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<strong>Foresight</strong> 4 VCT plc<br />
Interim Report for the six months<br />
ended 31 August 2005
Objective<br />
The objective of <strong>Foresight</strong> 4 VCT plc is to provide private investors with attractive returns from<br />
a portfolio of investments in fast growing unquoted technology-based companies in the<br />
United Kingdom. It is the intention to maximise the tax-free income available to investors from<br />
a combination of dividends and interest received on investments and the distribution of capital<br />
gains arising from trade sales or flotations.<br />
VCT Tax Benefit for Shareholders beyond 6 April 2004<br />
To obtain VCT tax reliefs on subscriptions up to £200,000 per annum, a VCT investor must be a<br />
‘qualifying’ individual over the age of 18 with UK taxable income. The tax reliefs for subscriptions<br />
since 6 April 2004 are:<br />
• Income tax relief of up to 40% on subscription of new shares, which is retained by<br />
shareholders if the shares are held for more than three years. This relief is available for<br />
the two tax years 2004/05 and 2005/06.<br />
• VCT dividends (including capital distributions of realised gains on investments) are not<br />
subject to income tax.<br />
• Capital gains on disposal of VCT shares are tax free, whenever the disposal occurs.<br />
Website: www.foresightvct.com<br />
Contents<br />
Summary and Chairman’s Statement 1<br />
Investment Summary 3<br />
Profit and Loss Account 9<br />
Statement of Total<br />
Recognised Gains and Losses 9<br />
Balance Sheet 10<br />
Summarised Statement of Cashflows 11<br />
Notes to the Interim Report 12<br />
Shareholder Information<br />
Corporate Information
Summary<br />
● As part of plans to raise up to £25m of new share capital, £832,000 was raised from existing shareholders in March 2005<br />
and the share capital was restructured in May 2005 (three ordinary shares of 5p each being consolidated into one new<br />
ordinary share of 1p each). An open offer for subscription to raise up to £24m was announced on 2 September 2005.<br />
● The Company invested £627,000 in follow-on funding rounds in three portfolio companies, namely Advanced Visual<br />
Technology (£200,000 net of a £50,000 loan repayment), Elam-T (£300,000) and EnSeal Systems (£127,000).<br />
● Two new investments were made during the period; £200,000 in alwaysON <strong>Group</strong> (VOiP telephony services) and<br />
£200,000 in Covion Holdings (facilities management).<br />
● During the period INCA Digital Printers was sold realising £2.3m in cash for <strong>Foresight</strong> 4 VCT, generating a return of<br />
three times the original cost of investment.<br />
● During the period The Casella <strong>Group</strong> sold its principal operating subsidiary, enabling Casella to redeem all its bank<br />
borrowings and a significant part of its shareholder loans, including £746,000 to <strong>Foresight</strong> 4 VCT.<br />
● Net asset value per share as at 31 August 2005 was 102.8p (compared to the equivalent 102.0p as at 28 February 2005),<br />
adjusted for the share consolidation in May 2005.<br />
● The Company has a mature portfolio of investments which, depending on their progress, could generate further<br />
successful exits and capital dividends.<br />
● The Company continues to exceed the 70% requirement for investment in qualifying holdings set by HM Revenue<br />
& Customs.<br />
Chairman’s Statement<br />
Peter Dicks<br />
Offers for Subscription, Share Consolidation and<br />
Change of Chairman<br />
During the six months to 31 August 2005, your Company<br />
made significant progress. In line with <strong>Foresight</strong> Venture<br />
Partners’ previously announced plans to raise further funds<br />
of up to £25 million for the Company via two offers, I am<br />
pleased to report that £832,000 was raised in March 2005<br />
through an initial offer for subscription to existing<br />
shareholders.<br />
On 23 June 2005, as previously announced, I replaced<br />
Roger Brooke as Chairman who still remains as a Director<br />
on the Board. I should like to take this opportunity to thank<br />
Roger for all his commitment and effort to the Company<br />
since inception.<br />
On 2 September 2005, following the three for one share<br />
consolidation, the second offer was formally announced,<br />
comprising a linked offer for subscription to the investing<br />
public with <strong>Foresight</strong> 3 VCT plc, another of the five VCTs<br />
managed by <strong>Foresight</strong> Venture Partners, whereby the two<br />
companies would raise up to £48m between them. Under<br />
this linked offer, which is currently open and will remain<br />
open until April 2006 (after which 40% income tax relief<br />
may be withdrawn), subscriptions will be divided equally<br />
between each company, thereby enabling each to raise up<br />
to £24m. With such new funds, your Company will be able<br />
to start a new phase in its life by participating in <strong>Foresight</strong><br />
Venture Partners’ strong deal flow and make new<br />
investments at a time in the economic cycle which is<br />
considered attractive. I consider this offer to be particularly<br />
important as it will increase the size of the Company,<br />
facilitate further investment and share buy backs, enhance<br />
liquidity in the Company’s shares and spread risk and<br />
running costs over a larger asset base while also<br />
increasing the prospects for dividends to recommence.<br />
In line with customary practice within the venture capital<br />
industry, it is proposed that <strong>Foresight</strong> Venture Partners be<br />
granted a performance related incentive as part of the<br />
second offer. Because of Bernard Fairman’s association<br />
with <strong>Foresight</strong> Venture Partners, your Company’s Manager,<br />
the grant of this performance related incentive is subject<br />
to shareholder approval and a circular and notice of<br />
extraordinary general meeting was recently sent to<br />
shareholders to seek such approval. This incentive relates<br />
solely to the new monies raised under this second offer and<br />
the terms are in line with current venture capital industry<br />
practice. I should like to confirm that the prior performance<br />
related incentive over the Company’s present assets will<br />
remain unchanged and unaffected by this new proposed<br />
carried interest incentive.<br />
The prospects of a number of portfolio companies continue<br />
to improve, with stronger order books and sales pipelines,<br />
most notably Footfall and EQOS. Advanced Visual<br />
Technology’s sales pipeline also continues to grow; its<br />
market leading retail space planning software is now being<br />
used by 50 major retailers Worldwide. Vectorcommand,<br />
through its US partner, continues to make good progress in<br />
the USA with its leading emergency simulation and training<br />
software. Other portfolio companies continue to experience<br />
more difficult trading conditions but are actively taking<br />
steps to improve their sales efforts or broaden their ranges<br />
of products or services in order to enhance sales growth.<br />
Investment activity<br />
During this six-month period, £627,000 was invested in<br />
follow-on funding rounds in three portfolio companies,<br />
namely Advanced Visual Technology (£200,000 net of a<br />
£50,000 loan repayment), Elam-T (£300,000) and EnSeal<br />
Systems (£127,000). In August 2005, Elam-T underwent a<br />
capital reorganisation, following which <strong>Foresight</strong> 4 VCT<br />
invested £300,000. The company raised the finance to<br />
continue the commercialisation of its promising organic<br />
light emitting display (OLED) materials, which are forecast<br />
to grow rapidly with applications in mobile phones, car<br />
stereos and MP3 players.<br />
<strong>Foresight</strong> 4 VCT plc<br />
1
Chairman’s Statement<br />
Two new investments were made during the period;<br />
£200,000 in alwaysON <strong>Group</strong>, a Reading based provider<br />
of VOiP telephony services to small and medium sized<br />
companies and £200,000 in Covion Holdings, a fast<br />
growing facilities management group providing a range<br />
of outsourced services to large companies.<br />
In June 2005, INCA Digital Printers was acquired by Dai<br />
Nippon Screen Mfg. Co. of Kyoto, Japan for £30m in cash,<br />
realising £2.3m in cash for <strong>Foresight</strong> 4 VCT and generating<br />
a return of three times the original cost of investment of<br />
£756,000. In May, The Casella <strong>Group</strong> sold its principal<br />
operating subsidiary, Casella Consulting Limited, one of<br />
the UK’s leading environmental consultancies, for £28.8m<br />
to Bureau Veritas, a major international environmental<br />
consultancy. This disposal enabled Casella to redeem all<br />
its bank borrowings and a significant part of its shareholder<br />
loans, including £746,000 to <strong>Foresight</strong> 4 VCT. The<br />
successful sale in October 2004 of DNA Research<br />
Innovations to Invitrogen Corporation of the USA realised<br />
£1.4m in cash at completion plus up to a further £1.4m<br />
if seven technical milestones are achieved, which will if<br />
received represent a return of nearly three times the original<br />
cost of investment of £1m. In August 2005, £144,000 was<br />
received on completion of the first milestone and work on<br />
the other six milestones is progressing satisfactorily.<br />
During the six-month period, upward revaluations were<br />
made to four investments totalling £0.7m as a result of<br />
improved trading performance or exit prospects. These<br />
included Footfall (£333,000) which continues to trade<br />
well and is on track for a possible listing and also EQOS<br />
(£246,000) which continues to win substantial orders<br />
from major retailers Worldwide for its highly regarded<br />
e-collaboration software. Provisions of £0.9m were made<br />
against the previous valuations of six investments. Despite<br />
gaining several major customers over recent years, Reqio<br />
finally succumbed to continuing slow market uptake for its<br />
highly regarded database cataloguing software and was<br />
placed into administration on 31 August, resulting in a<br />
provision of £37,000.<br />
Investment Objective<br />
Following shareholder approval granted on 28 February<br />
2005, the objective of <strong>Foresight</strong> 4 VCT plc is now to provide<br />
private investors with attractive returns from a portfolio of<br />
investments in fast growing unquoted largely technologybased<br />
companies in the United Kingdom. It is the intention<br />
to maximise the tax-free income available to investors from<br />
a combination of dividends and interest received on<br />
investments and the distribution of capital gains arising<br />
from trade sales or flotations.<br />
Net asset value<br />
The net asset value per share as at 31 August 2005 was<br />
102.8p, compared to the equivalent 102.0p as at<br />
28 February 2005 (post the three for one share consolidation).<br />
Valuation policy<br />
Unquoted investments have been valued in accordance<br />
with guidelines co-developed by the British Venture Capital<br />
Association (BVCA). Following changes to Generally<br />
<strong>Foresight</strong> 4 VCT plc<br />
2<br />
Accepted Accounting Practice listed securities are now<br />
valued at the bid price rather than the mid price as in<br />
previous periods with no discount applied.<br />
Dividend<br />
Over the last twelve months the Company has been<br />
successful in realising substantial cash gains on the sale<br />
of DNA Research Innovations and INCA Digital Printers<br />
and the Board is now in a position to recommence dividend<br />
payments. As a result it is proposed that subject to the<br />
approval of shareholders and sanction of the Court, the<br />
remaining share premium account be cancelled and a<br />
dividend of 5.0p per share be paid during December 2005.<br />
Future dividend payments are difficult to forecast but given<br />
the successful progress of the portfolio it is the Board’s<br />
intention to pay regular dividends.<br />
Venture Capital Trust Status<br />
<strong>Foresight</strong> 4 VCT has been granted approval as a Venture<br />
Capital Trust (VCT) under section 842AA of the Income<br />
and Corporation Taxes Act 1988 and it is intended that the<br />
business of the Company be carried on so as to maintain<br />
its VCT status.<br />
Purchase of own shares<br />
It continues to be the Company’s policy to consider<br />
repurchasing shares when they become available in order<br />
to provide liquidity for the Company’s shares. With sufficient<br />
cash resources following the realisations referred to above,<br />
the Company repurchased the equivalent of 406,667 shares<br />
at a cost of £349,600 during this six-month period.<br />
Outlook<br />
The prospects of certain portfolio companies continue to<br />
improve, with stronger order books and sales pipelines<br />
while others are actively taking steps to improve their sales<br />
efforts or broaden their ranges of products or services<br />
in order to enhance sales. This gives me confidence that<br />
the portfolio has the potential to generate value over time<br />
provided that economic circumstances continue to be<br />
stable and corporate investment continues at its present<br />
level. Investor confidence continues to improve as<br />
evidenced by the recent performance of the public<br />
markets. Approaches have been received from possible<br />
purchasers for certain portfolio companies, a number of<br />
which are being pursued and which could lead to exits<br />
in due course.<br />
The Company’s Manager, <strong>Foresight</strong> Venture Partners, is<br />
actively marketing the linked offer with <strong>Foresight</strong> 3 VCT plc<br />
for subscription to the investing public to raise up to £24m<br />
for your Company. As I indicated above, the success of<br />
this offer is important to the future of your Company as it<br />
will then be able to start a new phase in its life. I wish<br />
them every success in this fund raising and look forward<br />
to reporting the results of their efforts in early 2006.<br />
Peter Dicks<br />
Chairman<br />
15 November 2005
Investment Summary<br />
THE VENTURE CAPITAL FUNDS<br />
During the six-month period ended 31 August 2005, further investments totalling £627,000 were made in three existing<br />
portfolio companies: Advanced Visual Technology (£200,000 net of loan repayments), Elam-T (£300,000) and EnSeal Systems<br />
(£127,000). Two new investments were made during the year: alwaysON <strong>Group</strong> (£200,000) and Covion Holdings (£200,000).<br />
During the six-month period, upward revaluations were made to four investments totalling £0.7m as a result of improved<br />
trading performance or exit prospects. A prudent basis of valuation and continuing difficult market conditions for some<br />
portfolio companies have contributed to provisions of £0.9m being made against the previous valuations of six investments.<br />
INCA Digital Printers was sold during the period for £2,278,000 (including accrued interest) a three fold increase on the<br />
investment cost of £756,000. The main trading subsidiary of The Casella <strong>Group</strong> was sold in the year leading to a repayment<br />
of some of the loans and accrued interest. The first part of the earn-out on DNA Research Innovations, which was sold in<br />
October 2004, was received during the period and totalled £144,000 and was paid following the completion of the first<br />
milestone. Work on the other six milestones are progressing satisfactorily.<br />
The investment portfolio as at 31 August 2005 is detailed below:<br />
Adeptra Ltd<br />
develops and markets interactive content based alert services, principally to banks in the USA and UK, for debit and credit card notification where<br />
a transaction may be suspect or where an account is overdue. The company has made initial traction in these markets which provide very strong<br />
growth opportunities. In addition, there are many other potential applications including: share price, sports results and other content based alerts.<br />
The number of customers and volume of alerts are increasing steadily, however the valuation reflects the slower than expected rate of progress<br />
and the weight of prior ranking capital raised in October 2000.<br />
Dates of Investment: December 1999<br />
March 2000<br />
October 2000<br />
February 2005<br />
As at 31 August 2005 As at 28 February 2005 Year Ended: 31 December 2004<br />
£’000<br />
Amounts Invested £1,235,900 £1,235,900 Sales £2,611<br />
Valuation £191,968 £153,600 Loss Before Tax (£3,088)<br />
% Equity / Voting Rights 3.2% 3.2% Retained Loss (£2,928)<br />
Net Liabilities (£3,859)<br />
Valuation Methodology: discounted revenue multiple<br />
Advanced Visual Technology Ltd<br />
develops and markets retail space management software and now has 45 customers worldwide including Tesco, WH Smith, Barclays and HMV<br />
in the UK and Office Depot, Staples and KMart in the USA. Its products deliver impressive financial improvements for customers and more<br />
salesmen, partners and resellers have been recruited to increase marketing efforts. In the year to 30 September 2003, AVT achieved its first ever<br />
annual profit but trading in the year to 30 September 2004 has proved more difficult due to slower capital expenditure by customers and a loss<br />
was incurred.<br />
Dates of Investment: December 1998<br />
February 2000<br />
September 2000<br />
February 2001<br />
May 2004<br />
August 2005<br />
As at 31 August 2005 As at 28 February 2005 Year Ended: 30 September 2004<br />
£’000<br />
Amounts Invested £2,007,183 £1,806,844 Sales £1,648<br />
Valuation £1,073,477 £831,628 Loss Before Tax (£292)<br />
% Equity / Voting Rights 34.6% 34.6% Retained Loss (£292)<br />
Net Liabilities (£22)<br />
Valuation Methodology: indicative offer<br />
5<br />
<strong>Foresight</strong> 4 VCT plc<br />
3
Investment Summary<br />
alwaysON <strong>Group</strong> Ltd<br />
is a market leading provider of voice over IP (“VOiP”) services to SMEs. Call quality and security issues of VOiP have held back widespread<br />
adoption by SMEs to date, however, alwaysON’s solution addresses these issues by using the company’s own network coupled with proprietary<br />
software.<br />
Date of Investment: June 2005<br />
As at 31 August 2005 As at 28 February 2005 Year Ended: 31 March 2004<br />
£’000<br />
Amounts Invested £200,000 – Sales £1,991<br />
Valuation £200,000 – Loss Before Tax (£484)<br />
% Equity / Voting Rights 2.8% – Retained Loss (£417)<br />
Net Assets £183<br />
Valuation Methodology: price of recent funding round<br />
Covlon Holdings Ltd<br />
provides total facilities management services (“TFM”), or in its terminology “Facilities Integrated Services” (“FIS”), to private sector clients in the<br />
office and industrial sectors. Covion manages all the client’s facilities and subcontracts specific services where necessary. It seeks to form unique<br />
and close partnerships with its clients in the form of joint executive boards to which its site-based FIS manager reports. Key clients are Logica,<br />
Anglian Windows and Sara Lee.<br />
Date of Investment: May 2005<br />
<strong>Foresight</strong> 4 VCT plc<br />
4<br />
As at 31 August 2005 As at 28 February 2005<br />
Amounts Invested £200,000 – No audited accounts have<br />
Valuation £200,000 – been produced since<br />
% Equity / Voting Rights 2.4% – incorporation<br />
Valuation Methodology: price of recent funding round<br />
Elam-T<br />
develops organic emitting display materials targeting the flat-screen display market. Its materials are well suited to small portable devices offering<br />
brighter clearer colours, longer lifetimes and low power consumption. The company is working closely with key Far East product manufacturers<br />
which have given positive feedback, however commercial revenues are around twelve months away because of the lead time for building new<br />
manufacturing facilities. The $50bn global display screen market offers strong licence revenue opportunities.<br />
Dates of Investment: November 2000<br />
October 2001<br />
July 2005<br />
As at 31 August 2005 As at 28 February 2005 Year Ended: 31 July 2004<br />
£’000<br />
Amounts Invested £1,010,000 £710,000 Sales £12<br />
Valuation £300,000 £200,000 Loss Before Tax (£1,607)<br />
% Equity / Voting Rights 6.3% 6.3% Retained Loss (£1,607)<br />
Net Assets £601<br />
Valuation Methodology: price of recent funding round
Investment Summary<br />
EnSeal Systems Ltd<br />
has developed seal encoding technology for detecting cheque and document fraud. The technology is being used by the US Federal Reserve<br />
Bank and licenced to J P Morgan Chase, Fiserv (a major US banking services provider), an affiliate of Bank of America and HSBC USA. Several<br />
major US banks are keen to adopt this anti-fraud technology to sell as a revenue generating service to their corporate customers.<br />
Dates of Investment: February 2002<br />
February 2003<br />
June 2004<br />
March 2005<br />
June 2005<br />
As at 31 August 2005 As at 28 February 2005 Year Ended: 31 December 2004<br />
£’000<br />
Amounts Invested £1,237,783 £1,111,033 Sales £223<br />
Valuation £742,958 £1,111,033 Loss Before Tax (£373)<br />
% Equity / Voting Rights 75.0% 75.0% Retained Loss (£328)<br />
Net Liabilities (£593)<br />
Valuation Methodology: indicative offer less discount<br />
Eqos Ltd<br />
develops and markets e-collaboration and CRM (customer relationship management) software for business to business transactions, principally<br />
sold to major UK retailers for improving the efficiency of their supply chains. A significant proportion of annual sales revenue comes from repeat<br />
orders from existing customers but annual sales growth depends on winning a small number of orders from new customers.<br />
Dates of Investment: March 2000<br />
March 2001<br />
May 2001<br />
As at 31 August 2005 As at 28 February 2005 Year Ended: 30 September 2004<br />
£’000<br />
Amounts Invested £1,050,000 £1,050,000 Sales £2,515<br />
Valuation £745,845 £499,733 Profit Before Tax £65<br />
% Equity / Voting Rights 6.6% 6.6% Retained Profit £139<br />
Net Liabilities (£3,784)<br />
Valuation Methodology: revenue based multiple<br />
Footfall Ltd<br />
produces a key index for UK retail performance and is used by the Bank of England Monetary Policy Committee. The company is the UK’s leading<br />
provider of automated counting systems in retail environments and provides managed services to rapidly process and publish individual client<br />
data and national indices. A strong growth in sales during 2003 included prestigious projects such as the Bull Ring in Birmingham. Footfall is<br />
profitable and continues to forecast strong growth based on penetration of the UK and European retail markets.<br />
Dates of Investment: April 2000<br />
September 2001<br />
November 2001<br />
June 2002<br />
As at 31 August 2005 As at 28 February 2005 Year Ended: 31 March 2004<br />
£’000<br />
Amounts Invested £1,309,200 £1,309,200 Sales £6,157<br />
Valuation £1,600,000 £1,267,000 Profit Before Tax £386<br />
% Equity / Voting Rights 9.1% 9.1% Retained Profit £719<br />
Net Assets £2,733<br />
Valuation Methodology: indicative offer<br />
<strong>Foresight</strong> 4 VCT plc<br />
5
Investment Summary<br />
Healthgain Solutions Ltd<br />
continues to deliver good revenue growth in a tough market for healthcare contract sales teams. Growth has been achieved on the back of the<br />
company’s reputation for delivering high quality teams for specialist applications, and displacing more well known and larger contract sales team<br />
competitors. The company remains highly regarded for its specialist NHS knowledge and has a growing blue-chip customer base.<br />
Date of Investment: June 2000<br />
As at 31 August 2005 As at 28 February 2005 Year Ended: 30 April 2004<br />
£’000<br />
Amounts Invested £999,989 £999,989 Sales £2,511<br />
Valuation £1,260,000 £1,260,000 Loss Before Tax (£431)<br />
% Equity / Voting Rights 40.0% 40.0% Retained Loss (£571)<br />
Net Liabilities (£900)<br />
Valuation Methodology: indicative offer less discount<br />
Nomad Software Ltd<br />
is a London based developer and supplier of retail payments software and systems to the Central and Eastern European retail banking sector.<br />
The software is used in handling and processing of payments via debit and credit cards and ATMs. Reflecting a decline in demand from banks<br />
during 2002, Nomad incurred a substantial loss but in the second half of 2003 won a number of orders from new customers which substantially<br />
reduced the level of losses. This improvement in orders and sales has continued during 2004. In conjunction with IBM, Nomad has recently set<br />
up Debit Direct, a new outsourced debit card service to enable smaller UK financial institutions to issue such cards cost effectively and without<br />
heavy capital investment. Considerable interest has been shown by such institutions and a number of customers have already contracted for this<br />
new service.<br />
Dates of Investment: March 2000<br />
December 2001<br />
April 2004<br />
November 2004<br />
As at 31 August 2005 As at 28 February 2005 Year Ended: 31 December 2003<br />
£’000<br />
Amounts Invested £1,319,968 £1,319,968 Sales £3,345<br />
Valuation £701,291 £736,356 Loss Before Tax (£804)<br />
% Equity / Voting Rights 8.7% 8.7% Retained Loss (£736)<br />
Net Assets £280<br />
Valuation Methodology: revenue based multiple<br />
Oasis Healthcare plc<br />
is the UK’s leading privately focused dental group with a national chain of over 120 practices providing a full range of dental services, including<br />
implants and cosmetics. Oasis floated on AIM during 2000 and has since grown by a series of acquisitions. In February 2004, Oasis announced<br />
a profits warning for the year to 31 March 2004 and has since taken a number of steps to improve operational efficiency and profitability.<br />
Date of Investment: January 2003<br />
As at 31 August 2005 As at 28 February 2005 Year Ended: 31 March 2005<br />
£’000<br />
Amounts Invested £474,286 £474,286 Sales £74,868<br />
Valuation £108,207 £113,126* Loss Before Tax (£2,885)<br />
% Equity / Voting Rights 1.2% 1.2% Retained Loss (£2,783)<br />
Net Assets £8,979<br />
Valuation Methodology: bid price (February 2005: restated to bid price)<br />
<strong>Foresight</strong> 4 VCT plc<br />
6
Investment Summary<br />
Reqio Ltd<br />
despite proven and robust software in the emerging market for catalogue solutions market demand for Reqio’s software remained weak and as<br />
a result the company went into administration on 31 August 2005.<br />
Dates of Investment: January 2001<br />
September 2001<br />
September 2002<br />
January 2003<br />
June 2004<br />
As at 31 August 2005 As at 28 February 2005 Year Ended: 30 September 2003<br />
£’000<br />
Amounts Invested £1,678,206 £1,678,206 Sales £860<br />
Valuation £nil £36,866 Loss Before Tax (£2,378)<br />
% Equity / Voting Rights 9.5% 9.5% Retained Loss (£2,331)<br />
Net Assets £722<br />
Valuation Methodology: nil value<br />
Signum Technologies Ltd<br />
has developed and owns a number of patents relating to the digital watermarking of electronic images to ensure that an original electronic image<br />
has not been manipulated e.g. for scene of crime photographic evidence. Although royalties are generated from licensees including police forces<br />
and photocopier manufacturers, customer demand has been appreciably less than originally expected.<br />
Dates of Investment: January 2000<br />
February 2001<br />
As at 31 August 2005 As at 28 February 2005 Year Ended: 30 June 2004<br />
£’000<br />
Amounts Invested £1,254,000 £1,254,000 Sales £96<br />
Valuation £nil £nil Loss Before Tax (£54)<br />
% Equity / Voting Rights 35.2% 35.2% Retained Loss (£54)<br />
Net Assets £136<br />
Valuation Methodology: nil value<br />
Snell & Wilcox (UK) Ltd<br />
is a leading manufacturer of broadcast electronics and a global leader in digital and high definition TV systems. In May 2002, Advent Venture<br />
Partners led a geared institutional buy out of this loss-making company. The new management team has significantly restructured the business,<br />
including making redundancies, cutting costs and improving operational efficiency. The team is now making good progress and has returned the<br />
company to profitability.<br />
Date of Investment: September 2001<br />
As at 31 August 2005 As at 28 February 2005 Year Ended: 31 March 2004<br />
£’000<br />
Amounts Invested £839,137 £839,137 Sales £33,266<br />
Valuation £344,309 £344,309 Loss Before Tax (£3,187)<br />
% Equity / Voting Rights 1.6% 1.6% Retained Loss (£4,395)<br />
Net Liabilities (£1,027)<br />
Valuation Methodology: revenue based multiple<br />
<strong>Foresight</strong> 4 VCT plc<br />
7
Investment Summary<br />
The Casella <strong>Group</strong> Ltd<br />
is a leading environmental consultancy, services and instrumentation group. Prior to a change in senior management in late 2002 and a<br />
refinancing, the company was loss-making. Casella’s trading results have improved markedly from losses to significant positive EBITDA (earnings<br />
before interest, tax, depreciation and amortisation) and the group is now looking to achieve further growth in both sales and profits in the current<br />
year. Three of Casella’s subsidiaries, Stanger, Winton and Hazmat, are considered major brands within their respective niches in the environmental<br />
market. In June 2005, Casella’s major subsidiary, Casella Consulting Limited was sold for £28.8 million enabling Casella to repay loans to its<br />
shareholders, including £746,000 to <strong>Foresight</strong> 4 VCT.<br />
Dates of Investment: April 2000<br />
November 2002<br />
September 2003<br />
February 2004<br />
As at 31 August 2005 As at 28 February 2005 Year Ended: 30 June 2004<br />
£’000<br />
Amounts Invested £977,416 £1,596,249 Sales £36,141<br />
Valuation £374,177 £1,138,500 Loss Before Tax (£2,431)<br />
% Equity / Voting Rights 5.5% 5.5% Retained Loss (£2,493)<br />
Net Liabilities (£7,987)<br />
Valuation Methodology: indicative offers less discount<br />
Vector Command Ltd<br />
is a globally recognised authority on incident command and continues to secure orders for its core Fire Simulation and Training suites. Thirty-six<br />
UK Fire Brigades and eight Australian Fire Authorities have deployed the system, and other users are based in Europe, the USA, Canada and the<br />
West Indies. The company has over twenty fire scenarios and in partnership with Western government agencies is expanding its product portfolio<br />
with the introduction of multi-agency Emergency Management tools. Early success has been achieved selling these into overseas markets, with<br />
the company believed to be at the leading edge of training and emergency preparation tools.<br />
Dates of Investment: September 1999<br />
November 2000<br />
April 2002<br />
As at 31 August 2005 As at 28 February 2005 Year Ended: 31 December 2004<br />
£’000<br />
Amounts Invested £1,468,750 £1,468,750 Sales £1,270<br />
Valuation £1,938,000 £1,938,000 Profit Before Tax £5<br />
% Equity / Voting Rights 34.4% 34.4% Retained Profit £22<br />
Net Assets £859<br />
Valuation Methodology: price of recent funding round<br />
The above summary does not include Radiant Networks or IPV, which were both in liquidation and valued at £nil at the year end. The results of these companies have not<br />
been incorporated into the profit and loss account. Unless stated to the contrary, all classes of ordinary shares and none of the classes of preference shares have voting rights.<br />
The principal activity of the Company is to select and hold a portfolio of investments. As such, the companies are not treated as associates nor subsidiaries.<br />
Co-Investing Funds<br />
<strong>Foresight</strong> Venture Partners also advises <strong>Foresight</strong> Technology VCT plc, <strong>Foresight</strong> 2 VCT plc and Trivest VCT plc and manages <strong>Foresight</strong> 3 VCT plc. Investments have been<br />
made by <strong>Foresight</strong> 3 VCT plc in Oasis Healthcare (£1,343,809), Elam-T (£1,110,000) and Covion Holdings (£347,000). Investments have been made by <strong>Foresight</strong> Technology VCT<br />
plc in alwaysON <strong>Group</strong> (£300,000), Covion Holdings (£1,000,000), and Elam-T (£400,000). Investments have been made by <strong>Foresight</strong> 2 VCT plc in alwaysON <strong>Group</strong> (£1,000,000),<br />
Covion Holdings (£1,000,000) and Elam-T (£1,000,000).<br />
<strong>Foresight</strong> 4 VCT plc<br />
8
Profit and Loss Account<br />
for the six months to 31 August 2005<br />
6 Months to 6 Months to Year to<br />
31 August 2005 31 August 2004 28 February 2005<br />
(unaudited) (unaudited) (audited)<br />
£'000 £'000 £'000<br />
Investment income and deposit interest 97 44 47<br />
Investment management fees (124) (81) (273)<br />
Other expenses (134) (157) (298)<br />
––––––– ––––––– –––––––<br />
Operating loss (161) (194) (524)<br />
Profit/(loss) on realisation of investments 1,666 25 (1,645)<br />
––––––– ––––––– –––––––<br />
Profit/(loss) on ordinary activities before taxation 1,505 (169) (2,169)<br />
Tax on ordinary activities – – –<br />
––––––– ––––––– –––––––<br />
Profit/(loss) on ordinary activities after taxation 1,505 (169) (2,169)<br />
Dividends – – –<br />
––––––– ––––––– –––––––<br />
Balance transferred to/(from) reserves 1,505 (169) (2,169)<br />
––––––– ––––––– –––––––<br />
Earnings per share (restated for the share consolidation) 12.1p (1.4)p (18.1)p<br />
––––––– ––––––– –––––––<br />
Statement of Total Recognised Gains and Losses<br />
for the six months to 31 August 2005<br />
6 Months to 6 Months to Year to<br />
31 August 2005 31 August 2004 28 February 2005<br />
(unaudited) (unaudited) (audited)<br />
£'000 £'000 £'000<br />
Profit/(loss) for the period 1,505 (169) (2,169)<br />
Unrealised losses on revaluation of investments (1,291) (4,828) (1,523)<br />
––––––– ––––––– –––––––<br />
Total recognised gains/(losses) relating to the period 214 (4,997) (3,692)<br />
––––––– ––––––– –––––––<br />
All items in the Profit and Loss account derive from continuing operations. No operations were acquired or discontinued in<br />
the period.<br />
The Company has only one class of business and derives its income from investments made in shares, securities and bank<br />
deposits. Income from investments is recognised on an accruals basis.<br />
<strong>Foresight</strong> 4 VCT plc<br />
9
Balance Sheet<br />
at 31 August 2005<br />
As at As at As at<br />
31 August 05 31 August 04 28 February 05<br />
(unaudited) (unaudited) (audited)<br />
£'000 £'000 £'000<br />
Fixed assets<br />
Investments<br />
Quoted 108 133 125<br />
Unquoted 9,672 11,788 11,354<br />
––––––– ––––––– –––––––<br />
Current assets<br />
9,780 11,921 11,479<br />
Debtors 996 376 1,073<br />
Money market and other deposits 1,258 – –<br />
Cash 1,494 271 308<br />
––––––– ––––––– –––––––<br />
3,748 647 1,381<br />
Creditors:<br />
Amounts falling due within one year<br />
Bank borrowings – (982) –<br />
Other creditors (726) (694) (663)<br />
––––––– ––––––– –––––––<br />
Net current assets/(liabilities) 3,022 (1,029) 718<br />
––––––– ––––––– –––––––<br />
Net assets 12,802 10,892 12,197<br />
––––––– ––––––– –––––––<br />
Capital and reserves<br />
Called-up share capital 125 1,793 1,793<br />
Share premium account 24,199 23,581 23,581<br />
Capital redemption reserve 1,813 9 9<br />
Revaluation reserve (8,891) (10,893) (7,588)<br />
Profit and loss account (4,444) (3,598) (5,598)<br />
––––––– ––––––– –––––––<br />
Equity shareholders’ funds 12,802 10,892 12,197<br />
––––––– ––––––– –––––––<br />
Net asset value per ordinary share 102.8p 91.1p 102.0p<br />
(restated for 1 for 3 share consolidation) ––––––– ––––––– –––––––<br />
<strong>Foresight</strong> 4 VCT plc<br />
10
Summarised Statement of Cashflows<br />
for the six months to 31 August 2005<br />
6 months to 6 months to Year to<br />
31 August 05 31 August 04 28 February 05<br />
(unaudited) (unaudited) (audited)<br />
£'000 £'000 £'000<br />
Cashflow from operating activities<br />
Investment income received 133 – 30<br />
Deposit and similar interest received 12 1 2<br />
Investment management fees paid (144) (36) (350)<br />
Secretarial fees paid (30) (30) (60)<br />
Other cash (payments)/receipts (72) (96) 59<br />
Net cash outflow from operating activities<br />
––––––– ––––––– –––––––<br />
and returns on investment (101) (161) (319)<br />
––––––– ––––––– –––––––<br />
Taxation – – –<br />
Financial investment<br />
Purchase of unquoted investments and investments (1,077) (311) (613)<br />
quoted on AIM<br />
Net proceeds on sale of unquoted investments 2,946 – 1,479<br />
Net proceeds on deferred consideration 144 – –<br />
Net proceeds on sale of quoted investments – – –<br />
Net proceeds on liquidation of investments – 25 25<br />
Repurchase of own shares (222) – –<br />
––––––– ––––––– –––––––<br />
Net capital inflow/(outflow) from financial investment 1,791 (286) 891<br />
Management of liquid resources<br />
Loans drawn down/(repaid) – 368 (614)<br />
Movement in money market and other deposits (1,258) – –<br />
––––––– ––––––– –––––––<br />
(1,258) 368 (614)<br />
Financing<br />
Proceeds of fund raisings 832 – –<br />
Expenses of fund raisings (78) – –<br />
––––––– ––––––– –––––––<br />
754 – –<br />
––––––– ––––––– –––––––<br />
Increase/(decrease) in cash 1,186 (79) (42)<br />
––––––– ––––––– –––––––<br />
Reconciliation of net cashflow to movement<br />
in net cash/(debt)<br />
Increase/(decrease) in cash for the period 1,186 (79) (42)<br />
Net cash/(debt) at start of period 308 (264) (264)<br />
Loans (drawn down)/repaid – (368) 614<br />
––––––– ––––––– –––––––<br />
Net cash/(debt) at end of period 1,494 (711) 308<br />
––––––– ––––––– –––––––<br />
Reconciliation of operating loss to net<br />
cashflow from operating activities<br />
Operating loss (161) (194) (524)<br />
Changes in working capital 60 33 205<br />
––––––– ––––––– –––––––<br />
Net cash outflow from operating activities (101) (161) (319)<br />
––––––– ––––––– –––––––<br />
<strong>Foresight</strong> 4 VCT plc<br />
11
Notes to the Interim Report<br />
1. The unaudited interim results have been prepared on the basis of accounting policies set out in the statutory accounts<br />
of the Company for the year ended 28 February 2005. Unquoted investments have been valued in accordance with<br />
BVCA guidelines. Quoted investments are stated at bid prices in accordance with the BVCA guidelines and Generally<br />
Accepted Accounting Practice.<br />
2. These are not statutory accounts in accordance with section 240 of the Companies Act 1985 and are neither audited nor<br />
reviewed. The full audited accounts for the year ended 28 February 2005, which were unqualified, have been lodged with<br />
the Registrar of Companies. No statutory accounts in respect of any period after 28 February 2005 have been reported<br />
on by the Company’s auditors or delivered to the Registrar of Companies. The audited accounts to 28 February 2005<br />
have been restated in this publication to reflect the changes in presentation following the introduction of Financial<br />
Reporting Standard (‘FRS’) 25 and FRS 26.<br />
3. Copies of the Interim Report, which has been reviewed by the Company’s auditors, have been mailed to shareholders<br />
and are available for inspection at the Registered Office of the Company at Swiss Life House, South Park, Sevenoaks,<br />
Kent TN13 1DU.<br />
4. The number of shares in issue at 31 August 2005 was 12,453,689 1p ordinary shares (2004: 35,862,753 5p ordinary<br />
shares). The weighted average number of shares in issue during the period was 12,435,810 1p ordinary shares<br />
(2004: 35,862,753 5p ordinary shares). During the period, following shareholder approval, the Company undertook a<br />
restructuring of its share capital which resulted in three ordinary 5p shares being consolidated into one new ordinary<br />
1p share. This effectively trebled the share price but, since shareholders then held only one third of their original number<br />
of shares, did not affect the overall value of their shareholdings.<br />
5. Earnings for the first six months should not be taken as a guide to the results for the full year.<br />
6. Impact of the introduction of FRS 25 and 26<br />
The financial information for the six months ended 31 August 2005 has been prepared in accordance with FRS 25 and<br />
FRS 26. A full restatement, as appropriate, of the results for the year to 28 February 2005 will be shown in the Annual<br />
Report for the year ending 28 February 2006. The introduction of these new standards has had the following impacts:<br />
Valuation:<br />
The assets held at fair value through the profit and loss by the Company are valued at bid price rather than mid-market<br />
price as in prior periods.<br />
Six Months to Year to<br />
31 August 2005 28 February 2005<br />
(unaudited) (unaudited)<br />
£’000 £’000<br />
Valuation at bid price 108 113<br />
Valuation at mid-market price 118 125<br />
––––––– –––––––<br />
Difference (10) (12)<br />
Transaction costs:<br />
––––––– –––––––<br />
Transaction costs incurred when purchasing or selling assets have been written-off to the profit and loss account in the<br />
period they occur since 1 March 2004.<br />
7. Movement in reserves Called-up Share Capital Profit and<br />
share premium redemption Revaluation loss<br />
capital account reserve reserve account Total<br />
£'000 £'000 £'000 £'000 £'000 £'000<br />
As at 28 February 2005<br />
Opening balance adjustments:<br />
1,793 23,581 9 (7,588) (5,598) 12,197<br />
Quoted companies valued at bid price* – – – (12) – (12)<br />
––––––– ––––––– ––––––– ––––––– ––––––– –––––––<br />
As at 1 March 2005 1,793 23,581 9 (7,600) (5,598) 12,185<br />
Share issues in the period 136 696 – – 832<br />
Expenses on share issues – (78) – – – (78)<br />
Share re-organisation (1,777) 1,777 – – –<br />
Shares repurchased in the period (27) – 27 – (351) (351)<br />
Net decrease in the value of investments – – – (1,291) – (1,291)<br />
Profit for the period – – – – 1,505 1,505<br />
––––––– ––––––– ––––––– ––––––– ––––––– –––––––<br />
As at 31 August 2005 125 24,199 1,813 (8,891) (4,444) 12,802<br />
––––––– ––––––– ––––––– ––––––– ––––––– –––––––<br />
* Due to the introduction of FRS 25 and FRS 26 the quoted investment at 28 February 2005 was restated at bid price rather<br />
than the previously recorded mid-market price. The difference between the bid price and the mid-market price has led to<br />
a downwards revaluation of the quoted shares and this loss has been taken to the revaluation reserve.<br />
<strong>Foresight</strong> 4 VCT plc<br />
12
Notes to the Interim Report<br />
8. Summary of investments during the period Quoted Unquoted Total<br />
£'000 £'000 £'000<br />
Book cost as at 28 February 2005 474 18,590 19,064<br />
Unrealised depreciation (349) (7,236) (7,585)<br />
––––––– ––––––– –––––––<br />
Valuation at 28 February 2005 125 11,354 11,479<br />
Opening balance adjustment (12) – (12)<br />
––––––– ––––––– –––––––<br />
Valuation at 1 March 2005 113 11,354 11,467<br />
Movements in the period:<br />
Purchases at cost – 1,077 1,077<br />
Disposal proceeds – (2,946) (2,946)<br />
realised gains – 1,522 1,522<br />
Unrealised depreciation (5) (1,335) (1,340)<br />
––––––– ––––––– –––––––<br />
Valuation at 31 August 2005 108 9,672 9,780<br />
––––––– ––––––– –––––––<br />
Book cost at 31 August 2005 474 18,243 18,717<br />
Unrealised depreciation (366) (8,571) (8,937)<br />
––––––– ––––––– –––––––<br />
Valuation at 31 August 2005 108 9,672 9,780<br />
––––––– ––––––– –––––––<br />
Shareholder Information<br />
Dividends<br />
Interim dividends are ordinarily paid to shareholders in December. Final dividends are ordinarily paid to shareholders in July.<br />
Shareholders who wish to have dividends paid directly into their bank account rather than by cheque to their registered<br />
address can complete a Mandate Form for this purpose. Mandates can be obtained by telephoning the Company’s registrar,<br />
Computershare Investor Services (see over for details).<br />
Share price<br />
The Company’s Ordinary Shares are listed on the London Stock Exchange. The mid-price of the Company’s Ordinary Shares<br />
is given daily in the Financial Times in the Investment Companies section of the London Share Service. Share price<br />
information can also be obtained from many financial websites.<br />
Notification of change of address<br />
Communications with shareholders are mailed to the registered address held on the share register. In the event of a change<br />
of address or other amendment this should be notified to the Company’s registrar, Computershare Investor Services, under<br />
the signature of the registered holder.<br />
Trading shares<br />
The Company’s Ordinary Shares can be bought and sold in the same way as any other quoted company on the London<br />
Stock Exchange via a stockbroker. The primary market maker for <strong>Foresight</strong> 4 VCT plc is Teather & Greenwood (see over<br />
for details).<br />
Please call Hazel Gross (see details below) if you or your adviser have any questions about this process.<br />
Indicative financial calendar<br />
April 2006 Announcement of annual results for the year ended 28 February 2006<br />
May 2006 Posting of the Annual Report for the year ended 28 February 2006<br />
June 2006 Annual General Meeting<br />
October 2006 Announcement of interim results for the six months to 31 August 2006<br />
Enquires<br />
Contact Hazel Gross, <strong>Foresight</strong> Venture Partners, VCT Investor Relations Manager for <strong>Foresight</strong> 4 VCT plc:<br />
Telephone: 01732 471803<br />
Fax: 01732 471810<br />
e-mail: hgross@foresightventurepartners.com<br />
website: www.foresightvct.com<br />
<strong>Foresight</strong> 4 VCT plc is managed by <strong>Foresight</strong> Venture Partners, the trading name of VCF LLP, which is Authorised and regulated by the<br />
Financial Services Authority. Past performance is not necessarily a guide to future performance. Stockmarkets and currency movements may<br />
cause the value of investments and the income from them to fall as well as rise and investors may not get back the amount they originally<br />
invested. Where investments are made in unquoted securities and smaller companies, their potential volatility may increase the risk to the<br />
value of, and the income from, the investment.<br />
<strong>Foresight</strong> 4 VCT plc
Corporate Information<br />
Directors<br />
Peter Dicks (Chairman)<br />
Roger Brooke<br />
Philip Stephens<br />
Bernard Fairman<br />
Company Secretary<br />
VCF Fund Managers Limited<br />
Swiss Life House<br />
South Park<br />
Sevenoaks TN13 1DU<br />
Registered Office and<br />
Investment Managers<br />
<strong>Foresight</strong> Venture Partners<br />
Swiss Life House<br />
South Park<br />
Sevenoaks TN13 1DU<br />
Solicitors and<br />
VCT Tax Adviser<br />
Martineau Johnson<br />
No. 1 Colmore Square<br />
Birmingham B4 6AA<br />
Registrar<br />
Computershare Investor Services PLC<br />
PO Box 82<br />
The Pavillions<br />
Bridgwater Road<br />
Bristol BS99 7NH<br />
Shareholder helpline: 0870 703 6292<br />
Sponsors and Stockbrokers<br />
Teather & Greenwood<br />
Beaufort House<br />
15 St Botolph Street<br />
London EC3A 7QR<br />
Auditors and Tax Adviser<br />
Ernst & Young LLP<br />
1 More London Place<br />
London SE1 2AF<br />
Registered Number<br />
3506579<br />
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