Interim Results
Foresight 4 VCT PLC
31 October 2007
Announcement of half-yearly financial results for the six months ended 31 August
2007. This announcement constitutes the Half-yearly Financial Report and copies
can also be accessed via www.foresightvct.com.
Foresight 4 VCT plc (the 'Company'), which invests in fast-growing unquoted
technology-based companies in the United Kingdom, today announces the
half-yearly financial results for the six months ended 31 August 2007. This
Half-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 (compared
to 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 Global
Immersion (£267,000).
• Eight follow-on investments totaling £1,270,000 were made in Trilogy
Communications (£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 holding
in Oasis Healthcare plc
Chairman's Statement
I am pleased to report that your Company has continued to build on recent
progress during the six months under review, is continuing an active new
investment programme as well as realising both legacy and more recent
investments from within the portfolio. Reflecting recent investment gains, I am
pleased to announce that an interim dividend of 5.0p per share will be paid to
shareholders on 28 December 2007.
Although Foresight 4's holding in Oasis Healthcare was relatively small, when
combined with the holdings of other Foresight VCTs, Foresight Group funds held
over 10% of Oasis' share capital, enabling significant influence to be exerted
on the sales process and ultimately in achieving a particularly attractive final
offer. In my report 12 months ago, Oasis was valued at 28p per share but was
sold 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 in
May 2005. This was the first new investment by your Company following Foresight
Group's appointment as Investment Manager in July 2004. In the period since the
investment was made, Covion has grown its turnover from £10 million per annum to
a current annualised rate in excess of £30 million. Subsequent to the period
end, Covion was sold to Balfour Beatty for total proceeds of £33 million of
which Foresight 4 will receive some £850,000 over 4 times its original
investment of £200,000.
The performance of a number of portfolio companies continued to improve,
reflecting growing demand and strong sales pipelines, most notably Nomad
Payments, Adeptra and Trilogy. Nomad Payments is now enjoying increasing demand
for its market leading debit and prepaid card processing services while Nomad
CORTEX, the original card authorisation software business is performing
particularly strongly. Adeptra is enjoying growing sales for its automated
alert services, in particular winning more contracts from major financial
institutions in the USA, UK and now Europe. Trilogy is also enjoying increasing
demand 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 towards
developing its own specialist online auction platforms, the first of which
ToyMart (serving the collectible toy market) is making good progress and,
additionally, it is selling its ClockWorx workflow software suite to other
online product resellers.
Investment activity
The level of new investment activity remained high during the six months under
review, with four new investments being made totalling £2,147,000: £500,000 in
TFC 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 ring
and spring products to customers across a wide range of industries, including
aerospace, automotive, hydraulics and petrochemicals.
Iskra Wind Turbines is a Loughborough based manufacturer of tree-sized wind
turbines, typically 5.4m rotor diameter on a 12m high tower. The company has
developed a high efficiency turbine suitable for volume manufacture that has the
best price/performance of any tree-sized turbine currently commercially
available.
O-Gen's business is to develop, build, own and operate plants which convert
organic matter into combined heat and power ('CHP'). The market is driven by
government regulation and incentives, specifically landfill tax which is
currently £24 per tonne increasing at £8 per tonne per annum and is driving
waste operators towards cheaper and more efficient methods of waste disposal.
The electricity generated from processing the organic matter will be sold to the
National Grid and as a renewable energy source attracts Renewable Obligation
Certificates ('ROCs') which generate further revenue. According to UK
legislation, 10% of power generated in the UK must be from renewable sources by
2010 compared to 4% generated currently.
Global Immersion, a management buy out completed in July, designs and installs
sophisticated projection systems in planetariums and immersive theatres
Worldwide and provides related maintenance services.
During the period, £1,270,000 was invested in follow-on funding rounds in eight
portfolio 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 further
capital to fund a significant acquisition, which should help the company achieve
traction in its target markets, particularly the USA. More recent investments
Trilogy, The Bunker, Auctioning4u and Skillsmarket required follow-on funding
rounds as they continued to develop their product offerings following Foresight
4's original investment. The Adeptra fundraising was to support their
transition to a direct sales model and support strong growth (sales increased
from $8.8 million in 2005 to $12 million in 2006), including winning their first
3 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 to
Duke Street Capital followed several bids and counter bids from parties
interested in buying Oasis' expanding portfolio of dental practices and
represents a significant premium to the share price of 28p per share just 12
months ago.
On 17 October 2007, the Company sold its entire holding in Covion to Balfour
Beatty, 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 steady
flow of dividends from income and realised capital gains.
Reflecting recent realised gains, the Board has declared an interim dividend of
5.0p per share for the year ending 28 February 2008 to be paid on 28 December
2007. The ex-dividend date will be 19 December 2007 and the record date will be
21 December 2007.
Valuation policy
Investments held by the Company have been valued in accordance with the
International Private Equity and Venture Capital (IPEVC) guidelines developed by
the British Venture Capital Association and other organisations under which
investments are valued, as defined in the guidelines, at 'fair value'.
Ordinarily, unquoted investments will be valued at cost for the 12 months
following the date of acquisition as the most suitable approximation of fair
value unless there is an impairment in value during the period. Quoted
investments and investments traded on AIM and PLUS (formerly OFEX) are valued at
the bid price as at 31 August 2007. The portfolio valuations are prepared by
Foresight 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 (linked
with other Foresight VCTs) for each to raise up to £2.5 million in the current
and next tax years. This will enable your Company to remain an active investor
in the current market and take advantage of new opportunities currently being
reviewed by Foresight Group.
It continues to be the Company's policy to consider repurchasing shares when
they 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 to
Foresight Group on 1 October 2007.
Outlook
The market in which Foresight 4 operates continues to be encouraging in terms of
potential new investment opportunities, as evidenced by the volume of new
investments completed during the period and the current deal flow being reviewed
by Foresight Group. Furthermore, merger and acquisition activity continues to
be buoyant as witnessed by the realisations noted above. To date, there has
been no significant fallout from the recent credit crunch on the levels of
merger and acquisition activity at the smaller end of the market in which
Foresight 4 operates and with that in mind, Foresight Group will continue to
actively pursue potential realisations from within the portfolio.
Peter Dicks
Chairman
30 October 2007
Descriptions of Top Ten Investments by Value
Nomad Payments Ltd
is a leading provider of innovative card processing services and card payment
processing software based in London. Nomad Payments provides outsourced card
processing services for issuers of debit and prepaid cards and is a leader in
the latter emerging but fast growing market in the UK and Europe. Nomad CORTEX
supplies sophisticated retail payments software and systems used in handling
payments via debit and credit cards and ATMs, principally to retail banks in
Central and Eastern Europe, Africa and the Middle East. Nomad continues to win
more customers and launch more prepaid card programmes.
VectorCommand Ltd
is a globally recognised authority on incident command and continues to secure
orders for its core Fire Simulation and Training suites. Thirty-six UK Fire
Brigades and eight Australian Fire Authorities have deployed the system, and
other users are based in Europe, the USA, Canada and the West Indies. The
company is expanding its product portfolio and the introduction of multi-agency
Emergency Management tools has led to sales growth over the last 12 months,
especially overseas and further growth is expected in the USA through its US
partner.
Eqos Ltd
develops and markets e-collaboration and CRM (customer relationship management)
software for business to business transactions, principally sold to major UK
retailers for improving the efficiency of their supply chains. A significant
proportion of annual sales revenue comes from repeat orders from existing
customers but annual sales growth depends on winning a small number of orders
from new customers. Following the establishment of a US sales office, good
progress 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-production
films and to publishers and developers of interactive games on DVD. Authoring is
the process of transferring video and audio content to DVD and adding menus and
links to allow consumers to navigate the content. In August 2007, ZOO acquired
the authoring business of Scope Seven, providing the group with a base near its
key 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 9
million video ads per month including for blue chip clients such as BMW. The
company is also the UK market leader in online subsite advertising whereby full
page 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 food
grade packaging material. Following a £12m private and public sector funding
issue led by Foresight Venture Partners, the 35,000 tonne capacity plant will be
built in Dagenham and is expected to be fully operational during the first half
of 2008.
Advanced Visual Technology Ltd
develops and markets retail space management software and interactive hand-held
mobile store planners and now has 50 customers worldwide including Tesco, WH
Smith, Barclays and HMV in the UK and Office Depot, Staples and KMart in the
USA. Its products deliver impressive financial improvements for customers. The
company continues to win new customers worldwide while the prospects for the
sale of the new hand-held planner are promising.
Trilogy Communications Ltd
is a world-class supplier of Audio Communications and Infrastructure equipment
to the broadcast, defence, emergency management and commercial and industrial
sectors. Trilogy has a reputation for innovative design, ease of operation and
reliability. The company's products and systems are used in more than 40
countries around the world and excellent progress is being made with US defence
contractors which generates significant strategic value for the business.
Auctioning4U Ltd
through Auctioning4U, companies, individuals and government organisations can
sell items via eBay, Amazon or other electronic auction platforms - anonymously
- without the inconvenience of writing descriptions, digitally photographing the
goods, 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 Clockworx
workflow software.
Covion Holdings Ltd
provides total facilities management services ('TFM'), or in its terminology '
Facilities Infrastructure Services' ('FIS'), to private sector clients in the
office and industrial sectors. Covion manages all the client's facilities and
subcontracts specific services where necessary. It seeks to form unique and
close partnerships with its clients in the form of joint executive boards to
which its site-based FIS manager reports. Key clients are Britvic, Logica,
Anglian Windows and Sara Lee. The Covion business was sold to Balfour Beatty
Group on 17 October 2007, realising £855,000 of proceeds for Foresight 4 against
the original investment cost of £200,000 and 31 August 2007 valuation of
£808,294.
Investment Summary
31 August 28 February
Amount 2007 Valuation Amount 2007
Investment invested Valuation Methodology Invested Valuation
Nomad Payments Ltd 1,769,968 2,347,047 Discounted revenue 1,769,968 2,347,047
multiple
VectorCommand Ltd 1,468,750 1,550,400 Price of recent 1,468,750 1,550,400
funding round
Eqos Ltd 1,050,000 1,152,011 Discounted revenue 1,050,000 1,152,011
multiple
Auctioning4u Ltd 1,021,000 1,021,000 Cost 825,000 825,000
ZOO Digital Group plc 1,150,000 1,108,590 Bid price 850,000 808,590
Utarget plc 1,000,000 1,000,000 Cost 1,000,000 1,000,000
Closed Loop London Ltd 1,000,000 1,000,000 Cost 1,000,000 1,000,000
Advanced Visual Technology Ltd 2,032,183 939,730 Discounted revenue 2,007,183 939,730
multiple
Trilogy Communications Ltd 825,000 825,000 Cost 500,000 500,000
Covion Holdings Ltd 200,000 808,294 Discounted offer 200,000 536,370
proceeds
SkillsMarket Ltd 539,998 762,220 Price of recent 399,998 399,998
funding round
Iskra Wind Turbines Ltd 750,000 750,000 Cost - -
Ixaris Systems Ltd 750,000 750,000 Cost 750,000 750,000
O-Gen UK Ltd 630,000 630,000 Cost - -
The Bunker Secure Hosting Ltd 626,768 626,768 Cost 400,000 400,000
TFC Europe Ltd 500,000 500,000 Cost - -
Oled-T Ltd 1,010,000 441,701 Discounted revenue 1,010,000 441,701
multiple
Snell & Wilcox (UK) Ltd 839,137 413,525 Discounted revenue 839,137 538,274
multiple
Probability plc 450,000 307,894 Bid price 450,000 219,079
Aigis Blast Protection Ltd 275,000 275,000 Cost 275,000 275,000
Global Immersion Ltd 266,666 266,666 Cost - -
Infrared Integrated Systems Ltd 250,005 250,005 Cost 250,005 250,005
Adeptra Ltd 1,283,272 245,098 Discounted revenue 1,235,900 363,021
multiple
alwaysON Group Ltd 210,070 210,070 Cost 200,000 200,000
Sindicatum Carbon Capital Ltd 200,063 210,040 Price of recent 200,063 210,040
funding round
The Casella Group Ltd 774,291 171,052 Discounted offer 774,291 171,052
proceeds
Healthgain Solutions Ltd 1,299,989 - Nil Value 1,299,989 -
Oasis Healthcare plc - - Sold 276,607 232,349
Signum 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 in
accordance with United Kingdom Generally Accepted Accounting Practice ('UK
GAAP')
In preparing these summarised financial statements for the period to 31 August
2007, we the Directors, confirm that to the best of our knowledge:
(a) the summarised set of financial statements has been prepared in accordance
with the pronouncement on interim reporting issued by Accounting Standards
Board;
(b) the interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months 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 in
accordance with UK GAAP of the state of affairs of the Company and of the profit
and loss of the Company for that period and comply with UK GAAP and Companies
Act 1985 and;
(d) the interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transactions and changes
therein).
The Half-yearly Financial Report has not been audited or reviewed by the
auditors.
By order of the Board
Peter Dicks
Chairman
30 October 2007
Unaudited Profit and Loss Account
for 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 243 261 541
Investment management fees (336) (287) (588)
Other expenses (135) (130) (249)
Unrealised gain/(loss) on revaluation of 312 (1,354) 3,081
investments
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' Funds
for 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 16,566
Net proceeds from share issues (3) 7,113 7,113
Shares 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 Sheet
at 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 assets
Assets held at fair value through profit and loss - 18,562 10,558 15,110
investments
Current assets
Debtors 253 253 289
Money market and other deposits 3,607 10,104 7,335
Cash 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 7,571
Net assets 22,661 22,190 22,681
Capital and reserves
Called-up share capital 220 225 224
Share premium account 9,173 9,176 9,176
Capital redemption reserve 1,824 1,819 1,820
Profit 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 Statement
for 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
Cash flow from operating activities
Investment income received 70 57 89
Deposit and similar interest received 133 181 412
Investment management fees paid (167) (323) (652)
Secretarial fees paid (37) (36) (68)
Other cash payments (103) (180) (239)
Net cash outflow from
operating activities and returns on investment (104) (301) (458)
Taxation - - -
Returns on investment and servicing of finance
Purchase of unquoted investments and investments (3,417) (2,377) (5,652)
quoted on AIM
Net proceeds on sale of unquoted investments - 573 598
Net proceeds on deferred consideration - 925 925
Net proceeds on sale of quoted investments 539 14 14
Loan 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)
management
Management of liquid resources
Movement in money market and other deposits 3,728 (5,896) (3,126)
3,728 (5,896) (3,126)
Financing
Proceeds of fund-raisings - 7,524 7,524
Expenses of fund-raisings (3) (411) (411)
(3) 7,113 7,113
Increase/(decrease) in cash 380 (144) (1,602)
Reconciliation of net cashflow to movement
in net cash
Increase/(decrease) in cash for the period 380 (144) (1,602)
Net cash at start of period 9 1,611 1,611
Net cash at end of period 389 1,467 9
Reconciliation of operating profit/(loss) to net
cash flow from operating activities
Operating profit/(loss) 84 (1,510) 2,785
Unrealised 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 of
accounting policies set out in the statutory accounts of the Company for the
year ended 28 February 2007. Unquoted investments have been valued in accordance
with IPEVC guidelines. Quoted investments are stated at bid prices in accordance
with the IPEVC guidelines and Generally Accepted Accounting Practice.
2. The information set out in this Half-yearly Financial Report does not
constitute the Company's statutory accounts within the terms of Section 240 of
the 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 not
constitute statutory accounts within the terms of Section 240 of the Companies
Act 1985 and is derived from the statutory accounts for the financial year,
which have been delivered to the Registrar of Companies. The auditors reported
on those accounts; their report was unqualified and did not contain a statement
under Section 237(2) or (3) of the Companies Act 1985.
3. Copies of the Half-yearly Financial 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. Copies of the Half-yearly Financial
Report are also available electronically at www.foresightvct.com
4. The number of shares in issue at 31 August 2007 was 21,951,339 ordinary
shares (2006: 22,481,506 ordinary shares). The weighted average number of shares
in issue during the period was 22,165,119 ordinary shares (2006: 21,522,401
ordinary shares).
5. Earnings for the first six months should not be taken as a guide to the
results for the full year.
6. Foresight Group, as Investment Manager of the Company, is considered to be a
related 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 from
Foresight Group. At the 31 August 2007, the amount due to Foresight Group
disclosed under creditors was £119,546.
VCF Fund Managers Limited, as Secretary of the Company and as a subsidiary of
Foresight Group, is also considered to be a related party of the Company. During
the period, services of a total value of £31,427 (31 August 2006: £30,690, 28
February 2007: £62,239) were purchased by the Company from VCF Fund Managers
Limited. At the 31 August 2007, the amount due by VCF Fund Managers Limited
disclosed under debtors (prepayments) was £18,931.
No Director has, or during the period had, a contract of service with the
Company. Bernard Fairman is Managing Partner of Foresight Group, the Company's
investment manager. Subject to these exceptions, no Director was party to, or
had an interest in, any contract or arrangement with the Company at any time
during 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 22,681
Share issues in the period - - - - -
Expenses on share issues - (3) - - (3)
Shares repurchased in the period (4) - 4 (363) (363)
Retained profit for the period - - - 346 346
As 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 20,286
Unrealised depreciation (317) (4,859) (5,176)
Valuation at 28 February 2007 1,260 13,850 15,110
Movements in the period:
Purchases at cost 300 3,117 3,417
Disposal proceeds (539) - (539)
realised gains 262 - 262
Unrealised appreciation 133 179 312
Valuation at 31 August 2007 1,416 17,146 18,562
Book cost at 31 August 2007 1,600 21,826 23,426
Unrealised 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
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