Foresight Technology Regulatory News (FTV)

29 Apr 2008 11:57

Foresight VCT PLC29 April 2008 FORESIGHT VCT PLC PRELIMINARY ANNOUNCEMENT OF RESULTS Summary • Net asset value per new Ordinary Share as at 31 December 2007 was 60.5p (compared to 81.4p as at 16 January 2007, the date of the merger of the Ordinary and C Share funds); • 5.0p per share dividend paid on 7 March 2008; • Proceeds of £6,263,784 realised from the sale of Covion Holdings (£4,407,671), SmartFOCUS Group (£1,666,667), Rapide Communication (£88,860), Telecom Plus (£20,945) and Mirada plc (£8,500) (formerly YooMedia plc). Proceeds of £71,141 were also received from companies in administration; • 1.6 million of new share capital was raised during the year under review; • The Company made a follow-on investment of £375,000 into High Integrity Solutions, £431,000 in Oxonica plc, £394,000 into Sarantel Group, £78,000 into Oled-T, £15,000 into AlwayON and £325,000 into Trilogy Communications; • Following the year end a further £1,185,800 was realised through the sale of the remaining holding in Telecom Plus. Portfolio Review During the latter half of the year under review, stock markets experiencedextreme volatility primarily as a result of difficulties in the US Sub-primemortgage market and in the UK as a result of the problems surrounding thelending activities of Northern Rock. Whilst this market turmoil has not directlyaffected the unquoted holdings within our investments, several AIM quotedholdings have suffered as a result of the general market malaise. Against thisbackground your Company's net asset value has fallen to 60.5p per share from81.4p per share (equivalent) a year earlier. Among the Company's quoted holdings, Oxonica, Sarantel and ANT havedisappointed. After suffering a contract setback for its fuel additive, Envirox,during the first half of 2007 which significantly impacted its share price,Oxonica recently reported performance validation for this additive andsignificant commercial progress in mainland Europe and Russia. More recently inDecember Oxonica announced that it had raised in excess of £4 million through ashare placing to existing shareholders. New contract wins in the biodiagnosticsand security divisions also helped sales. Despite several new design wins by Sarantel during the period, revenues for theyear ended 30 September 2007 fell to £2.0 million (2006: £4.0 million). Revenueshave remained depressed due to the slower than expected development in thehand-held GPS market, which affects the take-up of the company's secondgeneration GPS antenna. The company raised £2.1 million in July 2007 and afurther £3.4 million in April 2008 from existing and new shareholders butdisappointing trading has seen the share price fall further in recent months to4.0p at the time of writing. ANT recently announced that its performance in the second half of its financialyear was much improved and the company was seeing good growth in unit shipmentsdemonstrating uptake from digital media subscribers. Although this trend wasexpected to continue in 2008, the rollout of IPTV across its customer base didnot accelerate as quickly as anticipated resulting in a significant fall in itsshare price during the year. On the other hand, SmartFOCUS increased revenues by 32% to £5.0 million in thefirst six months of 2007 and expects continued growth in demand as evidenced bythe encouraging number and quality of projects in its pipeline. As a result ofthis progress Foresight Group took the opportunity to realise £1,000,000(compared to a cost of £265,000) from a partial disposal of shares. Despite the fall in several of the quoted and unquoted holdings your managerhas, where possible, taken advantage of liquidity opportunities both throughtrade sales and the sale of quoted holdings when underlying market conditionspermitted these transactions at acceptable prices. The most notable successduring the year was the sale of Covion Holdings ('Covion'). Foresight VCTinvested £1,000,000 in the management buyout of Covion in May 2005 and in theperiod since the investment was made, Covion had grown its turnover from £10million per annum to an annualised run rate in excess of £30 million. On 17October 2007 Covion was sold to Balfour Beatty for total proceeds of £33million, of which Foresight VCT received in excess of £4 million, over fourtimes its original investment of £1 million. Within the unquoted investments there were several other positive developments:Actimax made encouraging progress and improved profitability; Datapointcontinued to make progress and Skillsmarket successfully raised further capitalto fund expansion. Actimax achieved 15% sales growth to £5.8 million in the year to 31 December2007 with the operating profits increasing to £180,000. The company hascontinued to win new orders in the current year and is optimistic about its fullyear prospects. Datapoint has recently secured several new managed service customers and thepipelines for both managed services and projects remain strong. Revenues andprofits are substantially ahead of 2007 and there is optimism that the prospectsand potential for future growth remain strong. Skillsmarket successfully raised £2.8 million in June 2007 to fund its ongoingactivities. Although still loss making, the company is starting to achieve salestraction in its core markets. Disappointingly, High Integrity Solutions was placed into administration afterthe period end as a result of losing a major contract with BAE Systems. During the period the Company made follow-on investments of £375,000 in HighIntegrity Solutions Limited, £325,000 in Trilogy Communications Limited,£431,000 into Oxonica plc. £394,000 into Sarantel Group plc, £78,000 into Oled-Tand £15,000 into AlwaysON. Trilogy Communications raised a further £1.5 million from existing investors asit seeks to develop products for the defence and homeland security markets. AlwaysON has recently enjoyed several contract wins for its VOIP services tosmall and medium sized enterprises and is optimistic about converting severalpilot schemes into firm orders over the coming months. Realisations Unquoted As previously noted, Covion was sold in October for proceeds of £4,407,671,compared to an original cost of £1,000,000. In addition, a further £88,860 fromthe sale of the remaining holding in Rapide Communication (formerly Wire-e) wasrealised from a sale to management. Quoted A partial sale of SmartFOCUS was made in July 2007, realising proceeds of£1,000,000 compared to an original cost of £264,583. Foresight VCT also received£666,667 following the redemption of the loan stock in SmartFOCUS. In additionthere were small realisations of £8,500 from a partial sale in Mirada plc(formerly YooMedia plc) and £20,945 from a partial sale in Telecom Plus plc.Following the year end, the remaining holding in Telecom plus plc was sold on 7January for gross proceeds of £1,185,800 representing a return in excess of fivetimes the original cost of £233,259. Results The results for the year from 1 January 2007 to 31 December 2007 are set outbelow. The net asset value per new Ordinary Share as at 31 December 2007 was60.5p (31 December 2006: 81.4p, equivalent) largely resulting from falls in thevalue of Oxonica and Sarantel and the provision against the entire investment inHigh Integrity Solutions. The total return (after tax) attributable to newOrdinary Shareholders was a loss of 19.92p (31 December 2006: N/A). Due to themerger of the Ordinary Shares fund and C Shares fund on 16 January 2007,comparative figures to 31 December 2006 are not applicable. The net asset valueper new Ordinary Share immediately following the merger on 16 January was 81.4p. Dividend The Company's dividend policy is to aim to distribute a steady flow of dividendsfrom income and realised capital gains to shareholders. As a result of recentsuccessful portfolio company realisations, the Board paid an interim dividend of5.0p per new ordinary shares on 7 March 2008 for the year ended 31 December2007. Valuation Policy Investments held by the Company have been valued in accordance with theInternational Private Equity and Venture Capital Valuation Guidelines (IPEVC)developed by the British Venture Capital Association and other organisations,under which investments are valued, as defined in the guidelines, at "fairvalue". Ordinarily, unquoted investments will be valued at cost for the 12months following the date of acquisition as the most suitable approximation offair value unless there is an impairment in value during the period. Quotedinvestments and investments traded on AIM and PLUS Markets are valued at the bidprice as at 31 December 2007. The portfolio valuations are prepared by ForesightGroup and are subject to approval by the Board. Share Issues and Share Buybacks In April 2007 the top-up offer was closed, fully subscribed, raising grossproceeds of approximately £1.6 million from the issue of 1,974,248 New OrdinaryShares. The Dividend Investment Scheme raised approximately £37,000 in aggregatefollowing the issue of 45,663 New Ordinary Shares as a result of the 2p pershare dividend paid in January 2007. Both of the above share issues were underthe new VCT provisions that commenced on 6 April 2006, namely: 30% upfrontincome tax relief which can be retained by qualifying investors if the sharesare held for the minimum five year holding period. As part of the Company'sactive buyback programme, 3,150,000 Ordinary Shares were purchased forcancellation at a cost of £1,938,938. Investment Adviser - Change of Name The investment adviser changed its name from Foresight Venture Partners toForesight Group on 1 October 2007. Directorate Change The Board would like to take this opportunity to thank Dr Nigel Horne, who was afounder Director of Foresight VCT, for his dedicated service and contribution tothe Company since its launch in 1997. Nigel resigned from the Board, due tofamily reasons, on 9 January 2008 and we shall miss his sound advice andexpertise in the technology area. Annual General Meeting The Company's Annual General Meeting will take place on 20 May 2008. I lookforward to welcoming you to the meeting, which will be held in London. 1 Outlook There has been no significant fallout from the current credit crunch on thelevels of merger and acquisition activity at the smaller end of the market inwhich Foresight VCT operates and of which the sale of Covion is an example. Yourmanager will continue to pursue potential realisations from within theportfolio. The market in which Foresight VCT operates continues to be encouraging in termsof potential new investment opportunities, as evidenced by the current deal flowbeing reviewed by Foresight Group. Foresight VCT will have access to this dealflow of new opportunities as it invests new funds raised as well as reinvestingsome of the proceeds from successful realisations. Peter DicksChairman Profit and Loss Account For the year ended 31 December 2007 31 December 2007 31 December 2006 Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ Unrealised losses on - (10,176,424) (10,176,424) - (3,353,701) (3,353,701)investments Gains on realisation - 1,855,600 1,855,600 - 218,789 218,789of investmentsIncome 526,695 - 526,695 497,635 - 497,635Investment management (208,477) (625,430) (833,907) (250,403) (751,208) (1,001,611)feesOther expenses (382,319) - (382,319) (501,885) - (501,885) (Loss) before (64,101) (8,946,254) (9,010,355) (254,653) (3,886,120) (4,140,773)taxationTaxation - - - (477) 477 - (Loss) for the year (64,101) (8,946,254) (9,010,355) (255,130) (3,885,643) (4,140,773) Earnings per share: New Ordinary Shares (0.14)p (19.78)p (19.92)p - - - Ordinary Shares - - - 0.06p (3.23)p (3.17)p "C" Shares - - - (0.75)p (9.63)p (10.38)p All items in the above statement derive from continuing operations. The totalcolumn represents the Company's profit and loss account. The supplementaryrevenue and capital columns are presented for information purposes asrecommended by the guidance note issued by the Association of InvestmentCompanies. There are no other recognised gains and losses in the year. Balance Sheetas at 31 December 2007 31 December 2007 31 December 2006 £ £ £ £ Non-Current AssetsAssets held at fair value through 20,775,787 33,560,030profit or loss - Investments Current AssetsDebtors and prepayments 782,314 871,954Current investments 5,219,908 2,593,769Cash at bank 41,100 34,092 6,043,322 3,499,815 Creditors: amounts falling due (180,653) (402,614)within one year Net current assets 5,862,669 3,097,201 Net assets 26,638,456 36,657,231 Capital and reservesCalled up share capital 440,230 497,674Share premium account 8,626,161 7,014,309Special distributable reserve 19,618,862 23,785,791 (7,342,501) 3,296,391 Revaluation reserveProfit & loss account 5,295,704 2,063,066Equity shareholders' funds 26,638,456 36,657,231 Net asset value per share of 1pence each: New Ordinary Shares 60.51p - Ordinary Shares - 55.25p "C" Shares - 81.44p Cash Flow Statementfor the year ended 31 December 2007 31 December 2007 31 December 2006 £ £ £ £Operating activitiesDividends received 50,080 6,260Deposit and similar interest 438,216 477,037Other cash receipts 7,360 7,360Investment management fees paid (865,902) (717,786)Other cash payments (613,918) (494,578)Net cash outflow from operating activities (984,164) (721,707) Investing activitiesPurchase of non-current investments (1,618,094) (400,000)Sale of non-current investments 6,143,624 1,927,742Net cash inflow from investing activities 4,525,530 1,527,742 Net cash inflow before financing and liquid 3,541,366 806,035resource management Management of liquid resources(Increase)/decrease in current investments (2,626,139) 155,401 FinancingPurchase of own shares (1,838,737) (1,027,667)Issue of shares (net of expenses) 1,632,051 13,921Equity dividends paid (701,533) (75,521) (908,219) (1,089,267) Net increase/(decrease) in cash 7,008 (127,831) Reconciliation of Movements in Shareholders' Fundsfor the year ended 31 December 2007 Year to 31 December Year to 31 December 2007 2006 £ £ Opening shareholders' funds 36,657,231 41,795,683Net share capital (bought back)/subscribed for in the year (306,887) (922,158)Loss for the year (9,010,355) (4,140,773)Dividend paid in the year (701,533) (75,521)Closing Shareholders' funds at 31 December 2007 26,638,456 36,657,231 Notes to the Financial Statements 1. All revenue and capital items in the income statement derive fromcontinuing operations. 2. In accordance with the policy statement published under "Management andAdministration" in the Company's prospectuses dated 1 October 1997 and 14October 1999, the Directors have charged 75% of the investment managementexpenses to the capital reserve. 3. The Company paid an interim dividend of 5.0p per New Ordinary Share forthe year ended 31 December 2007 on 7 March 2008 (2006: Ordinary Share £nil, "C"Share 2.0p). . The Board is not recommending a final dividend for the year ended 31 December2007. 4. The Company revoked its status as an investment company in March 2000,so that it can regard capital reserves as profits of the Company available fordistribution. The Company has not reapplied and does not intend to re-apply forinvestment company status. 5. The current investments predominantly represent the balance of the netproceeds from the issues of Ordinary Shares and "C" Shares. These funds areinvested in several Dublin based OEIC money market funds managed by BlackrockInc., Royal Bank of Scotland plc and HBOS plc. 6. Basic net asset value per Ordinary Share is based on net assets of£26,638,456 (2006: Ordinary Fund net assets £8,171,766 and C Fund net assets£28,485,465) of the New Ordinary Share fund at the year end, and on 44,023,031(2006: Ordinary Shares 14,791,348 and C Shares 34,976,091) New Ordinary Shares,being the number of New Ordinary Shares in issue on that date. As Ordinary Share warrants have lapsed, there is no difference between the basicnet asset value per New Ordinary Share and the diluted net asset value per NewOrdinary Share at 31 December 2007 and as at 31 December 2006. 7. Total earnings after taxation for the year were a loss of £9,010,355(2006: loss of £4,140,773 comprising a loss on the Ordinary Shares fund aftertaxation of £473,972 and a loss after taxation on the "C" Shares fund of£3,666,801). The basic earnings per New Ordinary Share is based on the net lossfrom ordinary activities and on 45,227,061 being the weighted number of NewOrdinary Shares in issue during the year (2006: 14,913,380 Ordinary Shares, and35,337,543 "C" Shares being the weighted average number in issue during theyear). As Ordinary Share warrants have lapsed, there is no difference between the basicearnings per New Ordinary Share and the diluted earnings per New Ordinary Shareat 31 December 2007 and as at 31 December 2006. The revenue return per New Ordinary Share is based on the net deficit aftertaxation of £64,101 (2006: Ordinary Share net revenue after taxation of £8,291and "C" Share net deficit after taxation of £263,421) and on 45,227,061 beingthe weighted number of New Ordinary Shares in issue during the year (2006:14,913,380 Ordinary Shares, and 35,337,543 "C" Shares being the weighted averagenumber in issue during the year). The capital return per New Ordinary Share is based on the net realised capitalgains of £1,855,600 (2006: Ordinary Share net realised capital gains of £8,903and "C" Share net realised capital gains of £209,886), net unrealised capitallosses of £10,176,424 (2006: Ordinary Share net realised capital losses of£339,339 and "C" Share net realised capital losses of £3,014,362) andcapitalised management fees less associated tax relief of £625,430 (2006:Ordinary Shares £151,827, and "C" Shares of £598,904). The capital return perNew Ordinary Share is also based on 45,227,061 being the weighted number of NewOrdinary Shares in issue during the year (2006: 14,913,380 Ordinary Shares, and35,337,543 "C" Shares being the weighted average number in issue during theyear). 8. The financial information set out in these statements does notconstitute the Company's statutory accounts for the year ended 31 December 2007but is derived from those accounts and is prepared on the same basis as set outin the previous year's annual accounts. Statutory accounts for the year ended31 December 2006 have been delivered to the Registrar of Companies. Statutoryaccounts for the year ended 31st December 2007 including an unqualified auditreport and containing no statements under S237(2) or (3) of the Companies Act1985 will be delivered to the Registrar of Companies in due course. 9. The Annual Report will be circulated by post to all shareholdersshortly and copies will be available thereafter to members of the public fromthe Company's registered office at ECA Court, 24-26 South Park, Sevenoaks, KentTN13 1DU. 10. The Annual General Meeting will be held at 12.30pm on 20 May 2008 at 35New Bridge Street, London, EC4V 6BW. 11. Movement in Reservesfor the year ended 31 December 2007 Called up Share Special Revaluation share premium distributable Profit & loss account capital account reserve reserve reserve Total £ £ £ £ £ £ At 1 January 2007 497,674 7,014,309 23,785,791 3,296,391 2,063,066 36,657,231 Issued share capital 20,199 1,611,852 - - - 1,632,051 Deferred shares written off (46,143) - 46,143 - - -Own shares purchased during the year (31,500) - (1,907,438) - - (1,938,938)Write off to special reserve - - (2,305,634) - 2,305,634 -Realisation of previously unrealised - - - (462,468) 462,468 -appreciation Dividend paid - - - - (701,533) (701,533)Loss for the year - - - (10,176,424) 1,166,069 (9,010,355) At 31 December 2007 440,230 8,626,161 19,618,862 (7,342,501) 5,295,704 26,638,456 This information is provided by RNS The company news service from the London Stock Exchange