(loss) on ordinary activities before 346 (1,294) (132)taxation Tax on ordinary activities - - - Profit/(loss) on ordinary activities after 346 (1,294) (132)taxation Balance transferred to/(from) reserves 346 (1,294) (132) Earnings/(loss) per share 1.6p (6.0)p (0.6)p All items in the profit and loss account derive from continuing operations. There were no other recognised gains or losses for the period. Unaudited Reconciliation of Movement in Shareholders' Fundsfor the six months ended 31 August 2007 6 Months to 6 Months to Year to 31 August 2007 31 August 2006 28 February 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Opening shareholders' funds 22,681 16,566 16,566Net proceeds from share issues (3) 7,113 7,113Shares repurchased in the period/year (363) (195) (304)Profit/(loss) for the period/year 346 (1,294) (132)Dividend - - (562) Closing shareholders' funds 22,661 22,190 22,681 Unaudited Balance Sheetat 31 August 2007 As at As at As at 31 August 2007 31 August 2006 28 February 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Non-current assetsAssets held at fair value through profit and loss - 18,562 10,558 15,110investments Current assetsDebtors 253 253 289Money market and other deposits 3,607 10,104 7,335Cash 389 1,467 9 4,249 11,824 7,633 Creditors: amounts falling due within one year (150) (192) (62) Net current assets 4,099 11,632 7,571Net assets 22,661 22,190 22,681 Capital and reservesCalled-up share capital 220 225 224Share premium account 9,173 9,176 9,176Capital redemption reserve 1,824 1,819 1,820Profit and loss account 11,444 10,970 11,461 Equity shareholders' funds 22,661 22,190 22,681 Net asset value per ordinary share 103.2p 98.7p 101.5p Unaudited Cash Flow Statementfor the six months ended 31 August 2007 6 Months to 6 Months to Year to 31 August 2007 31 August 2006 28 February 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000Cash flow from operating activitiesInvestment income received 70 57 89Deposit and similar interest received 133 181 412Investment management fees paid (167) (323) (652)Secretarial fees paid (37) (36) (68)Other cash payments (103) (180) (239)Net cash outflow fromoperating activities and returns on investment (104) (301) (458)Taxation - - -Returns on investment and servicing of financePurchase of unquoted investments and investments (3,417) (2,377) (5,652)quoted on AIMNet proceeds on sale of unquoted investments - 573 598Net proceeds on deferred consideration - 925 925Net proceeds on sale of quoted investments 539 14 14Loan guarantee called - - (150)Repurchase of own shares (363) (195) (304)Net capital outflow from financial investment (3,241) (1,060) (4,569) Equity dividends paid - - (562) Net cash outflow before financing and liquid resource (3,345) (1,361) (5,589)managementManagement of liquid resourcesMovement in money market and other deposits 3,728 (5,896) (3,126) 3,728 (5,896) (3,126)FinancingProceeds of fund-raisings - 7,524 7,524Expenses of fund-raisings (3) (411) (411) (3) 7,113 7,113Increase/(decrease) in cash 380 (144) (1,602)Reconciliation of net cashflow to movementin net cashIncrease/(decrease) in cash for the period 380 (144) (1,602)Net cash at start of period 9 1,611 1,611Net cash at end of period 389 1,467 9 Reconciliation of operating profit/(loss) to net cash flow from operating activitiesOperating profit/(loss) 84 (1,510) 2,785Unrealised losses on investments (312) 1,354 (3,081)Increase/(decrease) in creditors 89 (75) (56)Decrease/(increase) in debtors 35 (70) (106)Net cash outflow from operating activities (104) (301) (458) Notes to the Unaudited Financial Statements 1. The unaudited financial statements have been prepared on the basis ofaccounting policies set out in the statutory accounts of the Company for theyear ended 28 February 2007. Unquoted investments have been valued in accordancewith IPEVC guidelines. Quoted investments are stated at bid prices in accordancewith the IPEVC guidelines and Generally Accepted Accounting Practice. 2. The information set out in this Half-yearly Financial Report does notconstitute the Company's statutory accounts within the terms of Section 240 ofthe Companies Act 1985 for the period ended 31 August 2007 and 31 August 2006,and is unaudited. The information for the year ended 28 February 2007 does notconstitute statutory accounts within the terms of Section 240 of the CompaniesAct 1985 and is derived from the statutory accounts for the financial year,which have been delivered to the Registrar of Companies. The auditors reportedon those accounts; their report was unqualified and did not contain a statementunder Section 237(2) or (3) of the Companies Act 1985. 3. Copies of the Half-yearly Financial Report will be mailed to shareholders andwill be available for inspection at the Registered Office of the Company at ECACourt, South Park, Sevenoaks, Kent TN13 1DU. Copies of the Half-yearly FinancialReport are also available electronically at www.foresightvct.com 4. The number of shares in issue at 31 August 2007 was 21,951,339 ordinaryshares (2006: 22,481,506 ordinary shares). The weighted average number of sharesin issue during the period was 22,165,119 ordinary shares (2006: 21,522,401ordinary shares). 5. Earnings for the first six months should not be taken as a guide to theresults for the full year. 6. Foresight Group, as Investment Manager of the Company, is considered to be arelated party by virtue of its management contract with the Company. During the period, services of a total value of £335,533 (31 August 2006:£286,609, 28 February 2007: £588,349) were purchased by the Company fromForesight Group. At the 31 August 2007, the amount due to Foresight Groupdisclosed under creditors was £119,546. VCF Fund Managers Limited, as Secretary of the Company and as a subsidiary ofForesight Group, is also considered to be a related party of the Company. Duringthe period, services of a total value of £31,427 (31 August 2006: £30,690, 28February 2007: £62,239) were purchased by the Company from VCF Fund ManagersLimited. At the 31 August 2007, the amount due by VCF Fund Managers Limiteddisclosed under debtors (prepayments) was £18,931. No Director has, or during the period had, a contract of service with theCompany. Bernard Fairman is Managing Partner of Foresight Group, the Company'sinvestment manager. Subject to these exceptions, no Director was party to, orhad an interest in, any contract or arrangement with the Company at any timeduring the period under review or as at the date of this report. 7. Movement in reserves Called-up Share Capital Profit and Total share premium redemption loss account capital account reserve £'000 £'000 £'000 £'000 £'000 As at 28 February 2007 224 9,176 1,820 11,461 22,681Share issues in the period - - - - -Expenses on share issues - (3) - - (3)Shares repurchased in the period (4) - 4 (363) (363)Retained profit for the period - - - 346 346As at 31 August 2007 220 9,173 1,824 11,444 22,661 8. Summary of investments during the period Quoted Unquoted Total £'000 £'000 £'000 Book cost as at 28 February 2007 1,577 18,709 20,286Unrealised depreciation (317) (4,859) (5,176)Valuation at 28 February 2007 1,260 13,850 15,110Movements in the period:Purchases at cost 300 3,117 3,417Disposal proceeds (539) - (539) realised gains 262 - 262Unrealised appreciation 133 179 312Valuation at 31 August 2007 1,416 17,146 18,562 Book cost at 31 August 2007 1,600 21,826 23,426Unrealised depreciation (184) (4,680) (4,864)Valuation at 31 August 2007 1,416 17,146 18,562 This information is provided by RNS The company news service from the London Stock Exchange