Foresight Technology Regulatory News (FTV)

3 Apr 2007 11:04

Foresight VCT PLC03 April 2007 FORESIGHT VCT PLC PRELIMINARY ANNOUNCEMENT OF RESULTS CHAIRMAN'S STATEMENT During the year markets generally experienced benign trading conditions withparticular benefit to FTSE 250 midcap stocks. Technology stocks, however,remained out of favour and the Company's quoted technology investments sufferedaccordingly with several companies dropping in value during the period oftendespite good underlying progress. In addition the unquoted investments fell from£15.7 million to £14.8 million or 5.7% during the year, as several investmentsreported difficult trading conditions and order delays which impacted underlyingprofitability. Overall, the net asset value of the Ordinary Shares fund fell to55.2 p per share (31/12/05: 58.7p) and the net asset value of the "C" Sharesfund fell to 81.4 p per share (31/12/05: 91.7p). Among the Company's quoted holdings, Oxonica, Corero (formerly Mondas), ANT andsmartFOCUS achieved strong trading progress. Oxonica reported a leap in revenuesfrom £1.2 million to £10.2 million. Corero recently announced operating profitsof approximately £400,000 on revenues of approximately £6.3 million in the yearended 31 December 2006, which is a turnaround of just under £1.2 million fromthe £770,000 operating loss incurred in the previous year. ANT increasedrevenues by 48% to £3.7 million, reduced operating losses to £1.4 million (2005:£2.2 million) and announced an important new relationship with ScientificAtlanta. smartFOCUS increased revenues by 52% and delivered £918,000 inoperating profit. Trading progress at other quoted holdings was mixed. Sarantelachieved a 43% increase in sales to £4.0m for the year to 30 September 2006, butsaw flat sales in the second half of that year and incurred increased losses of£6.1 million from £5.3 million a year earlier. The company is winning new ordersbut at a slower rate than originally envisaged. YooMedia reported improvedresults for the six months ended 31 December 2006 as a result of cost savingsand higher revenues but its share price declined sharply. Among the Company's unquoted portfolio companies, iCore and Covion madeencouraging progress and improved profitability in the period, while Aquasiumand Camwood suffered reductions in profits. iCore reported a near 40% salesincrease to £4.5m and a profit before tax of £296,000 in its year to 30 June2006 as a result of contracts with large multinational companies. Progress hasbeen maintained in the current year with a further increase in profits expected.Covion Holdings continued to win new orders for its facilities managementservices from companies such as Britvic, Cooper Avon Tyres and CosmeticOutsourcing Solutions International. As a result Covion will report revenues inexcess of £20 million and profits in excess of £1 million for the year ended 31December 2006. During the period the Company made follow-on investments of £250,000 inSkillsMarket Limited and £150,000 in High Integrity Solutions Limited.Skillsmarket's product offering has been further developed since the originalinvestment in 2005 and as a consequence the prospects for revenue growth andprofitability in the medium term have improved. High Integrity Solutions madeprogress in winning contracts for its software solutions for project engineersbut continues to operate at a loss. Merger of the Ordinary Shares fund and the C Shares fund Following the year end, I am pleased to report that shareholders voted in favourof merging the Ordinary Shares fund and the "C" Shares fund. The formalconversion from existing Ordinary Shares and C Shares into new Ordinary Sharestook place on 16 January 2007 and new share certificates were issued along withan explanatory letter shortly thereafter. The costs associated with the mergerwere £53,000 (excl. VAT), which were well within the Board's expectation. The merger will result in the simplification of internal and published accountsand a reduction in the administration associated with the maintenance of twofunds as opposed to just one. Together with a new Board structure these measuresshould result in cost savings to the Company, progress of which will be reportedin my next statement to shareholders. At the Extraordinary General Meeting on 15 January 2007 shareholders alsoapproved the Company's name change to Foresight VCT plc from ForesightTechnology VCT plc. Results The results for the year from 1 January 2006 to 31 December 2006 are set outbelow. The net asset value per Ordinary Share as at 31 December 2006 was 55.2p(31 December 2005: 58.7p). The total return (after tax) attributable toOrdinary Shareholders was a loss of 3.2p (31 December 2005: loss of 16.1p). Thenet asset value per "C" Share as at 31 December 2006 was 81.4p (31 December2005: 91.7p) and the attributable return was a loss of 10.4p per "C" Share (31December 2005: loss of 1.15p). Directors As explained in the Circular to Shareholders, Roger Blears, Peter English andDavid Royds resigned from the Board on 16 January 2007. I would like to thankall three directors for their dedicated service over a number of years which hascontributed greatly to the success of the Company. Following a review of the Board composition, Gordon Humphries was appointed as aDirector by a Committee of the Board on 9 March 2007. Gordon has been involvedwith investment companies for over 15 years. He is currently head of investmentcompanies at Standard Life Investments and before that was deputy head ofinvestment trusts at F&C Asset Management plc. The Directors believe thatGordon's experience will complement the skill set of the existing Board and I amdelighted to welcome him to the Board. Dividend The Company paid an interim dividend of 2.0p per "C" Share for the year ended 31December 2006 to "C" Shareholders on 26 January 2007 (2005: Ordinary Shares0.50p, "C" Shares Nil). The Company's dividend policy is to distribute toshareholders income earned and capital gains realised as soon as is practicable. The Board is not recommending a final dividend for the year ended 31 December2006. Ordinary Shares fund YooMedia, as a result of a number of acquisitions over the past two years, hasdeveloped from a small business with revenues of less than £1 million to onewith revenues of more than £60 million for the year ended 31 December 2006.Following several disappointing trading statements and dilutive fund raisings,however, its share price performed poorly falling from 7p at 31 December 2005 to1.75p as at 31 December 2006. This fall in YooMedia resulted in a net decreaseof approximately £900,000 in the value of the Ordinary Shares fund since 31December 2005. During the year two follow-on investments were made in TheSkillsMarket Limited(£80,001) and High Integrity Solutions (£45,000) respectively. "C" Shares fund Oxonica, currently the largest holding in the portfolio at 29.2% as a result ofa strong share price performance, recently reported its annual results whichshowed an eightfold increase in sales to £10.2 million and reduced operatinglosses to £3,245,000 (2005: £4,504,00) and were in line with market expectationsfor the year ended 31 December 2006. Revenue and cash flow were positivelyimpacted by the Petrol Ofisi and Becton Dickinson transactions completed in thesecond half of the year and as a result, the company's year end cash positionwas ahead of expectations. Despite its trading progress, Oxonica's share pricefell in the period, resulting in a portfolio loss of £1,137,000. Corero recently announced that it had made strong progress for the year ended 31December 2006, achieving record revenues and profits. The Blue Curve division(formerly a Foresight portfolio company) had a particularly successful year,more than doubling its revenues compared to 2005. Significant licence revenueshave been derived both from existing customers, and from new clients addedduring the year. The Company produced operating profits of approximately£400,000 on revenues of approximately £6.3 million in the year ended 31 December2006, which is a turnaround of just under £1.2million from the £770,000operating loss incurred in the previous year. It also reported that all businessunits were profitable. Corero has also substantially improved its workingcapital position and operating cashflow is positive, putting it in an excellentposition to take advantage of the momentum built during the year and theopportunities that have been created across all its business units. smartFOCUS recently announced strong revenue growth for 2006 with an increase ofapproximately 52% compared to 2005. It made a profit of £918,000 in 2006compared to a loss of £19,000 in 2005. Within the unquoted portfolio, the most significant movements were decreases inthe valuations of Aquasium Technology Limited (£1,615,000) and Camwood Limited(£761,000). Aquasium fell as a result of order delays which impacted currentyear profits, whilst Camwood's profits declined as it continued to invest in itsnew product offerings. Following the recent release of Microsoft Vista, thecompany expects an increase in demand for its products and services in 2007/8.The valuation of Covion Holdings, which supplies facilities management servicesto a range of blue chip clients, increased by £1,139,000 in the year as itcontinued to win new contracts and generate increased profits. During the year two follow-on investments were made in TheSkillsMarket Limited(£169,999) and High Integrity Solutions (£105,000) respectively. The Combined Portfolio The combined portfolio contains several companies of outstanding quality, suchas Oxonica, as well as several other holdings which your Manager is optimisticmay receive approaches during the current year which could result in a sale thusgenerating liquidity for the fund 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 OFEX are valued at the bid priceas at 31 December 2006. The portfolio valuations are prepared by ForesightVenture Partners and are subject to approval by the Board. Dividend Investment Scheme and Share Buybacks During the period, the Company issued 26,468 Ordinary Shares under the DividendInvestment Scheme raising approximately £14,000 in aggregate. These shares wereissued under the new VCT provisions that commenced on 6 April 2006, namely: 30%upfront income tax relief which can be retained by qualifying investors if theshares are held for the minimum five year holding period. As part of the Company's active buyback programme, 339,412 Ordinary Shares werepurchased for cancellation at an approximate cost of £163,000, and at anapproximate discount to NAV of 10%. Furthermore, 930,000 "C" Shares werepurchased for cancellation at an approximate cost of £773,000, also at anapproximate discount to NAV of 10%. Change of Auditor The Company changed its auditor during July 2006 from KPMG Audit plc to Ernst &Young LLP. I would like to take this opportunity to thank KPMG for all theirwork over the last 8 years. Annual General Meeting The Company's Annual General Meeting will take place on 16 May 2006. I lookforward to welcoming you at the meeting, which will be held in London. Outlook As noted earlier, although the market in which Foresight VCT operates continuesto be buoyant in terms of potential new investment opportunities, both theOrdinary and "C" Share funds are now considered to be fully invested. Whilstyour manager continues to monitor new opportunities it is currently limiting anyfurther commitments to existing portfolio companies. Following the merger of the Ordinary Shares and "C" Shares funds, as notedearlier, in future reports I will be reviewing the fund as one combinedportfolio rather than two. Despite volatile stock markets, merger and acquisition activity remains buoyantand Foresight Venture Partners will continue to actively investigate liquidityopportunities within the portfolio. Peter Dicks Chairman 3 April 2007Unaudited Non-Statutory Analysis between the Ordinary Shares and "C" SharesFunds Profit and Loss Accountsfor the year ended 31 December 2006 Ordinary Shares fund "C" Shares fund Revenue Capital Total Revenue Capital Total £ £ £ £ £ £Losses on investments - (330,436) (330,436) - (2,804,476) (2,804,476)Income 170,796 - 170,796 326,839 - 326,839Investment Management Fees (50,768) (152,304) (203,072) (199,635) (598,904) (798,539)Other Expenses (111,260) - (111,260) (390,625) - (390,625) Return on ordinary activities 8,768 (482,740) (473,972) (263,421) (3,403,380) (3,666,801)before taxationTax on ordinary activities (477) 477 - - - - Return attributable to equity 8,291 (482,263) (473,972) (263,421) (3,403,380) (3,666,801)shareholders Return per share 0.06p (3.23)p (3.17)p (0.75)p (9.63)p (10.38)p Balance Sheetsas at 31 December 2006 Ordinary "C" Shares fund Shares fund £ £ £ £Non-current assets Assets held at fair value 6,549,381 27,010,649through profit or loss -investments Current assetsDebtors and prepayments 392,351 749,735Current investments 1,349,987 1,243,782Cash at bank 12,499 21,593 1,754,837 2,015,110Creditors: amounts falling due (132,452) (540,294)within one year Net current assets 1,622,385 1,474,816 Net assets 8,171,766 28,485,465 CapitalCalled up share capital 147,913 349,761ReservesShare premium account 4,060,624 2,953,685Special distributable reserve 3,939,794 19,845,997Revaluation reserve (1,172,325) 4,468,716Profit and loss account 1,195,760 867,306 8,171,766 28,485,465 No of shares in issue 14,791,348 34,976,091 Net asset value per 1p share: 55.25p 81.44p Reconciliation of Movements in Shareholders' FundsFor the year ended 31 December 2006 Ordinary Shares fund "C" Shares fund Year to 31 December Year to 31 2006 December 2006 £ £Opening Shareholders' funds 8,870,612 32,925,071Net share capital (bought back)/subscribed for in the year (149,353) (772,805)Loss for the year (473,972) (3,666,801)Final dividend paid for previous year (75,521) -Closing Shareholders' Funds at 31 December 2006 8,171,766 28,485,465 Profit and Loss AccountFor the year ended 31 December 2006 31 December 2006 31 December 2005 Revenue Capital Total Revenue Capital Total £ £ £ £ £ £Unrealised losses on - (3,353,701) (3,353,701) - (2,358,802) (2,358,802)investments Gains/(losses) on - 218,789 218,789 - (330) (330)realisation ofinvestmentsIncome 497,635 - 497,635 931,592 - 931,592Investment management (250,403) (751,208) (1,001,611) (263,824) (791,471) (1,055,295)feesOther expenses (501,885) - (501,885) (443,869) - (443,869) (Loss)/profit before (254,653) (3,886,120) (4,140,773) 223,899 (3,150,603) (2,926,704)taxationTaxation (477) 477 - (28,935) 28,935 - (Loss)/profit for the (255,130) (3,885,643) (4,140,773) 194,964 (3,121,668) (2,926,704)year Earnings per share: Ordinary Shares (3.17)p (16.12)p "C" Shares (10.38)p (1.15)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 2006 31 December 2006 31 December 2005 £ £ £ £Non-Current AssetsAssets held at fair value through 33,560,030 37,926,957profit or loss - Investments Current AssetsDebtors and prepayments 871,954 1,227,718Current investments 2,593,769 2,749,170Cash at bank 34,092 161,923 3,499,815 4,138,811Creditors: amounts falling due (402,614) (270,085)within one year Net current assets 3,097,201 3,868,726 Net assets 36,657,231 41,795,683 Capital and reservesCalled up share capital 497,674 510,104Share premium account 7,014,309 7,000,652Special distributable reserve 23,785,791 27,300,132 3,296,391 5,274,121 Revaluation reserveProfit & loss account 2,063,066 1,710,674Equity shareholders' funds 36,657,231 41,795,683 Net asset value per share of 1pence each: Ordinary Shares 55.25p 58.73p "C" Shares 81.44p 91.70p Cash Flow Statementfor the year ended 31 December 2006 31 December 2006 31 December 2005 £ £ £ £Operating activitiesDividends received 6,260 71,610Deposit and similar interest 477,037 655,076Other cash receipts 7,360 7,360Investment management fees paid (717,786) (1,097,933)Other cash payments (494,578) (721,707) (472,437) (836,324)Net cash outflow from operating activities Investing activitiesPurchase of non-current investments (400,000) (7,090,800)Sale of non-current investments 1,927,742 198,163Net cash inflow/ (outflow) from investing 1,527,742 (6,892,637)activities Net cash inflow/ (outflow) before financing and 806,035 (7,728,961)liquid resource management Management of liquid resourcesDecrease in current investments 155,401 9,457,841 FinancingPurchase of own shares (1,027,667) (1,446,051)Issue of shares (net of expenses) 13,921 10,791Equity dividends paid (75,521) (185,241) (1,089,267) (1,620,501) Net (decrease)/increase in cash (127,831) 108,379 Reconciliation of Movements in Shareholders' Fundsfor the year ended 31 December 2006 Year to 31 December Year to 31 December 2006 2005 £ £Opening shareholders' funds 41,795,683 46,366,242 Net share capital (bought back)/subscribed for in the year (922,158) (1,458,583) Loss for the year (4,140,773) (2,926,704) Final dividend paid for previous year (75,521) (185,272) Closing Shareholders' funds at 31 December 2006 36,657,231 41,795,683 Unaudited 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 2.0p per "C" Share for the yearended 31 December 2006 on 26 January 2007 (2005: Ordinary Shares 0.50p, "C"Shares Nil). The Company's dividend policy is to distribute to shareholdersincome earned and capital gains realised as soon as is practicable. The Board is not recommending a final dividend for the year ended 31 December2006. 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 Ordinary Shares fund current investments and the "C" Shares fundcurrent investments predominantly represent the balance of the net proceeds fromthe issues of Ordinary Shares and "C" Shares. These funds are invested inseveral Dublin based OEIC money market funds managed by Blackrock Inc., RoyalBank of Scotland plc and HBOS plc. 6. The net asset value per share for both the Ordinary Shares and the CShares has been calculated on the appropriate allocation of the Company's assetsand liabilities. Other than expenses specifically attributable to one fund orthe other, one quarter of costs incurred since 1 January 2006 has been allocatedto the Ordinary Shares fund. Basic net asset value per Ordinary Share is basedon net assets of £8,171,766 (31/12/2005 - £8,870,612) of the Ordinary Sharesfund at the year end, and on 14,791,348 (2005: 15,104,292) Ordinary Shares,being the number of Ordinary Shares in issue on that date. Basic net asset valueper "C" Share is based on net assets of £28,485,465 (31/12/2005 - £32,925,071)of the "C" Shares fund at the year end, and on 34,976,091 (2005: 35,906,091) "C"Shares, being the number of "C" Shares in issue on that date. 7. Total earnings after taxation for the year were a loss of £4,140,773(2005: loss of £2,926,704) comprising a loss on the Ordinary Shares fund aftertaxation of £473,972 (2005: loss of £2,508,285) and a loss after taxation on the"C" Shares fund of £3,666,801 (2005: loss of £418,419). The basic earnings perOrdinary Share is based on the net loss from ordinary activities and on14,913,380 (2005: 15,560,442) Ordinary Shares, being the weighted average numberof Ordinary Shares in issue during the year. There is no difference between thebasic earnings per share and diluted earnings per share as the Ordinary Warrantshave now lapsed. The basic earnings per "C" Share is based on the net loss from"C" Shares fund activities and on 35,337,543 (2005: 36,381,420) "C" Shares,being the weighted average number of "C" Shares in issue during the year. Thereis no difference between the basic earnings per share and diluted earnings pershare as the "C" Warrants have now lapsed. The revenue return per Ordinary Share is based on the net revenue from OrdinaryShare fund activities after taxation of £8,291 (2005: net revenue of £113,631)and on 14,913,380 (2005: 15,560,442) Ordinary Shares, being the weighted averagenumber of Ordinary Shares in issue during the year. The revenue return per "C"Share is based on the loss from "C" Share fund activities after taxation of£263,421 (2005: net revenue of £81,333) and on 35,337,543 (2005: 36,381,420) "C" Shares, being the weighted average number of "C" Shares in issue during theyear. The capital return per Ordinary Share is based on the net realised capital gainsof £8,903 (2005: £nil), on net unrealised capital losses of £339,339 (2005:losses of £2,425,405) and capitalised management fees less associated tax reliefof £151,827 (2005: £196,511) on the Ordinary Shares fund and on 14,913,380(2005: 15,560,442) Ordinary Shares. The capital return per "C" Share is based onthe net realised capital gains of £209,886 (2005: gains of £25,161), on netunrealised capital losses of £3,014,362 (2005: gains of £66,603) and capitalisedmanagement fees less associated tax relief of £598,904 (2005: £591,516) on the "C" Shares fund and on 35,337,543 (2005: 36,381,420) "C" Shares. 8. The financial information set out in these statements does notconstitute the Company's statutory accounts for the year ended 31 December 2006but 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 2005 have been delivered to the Registrar of Companies and those for2006 will be delivered following the Company's Annual General Meeting. Theprevious auditors, KPMG Audit plc, have reported on the 2005 accounts: theirreport was unqualified and did not contain a statement under Section 237 (2) or(3) of the Companies Act 1985. 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 16 May 2007 at OneJermyn Street, London SW1Y 4UH. 11. Movement in Reservesfor the year ended 31 December 2006 Profit & Called up Share Special Revaluation loss account share premium distributable capital account reserve reserve reserve Total £ £ £ £ £ £At 1 January 2006 510,104 7,000,652 27,300,132 5,274,121 1,710,674 41,795,683 Shares issued/(bought back) (12,430) 13,657 (923,385) - - (922,158) Realisation of previously unrealised - - - 1,375,971 (1,375,971) -diminution Loss for the year - - - (3,353,701) (787,072) (4,140,773) - - (2,590,956) - 2,590,956 - Transfer to distributable reserve -current year Dividend - final for year ended 31 - - - - (75,521) (75,521)December 2005 At 31 December 2006 497,674 7,014,309 23,785,791 3,296,391 2,063,066 36,657,231 This information is provided by RNS The company news service from the London Stock Exchange