Annual Financial Report
FORESIGHT VCT PLC
Financial Highlights
* Net asset value per Ordinary Share increased by 39.4% for the year ended 31
December 2010 to 55.5p compared to 39.8p as at 31 December 2009.
* Net asset value per Planned Exit Share as at 31 December 2010 was 95.5p
compared to 94.5p at launch.
* Final dividends of 5.0p per Ordinary Share and 3.0p per Planned Exit Share
will be paid on 17 June 2011.
* The Ordinary Shares fund provided funding totalling £585,904 for nine
portfolio companies.
* Realisation proceeds of £137,628 were received from one portfolio company
and, in addition, loan repayments totalling £637,228 were received from two
companies.
* Planned Exit fundraising closed on 30 June 2010 having issued 6,179,833
Planned Exit Shares at 100p per share.
* Eleven investments were made by the Planned Exit fund totalling £3,780,649.
Chairman's Statement
Performance and Dividends
I am pleased to be able to report sound progress in the development of our
investment portfolios.
The Company has two classes of shares (Ordinary Shares and Planned Exit Shares)
and each class of share has its own portfolio of investments, the performances
of which are more fully described in the Investment Manager's Report following
this statement. In summary, during the year ended 31 December 2010, the net
asset value of the Ordinary Share portfolio increased by 39.4% to 55.5p per
share, with 34.2% of the increase being generated by valuation increases in
AppDNA, Autologic Diagnostics, Trilogy Communications, Alaric and Camwood.
Further information on these companies can be found in the Investment Managers
Report. The net asset value of the Planned Exit Share portfolio increased by
1.1% from the launch net asset value to 95.5p per share at 31 December 2010.
The performance of several of the unquoted investments within the portfolios
both in terms of revenues and profits, has improved during the second half of
2010. A significant amount of this improvement can be attributed to export
driven growth, principally to the US and Europe. Furthermore, the order books of
a number of portfolio companies give the Investment Manager cause for optimism
for the latter half of the current year creating confidence that the recent good
portfolio performance can be maintained.
Notwithstanding these positive signs, stock market sentiment remains relatively
fragile with significant macroeconomic uncertainties remaining and difficult
trading and credit conditions in many sectors of the economy. Catastrophic
events recently in Japan serve to warn us all that no-one can guard against all
eventualities and against this background, the Board supports the Manager's
continued cautious approach to managing the portfolio and making new
investments.
The Company's policy is whenever possible to maintain a steady flow of tax-free
dividends, generated from income or from capital profits realised on the sale of
investments. Notwithstanding our awareness of future uncertainty, investment
gains and income generated from loan stock encourage the Board to recommend that
a final dividend of 5.0p per Ordinary Share for the year ended 31 December 2010
be paid to the Ordinary shareholders on 17 June 2011 and a final dividend of
3.0p per Planned Exit Share for the year ended 31 December 2010 be paid to the
Planned Exit shareholders on the same day. These dividends will have an exdate
of 1 June 2011 and a record date of 3 June 2011.
Valuation policy
Investments held by the Company have been valued in accordance with the
International Private Equity and Venture Capital (IPEVC) valuation guidelines
(September 2009) developed by the British Venture Capital Association and other
organisations. Through these guidelines investments are valued as defined at
'fair value'. Ordinarily, unquoted investments will be valued at cost for a
limited period following the date of acquisition, being the most suitable
approximation of fair value unless there is an impairment or significant
accretion 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 December
2010. The portfolio valuations are prepared by Foresight Group, reviewed by the
auditors and are subject to approval by the Board.
Share Issues and Share Buy-backs
The new Planned Exit Shares fund launched on 28 January 2010 had issued
6,179,833 shares at £1 per share when its offer for subscription closed on 30
June 2010.
It continues to be the Company's policy to consider repurchasing shares when
they become available in order to provide a degree of liquidity for the sellers
of the Company's shares. During the year to 31 December 2010, the Company
repurchased 595,984 Ordinary Shares for cancellation at a cost of £226,000.
Board Changes
I joined the Board when I took over from Peter Dicks as Chairman of the Company
at the end of July in anticipation of the new UK Listing Authority regulations
that came into effect on 28 September 2010. Peter chaired a number of Foresight
managed VCTs which meant that he was no longer regarded under the new regime as
independent. Peter, had been Chairman since the setting up of the Company and
has a wide range of investment expertise and a detailed knowledge of all aspects
of the Company's investment portfolios and I am therefore delighted he has
agreed to remain on the Board so that the Board continue to have the benefit of
his experience and advice. For related reasons, Bernard Fairman, the Chairman of
our investment manager Foresight Group retired from the Board in June. The Board
is grateful to him for his contribution to the Company during his 13 years as a
Director. I am glad that we will also continue to have access to his advice and
experience as he remains involved in the affairs of Foresight Group. Tony Diment
who has been on the Board since 1997 has indicated that he will not stand for
re-election at the forthcoming AGM in May and will therefore be retiring from
the Board at that time. On behalf of the Board I would like to thank Tony for
his significant input to the Board which has benefitted substantially from his
wisdom and expertise.
Post Year End Events
Following the end of last year two significant events have taken place:
* Acquisition of Keydata Income VCT 1 plc and Keydata Income VCT 2 plc
('Keydata')
Following shareholder approval, the assets of Keydata (approximately £3.6
million) were acquired by the Company on 28 February 2011. A total of 6,463,504
Ordinary Shares (at an NAV of 55.44p per Ordinary Share) in Foresight VCT plc
were issued as consideration to the shareholders of Keydata. Following the
completion of the merger there were 54,004,889 Ordinary Shares in issue.
Dependent upon the commercial success of its gasification project in Derby, for
which the Keydata assets were acquired, additional consideration may be payable
to Keydata shareholders up to a maximum amount of £2.8 million on or shortly
after 30 September 2013.
* Ordinary Shares Reconstruction
Also with shareholder approval, on 1 March 2011 the Ordinary Shares underwent a
reconstruction such that the underlying net asset value (NAV) of each Ordinary
Share was rebased to 100.0p. The reconstruction resulted in Ordinary
Shareholders' holdings being adjusted by a ratio of 0.554417986 per Ordinary
Share held at the close of business on 1 March 2011 and in 29,941,281 new
Ordinary Shares being issued.
The reconstruction of the Ordinary Share capital of Foresight VCT plc has not
impacted the value of Shareholders' holdings.
Outlook
Although there has been very little portfolio activity in terms of realisations
over the last year, we are witnessing potential acquirers slowly returning to
the market following two years of economic fragility. Additionally, Foresight
Group is seeing its dealflow of new investment opportunities increasing but we
remain cautious about the economic outlook and the Manager will aim to invest
only in new opportunities which are considered sufficiently robust and
attractive. The Board and Investment Manager are hopeful that the positive
current performance of the portfolio will translate into realisations that will,
over the medium term, be reflected in further positive net asset value
performance and continued distributions to shareholders.
Annual General Meeting
The Company's Annual General Meeting will take place on 26 May 2011. I look
forward to welcoming you to the meeting, which will be in London.
John Gregory
Chairman
Telephone: 01296 682 751
Email: j.greg@btconnect.com
27 April 2011
For further information please contact:
Gary Fraser, Foresight Fund Managers Limited Tel: 01732 471800
Investment Manager's Report
As referred to in the Chairman's statement, the recent performance of a number
of companies in the portfolio gives cause for optimism at an individual
investment level. The recent stock market rally is encouraging for equity
investors and may help restore some optimism. However, we continue to believe
that consensus expectations do not fully reflect a scenario of slowing growth
for 2011 and that nascent inflation could undermine prospects over coming
months. Against this background, we are only looking at opportunities which are
considered sufficiently robust and attractive in valuation terms.
Portfolio Review - Ordinary Shares Fund
Over the last two years, as a result of tougher trading and credit conditions,
the number of follow-on investments made by the Company has increased. This has
reflected the need for additional working capital arising as a result of trading
conditions and reduced bank credit lines and overdrafts but has also included
funding for growth.
The Ordinary Shares fund provided follow-on funding totalling £585,904 for nine
portfolio companies: SkillsMarket (£104,500), alwaysON (£90,201), i-plas Group
(£73,498), @Futsal (£70,988), Silvigen (£69,511), Trilogy (£62,500), Closed Loop
Recycling (£56,250), Land Energy (£41,515) and Rivington Street Holdings
(£16,941).
The performance highlights during the year were as follows:
Camwood's App-DNA software division, which is a market leader in automated
application compatibility for virtualisation, desktop and server operating
system projects, has continued to make good progress. The company has won a
number of major contracts with large corporations in the US and Europe and has
also developed a global network of partnerships. It has a strong pipeline of
opportunities and is optimistic that these can be converted into further
contract wins. For the year to 31 March 2010, the company reported rapid sales
growth and improved profitability and this is continuing for the year to 31
March 2011. In November 2010 the App-DNA division was spun out of Camwood as a
standalone company and is now reported on separately.
Autologic Diagnostics develops and sells sophisticated automotive diagnostic
software and hardware to independent mechanics and garages to allow them to
service and repair vehicles. The investment in Autologic Diagnostics was made in
February 2009. For the period from 20 February 2009 to 31 December 2009,
Autologic Diagnostics produced an operating profit of £1.48 million on sales of
£5.49 million. On 1 July 2010, Autologic Diagnostics took an important step
forward by acquiring its previously independently-owned US distributor.
Management accounts for Autologic Diagnostics for the full year ended 31
December 2010 show an operating profit of £2.5 million on sales of £6.9 million.
Actimax continued its strong growth in sales and profits and trading in the year
to 31 December 2010 and, following the year end, was sold for £4.4 million, of
which Foresight VCT plc received approximately £2.2 million.
Alaric is enjoying strong growth and is continuing to win major new contracts.
During the year to 31 March 2010, orders were won from 15 new customers,
resulting in total sales for that year of some £4 million. Capacity to satisfy
these orders is being met principally through expanding the office in Kuala
Lumpur. Alaric is developing a growing sales pipeline and profile in the Far
East, Mexico and the USA. An important relationship has been established with
Oracle to serve the card authorisation switch market Worldwide. The budget for
the current year shows substantial growth on sales achieved in 2010.
Having recovered from a fire in late 2009, Closed Loop Recycling continues to
make solid operational, commercial and revenue progress with production rates at
record levels, processing 100 tonnes per day of recycled plastic PET and HDPE
plastic, and producing material of a particularly high quality. The capital
expenditure work associated with the equipment replacement and upgrade to
replace fire damaged equipment, has been successfully completed. Closed Loop is
currently generating revenues in excess of £1 million per month.
Trilogy Communications is continuing to build partnerships with large
international defence companies and the pipeline of sales opportunities has
continued to grow. In recognition of the company's progress in foreign markets,
Trilogy Communications was awarded the Queen's Award for Enterprise in the
International Trade category. Delays in defence procurement contracts had an
impact on the business during the first quarter of 2010 and a further investment
of £62,500 was made. The company's financial year for 2010/11 produced strong
results and both the broadcast and defence divisions performed ahead of plan.
The company's order book is strong and the outlook for the remainder of the year
is positive.
A second tranche (£70,988) of the investment into @Futsal was made in the
period. Futsal is the fastest growing indoor sport in the world with 30 million
people currently playing this type of indoor football internationally. @Futsal's
Swindon and Cardiff facilities are now fully operational and the third site in
Birmingham has recently opened. Sales growth, however, is behind original
expectations and progress towards profitability has been impacted as a result.
A planned further tranche of £41,515 was invested in Land Energy. Land Energy's
wood pellets are used in several markets including animal bedding and for energy
generation. The company is looking at building its own combined heat and power
(CHP) plant, to use its own pellets as a fuel and qualify for additional
revenues. The UK Government has identified CHP as a highly efficient form of
energy use, which from April 2009 became eligible for double Renewable
Obligation Certificates.
Silvigen has positioned itself to supply the important biomass fuel needs of the
UK power generation sector and the developing industrial heat sector, both of
which are driven by a number of regulatory incentives. Additionally, the
company's product is well suited for the animal bedding market. Silvigen raised
£200,000 in February 2010, of which Foresight VCT invested £69,511 to provide
working capital for the business required as a result of operational delays. The
plant is now fully operational and producing excellent quality wood pellets.
The investment in i-plas Group of £73,498 was used to fund an increase in
capacity for the company, which produces building products in an area of
plastics recycling which has significant growth potential.
The Company invested a further £104,500 into SkillsMarket to fund the
operational costs associated with its turnaround strategy. The company
successfully launched its new web-based Software as a Service (SaaS) product,
iProfile Recruiter Account, at the start of 2010 and is now focusing its efforts
on growing the sales of the new product. Early indications are that the product
is proving to be popular within the company's target markets.
smartFOCUS announced full year sales to December 2010 had grown to £13.9 million
from £11.9 million in 2009, increasing profit before tax to £900,000 from
£500,000 in 2009. smartFOCUS announced on 11 April 2011, that it had reached
agreement on terms to be acquired for cash by Emailvision Holdings. The offer
price is 25.0p per smartFOCUS share, which is a 70% premium to the bid price of
14.5p per share at 31 December 2010. If the acquisition of smartFOCUS to
Emailvision proceeds this would result in Foresight VCT plc receiving proceeds
of approximately £3.5 million.
The turnaround at Aigis continues gradually and the business made small profits
in both the first and second quarters of 2010, which has helped improve the cash
position. Aigis is in the process of recruiting further engineering resource to
allow the company to meet customer requirements promptly, while reducing costs
in other areas.
A further £90,201 was invested in alwaysON as part of a restructuring. Foresight
VCT has significantly increased its equity holding in the business, which is
starting to see signs of recoveryin its underlying core operations.
Across all the portfolio companies, we have, ensured that management are focused
on cash conservation and cost control in light of the recession and the as yet
fragile, economic recovery.
Portfolio Review - Planned Exit Shares Fund
Eleven new investments were made by the Planned Exit Shares Fund totalling
£3,780,649. Investments included: Foresight Luxembourg Solar 2 S.a.r.l
(£1,000,000), DCG Group Limited (£750,000), Closed Loop Recycling Limited
(£566,667), Channel Safety Systems Group Limited (£565,000) and i-plas Group
Limited (£524,030). In addition, investments were made in Nevin Energy Resources
Limited (£186,000), Burley Energy Limited (£93,750), Cooke Generation Limited
(£93,750), Boyle Electrical Generation Limited (£484), Clarke Power Services
(£484) and Spencer Energy Services Limited (£484) (together 'the Keydata
portfolio companies').
The Planned Exit Shares Fund made its first investment during March 2010 of
£1,000,000 in Foresight Luxembourg Solar 2 S.a.r.l., an operating 10 MW solar
power plant in Spain. It is expected that the majority of the investment will be
short-term in nature but its yield and risk profile mirror the objective of the
fund and created an early opportunity to generate income. Although the
investment is euro denominated, the currency risk has been hedged to prevent any
currency losses to the Company on the cost of its investment.
The merger with the Keydata VCTs, explained more fully in the Chairman's
statement, also gave rise to an opportunity to invest in the Keydata portfolio
companies, as part of a total funding round of £3 million. The Planned Exit
Shares Fund invested £375,000 in December 2010 into the Keydata project in
Derby. This project is targeting 3.0 MW of electricity using gasification
technology similar to that in final commissioning at O-Gen Acme Trek's plant in
Stoke-on-Trent (another Foresight Group portfolio investment). This plant in
Derby is being built in 3 phases starting with 0.5 MW using waste wood as its
feedstock. The first electricity is expected to be produced in the third quarter
of 2011.
In October 2010, the Planned Exit Shares Fund invested £750,000 into DCG Group
to re-finance existing loans and provide additional working capital to enable
the company to continue the growth of its data managed services. The managed
service contracts typically have a three year term, and the company has been
successful in maintaining a very high level of customer retention due to the
quality of the service provided. The investment was structured primarily as a
yielding loan.
In December 2010 the Planned Exit Shares Fund backed a management buy-in of
Channel Safety Systems with £565,000. Channel designs and distributes fire
safety systems and emergency lighting, as well as providing associated services.
From its base in the South East of England Channel has been operating for 35
years. The company traded profitably through the recession and the management
team are exploring several growth strategies, including energy efficient LED
emergency lighting.
Realisations
Loan repayments during the period totalling £614,000 were received from two
investee companies: DCG Group (Ordinary Shares fund) repaid £594,000 of loan
stock during the year, as a result of a refinancing including investment from
the Planned Exit Shares Fund; and SkillsMarket (Ordinary Shares fund) repaid a
short-term loan of £20,000 following a further funding round.
1,000,000 smartFOCUS shares were sold during the year for proceeds of £137,628,
a return of 2.7 times the original cost of the shares sold.
Outlook
The recovery in the underlying trading of many of the portfolio companies has
benefited, to varying degrees, from the positive export conditions created by a
weaker currency and reflects better than expected growth in portfolio companies'
target markets. We remain reasonably optimistic about the current prospects and
outlook for many portfolio companies, which continue to display stronger order
books and revenue and profit growth. This is tempered by continued challenging
fundamentals and uncertainties that could lead to a prolonged period of low
growth.
Foresight is actively pursuing a number of portfolio realisations across several
market sectors in order to generate distributions for shareholders, but M&A
activity at the smaller company level is still limited. In our opinion, if the
economy continues to make progress, then the M&A market should start to pick up
momentum. In these circumstances we would be confident that several portfolio
companies across each of the Company's share classes could be attractive
acquisition candidates.
David Hughes
Chief Investment Officer
Foresight Group
27 April 2011
The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority
require certain disclosures in relation to the annual financial report, as
follows:
Principal risks, risk management and regulatory environment
The Board believes that the principal risks faced by the Company are:
* Economic risk - events such as an economic recession and movement in
interest rates could affect smaller companies' performance and valuations.
* Loss of approval as a Venture Capital Trust - the Company must comply with
Section 274 of the Income Tax Act 2007 which allows it to be exempted from
capital gains tax on investment gains. Any breach of these rules may lead
to: the Company losing its approval as a VCT; qualifying shareholders who
have not held their shares for the designated holding period having to repay
the income tax relief they obtained; and future dividends paid by the
Company becoming subject to tax. The Company would also lose its exemption
from corporation tax on capital gains.
* Investment and strategic - inappropriate strategy, poor asset allocation or
consistent weak stock selection might lead to under performance and poor
returns to shareholders.
* Regulatory - the Company is required to comply with the Companies Act 2006,
the rules of the UK Listing Authority and United Kingdom Accounting
Standards. Breach of any of these might lead to suspension of the Company's
Stock Exchange listing, financial penalties or a qualified audit report.
* Reputational - inadequate or failed controls might result in breaches of
regulations or loss of shareholder trust.
* Operational - failure of the Manager's or Company Secretary's accounting
systems or disruption to its business might lead to an inability to provide
accurate reporting and monitoring.
* Financial - inadequate controls might lead to misappropriation of assets.
Inappropriate accounting policies might lead to misreporting or breaches of
regulations. Additional financial risks, including interest rate, credit,
market price and currency, are detailed in note 15 to the accounts.
* Market risk - investment in AIM traded, PLUS traded and unquoted companies
by its nature involves a higher degree of risk than investment in companies
traded on the main market. In particular, smaller companies often have
limited product lines, markets or financial resources and may be dependent
for their management on a smaller number of key individuals. In addition,
the market for stock in smaller companies is often less liquid than that for
stock in larger companies, bringing with it potential difficulties in
acquiring, valuing and disposing of such stock.
* Liquidity risk - the Company's investments, both unquoted and quoted, may be
difficult to realise. Furthermore, the fact that a share is traded on AIM or
PLUS Markets does not guarantee its liquidity. The spread between the buying
and selling price of such shares may be wide and thus the price used for
valuation may not be achievable.
* Currency risk - short-term currency risk, such as that associated with the
investment in Foresight Luxembourg Solar 2 is mitigated by taking out an
option that converts the capital investment proceeds from Foresight
Luxembourg Solar 2 back into sterling at the same rate as the original
sterling investment was converted into Euros to make the original
investment. This ensures no currency loss on the investment up to original
cost. The cost of the option is covered by the returns on the investment.
The Board seeks to mitigate the internal risks by setting policy, regular review
of performance, enforcement of contractual obligations and monitoring progress
and compliance. In the mitigation and management of these risks, the Board
applies the principles detailed in the Combined Code. Details of the Company's
internal controls are contained in the Corporate Governance and Internal Control
sections.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Directors' Report and the
financial statements, in accordance with applicable United Kingdom law and
United Kingdom Generally Accepted Accounting Practice.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have elected to prepare the
financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and applicable law).
Under company law the Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs
of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent; and
- state whether applicable accounting standards have been followed, subject to
any material departures disclosed and explained in the financial statements.
The Directors are responsible for keeping adequate accounting records that
disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that its financial statements comply with the
Companies Act 2006. They have general responsibility for taking such steps as
are reasonably open to them to safeguard the assets of the Company and to
prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a Directors' Report (including Business Review), Directors'
Remuneration Report and Corporate Governance Statement that comply with that law
and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate
and financial information included on the Company's website,
www.foresightgroup.eu. Visitors to the website should be aware that legislation
in the UK governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Responsibility Statement of the Directors in respect of the Annual Financial
Report
Each of the Directors confirms that to the best of their knowledge:
* the financial statements, prepared in accordance with the applicable set of
accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company; and
* the Directors' Report includes a fair review of the development and
performance of the business and the position of the Company together with a
description of the principal risks and uncertainties that it faces.
Unaudited Non-Statutory Analysis of the Ordinary Shares and Planned Exit Shares
Funds
Income Statements
for the year ended 31 December
2010
 Planned Exit Shares
  Ordinary Shares Fund Fund
  Revenue Capital Total  Revenue Capital Total
  £'000 £'000 £'000  £'000 £'000 £'000
Investment holding
gains/(losses) Â - 8,783 8,783 Â - (35) (35)
Realised losses on investments  - (1,112) (1,112)  - - -
Unrealised gain on the value
of derivatives  - - -  - 25 25
Income  474 - 474  191 - 191
Investment management fees  (103) (307) (410)  (10) (32) (42)
Other expenses  (297) - (297)  (58) - (58)
------------------------- ----------------------
Return/(loss) on ordinary
activities before taxation  74 7,364 7,438  123 (42) 81
Taxation  31 (6) 25  (31) 6 (25)
------------------------- ----------------------
Return/(loss) on ordinary
activities after taxation  105 7,358 7,463  92 (36) 56
------------------------- ----------------------
Return/(loss) per share  0.2p 15.4p 15.6p  1.7p (0.7)p 1.0p
------------------------- ----------------------
Balance Sheets
at 31 December 2010
   Planned Exit Shares
  Ordinary Shares Fund  Fund
    £'000   £'000
Non-current assets
Investments at fair value
through profit or loss    24,558   3,746
---------------------- -----------------------
    24,558   3,746
Current assets
Debtors    1,204   249
Derivative financial
instruments    -   47
Money market and other
deposits    103   1,895
Cash    619   51
---------------------- -----------------------
    1,926   2,242
Creditors: Amounts falling
due within one year    (94)   (86)
---------------------- -----------------------
Net current assets    1,832   2,156
---------------------- -----------------------
Net assets    26,390   5,902
---------------------- -----------------------
Capital and reserves
Called-up share capital    475   62
Share premium account    11,893   5,784
Capital redemption reserve    29   -
Special distributable
reserve    18,070   (32)
Revenue reserve    (172)   92
Capital reserve    (1,611)   6
Ravaluation reserve    (2,294)   (10)
---------------------- -----------------------
    26,390   5,902
---------------------- -----------------------
Number of shares in issue    47,541,385   6,179,833
Net asset value per share    55.5p   95.5p
---------------------- -----------------------
Reconciliation of Movements in Shareholders' Funds
for the year ended 31 December 2010
Called-
up Share Capital Special
share premium redemption distributable Revenue Capital Revaluation
 capital account reserve reserve reserve reserve reserve Total
 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Ordinary
Shares
As at 1
January
2010 481 11,931 23 18,603 (277) (504) (11,077) 19,180
Expenses in
relation to
share
issues - (38) - - - - - (38)
Repurchase
of shares (6) - 6 (226) - - - (226)
Net
realised
loss on
disposal of
investments - - - - - (1,112) - (1,112)
Investment
holding
gains - - - - - - 8,783 8,783
Dividends
reimbursed - - - - - 11 - 11
Management
fees
charged to
capital - - - (307) - - - (307)
Tax charged
to capital - - - - - (6) - (6)
Revenue
return for
the year - - - - 105 - - 105
-----------------------------------------------------------------------------
As at 31
December 475 11,893 29 18,070 (172) (1,611) (2,294) 26,390
2010
-----------------------------------------------------------------------------
Called-
up Share Capital Special
share premium redemption distributable Revenue Capital Revaluation
 capital account reserve reserve reserve reserve reserve Total
 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Planned
Exit Shares
As at 1
January
2010 - - - - - - - -
Share
issues in
the period 62 6,118 - - - - - 6,180
Expenses in
relation to
share
issues - (334) - - - - - (334)
Investment
holding
losses - - - - - - (35) (35)
Unrealised
gain on the
value of
derivatives - - - - - - 25 25
Management
fees
charged to
capital - - - (32) - - - (32)
Tax
credited to
capital - - - - - 6 - 6
Revenue
return for
the year - - - - 92 - - 92
-----------------------------------------------------------------------------
As at 31
December 62 5,784 - (32) 92 6 (10) 5,902
2010
-----------------------------------------------------------------------------
Audited Income Statement
for the year ended 31 December 2010
 Year to  Year to
 31 December 2010  31 December 2009
 Revenue Capital Total  Revenue Capital Total
 £'000 £'000 £'000  £'000 £'000 £'000
Investment holding gains - 8,748 8,748 Â - 3,547 3,547
Realised losses on investments - (1,112) (1,112) Â - (3,988) (3,988)
Unrealised gain on the value
of derivatives - 25 25 Â - - -
Income 665 - 665 Â 441 - 441
Investment management fees (113) (339) (452) Â (100) (299) (399)
Other expenses (355) - (355) Â (318) - (318)
------------------------- ------------------------
Return/(loss) on ordinary
activities before taxation 197 7,322 7,519 Â 23 (740) (717)
Taxation - - - Â - - -
------------------------- ------------------------
Return/(loss) on ordinary
activities after taxation 197 7,322 7,519 Â 23 (740) (717)
Return per share:
Ordinary Share 0.2p 15.4p 15.6p  0.0p (1.5)p (1.5)p
------------------------- ------------------------
Planned Exit Share 1.7p (0.7)p 1.0p  N/A N/A N/A
------------------------- ------------------------
The total column of this statement is the profit and loss account of the Company
and the revenue and capital columns represent supplementary information.
All revenue and capital items in the above Income Statement are derived from
continuing operations. No operations were acquired or discontinued in the year.
The Company has no recognised gains or losses other than those shown above,
therefore no separate statement of total recognised gains and losses has been
presented.
Audited Reconciliation of Movements in Shareholders' Funds
for the year ended 31 December 2010
Called-
up Share Capital Special
share premium redemption distributable Revenue Capital Revaluation
 capital account reserve reserve reserve reserve reserve Total
 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1
January 464 10,817 14 19,225 (300) 3,974 (14,624) 19,570
2009
Share
issues in 25 1,146 - - - - - 1,171
the period
Expenses in
relation to - (54) - - - - - (54)
share
issues
Repurchase (9) - 9 (323) - - - (323)
of shares
Dividend - - - - - (467) - (467)
paid
Dividend 1 22 - - - (23) - -
reinvested
Net
realised - - - - - (3,988) - (3,988)
losses on
investments
Net
increase in
the value - - - - - - 3,547 3,547
of
investments
Management
fees - - - (299) - - - (299)
charged to
capital
Revenue
return for - - - - 23 - - 23
the year
-----------------------------------------------------------------------------
As at 31
December 481 11,931 23 18,603 (277) (504) (11,077) 19,180
2009
-----------------------------------------------------------------------------
Called-
up Share Capital Special
share premium redemption distributable Revenue Capital Revaluation
 capital account reserve reserve reserve reserve reserve Total
 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1
January 481 11,931 23 18,603 (277) (504) (11,077) 19,180
2010
Share
issues in 62 6,118 - - - - - 6,180
the period
Expenses in
relation to - (372) - - - - - (372)
share
issues
Repurchase (6) - 6 (226) - - - (226)
of shares
Net
realised
loss on - - - - - (1,112) - (1,112)
disposal of
investments
Investment
holding - - - - - - 8,748 8,748
gains
Unrealised
gain on the - - - - - - 25 25
value of
derivatives
Dividends - - - - - 11 - 11
reimbursed
Management
fees - - - (339) - - - (339)
charged to
capital
Revenue
return for - - - - 197 - - 197
the year
-----------------------------------------------------------------------------
As at 31
December 537 17,677 29 18,038 (80) (1,605) (2,304) 32,292
2010
-----------------------------------------------------------------------------
Audited Balance Sheet
at 31 December 2010
Registered Number:
     03421340
   As at  As at
   31 December 2010  31 December 2009
   £'000  £'000
   Total  Total
Non-current assets
Investments held at fair
value through profit or loss   28,304  17,095
------------------ ---------------------------
Current assets
Debtors   1,383  1,372
Derivative financial
instruments   47  -
Money market and other
deposits   1,998  570
Cash   670  233
------------------ ---------------------------
   4,098  2,175
Creditors
Amounts falling due within
one year   (110)  (90)
------------------ ---------------------------
Net current assets   3,988  2,085
------------------ ---------------------------
Net assets   32,292  19,180
------------------ ---------------------------
Capital and reserves
Called-up share capital   537  481
Share premium account   17,677  11,931
Capital redemption reserve   29  23
Special distributable reserve   18,038  18,603
Revenue reserve   (80)  (277)
Capital reserve   (1,605)  (504)
Ravaluation reserve   (2,304)  (11,077)
------------------ ---------------------------
Equity shareholders' funds   32,292  19,180
------------------ ---------------------------
Net asset value per share of
1p each:
Ordinary Shares   55.5 p  39.8 p
------------------ ---------------------------
Planned Exit Shares   95.5 p  N/A
------------------ ---------------------------
Audited Cash Flow Statement
for the year ended 31 December 2010
 Year to Year to
 31 December 2010 31 December 2009
 £'000 £'000
Cash flow from operating activities
Investment income received 374 125
Deposit and similar interest received 12 143
Investment management fees paid (480) (79)
Secretarial fees paid (118) (115)
Other cash payments (334) (207)
----------------------------------
Net cash outflow from operating activities and
returns on investment (546) (133)
Taxation - Â -
----------------------------------
Returns on investment and servicing of finance
Purchase of unquoted investments and
investments quoted on AIM (4,350) (2,406)
Net proceeds on sale of unquoted investments 637 165
Net proceeds on sale of quoted investments 138 167
Net proceeds from deferred consideration 20 110
----------------------------------
Net capital outflow from financial investment (3,555) (1,964)
Equity dividends paid 11 (490)
----------------------------------
Management of liquid resources
Subscription to money market (3,200) -
Redemption from money market 1,784 2,204
Income from money market (12) (24)
----------------------------------
 (1,428) 2,180
Financing
Proceeds of fund-raising 6,520 1,000
Expenses of fund-raising (339) (48)
Dividends reinvested - Â 23
Repurchase of own shares (226) (429)
----------------------------------
 5,955 546
----------------------------------
Increase in cash 437 139
----------------------------------
Reconciliation of net cash flow to movement in
net funds
Increase in cash for the year 437 139
Net cash at start of year 233 94
----------------------------------
Net cash at end of year 670 233
----------------------------------
Reconciliation of net income to net cash flow
from operating activities
Total return/(loss) before taxation 7,519 (717)
Investment holding gains (8,748) (3,547)
Realised losses on investments 1,112 3,988
Unrealised gain on the value of derivatives (25) -
Increase/(decrease) in creditors 18 (3)
(Increase)/decrease in debtors (422) 146
----------------------------------
Net cash outflow from operating activities (546) (133)
----------------------------------
Analysis of changes in net
debt
 At 1 January 2010 Cash flow At 31 December 2010
  £'000 £'000
Cash and cash equivalents 233 437 670
-------------------------------------------------
Notes
1. Â Â The audited Annual Financial Report has been prepared on the basis of
accounting policies set out in the statutory accounts of the Company for the
year ended 31 December 2010. Â All investments held by the Company are classified
as 'fair value through the profit and loss'. 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. Â Â These are not statutory accounts in accordance with S436 of the Companies
Act 2006. The full audited accounts for the year ended 31 December 2010, which
were unqualified and did not contain and statements under S498(2) of Companies
Act 2006 or S498(3) of Companies Act 2006, will be lodged with the Registrar of
Companies. Statutory accounts for the year ended 31 December 2010 including an
unqualified audit report and containing no statements under the Companies Act
2006 will be delivered to the Registrar of Companies in due course.
3. Â Â Copies of the Annual Report will be sent to shareholders and will be
available for inspection at the Registered Office of the Company at ECA Court,
South Park, Sevenoaks, Kent TN13 1DU and can be accessed on the following
website:www.foresightgroup.eu
4. Â Â Net asset value per share
The net asset value per share is based on net assets at the end of the period
and on the number of shares in issue at that date.
   31 December 2010 31 December 2009
   Ordinary Shares Planned Exit Ordinary Planned Exit
Fund Shares Shares Shares
Fund Fund  Fund
Net assets   £26,390,000 £5,902,000 £19,180,000 N/A
No. of shares   47,541,385 6,179,833 48,137,369 N/A
at year end
Net asset
value per   55.5p 95.5p 39.8p N/A
share
5. Â Â Return per share
    Year to     Year to
     31 December 2010     31 December 2009
Ordinary Planned Exit
 Ordinary Share Planned Exit Share Share Share
 2010 2010 2009 2009
 £'000 £'000 £'000 £'000
Total return/(loss)
after taxation 7,463 56 Â (717) N/A
Basic return/(loss)
per share (note a) 15.6p 1.0p  (1.5)p N/A
----------------------------------------------------------
Revenue return from
ordinary activities
after taxation 105 92 23 N/A
Revenue return per
share (note b) 0.2p 1.7p 0.0p N/A
----------------------------------------------------------
Capital return/(loss)
from ordinary
activities after
taxation 7,358 Â (36) Â (740) N/A
Capital return/(loss)
per share (note c) 15.4p  (0.7)p  (1.5)p N/A
----------------------------------------------------------
Weighted average
number of shares in
issue in the year 47,849,128 5,407,639 48,191,161 N/A
The total return of the Ordinary Shares (£7,438,000) and Planned Exit Shares
(£81,000) combine to form the return of £7,519,000 in the income statement.
Notes:
a) Total return per share is total return after taxation divided by the weighted
average number of shares in issue during the year.
b) Revenue return per share is revenue return after taxation divided by the
weighted average number of shares in issue during the year.
c) Capital return per share is capital return after taxation divided by the
weighted average number of shares in issue during the year.
6. Â Â The Annual General Meeting will be held at 12.00pm on 26 May 2011 at the
offices of Martineau, 35 New Bridge Street, London EC4V 6BW.
7. Â Â Income
Year to Year to
  31 December 31 December
  2010 2009
  £'000 £'000
Overseas based Open Ended Investment Companies
("OEICS") 13 16
Loan stock interest  652 333
Interest received on VAT refunded  -  84
Bank deposits  -  7
Other  -  1
------------------------
  665 441
------------------------
8. Â Â Investments
  2010 2009
  £'000 £'000
Company
Quoted investments  4,503 4,183
Unquoted investments  23,801 12,912
------------------
  28,304 17,095
------------------
 Quoted Unquoted Total
Company (total of all share classes) £'000 £'000 £'000
Book cost as at 1 January 2010 9,129 18,983 28,112
Investment holding losses (4,946) (6,071) (11,017)
--------------------------------
Valuation at 1 January 2010 4,183 12,912 17,095
Purchases at cost 552 4,607 5,159
Disposal proceeds (673) (894) (1,567)
Realised gains/(losses) 87 (1,218) (1,131)
  Investment holding gains 354 8,394 8,748
--------------------------------
Valuation at 31 December 2010 4,503 23,801 28,304
--------------------------------
Book cost at 31 December 2010 9,095 21,478 30,573
Investment holding (losses)/gains (4,592) 2,323 (2,269)
--------------------------------
Valuation at 31 December 2010 4,503 23,801 28,304
--------------------------------
 Quoted Unquoted Total
Ordinary Shares £'000 £'000 £'000
(unaudited non-statutory analysis)
Book cost as at 1 January 2010 9,129 18,983 28,112
Investment holding losses (4,946) (6,071) (11,017)
--------------------------------
Valuation at 1 January 2010 4,183 12,912 17,095
Purchases at cost 552 826 1,378
Disposal proceeds (673) (894) (1,567)
Realised gains/(losses) 87 (1,218) (1,131)
  Investment holding gains 354 8,429 8,783
--------------------------------
Valuation at 31 December 2010 4,503 20,055 24,558
--------------------------------
Book cost at 31 December 2010 9,095 17,697 26,792
Investment holding (losses)/gains (4,592) 2,358 (2,234)
--------------------------------
Valuation at 31 December 2010 4,503 20,055 24,558
--------------------------------
 Quoted Unquoted Total
Planned Exit Shares £'000 £'000 £'000
(unaudited non-statutory analysis)
Book cost as at 1 January 2010 - - -
Investment holding gains - - -
--------------------------------
Valuation at 1 January 2010 - - -
Purchases at cost - 3,781 3,781
  Investment holding losses - (35) (35)
--------------------------------
Valuation at 31 December 2010 - 3,746 3,746
--------------------------------
Book cost at 31 December 2010 - 3,781 3,781
Investment holding losses - (35) (35)
--------------------------------
Valuation at 31 December 2010 - 3,746 3,746
--------------------------------
9. Â Â Related party transactions
Foresight Group LLP and Foresight Fund Managers Limited are considered to be
Related Parties of the Company. Details of arrangements with these parties are
given in the Directors' Report and Note 3.
Foresight Group which acts as investment manager to the Company in respect of
its venture capital investments earned fees of £451,882 during the year (2009:
£399,111). Foresight Fund Managers Limited, Company Secretary, received fees
including VAT of £118,000 (2009: £115,000) during the year.
At the balance sheet date, there was £288 (2009: £1,312) due to Foresight Group
LLP and £nil (2009: £29,375) due to Foresight Fund Managers Limited. No amounts
have been written off in the year in respect of debts due to or from the related
parties.
ement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Foresight VCT PLC via Thomson Reuters ONE
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