Final Results

Foresight VCT PLC 03 April 2007 FORESIGHT VCT PLC PRELIMINARY ANNOUNCEMENT OF RESULTS CHAIRMAN'S STATEMENT During the year markets generally experienced benign trading conditions with particular benefit to FTSE 250 midcap stocks. Technology stocks, however, remained out of favour and the Company's quoted technology investments suffered accordingly with several companies dropping in value during the period often despite good underlying progress. In addition the unquoted investments fell from Â£15.7 million to Â£14.8 million or 5.7% during the year, as several investments reported difficult trading conditions and order delays which impacted underlying profitability. Overall, the net asset value of the Ordinary Shares fund fell to 55.2 p per share (31/12/05: 58.7p) and the net asset value of the 'C' Shares fund fell to 81.4 p per share (31/12/05: 91.7p). Among the Company's quoted holdings, Oxonica, Corero (formerly Mondas), ANT and smartFOCUS achieved strong trading progress. Oxonica reported a leap in revenues from Â£1.2 million to Â£10.2 million. Corero recently announced operating profits of approximately Â£400,000 on revenues of approximately Â£6.3 million in the year ended 31 December 2006, which is a turnaround of just under Â£1.2 million from the Â£770,000 operating loss incurred in the previous year. ANT increased revenues by 48% to Â£3.7 million, reduced operating losses to Â£1.4 million (2005: Â£2.2 million) and announced an important new relationship with Scientific Atlanta. smartFOCUS increased revenues by 52% and delivered Â£918,000 in operating profit. Trading progress at other quoted holdings was mixed. Sarantel achieved a 43% increase in sales to Â£4.0m for the year to 30 September 2006, but saw flat sales in the second half of that year and incurred increased losses of Â£6.1 million from Â£5.3 million a year earlier. The company is winning new orders but at a slower rate than originally envisaged. YooMedia reported improved results for the six months ended 31 December 2006 as a result of cost savings and higher revenues but its share price declined sharply. Among the Company's unquoted portfolio companies, iCore and Covion made encouraging progress and improved profitability in the period, while Aquasium and Camwood suffered reductions in profits. iCore reported a near 40% sales increase to Â£4.5m and a profit before tax of Â£296,000 in its year to 30 June 2006 as a result of contracts with large multinational companies. Progress has been maintained in the current year with a further increase in profits expected. Covion Holdings continued to win new orders for its facilities management services from companies such as Britvic, Cooper Avon Tyres and Cosmetic Outsourcing Solutions International. As a result Covion will report revenues in excess of Â£20 million and profits in excess of Â£1 million for the year ended 31 December 2006. During the period the Company made follow-on investments of Â£250,000 in SkillsMarket Limited and Â£150,000 in High Integrity Solutions Limited. Skillsmarket's product offering has been further developed since the original investment in 2005 and as a consequence the prospects for revenue growth and profitability in the medium term have improved. High Integrity Solutions made progress in winning contracts for its software solutions for project engineers but continues to operate at a loss. Merger of the Ordinary Shares fund and the C Shares fund Following the year end, I am pleased to report that shareholders voted in favour of merging the Ordinary Shares fund and the 'C' Shares fund. The formal conversion from existing Ordinary Shares and C Shares into new Ordinary Shares took place on 16 January 2007 and new share certificates were issued along with an explanatory letter shortly thereafter. The costs associated with the merger were Â£53,000 (excl. VAT), which were well within the Board's expectation. The merger will result in the simplification of internal and published accounts and a reduction in the administration associated with the maintenance of two funds as opposed to just one. Together with a new Board structure these measures should result in cost savings to the Company, progress of which will be reported in my next statement to shareholders. At the Extraordinary General Meeting on 15 January 2007 shareholders also approved the Company's name change to Foresight VCT plc from Foresight Technology VCT plc. Results The results for the year from 1 January 2006 to 31 December 2006 are set out below. The net asset value per Ordinary Share as at 31 December 2006 was 55.2p (31 December 2005: 58.7p). The total return (after tax) attributable to Ordinary Shareholders was a loss of 3.2p (31 December 2005: loss of 16.1p). The net asset value per 'C' Share as at 31 December 2006 was 81.4p (31 December 2005: 91.7p) and the attributable return was a loss of 10.4p per 'C' Share (31 December 2005: loss of 1.15p). Directors As explained in the Circular to Shareholders, Roger Blears, Peter English and David Royds resigned from the Board on 16 January 2007. I would like to thank all three directors for their dedicated service over a number of years which has contributed greatly to the success of the Company. Following a review of the Board composition, Gordon Humphries was appointed as a Director by a Committee of the Board on 9 March 2007. Gordon has been involved with investment companies for over 15 years. He is currently head of investment companies at Standard Life Investments and before that was deputy head of investment trusts at F&C Asset Management plc. The Directors believe that Gordon's experience will complement the skill set of the existing Board and I am delighted to welcome him to the Board. Dividend The Company paid an interim dividend of 2.0p per 'C' Share for the year ended 31 December 2006 to 'C' Shareholders on 26 January 2007 (2005: Ordinary Shares 0.50p, 'C' Shares Nil). The Company's dividend policy is to distribute to shareholders income earned and capital gains realised as soon as is practicable. The Board is not recommending a final dividend for the year ended 31 December 2006. Ordinary Shares fund YooMedia, as a result of a number of acquisitions over the past two years, has developed from a small business with revenues of less than Â£1 million to one with revenues of more than Â£60 million for the year ended 31 December 2006. Following several disappointing trading statements and dilutive fund raisings, however, its share price performed poorly falling from 7p at 31 December 2005 to 1.75p as at 31 December 2006. This fall in YooMedia resulted in a net decrease of approximately Â£900,000 in the value of the Ordinary Shares fund since 31 December 2005. During the year two follow-on investments were made in TheSkillsMarket Limited (Â£80,001) and High Integrity Solutions (Â£45,000) respectively. 'C' Shares fund Oxonica, currently the largest holding in the portfolio at 29.2% as a result of a strong share price performance, recently reported its annual results which showed an eightfold increase in sales to Â£10.2 million and reduced operating losses to Â£3,245,000 (2005: Â£4,504,00) and were in line with market expectations for the year ended 31 December 2006. Revenue and cash flow were positively impacted by the Petrol Ofisi and Becton Dickinson transactions completed in the second half of the year and as a result, the company's year end cash position was ahead of expectations. Despite its trading progress, Oxonica's share price fell in the period, resulting in a portfolio loss of Â£1,137,000. Corero recently announced that it had made strong progress for the year ended 31 December 2006, achieving record revenues and profits. The Blue Curve division (formerly a Foresight portfolio company) had a particularly successful year, more than doubling its revenues compared to 2005. Significant licence revenues have been derived both from existing customers, and from new clients added during the year. The Company produced operating profits of approximately Â£400,000 on revenues of approximately Â£6.3 million in the year ended 31 December 2006, which is a turnaround of just under Â£1.2million from the Â£770,000 operating loss incurred in the previous year. It also reported that all business units were profitable. Corero has also substantially improved its working capital position and operating cashflow is positive, putting it in an excellent position to take advantage of the momentum built during the year and the opportunities that have been created across all its business units. smartFOCUS recently announced strong revenue growth for 2006 with an increase of approximately 52% compared to 2005. It made a profit of Â£918,000 in 2006 compared to a loss of Â£19,000 in 2005. Within the unquoted portfolio, the most significant movements were decreases in the valuations of Aquasium Technology Limited (Â£1,615,000) and Camwood Limited (Â£761,000). Aquasium fell as a result of order delays which impacted current year profits, whilst Camwood's profits declined as it continued to invest in its new product offerings. Following the recent release of Microsoft Vista, the company expects an increase in demand for its products and services in 2007/8. The valuation of Covion Holdings, which supplies facilities management services to a range of blue chip clients, increased by Â£1,139,000 in the year as it continued to win new contracts and generate increased profits. During the year two follow-on investments were made in TheSkillsMarket Limited (Â£169,999) and High Integrity Solutions (Â£105,000) respectively. The Combined Portfolio The combined portfolio contains several companies of outstanding quality, such as Oxonica, as well as several other holdings which your Manager is optimistic may receive approaches during the current year which could result in a sale thus generating liquidity for the fund Valuation Policy Investments held by the company have been valued in accordance with the International Private Equity and Venture Capital Valuation Guidelines (IPEVC) developed by the British Venture Capital Association and other organisations, under which investments are valued, as defined in the guidelines, at 'fair value'. Ordinarily, unquoted investments will be valued at cost for the 12 months following the date of acquisition as the most suitable approximation of fair value unless there is an impairment in value during the period. Quoted investments and investments traded on AIM and OFEX are valued at the bid price as at 31 December 2006. The portfolio valuations are prepared by Foresight Venture Partners and are subject to approval by the Board. Dividend Investment Scheme and Share Buybacks During the period, the Company issued 26,468 Ordinary Shares under the Dividend Investment Scheme raising approximately Â£14,000 in aggregate. These shares were issued under the new VCT provisions that commenced on 6 April 2006, namely: 30% upfront income tax relief which can be retained by qualifying investors if the shares are held for the minimum five year holding period. As part of the Company's active buyback programme, 339,412 Ordinary Shares were purchased for cancellation at an approximate cost of Â£163,000, and at an approximate discount to NAV of 10%. Furthermore, 930,000 'C' Shares were purchased for cancellation at an approximate cost of Â£773,000, also at an approximate discount to NAV of 10%. Change of Auditor The Company changed its auditor during July 2006 from KPMG Audit plc to Ernst & Young LLP. I would like to take this opportunity to thank KPMG for all their work over the last 8 years. Annual General Meeting The Company's Annual General Meeting will take place on 16 May 2006. I look forward to welcoming you at the meeting, which will be held in London. Outlook As noted earlier, although the market in which Foresight VCT operates continues to be buoyant in terms of potential new investment opportunities, both the Ordinary and 'C' Share funds are now considered to be fully invested. Whilst your manager continues to monitor new opportunities it is currently limiting any further commitments to existing portfolio companies. Following the merger of the Ordinary Shares and 'C' Shares funds, as noted earlier, in future reports I will be reviewing the fund as one combined portfolio rather than two. Despite volatile stock markets, merger and acquisition activity remains buoyant and Foresight Venture Partners will continue to actively investigate liquidity opportunities within the portfolio. Peter Dicks Chairman 3 April 2007 Unaudited Non-Statutory Analysis between the Ordinary Shares and 'C' Shares Funds Profit and Loss Accounts for the year ended 31 December 2006 Ordinary Shares fund 'C' Shares fund Revenue Capital Total Revenue Capital Total Â£ Â£ Â£ Â£ Â£ Â£ Losses on investments - (330,436) (330,436) - (2,804,476) (2,804,476) Income 170,796 - 170,796 326,839 - 326,839 Investment Management Fees (50,768) (152,304) (203,072) (199,635) (598,904) (798,539) Other Expenses (111,260) - (111,260) (390,625) - (390,625) Return on ordinary activities 8,768 (482,740) (473,972) (263,421) (3,403,380) (3,666,801) before taxation Tax on ordinary activities (477) 477 - - - - Return attributable to equity 8,291 (482,263) (473,972) (263,421) (3,403,380) (3,666,801) shareholders Return per share 0.06p (3.23)p (3.17)p (0.75)p (9.63)p (10.38)p Balance Sheets as at 31 December 2006 Ordinary 'C' Shares fund Shares fund Â£ Â£ Â£ Â£ Non-current assets Assets held at fair value 6,549,381 27,010,649 through profit or loss - investments Current assets Debtors and prepayments 392,351 749,735 Current investments 1,349,987 1,243,782 Cash at bank 12,499 21,593 1,754,837 2,015,110 Creditors: amounts falling due (132,452) (540,294) within one year Net current assets 1,622,385 1,474,816 Net assets 8,171,766 28,485,465 Capital Called up share capital 147,913 349,761 Reserves Share premium account 4,060,624 2,953,685 Special distributable reserve 3,939,794 19,845,997 Revaluation reserve (1,172,325) 4,468,716 Profit and loss account 1,195,760 867,306 8,171,766 28,485,465 No of shares in issue 14,791,348 34,976,091 Net asset value per 1p share: 55.25p 81.44p Reconciliation of Movements in Shareholders' Funds For the year ended 31 December 2006 Ordinary Shares fund 'C' Shares fund Year to 31 December Year to 31 2006 December 2006 Â£ Â£ Opening Shareholders' funds 8,870,612 32,925,071 Net share capital (bought back)/subscribed for in the year (149,353) (772,805) Loss for the year (473,972) (3,666,801) Final dividend paid for previous year (75,521) - Closing Shareholders' Funds at 31 December 2006 8,171,766 28,485,465 Profit and Loss Account For the year ended 31 December 2006 31 December 2006 31 December 2005 Revenue Capital Total Revenue Capital Total Â£ Â£ Â£ Â£ Â£ Â£ Unrealised losses on - (3,353,701) (3,353,701) - (2,358,802) (2,358,802) investments Gains/(losses) on - 218,789 218,789 - (330) (330) realisation of investments Income 497,635 - 497,635 931,592 - 931,592 Investment management (250,403) (751,208) (1,001,611) (263,824) (791,471) (1,055,295) fees Other expenses (501,885) - (501,885) (443,869) - (443,869) (Loss)/profit before (254,653) (3,886,120) (4,140,773) 223,899 (3,150,603) (2,926,704) taxation Taxation (477) 477 - (28,935) 28,935 - (Loss)/profit for the (255,130) (3,885,643) (4,140,773) 194,964 (3,121,668) (2,926,704) year Earnings per share: Ordinary Shares (3.17)p (16.12)p 'C' Shares (10.38)p (1.15)p All items in the above statement derive from continuing operations. The total column represents the Company's profit and loss account. The supplementary revenue and capital columns are presented for information purposes as recommended by the guidance note issued by the Association of Investment Companies. There are no other recognised gains and losses in the year. Balance Sheet as at 31 December 2006 31 December 2006 31 December 2005 Â£ Â£ Â£ Â£ Non-Current Assets Assets held at fair value through 33,560,030 37,926,957 profit or loss - Investments Current Assets Debtors and prepayments 871,954 1,227,718 Current investments 2,593,769 2,749,170 Cash at bank 34,092 161,923 3,499,815 4,138,811 Creditors: amounts falling due (402,614) (270,085) within one year Net current assets 3,097,201 3,868,726 Net assets 36,657,231 41,795,683 Capital and reserves Called up share capital 497,674 510,104 Share premium account 7,014,309 7,000,652 Special distributable reserve 23,785,791 27,300,132 3,296,391 5,274,121 Revaluation reserve Profit & loss account 2,063,066 1,710,674 Equity shareholders' funds 36,657,231 41,795,683 Net asset value per share of 1 pence each: Ordinary Shares 55.25p 58.73p 'C' Shares 81.44p 91.70p Cash Flow Statement for the year ended 31 December 2006 31 December 2006 31 December 2005 Â£ Â£ Â£ Â£ Operating activities Dividends received 6,260 71,610 Deposit and similar interest 477,037 655,076 Other cash receipts 7,360 7,360 Investment management fees paid (717,786) (1,097,933) Other cash payments (494,578) (721,707) (472,437) (836,324) Net cash outflow from operating activities Investing activities Purchase of non-current investments (400,000) (7,090,800) Sale of non-current investments 1,927,742 198,163 Net cash inflow/ (outflow) from investing 1,527,742 (6,892,637) activities Net cash inflow/ (outflow) before financing and 806,035 (7,728,961) liquid resource management Management of liquid resources Decrease in current investments 155,401 9,457,841 Financing Purchase of own shares (1,027,667) (1,446,051) Issue of shares (net of expenses) 13,921 10,791 Equity dividends paid (75,521) (185,241) (1,089,267) (1,620,501) Net (decrease)/increase in cash (127,831) 108,379 Reconciliation of Movements in Shareholders' Funds for the year ended 31 December 2006 Year to 31 December Year to 31 December 2006 2005 Â£ Â£ Opening shareholders' funds 41,795,683 46,366,242 Net share capital (bought back)/subscribed for in the year (922,158) (1,458,583) Loss for the year (4,140,773) (2,926,704) Final dividend paid for previous year (75,521) (185,272) Closing Shareholders' funds at 31 December 2006 36,657,231 41,795,683 Unaudited Notes to the Financial Statements 1. All revenue and capital items in the income statement derive from continuing operations. 2. In accordance with the policy statement published under 'Management and Administration' in the Company's prospectuses dated 1 October 1997 and 14 October 1999, the Directors have charged 75% of the investment management expenses to the capital reserve. 3. The Company paid an interim dividend of 2.0p per 'C' Share for the year ended 31 December 2006 on 26 January 2007 (2005: Ordinary Shares 0.50p, 'C' Shares Nil). The Company's dividend policy is to distribute to shareholders income earned and capital gains realised as soon as is practicable. The Board is not recommending a final dividend for the year ended 31 December 2006. 4. The Company revoked its status as an investment company in March 2000, so that it can regard capital reserves as profits of the Company available for distribution. The Company has not reapplied and does not intend to re-apply for investment company status. 5. The Ordinary Shares fund current investments and the 'C' Shares fund current investments predominantly represent the balance of the net proceeds from the issues of Ordinary Shares and 'C' Shares. These funds are invested in several Dublin based OEIC money market funds managed by Blackrock Inc., Royal Bank of Scotland plc and HBOS plc. 6. The net asset value per share for both the Ordinary Shares and the C Shares has been calculated on the appropriate allocation of the Company's assets and liabilities. Other than expenses specifically attributable to one fund or the other, one quarter of costs incurred since 1 January 2006 has been allocated to the Ordinary Shares fund. Basic net asset value per Ordinary Share is based on net assets of Â£8,171,766 (31/12/2005 - Â£8,870,612) of the Ordinary Shares fund at the year end, and on 14,791,348 (2005: 15,104,292) Ordinary Shares, being the number of Ordinary Shares in issue on that date. Basic net asset value per 'C' Share is based on net assets of Â£28,485,465 (31/12/2005 - Â£32,925,071) of the 'C' Shares fund at the year end, and on 34,976,091 (2005: 35,906,091) 'C' Shares, being the number of 'C' Shares in issue on that date. 7. Total earnings after taxation for the year were a loss of Â£4,140,773 (2005: loss of Â£2,926,704) comprising a loss on the Ordinary Shares fund after taxation of Â£473,972 (2005: loss of Â£2,508,285) and a loss after taxation on the 'C' Shares fund of Â£3,666,801 (2005: loss of Â£418,419). The basic earnings per Ordinary Share is based on the net loss from ordinary activities and on 14,913,380 (2005: 15,560,442) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year. There is no difference between the basic earnings per share and diluted earnings per share as the Ordinary Warrants have now lapsed. The basic earnings per 'C' Share is based on the net loss from 'C' Shares fund activities and on 35,337,543 (2005: 36,381,420) 'C' Shares, being the weighted average number of 'C' Shares in issue during the year. There is no difference between the basic earnings per share and diluted earnings per share as the 'C' Warrants have now lapsed. The revenue return per Ordinary Share is based on the net revenue from Ordinary Share fund activities after taxation of Â£8,291 (2005: net revenue of Â£113,631) and on 14,913,380 (2005: 15,560,442) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year. The revenue return per 'C' Share is based on the loss from 'C' Share fund activities after taxation of Â£263,421 (2005: net revenue of Â£81,333) and on 35,337,543 (2005: 36,381,420) 'C ' Shares, being the weighted average number of 'C' Shares in issue during the year. The capital return per Ordinary Share is based on the net realised capital gains of Â£8,903 (2005: Â£nil), on net unrealised capital losses of Â£339,339 (2005: losses of Â£2,425,405) and capitalised management fees less associated tax relief of Â£151,827 (2005: Â£196,511) on the Ordinary Shares fund and on 14,913,380 (2005: 15,560,442) Ordinary Shares. The capital return per 'C' Share is based on the net realised capital gains of Â£209,886 (2005: gains of Â£25,161), on net unrealised capital losses of Â£3,014,362 (2005: gains of Â£66,603) and capitalised management fees less associated tax relief of Â£598,904 (2005: Â£591,516) on the ' C' Shares fund and on 35,337,543 (2005: 36,381,420) 'C' Shares. 8. The financial information set out in these statements does not constitute the Company's statutory accounts for the year ended 31 December 2006 but is derived from those accounts and is prepared on the same basis as set out in the previous year's annual accounts. Statutory accounts for the year ended 31 December 2005 have been delivered to the Registrar of Companies and those for 2006 will be delivered following the Company's Annual General Meeting. The previous auditors, KPMG Audit plc, have reported on the 2005 accounts: their report was unqualified and did not contain a statement under Section 237 (2) or (3) of the Companies Act 1985. 9. The Annual Report will be circulated by post to all shareholders shortly and copies will be available thereafter to members of the public from the Company's registered office at ECA Court, 24-26 South Park, Sevenoaks, Kent TN13 1DU. 10. The Annual General Meeting will be held at 12.30pm on 16 May 2007 at One Jermyn Street, London SW1Y 4UH. 11. Movement in Reserves for the year ended 31 December 2006 Profit & Called up Share Special Revaluation loss account share premium distributable capital account reserve reserve reserve Total Â£ Â£ Â£ Â£ Â£ Â£ At 1 January 2006 510,104 7,000,652 27,300,132 5,274,121 1,710,674 41,795,683 Shares issued/(bought back) (12,430) 13,657 (923,385) - - (922,158) Realisation of previously unrealised - - - 1,375,971 (1,375,971) - diminution Loss for the year - - - (3,353,701) (787,072) (4,140,773) - - (2,590,956) - 2,590,956 - Transfer to distributable reserve - current year Dividend - final for year ended 31 - - - - (75,521) (75,521) December 2005 At 31 December 2006 497,674 7,014,309 23,785,791 3,296,391 2,063,066 36,657,231 This information is provided by RNS The company news service from the London Stock Exchange

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