Foresight Technology Regulatory News (FTV)

26 Sep 2007 16:13

Foresight VCT PLC26 September 2007 FORESIGHT VCT PLC PRELIMINARY ANNOUNCEMENT OF RESULTS Summary • Net asset value per new Ordinary Share as at 30 June 2007 was 74.6p (compared to 81.4p as at 16 January 2007, the date of the merger of the Ordinary and C Share funds). • £1.6 million of new share capital was raised during the six months under review. • The Company made a follow-on investment of £300,000 into High Integrity Solutions and £325,000 into Trilogy Communications. • Proceeds of £756,000 realised from the sale of Rapide Communication and the redemption of loan stock from SmartFOCUS. CHAIRMAN'S STATEMENT During the six months under review the merger of the Ordinary Shares fund and CShares fund was completed and this is the first report of the combinedportfolio. The net asset value at 30 June 2007 decreased 8.4% to 74.6p per newOrdinary Share, compared to 81.4p per new Ordinary Share on 16 January 2007, thedate of the merger. Among the Company's quoted holdings, Oxonica, Sarantel and ANT havedisappointed. On 27 April Oxonica's shares were suspended (at 117.5p) from theAIM market following the termination of a contract for its fuel additive,Envirox. Following an agreed settlement with Petrol Ofisi, Oxonica's sharesre-listed on 6 June but the impact of the contract loss on its share price wassignificant and at 30 June its shares were trading at 60.0p. Oxonica wasForesight VCT's largest holding and the movement in share price represented afall of £4.8 million in the period. Sarantel announced 15 design wins for its antennae in its interim results to 31March 2007 but continued to struggle to convert these wins into volume orders.Sales for the six months ended 31 March 2007 were £1.5 million against £2.3million a year earlier. Existing investors including Foresight VCT havecommitted to provide £2.1 million in ongoing working capital for the business. ANT recently announced that the rollout of IPTV across its customer base was notaccelerating as quickly as originally anticipated and that the expectedreduction in current year revenues will result in a significantly greater lossfor 2007 than originally envisaged. On the other hand, SmartFOCUS increased revenues by 52% and delivered £918,000in operating profit in the year to 31 December 2006 and continues to make strongprogress. The company's share price improved from to 14.5p to 17.5p in theperiod, representing an uplift of some £600,000. Among the Company's unquoted portfolio companies, Actimax and Covion madeencouraging progress and improved profitability in the period, whileSkillsmarket successfully raised further capital to fund expansion. Actimaxachieved 58% sales growth to £5.0 million in the year to 31 December 2006 and afour-fold increase in operating profits to £159,000. The company has continuedto win new orders in the current year and is optimistic about its full yearprospects. Covion Holdings continued to win new orders for its facilitiesmanagement services from companies such as Britvic, Cooper Avon Tyres andCosmetic Outsourcing Solutions International. As a result Covion reportedrevenues in excess of £20 million and profits in excess of £1 million for theyear ended 31 December 2006. Skillsmarket successfully raised £2.8 million inJune 2007 to fund its ongoing activities. Although still loss making the companyis starting to achieve sales traction in its core markets. During the period the Company made follow-on investments of £300,000 in HighIntegrity Solutions Limited and £325,000 in Trilogy Communications Limited. HighIntegrity Solutions made progress in winning contracts for its softwaresolutions for project engineers and has secured an order pipeline in excess of£5 million but continues to operate at a loss. Trilogy Communications raised afurther £1.5 million from existing investors as it seeks to develop products forthe defence and homeland security markets. Realisations Foresight VCT received proceeds of £666,667 following the redemption of the loanstock from SmartFOCUS and a further £88,860 from the sale of the remainingholding in Rapide Communication (formerly Wire-e). Results The results for the six months from 1 January 2007 to 30 June 2007 are set outbelow. The net asset value per new Ordinary Share as at 30 June 2007 was 74.6p(31 December 2006: N/A). The total return (after tax) attributable to newOrdinary Shareholders was a loss of 5.6p (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 to shareholders a steadyflow of dividends from income and realised capital gains. The Board is not recommending an interim dividend for the year ended 31 December2007 at this time. 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 30 June 2007. The portfolio valuations are prepared by Foresight VenturePartners and are subject to approval by the Board. Share Issues and Share Buybacks The Board is pleased to announce that during the period the top-up offer wasclosed, fully subscribed, in April 2007 having raised gross process ofapproximately £1.6 million from the issue of 1,974,248 New Ordinary Shares. The Dividend Investment Scheme raised approximately £36,000 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 under the new VCT provisions that commencedon 6 April 2006, namely: 30% upfront income tax relief which can be retained byqualifying investors if the shares are held for the minimum five year holdingperiod. As part of the Company's active buyback programme, 1,800,000 Ordinary Shareswere purchased for cancellation at a cost of £1,222,253. Outlook The market in which Foresight VCT operates continues to be buoyant in terms ofpotential new investment opportunities. However at this time, the combinedportfolio is considered to be fully invested. Consequently, while your managercontinues to monitor new opportunities it is currently limiting any furthercommitments to existing portfolio companies. Foresight Venture Partners continues to actively investigate liquidityopportunities within the portfolio, which, if successful, should provide theresources both to recommence making new investments and enable furtherdistributions to shareholders. Peter Dicks Chairman September 2007 Unaudited Profit and Loss Account For the six months ended 30 June 2007 Six months Six months Year ended ended 30 ended 30 31 December June 2007 June 2006 2006 Restated (unaudited) (unaudited) (audited) Revenue Capital Total Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ £ £ £Unrealised losses - (2,008,811) (2,008,811) - (4,919,982) (4,919,982) - (3,353,701) (3,353,701)on investmentsRealised (losses)/ - (44,473) (44,473) - 212,219 212,219 - 218,789 218,789gains oninvestmentsIncome 219,668 - 219,668 236,561 - 236,561 497,635 - 497,635Investment (116,067) (348,199) (464,266) (133,328) (399,984) (533,312) (250,403) (751,208) (1,001,611)management feesOther expenses (236,003) - (236,003) (297,725) - (297,725) (501,885) - (501,885) Loss before (132,402) (2,401,483) (2,533,885) (194,492) (5,107,747)(5,302,239) (254,653) (3,886,120) (4,140,773)taxationTaxation - - - - - - (477) 477 - Loss for the (132,402) (2,401,483) (2,533,885) (194,492) (5,107,747)(5,302,239) (255,130) (3,885,643) (4,140,773)period Earnings per share New Ordinary (0.29)p (5.31)p (5.60)p N/a N/aShares Ordinary Shares N/a N/a N/a (7.07)p (3.17)p C Shares N/a N/a N/a (11.90)p (10.38)p All revenue and capital items in the profit and loss account derive fromcontinuing operations. There were no other recognised gains or losses for theperiod. Earnings for the period should not be taken as a guide to the results for thefull year. Unaudited Balance Sheetas at 30 June 2007 30 June 2007 30 June 2006 31 December 2006 (unaudited) (unaudited) (audited) £ £ £ £ £ £Non-Current AssetsAssets held at fair 31,376,219 32,201,449 33,560,030value through profit orloss - Investments Current AssetsDebtors and prepayments 840,494 898,876 871,954Current investments 1,933,944 2,873,443 2,593,769Cash at bank 225,235 7,619 34,092 2,999,673 3,779,938 3,499,815Current LiabilitiesOther creditors 398,394 250,194 263,039Accruals 145,887 163,132 139,575 (544,281) (413,326) (402,614)Net current assets 2,455,392 3,366,612 3,097,201 Net assets 33,831,611 35,568,061 36,657,231 Capital and reservesCalled up share capital 453,730 498,674 497,674Share premium account 8,626,161 7,014,309 7,014,309Special distributable 21,608,376 24,208,564 23,785,791reserve 1,914,213 1,722,810 3,296,391 -Revaluation reserveDistributable reserve 1,229,131 2,123,704 2,063,066Equity shareholders' 33,831,611 35,568,061 36,657,231funds Net asset value pershare of 1 pence each: New Ordinary 74.56p N/a N/aShares Ordinary Shares N/a 51.27p 55.25p C Shares N/a 79.78p 81.44p Unaudited Cashflow Statement for the six months ended 30 June 2007 Six months ended Six months ended Year ended 31 30 June 2007 30 June 2006 December 2006 (unaudited) (unaudited) (audited) £ £ £Operating activitiesDividends received 32,638 - 6,260Deposit and similar interest 196,650 223,042 477,037Other cash receipts 3,680 - 7,360Investment management fees paid (676,023) (503,156) (717,786)Other cash payments 135,581 (233,349) (494,578)Net cash outflow from operating activities (307,474) (513,463) (721,707) Investing activitiesPurchase of non-current investments (625,000) (250,000) (400,000)Sale of non-current investments 755,527 1,562,743 1,927,742Net cash inflow from investing activities 130,527 1,312,743 1,527,742 Net cash (outflow)/inflow before financing and liquid (176,947) 799,280 806,035resource management Management of liquid resources(Decrease)/increase in current investments 659,825 (124,273) 155,401 659,825 (124,273) 155,401 FinancingPurchase of own shares (1,222,253) (767,712) (1,027,667)Issue of shares 1,632,051 - 13,921Equity dividends paid (701,533) (61,599) (75,521) (291,735) (829,311) (1,089,267) Net increase/(decrease) in cash 191,143 (154,304) (127,831) Unaudited Reconciliation of Movement in Shareholders' Funds For the six months ended 30 June 2007 Six months ended Six months ended Year ended 31 30 June 2007 30 June 2006 December 2006 (unaudited) (unaudited) (audited) £ £ £ Opening shareholders' funds 36,657,231 41,795,683 41,795,683Net share capital subscribed/(bought back) in the period 409,798 (849,862) (922,158)Loss for the period (2,533,885) (5,302,239) (4,140,773)Dividends paid in the period (701,533) (75,521) (75,521)Closing shareholders' funds 33,831,611 35,568,061 36,657,231 Notes to the Unaudited Financial Statements For the six months ended 30 June 2007 1. Principal accounting policies The following accounting policies have been applied consistently throughout theperiod. Full details of accounting policies will be disclosed in the AnnualReport and Financial Statements. a) Basis of Accounting The accounts have been prepared in accordance with United Kingdom GenerallyAccepted Accounting Practice, and with the 2003 Statement of RecommendedPractice, Financial Statements of Investment Trust Companies', revised December2005. As a result of the Directors' decision to distribute capital profits by way ofa dividend, the Company revoked its investment company status as defined undersection 266 (3) of the Companies Act 1985, in March 2000. Consequently, the financial statements have been drawn up to include a statutoryprofit and loss account in accordance with Schedule 4 of the Companies Act 1985and Financial Reporting Standard 3 'Reporting Financial Performance'. This hasno effect on total returns or net assets per share. b) Investments Investments are classified as fair value through profit or loss. Quoted investments are stated on a bid price basis in accordance with FRS 26. Unquoted investments are stated at fair value by the Directors in accordancewith the following rules, which are consistent with IPEVCV guidelines: i investments which have been made in the last 12 months are at fair value,unless another methodology gives a better indication of fair value, will becost; ii Investments in companies at an early stage of their development are alsovalued at fair value, which unless another methodology gives a betterindication of fair value, will be at cost; and iii. Investments which have been held for more than 12 months and which havegone beyond the stage of their development in (ii) above are valued, in theabsence of overriding factors, using a suitable price-earnings ratio discountedto reflect the lack of marketability. Where overriding factors apply alternativemethods of valuation will be used. These will include the application of amaterial arms length transaction by an independent third party, cost, cost lessprovision for impairment, discounted cash flow, or a net asset basis. Unrealised capital gains and losses on investments are dealt with in therevaluation reserve and any movements are reflected through the profit and lossaccount. The only exception to this rule occurs when the Directors believe thatthere has been a permanent diminution in the value of an investment. In suchcircumstances, the associated write down in the value of the investment ischarged directly through the face of the profit and loss account. 2. On 16 January 2007, 14,791,348 Ordinary Shares held at 15 Januarywere redesignated as 10,177,029 C shares in accordance with a Conversion Ratiosuch that the total number of shares so redesignated is in proportion to theratio which the Unaudited net asset value of the Ordinary Shares Fund portfoliobore to the Unaudited net asset value of the C Shares Fund portfolio as at 15January 2007. The balance of 4,614,319 Ordinary Shares in each Shareholder'sholding of Ordinary Shares, having a nominal value of £46,143 was redesignatedas Deferred Shares and was purchased by the Company for an aggregate amount of1p. All of the resulting 45,153,120 C Shares were then redesignated as NewShares and the articles of association of the Company were amended so that allof the assets and liabilities of the Company as at 16 January 2007 were mergedinto a single pool of assets and liabilities to which the holders of the NewShares are exclusively entitled. 3. 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. 4. The New Ordinary Shareholders will be entitled to receive any dividendspaid out of the net income from the net assets attributable to the New OrdinaryShares. 5. 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. 6. Income Six months ended Six months ended Year ended 31 30 June 2007 30 June 2006 December 2006 (unaudited) (unaudited) (audited) £ £ £ Dividends 32,638 4,024 10,284Overseas based OEICS 52,757 73,626 135,894Loan stock interest 127,315 150,825 334,651Bank deposits 4,416 2,963 5,122Other 2,542 5,123 11,684Total Income 219,668 236,561 497,635 7. Current investments at 30 June 2007 represent funds invested in 3Dublin based OEIC money market funds managed by Blackrock Investment Managers,Insight Investment Management and Royal Bank of Scotland. 8. Earnings and return per share The basic earnings, revenue return and capital return per share shown belowfor each period are respectively based on numerators i)-iii), each divided bythe weighted average number of shares in issue in the period - see iv) below Earnings and return per shareNew Ordinary Shares Six months ended 30 June 2007 £ Total earnings after taxation (2,533,885)i) Basic earnings per share (pence) (5.60)p Net revenue from ordinary activities after taxation ( 132,402)ii) Revenue return per share (pence) (0.29)pCapital loss ( 2,401,483)iii) Capital loss per share (pence) (5.31)piv) Weighted average number of shares in issue in the period 45,222,731 Ordinary Shares fund Six months ended Year ended 30 June 2006 31 December 2006 £ £ Total earnings after taxation (1,063,082) ( 473,972)i) Basic earnings per share (pence) (7.07)p (3.17)pNet revenue from ordinary activities after taxation (8,907) 8,291ii) Revenue return per share (pence) (0.06)p 0.06pCapital loss (1,054,175) ( 482,263)iii) Capital loss per share (pence) (7.01)p (3.23)p iv) Weighted average number of shares in issue in the period 15,037,434 14,913,380 C Shares fund Six months ended Year ended 30 June 2006 31 December 2006 £ £ Total earnings after taxation (4,239,157) ( 3,666,801)i) Basic earnings per share (pence) (11.90)p (10.38)pNet revenue from ordinary activities after taxation (185,585) (263,421)ii) Revenue return per share (pence) (0.52)p (0.75)pCapital loss (4,053,572)) ( 3,403,380)iii) Capital loss per share (pence) (11.38)p (9.63)p iv) Weighted average number of shares in issue in the period 35,632,610 35,337,543 9. Net asset value per New Ordinary Share is based on net assets at the endof the period, and on 45,373,031 New Ordinary Shares, being the number ofOrdinary Shares in issue on that date. 10. The financial information for the six months ended 30 June 2007 has notbeen audited or previously published. The information for the year ended 31December 2006 does not comprise full financial statements within the meaning ofSection 240 of the Companies Act 1985. The financial statements for the yearended 31 December 2006 have been filed with the Registrar of Companies. Theauditors have reported on these financial statements and that report wasunqualified and did not contain a statement under Section 237(2) of theCompanies Act 1985. This information is provided by RNS The company news service from the London Stock Exchange