Interim Results - 6 Months to 31 March 2000

Foresight Technology VCT PLC 4 May 2000 Foresight Technology VCT plc Interim Results 6 months ended 31 March 2000 Chairman's Statement I have pleasure in enclosing the Interim Report and Financial Statements of Foresight Technology VCT plc for the period from 1st October 1999 to 31st March 2000. The return (after tax) attributable to Ordinary shareholders was 272.08 pence per Ordinary Share. The net asset value, after the interim dividend referred to below, per Ordinary Share at 31st March 2000 was 264.08 pence. With regard to the holders of 'C' Shares, the attributable return (after tax) was 0.16p per share and the net asset value was 94.07p per share. I am also pleased to note that the Ordinary Shares fund has now achieved its Venture Capital Trust qualification investment target of having more than 70% of its portfolio invested in qualifying shares and securities within its first three years. As announced to the London Stock Exchange on 29th February 2000, following the successful realisation of part of the Company's shareholding in e-district.net plc, the Company's status as an investment company has been revoked and a capital dividend of 100 pence per Ordinary Share will be paid by one instalment to Ordinary shareholders on the register at close of business on 10th March 2000. This payment should be received on 8th May 2000. This makes Foresight the first venture capital trust to pay a dividend to Ordinary shareholders equivalent to the starting capital of the Ordinary Shares fund; 100 pence per share. What makes this particularly pleasing is that this is entirely attributable to the partial realisation of just one of the Company's investments: e- district.net plc. As a result of this distribution the hurdle on the performance related carried interest arrangements relating to the Ordinary Shares fund will be met and 1,960,324 new Ordinary Shares have been issued at par to the parties entitled under those arrangements who will also participate in the proposed dividend to the extent of 39.8p per share. I am pleased to report that the public offer of 'C' Shares launched on 1st October 1999 raised, before expenses, £30,261,496. A further £2,738,500 was raised after the tax year making an aggregate amount raised of £32,999,996. I would like to take this opportunity of thanking all shareholders and warrantholders for their continuing support of the Company. My next statement will be in respect of the year to 30th September 2000. Peter Dicks Chairman 4th May 2000 ORDINARY SHARES FUND Sapphire International Limited Owns the long established 'DataEase' family of computer database software products and has a worldwide base of several hundred thousand users. The company is now introducing new technology that allows existing DataEase users to update their applications for client/server operation and internet enablements. Revaluation: Sapphire Group completed a second round equity financing with a third party resulting in a premium exceeding 80% on Foresight's equity cost. Results from the latest audited accounts for the year ended 31 December 1999: profit before tax £244,000, net assets £1,761,000 Date Amount Valuation % Equity/ Loan % of Ordinary of invested Voting Stock Shares Investment including Rights Portfolio Loan Stock July 1998 £1,000,000 £1,484,337 17.6% £400,000 10% 5.1% Unsecured Loan Stock Aran Software Plc Is a leading supplier of 'Open Systems' business solutions and associated services to wholesale, distribution and banking business throughout the UK. The company was formed in March 1999 when Unisoft Solutions Group Limited, the original Foresight investment, merged with Aran Limited to form a larger business with annual revenues of around £8 million. Since the merger of the two companies a significant amount of product and people reorganisation has taken place. The benefits of the merger have taken longer to come through than expected. The company is now trading profitably. However, the costs of high borrowing place a continuing pressure on cash flow and it is anticipated that Foresight will provide a bridging facility of £400,000 in advance of another capital raising to reduce the burden of debt. Results from the latest audited accounts of Aran Limited for the year ended 31 March 1998: loss before tax £14,000, net liabilities £1,345,000. Results from the latest audited accounts of Unisoft Solutions Group Limited for the year ended 31 March 1998: profit before tax £44,000, retained profit £35,000, net liabilities £796,000. Date Amount Valuation % Equity/ % of Ordinary of invested at cost Voting Shares Investment Rights Portfolio Oct 1998 £1,400,000 18.6% (plus 4.8% warrants to a total of 40%) Actimax plc Supplies digital telecommunications systems to small and medium sized customers. The company's management team previously started a successful telecommunications business and developed a focus on customer satisfaction. Actimax installs complex computer and telephone combined systems using components from suppliers such as Ascom, Lucent and Intertel. Since Foresight's investment the company has progressively reduced its monthly trading losses and is now trading profitably. Results from the latest audited accounts for the period ended 31 December 1999: operating loss £220,108, net liabilities £411,280. Date Amount Valuation % Equity/ Loan % of Ordinary of invested Voting Stock Shares Investment including at cost Rights Portfolio Loan Stock Nov 1998 £600,000 £1,484,337 42% £120,000 10% 2.1% (plus 6% warrants) Unsecured Loan Stock Survey and Development Services Limited Is a specialist geo-spatial data software products and services company. It serves the growing market for digital mapping and the building of geographical information system databases. The products include a software system that creates digital maps and a system that uses satellite positioning in conjunction with video for recording facilities for utilities. The company converts existing maps into digital format. The company is emerging from a difficult period and is now trading profitably on a month by month basis. A temporary facility of £100,000 was provided by shareholders in anticipation of the provision of a convertible loan facility by a new investor of £250,000. The provision made at the end of the last year against the cost of the investment continues. Results from the latest audited accounts for the year ended 30 June 1999: loss before tax £404,152, net assets £916,925. Date Amount Valuation % Equity/ Loan % of Ordinary of invested Voting Shares Investment Rights Portfolio Dec 1998 £550,000 £300,000 29.2% £50,000 1% CyberLife Technology Limited Is a leading artificial intelligence software company. The range of products under development covers entertainment software (such as the computer game 'Creatures') and productivity tools. The technology also relates to new platforms such as toys, mobile phones and digital television. Results from the latest audited accounts for the year ended 31 August 1999: loss before tax £1,322,150, net assets £3,178,459 Date Amount Valuation % Equity/ % of Ordinary of invested at cost Voting Shares Investment Rights Portfolio Jan 1999 £1,000,000 5.3% 3.5% Advanced Composites Group Limited Is a well established manufacturer of high technology carbon fibre composite material, with factories in Heanor north of Derby, and Tulsa, USA. Successful markets include F1 racing cars, sports equipment, and aerospace applications. Results from the latest consolidated audited accounts of the subsidiary undertakings for the year ended 31 August 1999: loss before tax £365,000, net assets £3,505,000. Date Amount Valuation % Equity/ % of Ordinary of invested at cost Voting Shares Investment Rights Portfolio March 1999 £1,500,000 26% 5.2% e-district.net plc (formerly SyNet Communications Limited) Runs an internet portal site with an international community of over 1.8 million registered users which generated approximately 120 million page hits in March 2000. The site provides an increasing number of facilities including online games, e-mail, personal home pages and chat, with e-commerce being introduced. The company was floated on the AIM market in March 2000 at a valuation of £149.7 million. Foresight sold 6,623,030 shares in the flotation at a placing price of 195p per share to raise £12.39 million net of expenses. Results from the latest audited accounts for the period ended 31 December 1999: profit before tax £81,059, net assets £517,554. Date Amount Valuation % Equity/ % of Ordinary of invested Voting Shares Investment Rights Portfolio March 1999 £341,319 £15,670,549 18.8% 54.2% Telecom 'plus' plc (OFEX listed) Offers low cost telephone services to private subscribers using relationship marketing as a means of obtaining new customers. Services currently offered include the provision of fixed wire and cellular phone services with the company acting as a switchless reseller. This business is now growing rapidly and Telecom plus intends to add gas and electricity to its offering shortly, allowing its customers to buy all major utilities from one source. Results from the latest audited accounts for the year ended 31 March 1999: loss before tax £1,135,000, net assets £281,000. Date Amount Valuation % Equity/ Loan % of Ordinary of invested Voting Stock Shares Investment including Rights Portfolio Loan Stock June 1998 £475,000 £3,096,250 1.5% £250,000 10.7% Convertible The e-Exchange Limited Has designed and built an internet-based online trading exchange to deal in the PC market. The company went live with its site in November and is now generating a growing volume of completed trades. A further financing round at a price 50% above our cost was completed in March. This investment has therefore has been valued at the increased price, some two months after the Company's investment, in accordance with BVCA guidelines. Results from the latest audited accounts for the period ended 31 December 1999: operating loss US$6,755,000, net liabilities US$4,423,000 Date Amount Valuation Ordinary Convertible Warrants % Shares of invested Shares Loan Ordinary Investment including US$ each Stock Portfolio Convertible Loan Stock Jan 1998 £933,000 £1,399,500 50,000 450,000 100,000 4.8% units exercisable exercisable at US $3 per at US $1 ordinary per ordinary share share THE 'C' SHARES FUND UK Directory (Holdings) Limited (OFEX listed) Operates an internet directory with a search engine containing approximately 42,000 UK business web site addresses. A magazine which lists some 21,000 web sites and has a circulation of approximately 17,000. France Telecom uses the UK Directory database for its 'Voila' web site. Revenue is generated from advertising in various forms. Results from the latest audited accounts for the period ended 31 August 1999: loss before tax £2,519, net liabilities £44,224. Date Amount Valuation % Equity/ % of 'C' Shares of Invested at cost Voting Rights Portfolio Investment March 2000 £1,000,000 10% 3.5% eclipsis.com Group plc (trading as Travelstore.com) This business has developed an internet-based travel site focused on the business traveller/SME market. The company is growing partly by acquiring existing travel agents. Their target customers are frequent travellers, buying premium tickets, interested in other services and motivated by loyalty programmes. A further round of funding is currently in progress and is likely to raise more expansion capital at a price substantially higher than our cost. Results from the latest audited accounts for the period ended 31 March 1999:loss before tax £508,153, net assets £647,445. Date Amount Valuation % Equity/ % of 'C' Shares of Invested at cost Voting Rights Portfolio Investment Dec 2000 £1,000,000 3.3% 3.5% FURTHER INVESTMENTS - 'C' SHARES FUND KeepAhead Limited (Investment completed in April 2000) Sends out a growing portfolio of quality email services which consumers can receive virtually every day, for free. Revenue is generated from advertising, and longer term from e-commerce. The services cover subjects like sport and current affairs. The company has 75,000 registered users and is growing rapidly. No audited accounts produced since incorporation in February 1999. Date of Investment Amount Invested % Equity/Voting Rights April 2000 £1,000,000 15% (plus 4% warrants) Six months to Six months to 31st March 2000 31st March 1999 (unaudited) (unaudited) Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ Unrealised gains and losses on investments - 30,181,102 30,181,102 - 101,929 101,929 Income 589,152 - 589,152 260,577 - 260,577 Investment management fees (77,801) (233,405) (311,206) (32,612)(97,837)(130,449) Other expenses (184,967) - (184,967) (86,406) - (86,406) --------- ---------- --------- -------- ------- -------- Return on ordinary activities before taxation 326,384 29,947,697 30,274,081 141,559 4,092 145,651 (97,916) 70,022 (27,894) (29,727) 20,546 (9,181) --------- --------- ----------- -------- ------ -------- Return attributable to equity shareholders 228,468 30,017,719 30,246,187 111,832 24,638 136,470 Dividends in respect of equity shares - (11,889,529)(11,889,529)(109,427) - (109,427) -------- ---------- ----------- -------- ------- -------- Transfer to reserves 228,468 18,128,190 18,356,658 2,405 24,638 27,043 ------ ---------- ---------- -------- ------- -------- Return per Share: Ordinary Shares 0.84p 271.24p 272.08p 1.0p 0.2p 1.2p ------ ---------- ---------- -------- ------- -------- Return per Share 'C' Shares 0.94p (0.78)p 0.16p - - - ------ ---------- ---------- --------- ------ -------- Unrealised gains and and losses on investments - 529,243 593,243 Income 437,381 - 437,381 Investment management fees (64,627) (193,881) (258,508) Other expenses (174,030) - (174,030) -------- ------- -------- Return on ordinary activities before taxation 198,724 399,362 598,086 (69,355) 39,746 (29,609) --------- ------- -------- Return attributable to equity shareholders 129,369 439,108 568,477 Dividends in respect of equity shares (110,295) - (110,295) -------- -------- --------- Transfer to reserves 19,074 439,108 458,182 --------- --------- ---------- Return per Share: Ordinary Shares 1.17p 4.00p 5.17p --------- --------- ---------- Return per Share 'C' Shares - - - --------- ---------- ---------- Analysis Between the Ordinary Shares and 'C' Shares Funds (unaudited) Six months to 31st March 2000 Six months to 31st March 2000 Ordinary Shares Fund 'C' Shares Fund Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ £ Unrealised gains and losses on investments - 30,203,153 30,203,153 - (22,051) (22,051) Income 211,333 - 211,333 377,819 - 377,819 Investment management fees (34,418) (103,256) (137,674) (43,383)(130,149) (173,532) Other expenses (44,369) - (44,369)(140,598) - (140,598) --------- --------- --------- --------- -------- --------- Return on ordinary activities before taxation 132,546 30,099,897 30,232,443 193,838 (152,200) 41,638 Tax on ordinary activities (39,764) 30,977 (8,787) (58,152) 39,045 (19,107) --------- --------- --------- --------- -------- --------- Return attributable to equity shareholders 92,782 30,130,874 30,223,656 135,686 (113,155) 22,531 Dividends in respect of equity shares - (11,889,529)(11,889,529) - - - ------- ---------- ---------- -------- -------- ------ Transfer to reserves 92,782 18,241,345 18,334,127 135,686 (113,155) 22,531 ------- ---------- ---------- -------- -------- ------ Unaudited Balance Sheet 31 March 2000 31 March 1999 31 March 2000 30th September 1999 (unaudited) (unaudited) (audited) £ £ £ £ £ £ Fixed Assets Investments 46,753,157 10,026,569 10,036,805 Monies held on deposit pending investment 10,180,399 299,668 719,032 ---------- ---------- ---------- 56,933,556 10,326,237 10,755,837 Current Assets Debtors and prepayments1,127,888 294,960 315,873 Cash at bank 12,001,680 31,226 31,937 ---------- ---------- ---------- 13,129,568 326,186 347,810 Creditors: amounts falling due within one year (12,260,006) (249,728) (102,993) ---------- ---------- ---------- Net current assets 869,562 76,458 244,817 ---------- ---------- ---------- Net assets 57,803,118 10,402,695 11,000,654 ---------- ---------- ---------- Capital and reserves Called up share capital 413,700 109,427 111,085 Share premium account 38,485,364 10,177,011 10,342,173 Capital reserves 18,654,797 112,137 526,607 Revenue reserves 249,257 4,120 20,789 ---------- ---------- ---------- Equity shareholders' funds 57,803,118 10,402,695 11,000,654 ---------- ---------- ---------- Net asset value per share For Ordinary Shares of 1p each: Ordinary Shares 264.08p 95.1p 99.0p 'C' Shares 94.07p - - Analysis Between the Ordinary Shares and 'C' Shares Funds (unaudited) 31st March 2000 31st March 2000 Ordinary Shares Fund 'C' Shares Fund £ £ £ £ Fixed Assets Investments 27,471,986 19,281,171 Monies held on deposit pending investment 1,421,911 8,758,488 ---------- ---------- 28,893,897 28,039,659 Current Assets Debtors and prepayments 497,938 766,021 Cash at bank 11,959,487 42,193 ---------- ---------- 12,457,425 808,214 Creditors: amounts falling due within one year (12,016,541) (379,536) ---------- ---------- Net current assets 440,884 428,678 ---------- ---------- Net assets 29,334,781 28,468,337 ---------- ---------- Capital and reserves Called up share capital 111,085 302,615 Share premium account 10,342,173 28,143,191 Capital reserves 18,767,952 (113,155) Revenue reserves 113,571 135,686 ---------- ---------- Equity shareholders' funds 29,334,781 28,468,337 ---------- ---------- These interim accounts for the six months ended 31st March 2000 have been prepared to confirm that the Company has sufficient distributable reserves to support the interim dividend declared on 14th April 2000 which is payable on 8th May 2000. They are interim accounts as required by section 272 of the Companies Act 1985 and are unaudited. Notes: 1. The revenue column of the Statement of Total Return is the profit and loss account of the Company. 2. All revenue and capital items in the Statement of Total Return derive from continuing operations. 3. In accordance with the policy statement published under 'Management and Administration' in the Company's prospectus dated 1st October 1997, the Directors have charged 75% of the investment management expenses to the capital reserve. 4. Earnings for the first six months should not be taken as a guide to the results for the full year. 5. The 'C' shareholders will be entitled to receive any dividends paid out of the net income derived from the net assets allocable to the 'C' Shares. 6. An interim dividend of 100p will be paid to Ordinary shareholders on 8th May 2000 from the capital reserves of the Ordinary Shares fund. When this was declared the Company became obliged to issue to the carried interest rights holders 1,960,324 Ordinary Shares at par carrying the entitlement to participate in this dividend to the extent of 39.8 pence per Ordinary Share. 7. In order that the Company might make this capital distribution, it has revoked its status as an investment company, so that under the Articles of Association, it can regard capital reserves as profits of the company available for distribution. 8. Basic return per Ordinary Share and 'C' Share is based on the net revenue on ordinary activities after taxation and is based on 11,108,500 Ordinary Shares (31st March 1999: 10,944,777) and 14,402,435 'C' Shares (1999: Nil). 9. 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 1st October 1999 has been allocated to the Ordinary Shares fund and three quarters to the 'C' Shares. 10. The financial information for the six months ended 31st March 2000 and 31st March 1999 has not been audited. The information for the year ended 30th September 1999 does not comprise full financial statements within the meaning of section 240 of the Companies Act 1985. The financial statements for the year ended 30th September 1999 have been filed with the Registrar of Companies. The auditors have reported on those financial statements and that report was unqualified and did not contain a statement under Section 237 (2) of the Companies Act 1985.

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