Final Results

To: City Editors NEWS RELEASE 7 February 2007 FINSBURY TECHNOLOGY TRUST PLC Preliminary results for the year ended 30 November 2006 Finsbury Technology Trust PLC today announces preliminary results for the year ended 30 November 2006. Financial Summary 30 November 2006 30 November % Change 2005 Net asset value per share 227.4p* 237.2p -4.1 Share price 212.5p 220.3p -3.5 Dow Jones World Technology Index 231.8 235.4 -1.5 (sterling adjusted, calculated on a total return basis) Discount of share price to net 6.6% 7.1% - asset value per share * Investments valued at fair value (the bid valuation (see note 1c)). Investments as at 30 November 2005 have been valued using mid market prices. The Company has not generated significant income and the Directors are not proposing a dividend for the year (2005: nil). For and on behalf of Close Investments Limited Company Secretary 7 February 2007 The following are attached: * Chairman's Statement * Income Statement * Reconciliation of Movements in Shareholders' Funds * Balance Sheet * Cash Flow Statement * Notes to the Financial Statements For further information please contact: Mark Pope, Close Investments Limited 020 7426 6294 Jeremy Gleeson, Close Investments Limited 020 7426 4338 CHAIRMAN'S STATEMENT Performance In the year to 30 November 2006 the Company's net asset value per share declined by 4.1% from 237.2p to 227.4p. This compared with a fall of 1.5% in the Company's benchmark, the Dow Jones World Technology Index, which is measured in sterling terms and on a total return basis. In the same period, the Company's share price fell by 3.5% from 220.3p to 212.5p. The discount of share price to net asset value per share narrowed from 7.1% to 6.6%. The decline in net asset value per share is disappointing. During the year, the Company's North American portfolio performed well and, even after adjusting for a 13.7% fall in the value of the US dollar against sterling, produced a significant gain. This was more than offset, however, by a fall in the value of investments held in the UK, Continental Europe, Israel and the Pacific Rim. Results and Dividend The total loss per share for the year was 10.1p (2005: return of 15.1p per share). This was made up of a revenue loss of 3.5p per share (2005: loss of 4.5p per share) and a capital loss of 6.6p per share (2005: return of 19.6p per share). The investments in the Company's investment portfolio typically provide a very low yield. No dividend has been declared in respect of the year ended 30 November 2006 (2005: nil) and it is unlikely that a dividend will be paid for the foreseeable future. Manager and Company Secretary and Investment Manager Following a recent programme of restructuring, Close Investments Limited ("CIL") now acts as both the Company's Manager and Company Secretary and also as its Investment Manager. In October, the Board learned that Michael Bourne, who had managed the investment Portfolio since the Company's inception had decided to leave CIL and would be handing over his responsibilities to Jeremy Gleeson with effect from 1 January 2007. I would like to wish Michael every success in his future ventures and to thank him for his dedication and hard work over the past eleven years. Jeremy has worked closely with Michael since 1997. He is responsible for other technology funds managed by CIL and is supported by other members of the CIL team. The Board is satisfied that Jeremy and the CIL team can provide appropriate investment management but in light of Michael's departure are undertaking a review of the Company's longer-term investment management and administration arrangements. The results of this review are expected to be available for presentation to shareholders at or before the Annual General Meeting in April. Board of Directors I am pleased to welcome Richard Holway to the Board as an independent non-executive Director. Richard has been involved in the UK IT services sector for almost 40 years and is considered by many to be one of the UK's leading analysts in the sector. He brings a wealth of experience that will be valuable to the Board and will inform our views on many aspects of the technology marketplace. Discount Management Policy, Buy Back Authority and Treasury In November last year, the Company adopted a discount management policy whereby consideration is given to buying back shares, for cancellation, at prices representing a discount greater than 7.0% to net asset value per share, if there is demand in the market for it to do so. During the year, a total of 1,875,000 shares (representing 7.2% of the Company's issued share capital at the beginning of the year) were repurchased and cancelled at a total cost of Â£ 4,088,000 and between the year-end and 6 February 2007 a further 199,500 shares have been purchased at a cost of Â£439,700. In the event that the Company buys back the maximum permitted amount of 14.99% of its issued ordinary share capital the Board will seek shareholder approval to renew this authority. The making and timing of any share buy backs will be at the absolute discretion of the Board, which will closely monitor the effect of the discount management policy and will review the Company's future if it deems that the effect of the policy would be to reduce the Company's market capitalisation to the detriment of shareholders. Outlook Your Board believes that significant opportunities for profitable investment will arise in the future from companies that are able to apply innovation so as to replace existing technology or radically to change products and services and the ways in which they are supplied to customers. Your Board will continue to seek to position the Company to take advantage of such opportunities. Annual General Meeting The Annual General Meeting will be held at 10 Crown Place, London EC2A 4FT, on Tuesday, 10 April 2007 at 12 noon. I hope that as many shareholders as possible will attend the meeting, at which representatives of our Investment Manager will make a presentation. David Quysner Chairman 7 February 2007 Income Statement for the year ended 30 November 2006 Revenue Capital Total Revenue Capital Total 2006 2006 2006 2005 2005 2005 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 ----------- ----------- ----------- ----------- ----------- ----------- (Losses)/gains on - (1,597) (1,597) - 5,543 5,543 investments held at fair value through profit or loss Exchange losses on - (67) (67) - (147) (147) currency balances Income from 218 - 218 326 - 326 investments (see note 2) Management fee (see (595) - (595) (658) - (658) note 3) Other expenses (464) - (464) (851) - (851) ----------- ----------- ----------- ----------- ----------- ----------- Net (loss)/return (841) (1,664) (2,505) (1,183) 5,396 4,213 before finance charges and taxation Finance charges (17) - (17) (39) - (39) ----------- ----------- ----------- ----------- ----------- ----------- (Loss)/return on (858) (1,664) (2,522) (1,222) 5,396 4,174 ordinary activities before taxation Taxation on ordinary (5) - (5) (28) - (28) activities ----------- ----------- ----------- ----------- ----------- ----------- (Loss)/return on (863) (1,664) (2,527) (1,250) 5,396 4,146 ordinary activities after taxation for the year ----------- ----------- ----------- ----------- ----------- ----------- (Loss)/return per (3.5)p (6.6)p (10.1)p (4.5p) 19.6p 15.1p Ordinary share (see note 4) ----------- ----------- ----------- ----------- ----------- ----------- The total column of this statement represents the profit and loss account of the Company. The revenue and capital columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies (AIC), formerly known as the Association of Investment Trust Companies. All items in the above statement derive from continuing operations. The Company has no recognised gains or losses other than declared in the Income Statement. Reconciliation of Movements in Shareholders' Funds For the year ended 30 November 2006 Called-up Share Capital share premium redemption Capital Revenue capital account reserve reserves reserve Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 ------------ ----------- --------------- ----------- ----------- ------------ As at 30 November 6,539 23,488 365 40,444 (8,803) 62,033 2005 (as previously stated) Adjustment to bid - - - (194) - (194) valuations (see note 1) ------------ ----------- --------------- ----------- ----------- ------------ Total as at 1 6,539 23,488 365 40,250 (8,803) 61,839 December 2005 (restated) Net loss from - - - (1,664) (863) (2,527) ordinary activities Shares purchased and (469) - 469 (4,088) - (4,088) cancelled ------------ ----------- --------------- ----------- ----------- ------------ At 30 November 2006 6,070 23,488 834 34,498 (9,666) 55,224 ------------ ----------- --------------- ----------- ----------- ------------ For the year ended 30 November 2005 Called-up Share Capital share premium redemption Capital Revenue capital account reserve reserves reserve Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 ------------ ----------- --------------- ----------- ----------- ------------ As at 30 November 6,904 23,488 - 38,214 (7,553) 61,053 2004 Net return/(loss) - - - 5,396 (1,250) 4,146 from ordinary activities Shares purchased and (365) - 365 (3,166) - (3,166) cancelled ------------ ----------- --------------- ----------- ----------- ------------ At 30 November 2005 6,539 23,488 365 40,444 (8,803) 62,033 ------------ ----------- --------------- ----------- ----------- ------------ Balance Sheet as at 30 November 2006 2006 2005 Â£'000 Â£'000 ----------------- -------------- Fixed assets Investments held at fair 55,073 61,743 value through profit or loss Current assets Debtors 221 3,080 Cash at bank 555 2,432 ----------------- -------------- 776 5,512 Creditors Amounts falling due within (625) (5,222) one year ----------------- -------------- Net current assets 151 290 ----------------- -------------- Net assets 55,224 62,033 ----------------- -------------- Capital and reserves Called up share capital 6,070 6,539 Share premium account 23,488 23,488 Capital redemption reserve 834 365 Capital reserves 34,498 40,444 Revenue reserve (9,666) (8,803) ----------------- -------------- Equity shareholders' funds 55,224 62,033 ----------------- -------------- Net asset value per Ordinary 227.4p 237.2p share (see note 5) ----------------- -------------- Cash Flow Statement for the year ended 30 November 2006 2006 2005 Â£'000 Â£'000 ----------------- -------------- Net cash outflow from (1,410) (779) operating activities Servicing of finance Bank overdraft and loan (17) (39) interest paid Taxation Tax recovered 3 8 Financial investment Purchases of investments (28,534) (47,362) Sales of investments 32,251 53,180 ----------------- -------------- Net cash inflow from financial 3,717 5,818 investments Financing Purchase of Ordinary shares (4,088) (3,166) ----------------- -------------- Net cash outflow from (4,088) (3,166) financing ----------------- -------------- (Decrease)/increase in cash (1,795) 1,842 ----------------- -------------- Reconciliation of net cash flow to movement in net funds (Decrease)/increase in cash as (1,795) 1,842 above Exchange movements (67) (147) ----------------- -------------- Movement in net funds (1,862) 1,695 Net funds at 1 December 2,417 722 ----------------- -------------- Net funds at 30 November 555 2,417 ----------------- -------------- Notes to the Financial Statements 1. Accounting Policies The principal accounting policies, all of which have been applied consistently throughout the year, in the preparation of these financial statements are set out below: (a) Accounting Convention The financial statements have been prepared under the historical cost convention, except where stated in (b) and (c) below, in accordance with applicable UK accounting standards and the revised Statement of Recommended Practice (the SORP") for Investment Trust Companies produced by the Association of Investment Companies ("AIC") dated December 2005. All the operations of the Company are of a continuing nature. (b) Changes in accounting policies and presentation The Company has changed its accounting policy for the valuation of investments in accordance with the provisions of FRS 26 - Financial instruments: Recognition and Measurement (`FRS 26'). This change in policy and the associated impact on the results of the Company are referred to below. The Statement of Total Return is now called the Income Statement. Dividends, if they were to become payable to equity shareholders, will no longer be reflected in the Income Statement, although they will continue to be shown in the Reconciliation of Movements in Shareholders' Funds which is now presented as a primary statement. (c) Investments As the Company's business is investing in financial assets with a view to profiting from their total return in the form of increases in fair value, financial assets are designated as fair value through profit and loss on initial recognition in accordance with FRS 26. The Company manages and evaluates the performance of these investments on a fair value basis in accordance with its investment strategy, and information about the investments is provided on this basis to the Board of Directors. Investments held at fair value through profit or loss are initially recognised at fair value, being the consideration given and excluding material transaction or other dealing costs associated with the investment, which are expensed and included in the capital column of the Income Statement. After initial recognition, investments, which are classified as at fair value through profit or loss, are measured at fair value. Gains or losses on investments classified as at fair value through profit or loss are recognised in the capital column of the Income Statement. All purchases and sales of investments are accounted for on the trade date basis. For quoted investments fair value is established by reference to bid, or last, market prices depending on the convention of the exchange on which the investment is quoted. For unquoted investments fair value is established using valuation techniques such as recent arm's length market transactions, earnings multiples and net asset value. Where fair value cannot be reliably measured the investment will be carried at cost for recent investments, or at the previous reporting date value, unless there is evidence that the investment has since been impaired in value or there is strong defensible evidence of an increase in value. Prior to 1 December 2005, quoted investments were valued at middle market prices. Following the introduction of FRS 26 quoted investments are now valued at fair value in accordance with the above policy. In accordance with the exemption conferred by FRS 26, comparatives have not been restated for this change in accounting policy and therefore quoted investments shown at 30 November 2005 are stated at middle market prices. The adoption of FRS 26 on 1 December 2005 decreased the value of investments by Â£194,000. The effect of this change in accounting policy is to decrease the value of investments at 30 November 2006 by Â£301,000 and increase the loss on ordinary activities after taxation for the period then ended by Â£107,000. FRS 26 requires that transaction costs on the acquisition of financial investments at fair value through profit or loss be expensed. The Company's policy is to capitalise transaction costs on acquisition. Whilst there is no overall impact on the total return for the year or net assets, this does result in an overstatement of investment bookcost and a misallocation between realised and unrealised capital reserves. This does not have a material impact on the Company's results. Transaction costs incurred on the acquisition and disposal of investments are included within the Income Statement and allocated to the capital reserve. For the year ended 30 November 2006, these amounted to Â£58,000 in relation to purchases and Â£54,000 in relation to sales; in the year ended 30 November 2005 purchase costs amounted to Â£112,000 and sales costs amounted to Â£136,000. All purchases and sales are accounted for on a trade date basis. d) Investment Income Dividends receivable on equity shares are recognised on the ex-dividend date. Where no ex-dividend date is quoted, dividends are recognised when the Company's right to receive payment is established. Dividends and interest on investments in unlisted shares and securities are recognised when they are received. Fixed returns on non-equity shares are recognised on a time apportionment basis so as to reflect the effective yield, provided there is no reasonable doubt that payment will be received in due course. (e) Other Income Bank interest is accounted for on an accruals basis. (f) Expenses Policy All expenses including finance costs are accounted for on an accruals basis. Expenses are charged through the revenue column of the Income Statement except as follows: (i) material expenses which are incidental to the acquisition of an investment are treated as part of the cost of that investment; (ii) expenses which are incidental to the disposal of an investment are deducted from the proceeds of that investment; (iii) expenses may be allocated to the Capital Reserve - realised, via the capital column of the Income Statement, where a connection with the maintenance or enhancement of the value of the investment can be demonstrated; (iv) performance related investment management fees and the related irrecoverable VAT are allocated to the capital column of the Income Statement. The expenses are allocated to capital as it is expected that virtually all of the Company's investment returns will derive from capital appreciation. (g) Taxation Deferred tax is provided on all timing differences that have originated but not reversed by the balance sheet date. A deferred tax asset is only recognised to the extent that it is regarded more likely than not that there will be available profits from which the future reversal of the underlying timing differences can be deducted. Any tax relief obtained in respect of performance fees is allocated to the capital column of the Income Statement and a corresponding amount is charged against the revenue column. The tax relief is the amount by which corporation tax payable is reduced as a result of those capital expenses. (h) Foreign Currencies Transactions denominated in foreign currencies are recorded in sterling at the actual exchange rates as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the year end are reported at the rates of exchange prevailing at the year end. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the capital column or in the revenue column of the Income Statement, depending if the gain or loss is of a capital or revenue nature respectively. (i) Reserves Capital reserves - Realised The following are taken to this reserve: - gains and losses on the realisation of investments, - realised exchange differences of a capital nature, - expenses charged to this reserve in accordance with the above policies, - any element of unrealised loss on the revaluation of an investment which is considered to be a permanent diminution in value. Capital reserves - Unrealised The following are taken to this reserve: - increases and decreases in the valuation of investments held at the year end, - unrealised exchange differences of a capital nature. 2. Income 2006 2005 Â£'000 Â£'000 ---------------- ---------------- Income from investments Dividends: - UK listed 45 50 - Overseas listed 57 188 Fixed interest: - UK listed 106 53 Stock dividends - 12 ---------------- ---------------- 208 303 ---------------- ---------------- Interest receivable and other income - Deposit interest 10 23 ---------------- ---------------- 10 23 ---------------- ---------------- Total Income 218 326 ---------------- ---------------- 3. Investment Management Fees Revenue Capital Total Revenue Capital Total 2006 2006 2006 2005 2005 2005 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 ----------- ----------- ----------- ----------- ----------- ----------- Periodic fee 547 - 547 630 - 630 Irrecoverable 48 - 48 28 - 28 VAT thereon ----------- ----------- ----------- ----------- ----------- ----------- Total 595 - 595 658 - 658 ----------- ----------- ----------- ----------- ----------- ----------- 4. (Loss)/Return Per Ordinary Share The total return per Ordinary share is based on the total loss attributable to equity shareholders of Â£2,527,000 (2005: return Â£4,146,000), and on 25,005,709 (2005: 27,559,312) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year. Revenue loss per Ordinary share is based upon the loss attributable to ordinary shareholders of Â£863,000 (2005: Â£1,250,000) and 25,005,709 (2005: 27,559,312) Ordinary shares being the weighted average number of shares in issue during the year. Capital return per Ordinary share is based upon net capital loss attributable to ordinary shareholders of Â£1,664,000 (2005: return of Â£5,396,000) and 25,005,709 (2005: 27,559,312) Ordinary shares being the weighted average number of shares in issue during the year. 5. Net Asset Value Per Ordinary Share The net asset value per Ordinary share is based on the net assets attributable to equity shareholders of Â£55,224,000 (2005: Â£62,033,000) and on 24,280,312 (2005: 26,155,312) Ordinary shares in issue at 30 November 2006. 6. Financial Information This preliminary statement is not the Company's statutory accounts. The above results for the year ended 30 November 2006 have been agreed with the Auditors and are an abridged version of the Company's full draft accounts, which have not yet been approved, audited or filed with the Registrar of Companies. The statutory accounts for the year ended 30 November 2005 have been delivered to the Registrar of Companies and those for 30 November 2006 will be despatched to shareholders shortly. The statutory accounts for the year ended 30 November 2005 received an audit report which was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report, and did not contain statements under Section 237 (2) and (3) of the Companies Act 1985. Close Investments Limited Company Secretary 7 February 2007

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