Final Results

Foresight Technology VCT PLC 10 March 2005 FORESIGHT TECHNOLOGY VCT PLC PRELIMINARY ANNOUNCEMENT OF RESULTS CHAIRMAN'S STATEMENT Introduction I have pleasure in announcing the Annual Results for the year ending 31st December 2004. The results are set out below. As I have indicated over the last year, a number of the portfolio companies are benefiting from improving economic conditions after a sustained period of difficult trading. They are increasing their sales and marketing efforts, but at the same time ensuring they have sufficient resources to manage growing order books and sales. I believe that several investee companies in the portfolio have the potential to generate further value, providing the outlook is maintained or continues to improve. The technology sector, in particular, has been a beneficiary and increased corporate spending on IT services will be an important contributory aspect. As a result of these trends, corporate activity has been on the increase with a revival of enthusiasm for new listings. During the period under review and following the year end a number of our unquoted holdings have either been the subject of Initial Public Offerings (IPOs) to the AIM Market or have been the subject of preliminary approaches from potential purchasers or merger partners. Results The results for the year from 1st January 2004 to 31st December 2004 are set out below. The return (after tax) attributable to the Ordinary Shareholders was a loss of Â£7,751,552 (2003: profit of Â£12,711,291) and the net asset value per ordinary share as at 31st December 2004 was 76.60p (2003: 186.75p). The return (after tax) attributable to 'C' Shareholders was a profit of Â£9,842,237 (2003: loss of Â£1,420,232) and the net asset value per 'C' Share as at 31st December 2004 was 93.41p (2003: 67.18p). The after tax revenue return (before capital gains) per Ordinary Share was (0.15)p (2003: 2.04p) and the after tax revenue return (before capital gains) per 'C' Share was 0.81p (2003: 0.96p) for the year ended 31st December 2004. Dividend The Board is recommending a final dividend of 0.50p per 'C' Share (2003: 0.50p) for the year ended 31st December 2004 payable to 'C' Shareholders on the register on 18th March 2005. If approved at the Annual General Meeting, these payments will be made on 27th May 2005. The Board does not recommend a final dividend on the Ordinary Shares (2003: Â£nil) in addition to the special dividend of 52p per share paid to Ordinary Shareholders in July 2004. The Company's dividend policy is to distribute to shareholders income earned and capital gains realised as soon as is practicable. Ordinary Shares Fund Advanced Composites Group Limited, as reported in my interim statement, was sold to UMECO in May 2004 for a total cash consideration of Â£44.25 million of which the Fund received approximately Â£10 million. This enabled the Company to pay a dividend of Â£7.98 million or 52p per Ordinary Share to shareholders in July. The price of YooMedia plc has performed poorly in the year under review, falling from 49p as at 31st December 2003 to 17p as at 31st December 2004. This resulted in a net decrease of approximately Â£5.8 million in the value of the fund. However, YooMedia acquired Digital Interactive Television Group and the Gaming Channel during the year predominately through the issue of 120 million new shares as well as undertaking a discounted rights issue at 15p per share to raise up to Â£25 million for on-going working capital for the enlarged group. The result is that the group is now a market leader in the independent interactive digital TV industry and in a position to satisfy the growing appetite for interactive applications in TV, radio, mobile and through the internet. Bernard Fairman left the Board of YooMedia in December 2004. A small holding in Telecom Plus plc was realised during the year at approximately ten times cost, generating proceeds of Â£400,000 leaving the fund with a holding of 651,000 shares with a year end value of Â£1,448,475. During the year three smaller new investments were made in DCG Datapoint Group Limited (Â£175,000), Aigis Limited (Â£33,000) and Sarantel Limited (Â£110,000). Sarantel manufactures miniature antennae used in a variety of wireless applications. Subsequent to the year end, it undertook an IPO on the AIM market at a price of 82p per share. At the current price of 108p per share, Sarantel's market value is Â£57 million. 'C' Shares Fund The Board is pleased with recent progress made within the 'C' Share portfolio which is driven by the valuations and prospects of several of the investee companies. As noted above, Sarantel listed on the AIM market on 2nd March 2005 raising a total of Â£18 million to fund its ongoing expansion. Its miniature antennae are used in mobile phones and personal digital assistants offering location based services through navigation satellites. These antennae also reduce the amount of energy absorbed by the users of mobile phones. The Company saw its sales quadruple in the year to 30th September 2004 and expects further growth during the current year. ANT Limited is a leading provider of embedded application software and support for the broadband TV, hospitality and consumer electronics markets. ANT software has been extensively deployed by customers throughout the world including Thomson, Pace, Philips, Amino, Sagem and Samsung. ANT is now the preferred set top box browser supplier for Alcatel's Open Media Suite, which is deployed in more IPTV networks than any other middleware solution. Oxonica Limited engineers the properties of materials at the nano-scale level for application in fuel additives, UV protection and other products. Demand has been encouraging for the company's products and Stagecoach has now rolled out the fuel additive product globally. It is anticipated that a major retail group will be incorporating the UV protection product into a sunscreen material in a Spring 2005 facial product range. Foresight Technology invested Â£510,000 into the company in a post year end rights issue. Oxonica is considering the possibility of an IPO later this year. Smartfocus Group PLC listed on the AIM market during October 2004 and at the same time Foresight Technology took the opportunity to invest a further Â£667,000 into the company. At the year end this holding was valued at an approximate 50% increase on cost. The company provides software to enable accurate targeting and execution of marketing campaigns. Broadreach Networks Limited continues to make progress in the Wi-Fi market. Its partners now include Virgin Megastores, Little Chef, Moto, Sainsbury's and Travel Lodge. During the year Foresight Technology invested a further Â£1 million in the company to finance its expansion plans. In addition to several follow-on funding rounds in existing investee companies, new investments were made in DCG Datapoint Group Limited (Â£575,000) and Aigis Limited (Â£109,000). Datapoint provides data storage and back-up solutions to corporates either remotely or at their premises. Its growing customer list includes MCI, Channel 4 and National Blood Service. Aigis Limited manufactures blast absorption materials that can be used in a wide variety of applications, including airlines, military and buildings. Aigis is performing well in its current financial year and demand for its products is increasing. As at 31 December 2004 approximately Â£24 million had been approved for investment or invested in 24 companies by the 'C' Share Fund. This represented approximately 79% of the Fund's investments, the balance was temporarily invested in money funds and cash deposits. Foresight Venture Partners continue to receive a steady flow of new investment opportunities and is reviewing a number of new investments as well as considering additional investments in existing portfolio companies. Although difficult to forecast with any accuracy, we are hopeful that as a result of the improved Stock Market conditions and increased corporate activity there may be further liquidity opportunities within the portfolio during the year. Details of investments made in the Ordinary and 'C' Share funds during the period are given below. Valuation Policy The investments held by the Company that are not quoted on AIM, OFEX or the London Stock Exchange have been valued in accordance with the Valuation Guidelines issued by the British Venture Capital Association ('BVCA') under which unquoted investments are not normally revalued above cost for at least 12 months after the date of acquisition and thereafter at 'fair value'. Quoted investments and investments traded on AIM and OFEX are stated at the middle-market price as at 31st December 2004. The portfolio valuations are prepared by Foresight Venture Partners and are subject to approval by the Board. Share Offers and Dividend Investment Scheme During the year, the Company issued 717,262 Ordinary Shares and 2,151,766 'C' Shares under two offers for subscription. These offers raised approximately Â£1,167,000 for the Ordinary Shares fund and Â£1,456,000 for the 'C' Shares fund. Under the dividend investment scheme 836,222 Ordinary Shares and 13,578 'C' Shares were issued raising approximately Â£708,000 in aggregate. Warrant Exercise The final warrant exercise opportunity on 22nd May 2004 resulted in 1,231,724 Ordinary Shares and 139,400 'C' Shares being issued to shareholders, both at 100p per share. After this date, the remaining options lapsed. International Financial Reporting Standards ('IFRS') The Board notes that the IFRS may have an impact on the Company's financial reporting requirements. These elements will be monitored and assessed with regard to their likely impact. Shareholder Questionnaire As shareholders will be aware, a questionnaire was sent out to all shareholders on 7 December 2004. This questionnaire resulted in a good response with some 23% of the combined shareholder base of Ordinary and 'C' Shares Funds replying. Overall, shareholder feedback was positive and we are grateful for your responses. As many of you will know, our manager, Foresight Venture Partners now has a dedicated person in place to address shareholders' questions and concerns and we welcome all comments and suggestions which you may have. Annual General Meeting The Company's Annual General Meeting will take place on 4 May 2005. I look forward to welcoming you at the meeting which will be held in London this year in response to Shareholders' comments. I would also like to take this opportunity to thank all shareholders for their continued support. Peter Dicks Chairman 10 March 2005 THE VENTURE CAPITAL FUNDS Foresight Venture Partners advise the Company in respect of investments made within the Ordinary Shares fund and the 'C' Shares fund. During the year ended 31 December 2004 one follow on investment was made from the Ordinary Shares fund at a cost of Â£100,000 and three new investments were made at a cost of Â£317,837. In addition eight further follow-on investments were made from the 'C' Shares fund at a cost of Â£3,346,685 and two new investments were made at a cost of Â£684,470. In accordance with the BVCA guidelines, all investments are held at ' fair value' unless this cannot be reliably measured, in such cases an explanation has been given in the individual company narratives. No discounts have been applied to the quoted investments, in line with generally accepted practice in the venture capital market. The full investment portfolio of both funds as at 31 December 2004 is detailed below. ORDINARY SHARES FUND Actimax plc Supplies digital telecommunications systems to small and medium sized customers. The company installs complex computer and telephone combined systems using components from suppliers such as Ascom, Alcatel, Cisco and Intertel. The company won the Best Small Business, Essex Business Awards 2004 and is trading profitably. The Ordinary Shares fund holds 300,868 shares in the company and 34,615 warrants. Results from the latest audited accounts for the period ended 31 December 2003: sales Â£2,627,721, profit before tax Â£155,611, retained profit Â£155,611, net liabilities Â£61,650. Dates of Amount Invested Valuation Valuation % Equity/ Investor % of Ordinary Investment (including Loan Director Shares Portfolio Stock) as at 31 as at 31 December Voting Rights December 2003 2004 Nov 98, Mar 00 Â£480,001* Â£937,412 Â£817,412 42.2* Peter English 6.80 & Jun 03 * Foresight also holds warrants in the company. Aigis Limited Produces materials that provide explosive blast protection. Applications include containers that can be used at airports for homeland security purposes, military vehicles and buildings. The company is already selling its products internationally. The Ordinary Shares fund holds 9,122 shares in the company. Results from the latest accounts for the year ended 30 September 2004: sales Â£680,759, loss before tax Â£20,293, retained loss Â£6,549, net liabilities Â£364,247. Date of Amount Invested Valuation Valuation % Equity/Voting Investor % of Ordinary Investment Rights Director Shares Portfolio as at 31 as at 31 December 2003 December 2004 Jul 04 Â£32,837 N/A Â£32,837 1.8 Jamie Richards 0.27 Clarity Commerce Solutions plc (AIM listed) Is part of a group of companies that provide EPOS solutions, CRM products and services to the UK hospitality and leisure sectors. Recent customers include Burberry and Yo! Sushi. A further acquisition was made in the final quarter of 2004 which extends the company's product set and customer base. The Ordinary Shares fund holds 400,000 shares in the company. Results from the latest audited accounts for the year ended 31 March 2004: sales Â£13,325,000, profit before tax Â£511,000, retained profit Â£380,000, net assets Â£9,021,000. Date of Investment Amount Invested Valuation Valuation % Equity/Voting % of Ordinary Rights Shares Portfolio as at 31 December as at 31 December 2003 2004 (Mid-market) (Mid-market) Jul 00 Â£500,000 Â£282,000 Â£270,000 2.5 2.25 DCG Datapoint Group Limited Provider of data storage and back-up solutions to coporates either remotely or at customers' premises. The demand for Datapoint's services is driven by greater compliance requirements for retention and retrieval of data and the ever growing volume of electronic data produced by organisations. Datapoint's growing customer list includes MCI, Channel 4 and National Blood Service. The Ordinary Shares fund holds 6,388 shares in the company. Results from the latest audited accounts for the year ended 31 March 2004: sales Â£2,572,694, loss before tax Â£394,807, retained loss Â£394,807, net liabilities Â£222,355. Date of Amount Valuation Valuation % Equity/ Loans Investor % of Ordinary Investment Invested Director Shares (including as at 31 as at 31 Voting Rights Portfolio Loans) December 2003 December 2004 Mar 04 Â£175,000 N/A Â£175,000 4.4 Â£116,725 Jamie Richards 1.46 (Secured) Sarantel Limited Sarantel Limited listed on the AIM market on 2 March 2005 raising an additional Â£18 million to fund the ongoing expansion of the business. Sarantel's miniature antennae (which reduce the energy reaching the heads of users by approximately 90%) are used in mobile phones and personal digital assistants offering location based services through navigation satellites. Its sales quadrupled in the year to 30 September 2004 and further growth is anticipated in 2005. The Ordinary Shares fund holds 220,000 shares in the company. Results from the latest audited accounts for the year ended 30 September 2003: sales Â£204,836, loss before tax Â£2,930,606, retained loss Â£2,655,634, net assets Â£5,023,395. Date of Amount Invested Valuation Valuation % Equity/ Investor % of 'C' Shares Investment Director Portfolio as at 31 as at 31 Voting Rights December 2003 December 2004 Sep 04 Â£110,000 N/A Â£180,400 0.9 Matt Taylor 1.5 Telecom plus plc (listed on the London Stock Exchange) Offers low cost telephone and energy services to private subscribers. Interim results announced in December 2004 show an increase of 31% in profit before tax and turnover up 15%. Telecom Plus claims to be the UK's cheapest gas and electricity supplier. The Ordinary Shares fund holds 651,000 shares in the company following the partial realisation during the year. Results from the latest audited accounts for the year ended 31 March 2004: sales Â£81,828,000, profit before tax Â£10,632,000, retained profit Â£1,295,000, net assets Â£13,014,000. Dates of Amount Invested Valuation Valuation % Equity/Voting % of Ordinary Investment Rights Shares Portfolio as at 31 December as at 31 December 2003 2004 (Mid-market) (Mid-market) Jun 99 & Dec 02 Â£248,367 Â£2,985,225 Â£1,448,475 1.1 12.05 YooMedia plc (AIM listed) Operates a portal site which provides an increasing number of facilities including online games, e-mail, personal home pages and chat available from a number of platforms. The company now operates interactive games channels on Sky and Freeview and also distributes games on Telewest and NTL. In addition the company provides various other interactive TV solutions such as e-voting. Foresight made a further investment of Â£100,000 in April 2004, following which the Ordinary Shares fund now holds 18,810,000 shares in the company. Results from the latest audited accounts for the year ended 31 December 2003: sales Â£743,150, loss before tax Â£4,849,307, retained loss Â£4,621,862, net assets Â£1,914,585. Dates of Amount Invested Valuation Valuation % Equity/Voting % of Ordinary Investment Rights Shares Portfolio as at 31 December as at 31 December 2003 2004 (Mid-market) (Mid-market) Mar 99, Â£917,357 Â£9,020,900 Â£3,197,700 4.1 26.61 Nov 02, May 03, Oct 03 & Apr 04 'C' SHARES FUND Actimax plc Supplies digital telecommunications systems to small and medium sized customers. The company installs complex computer and telephone combined systems using components from suppliers such as Ascom, Alcatel, Cisco and Intertel. The company won the Best Small Business, Essex Business Awards 2004 and is trading profitably. The 'C' Shares fund holds 79,440 shares in the company. Results from the latest audited accounts for the period ended 31 December 2003: sales Â£2,627,721, profit before tax Â£155,611, retained profit Â£155,611, net liabilities Â£61,650. Date of Amount Valuation Valuation % Equity/ Loans Investor % of 'C' Investment Invested Director Shares (including as at 31 as at 31 Voting Rights Portfolio Loans) December 2003 December 2004 Jun 03 Â£203,193 Cost Â£200,000 10.0 Â£133,333 Peter English 0.58 (Secured) Aigis Limited Produces materials that provide explosive blast protection. Applications include containers that can be used at airports for homeland security purposes, military vehicles and buildings. The company is already selling its products internationally. The 'C' Shares fund holds 30,410 shares in the company. Results from the latest accounts for the year ended 30 September 2004: sales Â£680,759, loss before tax Â£20,293, retained loss Â£6,549, net liabilities Â£364,247. Date of Amount Invested Valuation Valuation % Equity/Voting Investor % of Ordinary Investment Rights Director Shares Portfolio as at 31 as at 31 December 2003 December 2004 Jul 04 Â£109,470 N/A Â£109,470 5.5 Jamie Richards 0.32 Alaric Systems Limited Specialises in the development, sale, distribution and support of payment systems software including systems for electronic payments, authorisation and e-commerce integration. It is also involved in the use of software based mathematical modelling techniques for card payments and fraud detection. The 'C' Shares fund holds 2,141,075 shares in the company. Existing investors have approved a further investment of up to Â£500,000 in the company in the form of secured loans; Foresight's share of this is Â£114,923, of which Â£45,969 was advanced to the company on 23 June 2004 and Â£22,985 on 29 September 2004. Results from the latest audited accounts for the year ended 31 March 2004: sales Â£2,173,999, loss before tax Â£844,005, retained loss Â£512,418, net assets Â£198,371. Dates of Amount Valuation Valuation % Equity/ Loans Investor % of 'C' Investment Invested Director Shares (including as at 31 as at 31 Voting Rights Portfolio Loans) December 2003 December 2004 Feb 02, Oct Â£1,323,133 Â£1,254,179 Â£1,323,133 16.8 Â£68,954 Donald 3.85 02, Dec 02, Maclennan Jun 04 & Sept 04 ANT Limited Provides content rendering software to improve users' interactive communication with digital television sets and other consumer electronic devices. ANT was set up in 1993 and first licensed its software to Symbian (one of the leading software platforms for PDAs) in May 1998. It now has a leading position in the market for integrated digital TVs, TV over internet protocol and enhanced DVDs. Trading in 2003 improved significantly and the company was profitable in the last quarter of the year. The 'C' Shares fund holds 7,782,976 shares in the company. Results from the latest audited accounts for the year ended 31 December 2003: sales Â£1,719,113, loss before tax Â£1,020,470, retained loss Â£1,020,470, net liabilities Â£6,216,456. Dates of Amount Invested Valuation Valuation % Equity/ Investor % of Ordinary Investment Director Shares Portfolio as at 31 as at 31 Voting Rights December 2003 December 2004 Jul 01, Feb 03 & Â£1,097,200 Â£491,590 Â£1,945,744 12.3 Matt Taylor 5.66 Mar 04 Aquasium Technology Limited Is engaged in the design, manufacture and marketing of bespoke electron beam welding and vacuum furnace equipment. Its products are used in the processes of a wide range of manufacturing industries including automotive, electronics, medical, power generation and aerospace. The 'C' Shares fund holds 86,666 shares in the company. Results from the latest audited accounts for the year ended 31 December 2003: sales Â£4,512,621, loss before tax Â£522,627, retained loss Â£Â£510,023, net liabilities Â£1,085,006. Dates of Amount Valuation as Valuation as % Equity/ Loans Investor % of 'C' Investment Invested at 31 at 31 Director Shares (including December 2003 December Voting Rights Portfolio Loans) 2004 Oct 01 & Â£1,200,000 Â£1,100,000 Â£1,200,000 33.3 Â£866,667 Donald 3.49 April 03 (Secured) Maclennan Blue Curve Research.net Limited Is a software company that sells products and services to investment banks and fund managers which automate the production and distribution of research material. Analytical research and services are a key customer retention tool for investment banks but are also a major cost. The company's software products improve the efficiency of research distribution while at the same time reducing cost. The 'C' Shares fund holds 367 shares in the company. Results from the latest audited accounts for the year ended 31 December 2003: sales Â£687,428, loss before tax Â£447,829, retained loss Â£433,697, net liabilities Â£844,255. Date of Amount Valuation as Valuation as % Equity/ Loans Investor % of 'C' Investment Invested at 31 at 31 Director Shares (including December 2003 December 2004 Voting Rights Portfolio Loans) Oct 01 Â£1,000,000 Â£793,334 Â£793,334 23.7 Â£666,667 Peter English 2.31 (Secured) Broadreach Networks Limited Provides both fixed line and Wi-Fi hotspot public internet access. Users gain access from fixed terminals installed at coffee shops, hotels and transport hubs or by utilising their own portable device. Location partners include Virgin Megastores, Little Chef, Moto, Sainsbury's and Travelodge. Investors include Virgin, Intel and BT. The 'C' Shares fund holds 4,854,006 shares in the company. Results from the latest audited accounts for the year ended 31 October 2003: sales Â£323,418, loss before tax Â£1,131,860, retained loss Â£1,131,860, net liabilities Â£1,085,896. Date of Amount Valuation as Valuation as % Equity/ Loans Investor % of 'C' Investment Invested at 31 at 31 Director Shares (including December 2003 December 2004 Voting Rights Portfolio Loans) Feb 03 & Â£1,857,000 Â£1,000,000 Â£1,857,000 22.9 Â£1,585,600 Jamie 5.40 Oct 03 (Secured) Richards Broadreach Train Services Limited ('BTSL') Set up to exploit the on-train Wi-FI opportunity that originated from Broadreach Networks Limited. Working closely with Virgin Trains, BTSL is aiming to secure a substantial share of the on-train Wi-Fi market. Users will benefit from broadband internet connections throughout their journeys. No accounts produced since trading commenced on 16 June 2004. Dates of Amount Valuation as Valuation as % Equity/ Loans Investor % of 'C' Investment Invested at 31 at 31 Director Shares (including December 2003 December Voting Rights Portfolio Loans) 2004 Jun 04 Â£143,000 N/A Â£143,000 0.0 Â£143,000 Jamie 0.42 (Secured) Richards Callserve Communications plc Is a voice over IP telecoms network and service provider which enables telephone calls to be made from a PC via the internet to any phone worldwide. The company sells phonecards to consumers in many jurisdictions, particularly the Middle East. It continues to grow the geographic spread of its business which helps to combat tactical pricing decisions by local competitors. The 'C' Shares fund holds 222,222 shares in the company. Results from the latest audited accounts for the year ended 31 March 2003: sales Â£9,293,066, loss before tax Â£3,960,176, retained loss Â£3,960,176, net liabilities Â£4,323,990. Date of Investment Amount Invested Valuation Valuation % Equity/Voting % of 'C' Shares Rights Portfolio as at 31 December as at 31 December 2003 2004 Oct 00 Â£502,893 Â£224,999 Â£224,999 1.27 0.65 Camwood Limited Provides an 'Enterprise Platform Manager' solution which allows its customers to assess the effects of the introduction of new operating systems and updates such as the service Pack 2 update to Microsoft Windows XP. It also provides monitoring checks to allow customers to ensure compliance with Microsoft best practices. Sales are made directly and through channel partners to the corporate sector. The 'C' Shares fund holds 2,214,800 shares in the company. Results from the latest audited accounts for the year ended 31 March 2004: sales Â£2,621,946, loss before tax Â£830,007, retained loss Â£631,665, net liabilities Â£218,531. Date of Amount Valuation as Valuation as % Equity/ Loans Investor % of 'C' Investment Invested at 31 at 31 Director Shares (including December 2003 December 2004 Voting Rights Portfolio Loans) Sep 03 Â£500,000 Â£500,000 Â£500,000 11.9 Â£333,333 Donald 1.45 (Secured) Maclennan DCG Datapoint Group Limited Provider of data storage and back-up solutions to coporates either remotely or at customers' premises. The demand for Datapoint's services is driven by greater compliance requirements for retention and retrieval of data and the ever growing volume of electronic data produced by organisations. Datapoint's growing customer list includes MCI, Channel 4 and National Blood Service. The 'C' Shares fund holds 20,987 shares in the company. Results from the latest audited accounts for the year ended 31 March 2004: sales Â£2,572,694, loss before tax Â£394,807, retained loss Â£394,807, net liabilities Â£222,355. Date of Amount Valuation Valuation % Equity/ Loans Investor % of Ordinary Investment Invested Director Shares (including as at 31 as at 31 Voting Rights Portfolio Loans) December 2003 December 2004 Mar 04 Â£575,000 N/A Â£575,000 14.4 Â£383,525 Jamie Richards 1.67 (Secured) FfastFill plc (AIM Listed) Is a software company that develops sophisticated trading solutions for futures and options traders, brokers and risk managers. The acquisition of Future Dynamics in 2004 has resulted in a combined customer base of 30 customers and has added a back office capability to the company's software. An important contract with Reuters was also won during the period. The 'C' Shares fund holds 6,485,498 shares in the company. Results from the latest audited accounts for the year ended 31 March 2004: sales Â£2,651,000, loss before tax Â£2,547,000, retained loss Â£2,546,000, net assets Â£231,000. 'C' Dates of Amount Invested Valuation Valuation % Equity/Voting % of 'C' Shares Investment Rights Portfolio as at 31 December as at 31 December 2003 2004 (Mid-market) (Mid-market) Jul 00, Jan 04 & Â£856,339 Â£52,559 Â£421,558 3.3 1.22 Apr 04 iCore Limited Is an IT management services company, with services that range from strategic IT reviews, infrastructure design and management, outsourcing procurement, through to business process management, interim project management and establishing project offices. Although the company is trading profitably, the Board believes it is prudent to make a further small provision against the cost of this investment to reflect lower turnover than that anticipated at the time of the initial investment. The 'C' Shares fund holds 201,176 shares in the company. Results from the latest audited accounts for the year ended 30 June 2003: sales Â£3,355,901, profit before tax Â£3,735, retained profit Â£237, net assets Â£564,442.f 'C' Date of Amount Invested Valuation Valuation % Equity/Voting Investor % of 'C' Shares Investment Rights Director Portfolio as at 31 as at 31 December 2003 December 2004 Dec 00 Â£750,000 Â£544,000 Â£500,000 16.8 Peter English 1.45 Monactive Limited Is a leading provider of software licence information management solutions with over 100 customers. The company's software monitors software usage on PC networks, providing corporates with data for cost reduction and compliance. Its customers are able to reduce software licensing costs whilst demonstrating legal compliance. The 'C' Shares fund holds 474,057 shares in the company. After a difficult period, the company has achieved renewed growth in sales and a return to profitability at the operating level. Results from the latest audited accounts for the year ended 31 July 2003: sales Â£865,776, loss before tax Â£792,351, retained loss Â£741,971, net liabilities Â£1,585,051. Dates of Amount Valuation as Valuation as % Equity/ Loans Investor % of 'C' Investment Invested at 31 at 31 Director Shares (including December 2003 December 2004 Voting Rights Portfolio Loans) Mar 01 & Â£1,017,858 Â£656,251 Â£656,251 22.2 Â£616,072 Matt Taylor 1.91 Jan 03 (Secured) Mondas plc (AIM Listed) Has developed e-Business technologies to allow securities and investment houses to deploy new front and back office applications to facilitate straight through processing. Customers benefit from improved content management, document management, business process software and service solutions. The 'C' Shares fund holds 489,855 shares in the company and Â£900,000 convertible loan stock. Results from the latest audited accounts for the year ended 30 April 2004: sales Â£3,974,732, loss before tax Â£1,779,554, retained loss Â£1,631,806, net liabilities Â£617,901. Dates of Amount Valuation as Valuation as % Equity/ Loan Stock Investor % of 'C' Investment Invested at 31 December at 31 December Director Shares (including 2003 2004 Voting Rights Portfolio Loan Stock (Mid-market) (Mid-market) Oct 00 & Â£1,068,116 Â£1,113,145 Â£1,017,623 1.9 Â£900,000 Bernard 2.96 Dec 02 (at cost) Fairman Oxonica Limited Engineers the properties of materials at the nano-scale for application in fuel additives, UV protection and other products. Stagecoach has now rolled out the fuel additive product globally, and Boots will be incorporating the sun screen material into a Spring 2005 facial product range. Foresight invested a further Â£510,000 in shares in a January 2005 rights issue. The Company is now considering an IPO on the AIM market. The 'C' Shares fund holds 60,071 shares in the company prior to the further investment. Results from the latest audited accounts for the year ended 31 December 2003: sales Â£209,905, loss before tax Â£2,705,216, retained loss Â£2,621,827, net liabilities Â£2,538,148. Dates of Amount Valuation as Valuation as % Equity/ Loans Investor % of 'C' Investment Invested at 31 at 31 Director Shares (including December 2003 December 2004 Voting Rights Portfolio Loans) Jun 02, Dec Â£1,863,437 999,999 Â£5,746,186 20.6 Â£524,053 Bernard 16.70 02 & Jan 04 (Secured) Fairman Sarantel Limited Sarantel Limited listed on the AIM market on 2 March 2005 raising an additional Â£18 million to fund the ongoing expansion of the business. Sarantel's miniature antennae (which reduce the energy reaching the heads of users by approximately 90%) are used in mobile phones and personal digital assistants offering location based services through navigation satellites. Its sales quadrupled in the year to 30 September 2004 and further growth is anticipated in 2005. The 'C' Shares fund holds 8,268,429 shares in the company. At 31 December Sarantel was valued at Â£6.8 million against an original cost of Â£2.8 million. Results from the latest audited accounts for the year ended 30 September 2003: sales Â£204,836, loss before tax Â£2,930,606, retained loss Â£2,655,634, net assets Â£5,023,395. Dates of Amount Invested Valuation Valuation % Equity/ Investor % of 'C' Shares Investment Director Portfolio as at 31 as at 31 Voting Rights December 2003 December 2004 Sep 00, Apr 01, Â£2,853,166 Â£2,466,158 Â£6,780,112 34.6 Matt Taylor 19.71 Jun 01, Mar 02, Aug 02, Sep 02, Nov 02, Feb 03, Jun 04 & Sep 04 SmartFocus Group PLC (AIM Listed) Provides software to enable accurate targeting and execution of marketing campaigns. The company is an established solution provider in this area with approximately 300 customers forming a wide customer base spread across financial services, retail, marketing services and other consumer-driven sectors. The company adds value to its customers marketing campaigns by linking with multiple databases, returning query results in seconds whilst presenting the results in an easily understandable graphic manor. The 'C' Shares fund holds 19,892,985 shares in the company. Results from the latest audited accounts for the year ended 31 December 2003: sales Â£2,151,092, loss before tax Â£546,949, retained loss Â£393,735, net liabilities Â£1,260,286. Date of Amount Invested Valuation Valuation % Equity/ Loans % of 'C' Shares Investment (including Portfolio Loans) as at 31 as at 31 Voting Rights December 2003 December 2004 (Mid-market) Dec 01 & Oct 04 Â£1,666,667 Â£1,000,000 Â£2,480,843 27.0 Â£666,667 7.21 (Secured) themutual.net plc (AIM Listed) Sells targeted advertising by email aimed to its 1 million plus loyalty based online shoppers. The company's share price has risen as a result of a good set of interim accounts and consequent institutional interest in the shares. The 'C ' Shares fund holds 3,427,302 shares in the company. Results from the latest audited accounts for the year ended 30 April 2004: sales Â£2,198,708, profit before tax 650,485, retained profit Â£650,485, net assets Â£1,797,467. Date of Investment Amount Invested Valuation Valuation % Equity/Voting % of 'C' Shares Rights Portfolio as at 31 December as at 31 December 2003 2004 Jun 00 Â£502,938 Â£822,553 Â£976,781 9.3 2.84 Wire-e Limited Provides voice and text broadcast services to corporates and small and medium enterprises. The business is now making an operating profit as sales continue to grow. The company is developing a more user friendly version of its service and is targeting new channels to market in order to grow revenues further. The ' C' Shares fund holds 6,666,666 shares in the company. Results from the latest audited accounts for the year ended 30 June 2004: sales Â£897,661, loss before tax Â£381,079, retained loss Â£356,692, net liabilities Â£1,313,574. Date of Amount Valuation as Valuation as % Equity/ Loans Investor % of 'C' Investment Invested at 31 at 31 Director Shares (including December 2003 December 2004 Voting Rights Portfolio Loans) Sep 02 Â£1,000,000 Â£750,000 Â£500,000 26.9 Â£900,000 Jamie 1.45 (at cost) Richards (Secured) In addition Foresight Ordinary Fund has small investments in DSM Geodata Ltd (Â£69,391) and Sapphire International Limited (Â£60,000). The 'C' Shares fund has a small investment in KeepAhead Ltd (Â£10,000). REALISATIONS - ORDINARY SHARES FUND Advanced Composites Group Limited Is a long 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. UMECO plc acquired 100% of the company for a total cash consideration of Â£44.25 million in May 2004, realising Â£10 million in respect of the investment by Foresight. Dates of Investment Amount Invested Amount Realised % Equity/Voting Rights Mar 99, Oct 99 & Jul 00 1,622,978 Â£9,997,911 40.14 Investment Portfolio Summary at 31 December 2004 ORDINARY SHARES FUND Cost % of (including Ordinary administrative Shares costs) Valuation Portfolio Equity Portfolio (including loans) Â£ Â£ % YooMedia plc (formerly e-district.net plc) 917,357 3,197,700 26.61 Telecom plus plc 248,367 1,448,475 12.05 Actimax plc 480,001 817,412 6.80 Clarity Commerce Solutions plc 500,000 270,000 2.25 Sarantel Limited 110,000 180,400 1.50 DCG Datapoint Consulting Group 175,000 175,000 1.46 DSM Geodata Limited - 69,391 0.58 Sapphire International Limited 1,150,000 60,000 0.50 Aigis Engineering Solutions Limited 32,837 32,837 0.27 Survey and Development Services Limited 700,000 - - Entraline Limited (formerly Creature Laboratories Limited) 1,501,897 - - --------------- --------------- --------------- 5,815,459 6,251,215 52.02 Current investments 5,766,660 5,766,660 47.98 --------------- --------------- --------------- Total Ordinary Shares fund 11,582,119 12,017,875 100.00 --------------- --------------- --------------- 'C' SHARES FUND Cost % of (including Ordinary administrative Shares costs) Valuation Portfolio Equity Portfolio (including loans) Â£ Â£ % Sarantel Limited 2,853,166 6,780,112 19.71 Oxonica Limited 1,863,437 5,746,186 16.70 SmartFocus Group PLC 1,666,667 2,480,843 7.21 ANT Limited 1,097,200 1,945,744 5.66 Broadreach Networks Limited 1,857,000 1,857,000 5.40 Alaric Limited 1,323,133 1,323,133 3.85 Aquasium Technology Limited 1,200,000 1,200,000 3.49 Mondas plc 1,068,116 1,017,623 2.96 themutual.net.plc 502,938 976,781 2.84 Blue Curve Research.net Limited 1,000,000 793,334 2.31 Monactive Limited 1,017,858 656,251 1.91 DCG Datapoint Consulting Group 575,000 575,000 1.67 Camwood Limited 500,000 500,000 1.45 iCore Limited 750,000 500,000 1.45 Wire-e Limited 1,000,000 500,000 1.45 FfastFill plc 856,339 421,558 1.22 Callserve Communications plc 502,893 224,999 0.65 Actimax plc 203,193 200,000 0.58 Broadreach Train Services Limited 143,000 143,000 0.42 Aigis Engineering Solutions Limited 109,470 109,470 0.32 KeepAhead Limited 1,000,000 10,000 0.03 Travelstore.com plc 1,343,202 - - UK Directory (Holdings) Limited 1,000,000 - - iDesk plc 500,000 - - --------------- --------------- --------------- 23,932,612 27,961,034 81.28 Current investments 6,440,351 6,440,351 18.72 --------------- --------------- --------------- Total 'C' Shares fund 30,372,963 34,401,385 100.00 --------------- --------------- --------------- COMPANY TOTAL 41,955,082 46,419,260 --------------- --------------- The amounts provided or written off against unlisted investments in the last financial years were: Provisions Write Offs Made Financial Year Â£ Â£ Year ended 31 December 2004 67,259 3,745,499 Year ended 31 December 2003 2,456,474 695,000 Period to 31 December 2002 (128,528) - Year ended 30 September 2002 2,231,971 - Year ended 30 September 2001 3,220,526 - No individual provision or write off exceeded 5% of the gross assets of the Company. Non-Statutory Analysis between the Ordinary Shares and 'C' Shares Funds Unaudited Statement of Total Return for the year ended 31 December 2004 Ordinary Shares fund 'C' Shares fund Revenue Capital Total Revenue Capital Total Â£ Â£ Â£ Â£ Â£ Â£ (Losses)/ gains on investments - (7,360,488) (7,360,488) - 9,923,132 9,923,132 Income 238,476 - 238,476 935,581 - 935,581 Investment management fees (122,701) (368,103) (490,804) (148,630) (445,892) (594,522) Other expenses (138,736) - (138,736) (421,954) - (421,954) ------------ ------------ ------------- ------------ ------------ ------------ Return on ordinary activities before taxation (22,961) (7,728,591) (7,751,552) 364,997 9,477,240 9,842,237 Tax on ordinary activities - - - (69,349) 69,349 - ------------ ------------ ------------- ------------ ------------ ------------ Return attributable to equity Shareholders* (22,961) (7,728,591) (7,751,552) 295,648 9,546,589 9,842,237 Dividends in respect of equity Shares - (7,988,846) (7,988,846) (186,430) - (186,430) ------------ --------------- --------------- ------------ -------------- ------------- Transfer (from)/ to Reserves (22,961) (15,717,437) (15,740,398) 109,218 9,546,589 9,655,807 ------------ --------------- --------------- ------------ -------------- ------------- Return per share* (0.15)p (51.73)p (51.88)p 0.81p 26.14p 26.95p Unaudited Balance Sheets as at 31 December 2004 Ordinary Shares fund 'C' Shares fund Â£ Â£ Â£ Â£ Fixed assets Investments 6,251,215 27,961,034 Current assets Debtors and prepayments 192,836 592,632 Current investments 5,766,660 6,440,351 Cash at bank 7,566 45,978 ------------ ------------- 5,967,062 7,078,961 Creditors: amounts falling due within one year (101,239) (426,773) ------------ ------------- Net current assets 5,865,823 6,652,188 ------------ -------------- Net assets 12,117,038 34,613,222 ------------ -------------- Capital Called up share capital 158,188 370,544 Share premium account 4,046,967 2,943,011 Cancelled share premium account 4,858,002 24,817,483 Revaluation reserve 1,937,653 6,371,624 Profit and loss account 1,116,228 110,560 -------------- --------------- Equity shareholders' funds 12,117,038 34,613,222 -------------- -------------- Number of shares in issue 15,818,826 37,054,390 Net asset value per share - basic 76.60p 93.41p Net asset value per share - diluted 76.60p 93.41p Unaudited Profit and Loss Account for the year ended 31 December 2004 Year ended Year ended 31 December 2004 31 December 2003 Revenue Capital Total Revenue Capital Total Â£ Â£ Â£ Â£ Â£ Â£ (Losses)/gains on realisation of investments - (14,261) (14,261) - 64,000 64,000 Income 1,174,057 - 1,174,057 1,282,311 - 1,282,311 Investment management fees (271,331) (813,995) (1,085,326) (218,729) (656,186) (874,915) Other expenses (560,690) - (560,690) (402,024) - (402,024) ------------ ------------ ------------ ------------ ------------ ------------ Profit/(loss) on ordinary activities before taxation 342,036 (828,256) (486,220) 661,558 (592,186) 69,372 Tax on ordinary activities (69,349) 69,349 - (73,475) 75,202 1,727 ------------ ------------ ------------ ------------ ------------ ------------ Profit/(loss) on ordinary activities after taxation 272,687 (758,907) (486,220) 588,083 (516,984) 71,099 Dividends (186,430) (7,988,846) (8,175,276) (428,344) (1,022,462) (1,450,806) ------------ ------------ ------------ ------------ ------------ ------------ Retained profit/(loss) for the year transferred to/ (from) reserves 86,257 (8,747,753) (8,661,496) 159,739 (1,539,446) (1,379,707) ------------ ------------ ------------ ------------ ------------ ------------ Earnings per share: Ordinary Shares (2.66)p 2.60p 'C' Shares (0.24)p (0.80)p All the items in the above statement derive from continuing operations. Unaudited Statement of Total Recognised Gains and Losses for the year ended 31 December 2004 Year ended Year ended 31 December 2004 31 December 2003 Revenue Capital Total Revenue Capital Total Â£ Â£ Â£ Â£ Â£ Â£ Profit/(loss) for the 272,687 (758,907) (486,220) 588,083 (516,984) 71,099 year Unrealised gains on revaluation of investments - 2,576,905 2,576,905 - 11,219,960 11,219,960 ------------ --------------- --------------- ------------ --------------- --------------- Total recognised gains during the year 272,687 1,817,998 2,090,685 588,083 10,702,976 11,291,059 ------------ --------------- --------------- ------------ --------------- --------------- Return per share: Ordinary Shares (0.15)p (51.73)p (51.88)p 2.04p 95.76p 97.80p 'C' Shares 0.81p 26.14p 26.95p 0.96p (5.21)p (4.25)p Note of Historical Cost Profits and Losses for the year ended 31 December 2004 Year ended Year ended 31 December 31 December 2004 2003 Total Total Â£ Â£ (Loss)/ profit on ordinary activities before taxation (486,220) 69,372 Realisation of revaluation gains/ (losses) of previous years 4,998,853 (381,208) -------------- -------------- Historical cost profit/ (loss) on ordinary activities before taxation 4,512,633 (311,836) -------------- -------------- Historical cost loss for the year after taxation and dividends (3,662,643) (1,760,915) -------------- -------------- Unaudited Balance Sheet as at 31 December 2004 Year ended Year ended 31 December 2004 31 December 2003 Â£ Â£ Â£ Â£ Fixed assets Investments 34,212,249 37,766,434 Current assets Debtors and prepayments 710,375 568,375 Current investments 12,207,011 10,422,952 Cash at bank 53,544 110,447 ------------- ------------- 12,970,930 11,101,774 Creditors: amounts falling due within one year (452,919) (343,947) -------------- -------------- Net current assets 12,518,011 10,757,827 -------------- -------------- Net assets 46,730,260 48,524,261 -------------- -------------- Capital Called up share capital 528,732 483,606 Share premium account 6,989,978 2,339,207 Cancelled share premium account 29,675,485 34,578,917 Revaluation reserve 8,309,277 10,731,225 Revenue reserves 1,226,788 391,306 -------------- -------------- Equity shareholders' funds 46,730,260 48,524,261 -------------- -------------- Net asset value per share of 1 pence each: Basic Diluted Basic Diluted Ordinary Shares 76.60p 76.60p 186.75p 176.85p 'C' Shares 93.41p 93.41p 67.18p 67.18p Unaudited CASH FLOW STATEMENT for the year ended 31 December 2004 Year ended Year ended 31 December 2004 31 December 2003 Â£ Â£ Â£ Â£ Operating activities Dividends received 69,600 356,690 Deposit and similar interest received 932,914 915,786 Other cash receipts 13,248 11,220 Investment management fees paid (1,093,543) (892,855) Other cash payments (469,979) (456,191) -------------- -------------- Net cash outflow from operating activities (547,760) (65,350) Taxation Net tax refund 7,259 - Capital expenditure and financial investment Purchase of other investments (4,448,992) (3,086,611) Sale of fixed income investments - 9,016,050 Sale of other investments 10,565,821 2,100,275 -------------- -------------- Net cash inflow from capital expenditure and financial investment 6,116,829 8,029,714 Equity dividends Net dividends paid (8,171,595) (1,831,953) -------------- -------------- Net cash (outflow)/inflow before financing and liquid resource management (2,595,267) 6,132,411 Management of liquid resources Increase in current investments (1,784,059) (10,422,952) Financing Issue of shares (net of expenses) 4,701,670 2,366,012 Purchase of own shares (379,247) (398,021) -------------- -------------- 4,322,423 1,967,991 -------------- -------------- Net decrease in cash (56,903) (2,322,550) -------------- -------------- Notes 1 Earnings and return per share Total earnings after taxation for the year were a loss of Â£486,220 (2003: profit of Â£71,099) comprising a loss on the Ordinary Shares fund after taxation of Â£397,345 (2003: profit of Â£338,432) and a loss after taxation on the 'C' Shares fund of Â£88,875 (2003: loss of Â£267,333). The basic earnings per Ordinary Share is based on the net loss from ordinary activities and on 14,938,984 (2003: 12,997,238) 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 36,526,571 (2003: 33,449,602) '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 loss from Ordinary Share fund activities after taxation of Â£22,961 (2003: revenue of Â£265,756) and on 14,938,984 (2003: 12,997,238) 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 net revenue from 'C' Share fund activities after taxation of Â£295,648 (2003: Â£322,327) and on 36,526,751 (2003: 33,449,602) '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 losses of Â£6,281 (2003: gains of Â£294,229), on net unrealised capital losses of Â£7,354,207 (2003: gains of Â£12,372,859) and capitalised management fees less associated tax relief of Â£368,103 (2003: Â£221,553) on the Ordinary Shares fund and on 14,938,984 (2003: 12,997,238) Ordinary Shares. The capital return per 'C' Share is based on the net realised capital losses of Â£7,980 (2003: losses of Â£230,229), on net unrealised capital gains of Â£9,931,112 (2003: losses of Â£1,152,899) and capitalised management fees less associated tax relief of Â£376,543 (2003: Â£359,431) on the 'C' Shares fund and on 36,526,751 (2003: 33,449,602) 'C' Shares. 2 Dividends Year to Year to 31 31 December December 2004 2003 Â£ Â£ Ordinary Shares Interim dividend paid 7,988,846 1,023,263 Final dividend proposed - - Over-accrued in previous period - (801) -------------- -------------- 7,988,846 1,022,462 -------------- -------------- 'C' Shares Interim dividend paid - 247,870 Final dividend proposed 185,272 181,237 Under/(over) accrued in previous period 1,158 (763) -------------- -------------- 186,430 428,344 -------------- -------------- 3 Net asset value per Share - basic and diluted Basic net asset value per Ordinary Share is based on net assets of the Ordinary Shares fund at the year end, and on 15,818,826 (2003: 13,410,141) Ordinary Shares, being the number of Ordinary Shares in issue on that date As Ordinary Share warrants have now lapsed, there is no difference between the basic net asset value per Ordinary Share and the diluted net asset value per Ordinary Share at 31December 2004. As at 31 December 2003, diluted net asset value per Ordinary Share was based on net assets of the Ordinary Shares fund at the year end, and on 13,410,141 Ordinary Shares, being the number of Ordinary Shares in issue on that date, plus the number of warrants remaining to be exercised of 1,728,500 on that date. Basic net asset value per 'C' Share is based on net assets of the 'C' Shares fund at the year end, and on 37,054,390 (2003: 34,950,472) 'C' Shares, being the number of 'C' Shares in issue on that date. As 'C' Share warrants have now lapsed, there is no difference between the basic net asset value per 'C' Share and the diluted net asset value per 'C' Share at 31 December 2004. As at 31 December 2003, there was no difference between the basic net asset value per 'C' Share and the diluted net asset value per 'C' Share as the 'C' warrants were not considered dilutive. 4 The financial information set out in these statements does not constitute the Company's statutory accounts for the years ended 31 December 2004 but is derived from those accounts. Statutory accounts for the year ended 31 December 2003 have been delivered to the Registrar of Companies and those for 2004 will be delivered following the Company's Annual General Meeting. The auditors have reported on the 2003 accounts: their report was unqualified and did not contain a statement under Section 237 (2) or (3) of the Companies Act 1985 5 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 No.1 Colmore Square, Birmingham B4 6AA. 6 The Annual General Meeting will be held at 12.30pm on 4 May 2005 at One Jermyn Street, London SW1Y 4UH This information is provided by RNS The company news service from the London Stock Exchange SSISEDD

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