7th Jun 2006 09:03
Foresight 4 VCT PLC07 June 2006 Foresight 4 VCT plc Investment Objective The objective of Foresight 4 VCT plc is to provide private investors withattractive returns from a portfolio of investments in fast growing unquotedtechnology-based companies in the United Kingdom. It is the intention tomaximise the tax-free income available to investors from a combination ofdividends and interest received on investments and the distribution of capitalgains arising from trade sales or flotations. Summary - Net asset value per share as at 28 February 2006 was 104.6p (compared to theequivalent 101.9p as at 28 February 2005 and 102.8p as at 31 August 2005). - £12,090,000 of new share capital was raised by April 5 2006. - Three successful realisations were achieved during the year, namely IncaDigital Printers, Footfall Limited and the sale of The Casella Group's principaloperating subsidiary, Casella Consulting, which together realised £5.875m incash, generating profits of £3.045m. Following its sale to Invitrogen inOctober 2004, DNA Research Innovations made excellent progress with its earn outduring the year, achieving six of its seven milestones, generating £863,500 incash, all profit. - The Company invested £1,052,000 in follow-on funding rounds in four portfoliocompanies, namely Advanced Visual Technology (£200,000 net of a £50,000repayment), EnSeal Systems (£252,000), OLED-T (£300,000) and Healthgain(£300,000). - Five new investments totalling £1.425m were made during the year; £200,000 inalwaysOn (VOiP telephony services), £200,000 in Covion (facilities management),£275,000 in Aigis Blast Protection (blast absorbing materials and products),£250,000 in Infrared Integrated Systems (infrared thermal imaging detectors andcameras) and £500,000 in Trilogy Broadcast (interoperable audio communicationsequipment for security and broadcast applications). - Reflecting the above successful realisations, an interim dividend of 5p pershare was paid on 30 December 2005 after several years without any dividendpayments. No final dividend is being recommended. Chairman's Statement I am pleased to report a year of considerable progress and increased activityfor your Company. Having raised a total of £12,090,000 of new share capitalfrom March 18 2005 to April 5 2006 (the end of the 2005/2006 tax year), Ibelieve your Company has now firmly entered a new phase of its life and, withthese new financial resources, can build on the progress made over the lasteighteen months and take advantage of the deal flow being generated by itsManager, Foresight Venture Partners. Reflecting three successful realisations, I am pleased to report that a dividendof 5p per share was paid on 30 December 2005, the first for several years. Offers for Subscription, Share Consolidation, Change of Chairman As previously announced, £820,000 was raised in April 2005 through an initialoffer for subscription to existing shareholders. To facilitate a second offerto the general public the share capital was restructured on 13 May 2005 withshareholder approval, which resulted in three of ordinary 5p shares beingconsolidated into one new ordinary 1p share. This effectively trebled the shareprice but, since shareholders then held only one third of their original numberof shares, did not affect the overall value of their shareholdings. On 23 June 2005, I replaced Roger Brooke as Chairman who remains a director onthe Board. On 2 September 2005, the second offer was formally announced, comprising alinked offer for subscription to the investing public with Foresight 3 VCT plc,another of the five VCTs managed by Foresight Venture Partners. By the closingdate of April 5 2006, both funds had each raised £11,270,000 of new sharecapital. These new funds will facilitate further investment and the Company'sability to implement share buy backs, enhance liquidity in the Company's sharesand spread risk and running costs over a larger asset base while also improvingdividend prospects. The performances of a number of portfolio companies continue to improve,reflecting growing demand and strong sales pipelines, for example EQOS andAdeptra. Through its US partner, Vectorcommand continues to make good progressin the USA with its leading emergency simulation and training software. After adifficult period, Nomad Software is now enjoying strong demand for its marketleading debit and prepaid card processing services. Investment activity During year to 28 February 2006, £1,052,000 was invested in follow-on fundingrounds in four portfolio companies, namely Advanced Visual Technology (£200,000net of a £50,000 repayment), EnSeal Systems (£252,000), OLED-T (£300,000) andHealthgain (£300,000). Advanced Visual Technology continues to win orders frommajor retailers in Europe and the USA. In August 2005, OLED-T raised £3.28m ofnew share capital through a restructuring to finance the commercialisation ofits promising organic light emitting display materials. OLED displays (OrganicLight Emitting Displays) are forecast to grow rapidly to over 10% of the globaldisplay market by 2010. Having been involved in customer trials for some time,OLED-T is now well placed to secure substantial licensing deals with majordisplay screen manufacturers. Five new investments totalling £1.425m were made during the year, namely:£200,000 in alwaysOn, a provider of VOiP telephony services to small and mediumsized companies; £200,000 in Covion, a fast growing facilities management groupproviding a range of outsourced services to large companies; £275,000 in AigisBlast Protection, which develops blast absorbing materials and products usingits proprietary technology; £250,000 in Infrared Integrated Systems, amanufacturer of infrared arrays and cameras and thermal imaging detectors usedfor counting people and security applications; and £500,000 in TrilogyBroadcast, a designer and manufacturer of interoperable audio communicationsequipment for security and broadcast applications. During the year to 28 February 2006, upward revaluations were made to fiveinvestments totalling £883,000 as a result of improved trading performance.These included EQOS (£509,000) which continues to win substantial orders for itshighly regarded e-collaboration software from major retailers worldwide, andSnell & Wilcox (£162,000) reflecting the continuing progress being made inimproving trading and profits. Provisions of £1.59m were made against theprevious valuations of six investments, including £915,000 against EnSealSystems, £145,000 against The Casella Group and £200,000 against OLED-T as partof the above restructuring. Despite gaining several major customers over recentyears, Reqio finally succumbed to continuing slow market uptake for its databasecataloguing software and was placed into administration on 31 August, resultingin a provision of £37,000. Realisation activity In June 2005, INCA Digital Printers was acquired by Dainippon Screen Mfg. Co. ofKyoto, Japan for £30m in cash, realising £2.3m in cash for Foresight 4,generating a return of three times the original cost of investment of £756,000.In May 2005, The Casella Group sold its principal operating subsidiary, CasellaConsulting Limited, one of the UK's leading environmental consultancies, for£28.8m to Bureau Veritas, a major international environmental consultancy. Thisdisposal enabled Casella to redeem all its bank borrowings and a significantpart of its shareholder loans, including £746,000 to Foresight 4. In December2005, Footfall Limited was acquired by Experian, the leading internationalconsumer information provider with annual sales of $2.5bn, for a cashconsideration in excess of £30m, realising £2.8m in cash for Foresight 4 andgenerating a return of 2.2 times the original cost of investment of £1.3m. The successful sale in October 2004 of DNA Research Innovations to InvitrogenCorporation of the USA realised £1.4m in cash at completion plus an earn out ofup to a further £1.4m if seven technical milestones were achieved, compared withthe original cost of investment of £1m. Excellent progress was made with DNAResearch's earn out during the year, with six of the seven milestones beingachieved, generating cash receipts of £863,500. Work on the remaining milestoneis progressing satisfactorily and a further payment of £568,000 was releasedfrom escrow during May 2006. Balance sheet The net asset value per share as at 28 February 2006 was 104.6p following thepayment of the 5p capital dividend, compared to the equivalent 101.9p as at 28February 2005 and 102.8p as at 31 August 2005. Valuation policy The investments held by the company that are not quoted on AIM, OFEX or theLondon Stock Exchange have been valued in accordance with the InternationalPrivate Equity and Venture Capital Guidelines developed by, alongside otherorganisations, the British Venture Capital Association ("BVCA") 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 OFEX are stated at the bid priceas at 28 February 2006. The move from mid-market prices to bid prices, as aresult of the introduction of new accounting standards, has resulted in areduction in net assets at 28 February 2006 of approximately £8,000. Theportfolio valuations are prepared by Foresight Venture Partners and are subjectto approval by the Board. Dividend Reflecting substantial cash gains arising during the year from the sale of INCADigital Printers, Footfall and earn out payments achieved by DNA ResearchInnovations, the Board declared an interim dividend of 5p per share which waspaid on 30 December 2005 to shareholders on the Register of Members on 16December 2005. However, the Board is not recommending a final dividend for yearto 28 February 2006. The Board would consider paying further dividends assoon as they considered that the Company had generated sufficient profits andhad sufficient cash resources to meet its projected investment requirements. Purchase of own shares 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.With sufficient cash resources following the realisations referred to above, theCompany repurchased the equivalent of 681,667 shares at a cost of £605,000during the year. Outlook Reviewing the portfolio as a whole over the year, I am pleased by the overallimprovement in performance, as evidenced by recent realisations, the quality ofnew investments made by the Manager, Foresight Venture Partners and improvingprospects of various portfolio companies. I believe the portfolio has thepotential to generate value over time and dividends for shareholders as long aseconomic conditions remain benign and capital investment continues at itspresent level. Approaches continue to be received from possible purchasers forvarious companies in the portfolio which could lead to exits in due course. Having successfully raised £12.1m of new capital through the offers forsubscription, your Company is now well placed to make further new investmentsand I look forward to reporting on further progress in the Summer. Annual General Meeting The Company's Annual General Meeting will take place on 4 July 2006. I lookforward to welcoming you at the meeting and I would also like to take thisopportunity to thank all shareholders for their continued support. Peter Dicks Chairman For further information please contact:Foresight Venture Partners, Tel: 01732 471800Teather and Greenwood, Tel: 020 7426 9000 Unaudited Income Statement for the year ended 28 February 2006 2006 2005 (restated) £'000 £'000 Investment income and deposit interest 158 47Investment management fees (371) (273)Other expenses (259) (298)Unrealised loss on revaluation of investments (1,363) (1,523) Operating loss (1,835) (2,047) Gain / (loss) on realisation of investments 3,064 (1,645) Profit/(loss) on ordinary activities before taxation 1,229 (3,692) Tax on ordinary activities - - Profit/(loss) ordinary activities after taxation 1,229 (3,692) Balance transferred to/(from) reserves 1,229 (3,692) Earnings per share (restated for the share 9.5p (30.9)pconsolidation) Statement of Total Recognised Gains and Lossesfor the year ended 28 February 2006 2006 £'000 Profit for the year 1,229Impact of application of new accounting policies (12) Total recognised gain relating to the year 1,217 All items in the above statement account derive from continuing operations. Nooperations were acquired or discontinued in the year. The Company has only one class of business and derives its income frominvestments made in shares, securities and bank deposits. Income frominvestments is recognised on an accruals basis. Unaudited Balance Sheet at 28 February 2006 2006 2005 (restated) £'000 £'000 Non-current assetsAssets held at fair value through profit and 9,288 11,467loss - Investments Current assetsDebtors 1,575 1,073Money market and other deposits 4,209 -Cash 1,611 308 7,395 1,381Creditors: amounts falling due within one year (117) (663) Net current assets 7,278 718 Net assets 16,566 12,185 Capital and reservesCalled-up share capital 158 1,793Share premium account 2,132 23,581Capital redemption reserve 1,817 9Revaluation reserve (8,963) (7,600)Profit and loss account 21,422 (5,598) Equity shareholders' funds 16,566 12,185 Net asset value per share 104.6p 101.9p(restated for 1 for 3 share consolidation) Unaudited Cashflow Statementfor the year ended 28 February 2006 2006 2005Cashflow from operating activities £'000 £'000Investment income received 181 30Deposit and similar interest received 6 2Investment management fees paid (259) (350)Secretarial fees paid (61) (60)Other cash (payments)/receipts (1,639) 59Net cash outflow fromoperating activities and returns on investment (1,772) (319)Taxation - -Financial investmentPurchase of unquoted investments and (2,527) (613)investmentsquoted on AIMNet proceeds on sale of unquoted investments 5,758 1,479Net proceeds on deferred consideration 720Net proceeds on sale of quoted investments 45 -Repurchase of own shares (513) 25Net capital inflow from financial investment 3,483 891Equity dividends paid (690) -Net cash inflow before financing and liquidresource management 1,021 572Management of liquid resourcesLoans repaid down - (614)Movement in money market and other deposits (4,165) - (4,165) (614)FinancingProceeds of fund raisings 4,768 -Expenses of fund raisings (321) - 4,447 -Increase/(decrease) in cash 1,303 (42)Reconciliation of net cashflow to movementin net cash/(debt)Increase/(decrease) in cash for the year 1,303 (42)Net cash/(debt) at start of 308 (264)yearLoans repaid - 614Net cash at end of year 1,611 308 Reconciliation of operating loss to net cashflow from operating activitiesOperating loss (1,835) (2,047)Unrealised losses on 1,363 1,523investmentsIncrease in creditors 18 1(Increase)/decrease in (1,318) 204debtorsNet cash outflow from operating activities (1,772) (319) Notes 1. The unaudited preliminary results have been prepared on the basis ofaccounting policies set out in the statutory accounts of the Company for theyear ended 28 February 2005, except for the changes noted below: The Company has taken advantage of the exemptions conferred by S.229(2) andS.229(3)(c) of the Companies Act 1985 from consolidating EnSeal Systems Limitedas the value of the company is immaterial to Foresight 4 VCT plc, an investmentwhere Foresight 4 VCT plc holds in excess of 50% of the share capital. The accounts to 28 February 2005 have been restated to reflect the changes inpresentation and measurement following the introduction of Financial ReportingStandards ("FRS") 25 and FRS 26. FRS 25 Financial Instruments: Disclosure and Presentation; and FRS 26 Financialinstruments: Measurement All investments held by the Company are classified as 'fair value through profitand loss'. For investments actively traded in organised financial markets, fairvalue is generally determined by reference to Stock Exchange market quoted bidprices at the close of business on the balance sheet date. Previously all listedinvestments were valued using closing mid-market prices at the balance sheetdate. The transaction costs incurred when purchasing assets are now written off to theincome statement in the period they occur. Unquoted investments have been valued in accordance with the InternationalPrivate Equity and Venture Capital Valuation guidelines. Quoted investments arestated at bid prices. 2. These are not statutory accounts in accordance with section 240 of theCompanies Act 1985 and are unaudited. The full audited accounts for the yearended 28 February 2005, which were unqualified, have been lodged with theRegistrar of Companies. No statutory accounts in respect of any period after 28February 2005 have been reported on by the Company's auditors or delivered tothe Registrar of Companies. 3. Copies of the Annual Report will be sent to shareholders and will beavailable for inspection at the Registered Office of the Company at Swiss LifeHouse, South Park, Sevenoaks, Kent TN13 1DU. 4. Number of shares in issue 15,840,149 (2004: 35,862,753). 5. Post Balance Sheet Events The joint offer for subscription with Foresight 3 VCT plc closed on 5 April 2006having raised an additional £7.4 million post year-end. This took the totalraised by Foresight 4 VCT plc to £11.3 million. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Foresight Ent