Foresight 4 VCT PLC : Annual Financial Report

FORESIGHT 4 VCT PLC

Summary Financial Highlights

Ordinary Sharesfund

• Net asset value per Ordinary Share at 31 March 2015 was 83.9p (31 March 2014: 86.7p).
   
• The Ordinary Shares fund provided follow-on funding totalling £1.1 million to eight portfolio companies.
   
• The Ordinary Shares fund realised £2.5 million from sales and loan redemptions from seven portfolio companies.

C Sharesfund

• Net asset value per C Share at 31 March 2015 was 110.8p (31 March 2014: 66.1p).
   
• One new investment was made by the C Shares fund totalling £0.5 million and two follow-on investments were made totalling £0.7 million.
   
• The C Shares fund realised £10.5 million from sales and loan redemptions from two portfolio companies.

Chairman's Statement

Performance

During the year to 31 March 2015, the net asset value per Ordinary Share decreased by 3.2% to 83.9p from 86.7p at 31 March 2014. A number of the private equity investments performed well, particularly Aerospace Tooling Corporation, Procam Television Holdings, TFC Europe and CoGen which together generated an increase in net asset value of £3.5 million.

The main reason for the decline in net asset value, resulted from the Board's decision to reduce the valuation of Closed Loop Recycling to £nil with a further, final, provision of £4.0 million in light of the failure to achieve a sale and continuing trading difficulties. The company entered administration on 30 April 2015. Following this write off, the portfolio has little exposure to environmental type investments and the remaining portfolio comprises private equity type investments in a range of sectors. The majority are profitable at EBITDA level and increases in the valuation of these investments helped to largely offset the further provision made against Closed Loop Recycling.

Given the time, effort and money which went into Closed Loop Recycling in an attempt to make it a success, the failure of this investment was particularly disappointing. The Board and Foresight Group, as investment manager, are, however, now entirely focussed on achieving success from the private equity portfolio which, as noted above, predominantly comprises profitable companies. This strategy, which was first trailed several years ago in my statement, is starting to deliver attractive returns.

The C Shares fund net asset value increased significantly by 67.6% to 110.8p per share at 31 March 2015 from 66.1p per C Share at 31 March 2014, mainly due to the sale of Defaqto as well as the positive performance, generally, of its private equity portfolio, notably Aerospace Tooling Corporation and Procam Television.

For a detailed review of all of the Company's investments I refer you to the Manager's Report that starts on page 10 of the Annual Report and Accounts.

Ordinary and C Shares merger

As part of the merger of Acuity Growth VCT plc (Foresight 5 VCT plc) and Acuity VCT 3 plc with Foresight 4 VCT plc in February 2012, through the issue of C Shares, shareholders also approved the conversion of C shares into Ordinary Shares. This Conversion is due to take place on the tenth business day following the publication of these audited results of the Company for the year ended 31 March 2015.

Dividends

It continues to be the Company's policy to provide a flow of tax-free dividends, generated from income and from capital profits realised on the sale of investments. Distributions will however inevitably be dependent on successful realisations, as well as cash generation from the portfolio, capital restructurings and interest payments.

The recent and continuing success in generating cash from portfolio investments within the Ordinary Shares fund gives the Board confidence that it will be able to declare a dividend for the year ending 31 March 2016.

The Board is pleased to announce, principally as a result of the successful sale of Defaqto, the payment of a 25p dividend per C Share to C Shareholders on 6 August 2015. The dividend will have a record date of 10 July 2015 and an ex-dividend date of 9 July 2015.

Top-up Share Issues and Share Buy-backs

No shares were issued during the year.

During the period under review 285,000 Ordinary Shares were repurchased for cancellation at a cost of £163,000.

Alternative Investment Fund Management Registration

The Board has considered the impact on the Company of an EU directive regulating Alternative Investment Fund Managers (AIFM) which applies to most UK investment funds including the Company. To minimise the regulatory and financial cost of compliance as a 'full scope UK AIFM' with this legislation, the Board decided that the Company would register as a 'small registered UK AIFM' directly with the Financial Conduct Authority as permitted by the rules. The application process was completed in June 2014 and approval confirmed in early August 2014. This will not affect the current arrangements with the Manager which will continue to report to the Board and manage the Company's investments on a discretionary basis.

VCT Legislation

VCTs, as tax efficient investment vehicles, are periodically subject to new rules which the Government and/or the European Commission consider appropriate for achieving the VCT scheme's objectives and to comply with the rules relating to state aid to promote risk finance investments.

These proposed new rules were announced in the Chancellor's Budget on 8 July 2015 and, in summary, are as follows:

• Introducing an 'age of company' restriction of 7 years
• Introducing a lifetime investment limit of £12 million
• Restricting VCT investments in buyouts
• All investments to be made with intention to grow and develop a business.

These rules will become effective from Royal Assent of the Finance Bill in 2015.

Annual General Meeting

Prior to the Annual General Meeting at 11.00am on 2 October, Foresight Group, the investment Manager and two investee companies will give presentations between 10.00am and 11.00am.

The Company's Annual General Meeting will take place after the presentations. I look forward to welcoming you to the Meeting, which will be held at the offices of Shakespeare Martineau in London. Details can be found on page 65 of the Annual Report and Accounts.

Directorate Changes

The Board announced on 3 October 2014 that Raymond Abbott, Director, had retired from the Board with immediate effect. Raymond was then appointed to the position of Director of Foresight 3 VCT plc. On behalf of the Board I would like to thank Raymond for all of his hard work during the past two and a half years and wish him well in his new role at Foresight 3 VCT plc.

The Board of Foresight 4 VCT plc also announced on 3 October 2014 the appointment of Simon Jamieson to the Board. Simon was formerly a Director of FF&P Asset Management Ltd and IBIS Media VCT 1 plc.

Outlook

Although there is still considerable uncertainty in continental Europe as a result of stresses within the Euro area, the UK economy is in reasonable health and many portfolio businesses are now making steady progress. Many of the familiar risks, both financial and political, remain and there can be no grounds for complacency as all our investments operate in competitive environments.

The effect of the improvement in the economy has been noticeable in the performance of the private equity part of both the Ordinary Shares and C Shares portfolios which comprise the major part of each portfolio. Within both portfolios, a series of realisations, refinancings and loan repayments has generated significant cash balances. This underpins the Board's dividend commitment to Shareholders and provides sufficient capacity for several new investments to be made over the medium term, which we anticipate will further enhance shareholder returns.

Philip Stephens

Chairman

27 July 2015

Strategic Report

Introduction

This Strategic Report, on pages 4 to 9 of the Annual Report and Accounts, has been prepared in accordance with the requirements of Section 414 of the Companies Act 2006 and best practice. Its purpose is to inform the members of the Company and help them to assess how the Directors have performed their duty to promote the success of the Company, in accordance with Section 172 of the Companies Act 2006.

Foresight 4 VCT plc - Ordinary Shares fund

In August 2004, Foresight was appointed to manage Advent 2 VCT plc, which was subsequently renamed Foresight 4 plc.

On 6 February 2012, Foresight Clearwater VCT plc was merged into the existing Ordinary Share class.

The number of Ordinary Shares in issue at 31 March 2015 was 38,284,414.

Foresight 4 VCT plc - C Shares fund

On 6 February 2012, Acuity VCT 3 plc and Foresight 5 VCT plc merged into a new "C" Share class within Foresight 4 VCT plc.

The number of C Shares in the Company in issue at 31 March 2015 was 18,680,907.

Summary of the Investment Policy

The Manager (Foresight Group) will target investments in UK unquoted companies which it believes will achieve the objective of producing attractive returns for shareholders.

Investment Objectives

Ordinary Shares fund

To provide private investors with attractive returns from a portfolio of investments in fast-growing unquoted companies in the United Kingdom. It is the intention to maximise tax-free income available to investors from a combination of dividends and interest received on investments and the distribution of capital gains arising from trade sales or flotations.

C Shares fund

To achieve capital gains and maximise UK tax-free income to its shareholders from dividends and capital distributions. It is intended that this objective will be achieved by investing the majority of the funds in a portfolio of qualifying investments.

Performance and key performance indicators (KPIs)

The Board expects the Manager to deliver a performance which meets the objectives of the two classes of shares. The KPIs covering these objectives are net asset value performance and dividends paid, which, when combined, give net asset value total return. Additional key performance indicators reviewed by the Board include the discount of the share price relative to the net asset value and total expenses as a proportion of shareholders' funds.

A record of some of these indicators is contained below. The on-going charges ratio in the period was 2.8%. Share buy-backs, (excluding enhanced buybacks), have been completed for 285,000 shares at an average discount of 33.7%. The level of these KPIs are reasonable when compared with the wider VCT marketplace based on independently published information, for reasonableness.

A review of the Company's performance during the financial period, the position of the Company at the period end and the outlook for the coming year is contained within the Manager's Report. The Board assesses the performance of the Manager in meeting the Company's objective against the primary KPIs highlighted above.

                                                                                                                                31 March 2015              31 March 2014

	Ordinary	C	Ordinary	C
	Shares	Shares	Shares	Shares
Net asset value per share	83.9p	110.8p	86.7p	66.1p
Net asset value total return (including all dividends paid*)	180.2p	110.8p	183.0p	66.1p
	Ordinary	C	Ordinary	C
	Shares	Shares	Shares	Shares
Share price	52.0p	72.0p	62.0p	36.0p
Share price total return (including all dividends paid*)	148.3p	72.0p	158.3p	36.0p
Ordinary		C	Ordinary	C
Shares		Shares	Shares	Shares
Dividends paid	96.3p	-	96.3p	-
Dividends paid in the year	-	-	4.0p	-
Dividend yield %	-	-	6.5	-
* Since the date of the merger on 6 February 2012, for the C Shares fund.

	2015	2014
Ordinary Shares fund
Discount to NAV at 31 March	38.0%	28.4%
Average discount on buybacks	33.7%	17.5%
Shares bought back during the year under review	285,000	150,000
Decrease in net asset value during year	3.2%	3.9%
Ongoing charges ratio (Company/Fund)	3.3%	3.3%
C Shares fund
Discount to NAV at 31 March	35.0%	45.5%
Increase in net asset value during year	67.6%	31.0%
Ongoing charges ratio (Company/Fund)	2.0%	4.1%

Company
Ongoing charges ratio (Company/Fund)	2.8%	3.5%

Strategies for achieving objectives

Investment Policy

The Company will target UK unquoted companies which it believes will achieve the objective of producing attractive returns for shareholders.

Investment securities

The Company invests in a range of securities including, but not limited to, ordinary and preference shares, loan stock, convertible securities, and fixed-interest securities as well as cash. Unquoted investments are usually structured as a combination of ordinary shares and loan stock, while AIM investments are primarily held in ordinary shares. Pending investment in unquoted or AIM listed securities, cash is primarily held in interest bearing money market open ended investment companies (OEICs) as well as in a range of non-qualifying companies. Non-qualifying investments may include holdings in money market instruments, short-dated bonds, unit trusts, OEICs, structured products, guarantees to banks or third parties providing loans or other investments into investee companies and other assets where it is believed that the risk/return portfolio is consistent with the overall investment objectives of the portfolio.

UK companies

Investments are primarily made in companies which are substantially based in the UK, although many will trade overseas. The companies in which investments are made must have no more than £7 million of gross assets at the time of investment (or £15 million depending on applicable HMRC rules) to be classed as a VCT qualifying holding.

Asset mix

The Company aims to be significantly invested in growth businesses subject always to the quality of investment opportunities and the timing of realisations. Any uninvested funds are held in cash, interest bearing securities and a range of non-qualifying investments. It is intended that the significant majority (no less than 70%) of any funds raised by the Company will ultimately be invested in VCT qualifying investments.

Risk diversification and maximum exposures

Risk is spread by investing in a range of different businesses within different industry sectors using a mixture of securities. The maximum amount invested in any one company including any guarantees to banks or third parties providing loans or other investments into investee companies, is limited to 15% of the portfolio, at the time of investment.

Investment style

Investments are selected in the expectation that value will be enhanced by the application of private equity disciplines, including an active management style for unquoted companies through the placement of a director on investee company boards.  

Borrowing powers

The Company has a borrowing limit of an amount not exceeding an amount equal to the adjusted capital and reserves (being the aggregate of the amount paid up on the issued share capital of the Company and the amount standing to the credit of its reserves). Whilst the Company does not currently borrow, its policy allows it to do so.

Co-investment

The Company aims to invest in larger, more mature, unquoted and AIM companies and, in order to achieve this, often invests alongside the other Foresight funds. Consequently, at the time of initial investment, the combined investment can currently amount to a maximum of £5.0 million per annum for unquoted or for AIM investments.

VCT regulation

The investment policy is designed to ensure that the Company continues to qualify and is approved as a VCT by HM Revenue & Customs. Amongst other conditions, the Company may not invest more than 15% of its investments (by VCT value at the time of investment) in a single company and must have at least 70% by value of its investments throughout the period in shares or securities in qualifying holdings, of which 30% by VCT value (70% for funds raised after 5 April 2011) in aggregate must be in ordinary shares which carry no preferential rights (although only 10% of any individual investment needs to be in the ordinary shares of that company).

Management

The Board has engaged Foresight Group as discretionary investment manager. Foresight also provides or procures the provision of company secretarial, administration and custodian services to the Company. Foresight Group prefers to take a lead role in the companies in which it invests. Larger investments may be syndicated with other investing institutions, or strategic partners with similar investment criteria. In considering a prospective investment in a company, particular regard will be paid to:

• Evidence of high-margin products or services capable of addressing fast-growing markets;
• The company's ability to sustain a competitive advantage;
• The strength of the management team;
• The existence of proprietary technology;
• The company's prospects of being sold or achieving a flotation within three to five years.

Environmental, Human Rights, Employee, Social and Community Issues

The Board recognises the requirement under Section 414 of the Act to provide information about environmental matters (including the impact of the Company's business on the environment), employee, human rights, social and community issues; including information about any policies it has in relation to these matters and effectiveness of these policies. As the Company has no employees or policies in these matters this requirement does not apply.

Gender diversity

The Board currently comprises three male Directors. The Board is, however, conscious of the need for diversity and will consider both male and female candidates when appointing new Directors.

The Manager has an equal opportunities policy and currently employs 62 men and 39 women.  

Dividend policy

A proportion of realised gains will normally be retained for reinvestment and to meet future costs. Subject to this, the Company will endeavour to maintain a flow of dividend payments. It is the intention to maximise the Company's tax-free income available to investors from a combination of dividends and interest received on investments and the distribution of capital gains arising from trade sales or flotations.  

Purchase of own shares
It is the Company's policy, subject to adequate cash availability, to consider repurchasing shares when they become available in order to help provide liquidity to the market in the Company's shares.

Principal risks, risk management and regulatory environment

The Board believes that the principal risks faced by the Company are:

· Economic risk

· Loss of approval as a Venture Capital Trust

· Investment and strategic

· Regulatory

· Reputational

· Operational

· Financial

· Market risk

· Liquidity risk

Further detail on these principal risks is given in note 15 on page 55 of the Annual Report and Accounts. The Board regularly reviews the principal risks and uncertainties facing the Company which the Board and the Manager have identified and the Board sets out delegated controls designed to manage those risks and uncertainties. Key risks within investment strategy are managed by the Board through a defined investment policy, with guidelines and restrictions, and by the process of oversight at each Board meeting. Operational disruption, accounting and legal risks are also covered at least annually and regulatory compliance is reviewed at each Board meeting.

The Directors have adopted a framework of internal controls which is designed to monitor the principal risks and uncertainties facing the Company and to provide a monitoring system to enable the Directors to mitigate these risks as far as possible. Details of the Company's internal controls are contained in the Corporate Governance and Internal Control sections.

Performance-related incentives

Foresight Group is entitled to a payment equal to 15% of dividends paid to Ordinary Shareholders, subject to the net asset value plus cumulative dividends paid per Ordinary Share exceeding 100.0p per Share (''High Watermark''), both immediately before and immediately after the performance related incentive fee is paid.

After each distribution is made to Ordinary Shareholders where a performance incentive is paid to Foresight Group, the High Watermark required to be achieved by the Company to trigger a further performance incentive fee increases by a per Ordinary Share amount equivalent to the aggregate amount of the dividend paid less the 15% performance fee paid to Foresight Group.

The performance incentive fee may be satisfied by either a cash payment or the issue of Ordinary Shares (or by a combination of both) ultimately at the Board's discretion. Any new Ordinary Shares to be issued to Foresight Group would be calculated by dividing the performance fee cash equivalent amount by the latest net asset value per Ordinary Share after adding the cumulative dividends to be paid.

No performance incentive was paid in the year (2014: £nil paid).

Valuation Policy

Investments held by the Company have been valued in accordance with the International Private Equity and Venture Capital Valuation ("IPEVCV") guidelines (December 2012) developed by the British Venture Capital Association and other organisations. Through these guidelines, investments are valued as defined at 'fair value'. Ordinarily, unquoted investments will be valued at cost for a limited period following the date of acquisition, being the most suitable approximation of fair value unless there is an impairment or significant accretion in value during the period. Quoted investments and investments traded on AIM and ISDX Growth Market are valued at the bid price as at 31 March 2015. The portfolio valuations are prepared by Foresight Group, reviewed and approved by the Board quarterly and subject to review by the auditors annually.  

VCT Tax Benefit for Shareholders

To obtain VCT tax reliefs on subscriptions up to £200,000 per annum, a VCT investor must be a 'qualifying' individual over the age of 18 with UK taxable income. The tax reliefs for subscriptions since 6 April 2006 are:

· Income tax relief of 30% on subscription for new shares, which is forfeit by shareholders if the shares are not held for more than five years;

· VCT dividends (including capital distributions of realised gains on investments) are not subject to income tax in the hands of qualifying holders;

· Capital gains on disposal of VCT shares are tax-free, whenever the disposal occurs.

Venture Capital Trust Status

Foresight 4 VCT plc has been granted approval as a Venture Capital Trust (VCT) under S274-S280A of the Income Tax Act 2007 for the year ended 31 March 2014. The next complete review will be carried out for the year ended 31 March 2015. It is intended that the business of the Company be carried on so as to maintain its VCT status.

The Directors have managed, and continue to manage, the business in order to comply with the legislation applicable to VCTs. In addition, the Board has appointed Shakespeare Martineau LLP as taxation adviser to the Company to provide further independent assurance of compliance with venture capital tax legislation and to provide guidance on changes in taxation legislation affecting Foresight 4 VCT plc. As at 31 March 2015 the Company had 83.6% of its funds in such VCT qualifying holdings.

Future Strategy

The Board and the Manager believe that the strategy of focusing on traditional private equity investments is in the best interests of Ordinary and C Shareholders and the historical information reproduced in this report is evidence of positive recent performance in this area.

The Company's performance relative to its peer group and benchmarks will depend on the Manager's ability to allocate the Company's assets effectively, and manage its liquidity appropriately.

Philip Stephens

Director

27 July 2015

Investment Manager's Report

During the year to 31 March 2015, the net asset value per Ordinary Share decreased by 3.2% to 83.9p from 86.7p at 31 March 2014. A number of the private equity investments performed well, particularly Aerospace Tooling Corporation, Procam Television Holdings, TFC Europe and CoGen which, together, generated an increase in net asset value of £3.5 million. Aerospace Tooling Corporation and The Bunker Secure Hosting both successfully completed recapitalisations, returning £2.7 million to the Ordinary Shares fund with unchanged equity shareholdings to the fund.

Notwithstanding the above, the overall performance of the Ordinary Shares fund during the year to 31 March 2015 was disappointing, the impact of the full provision of £4.0 million made against the investment in Closed Loop Recycling, as explained below, counterbalancing the strong performance of the private equity investments. Subsequent to the year end, Closed Loop was placed into administration on 30 April 2015, with no prospect of any recovery.

In marked contrast, the net asset value per C Share increased substantially during the year by 67.6% to 110.8p at 31 March 2015 from 66.1p per C Share at 31 March 2014, principally reflecting continuing strong performances by Aerospace Tooling Corporation, Procam Television Holdings and Defaqto, which was successfully sold in March for £9.5 million. Together, these three investments generated an increase in net asset value of nearly £8.0 million during the year. It was intended that the C Shares fund, created through the merger of Acuity Growth VCT and Acuity VCT 3 in February 2012, would be managed separately to the Ordinary Shares fund until summer 2015, when the C Shares fund would be merged with the Ordinary Shares fund on a relative net asset value basis using the net asset values of each fund as at 31 March 2015.

A review of the portfolio investments in the Ordinary Shares fund and C Shares fund is set out below.

Portfolio Review: Ordinary Shares fund

1. New investments

                  During the year, one small new investment was made by the Ordinary Shares fund in CoGen Limited, a new company formed by O-Gen UK and its existing 50:50 joint venture partner, Una Group, to further develop their combined pipeline of waste to energy projects. As part of a £1.3 million funding round, the Ordinary Shares fund invested a nominal £11 for a shareholding representing 9.50% of CoGen's equity, alongside similar investments from other Foresight VCTs.

2. Follow-on funding

Company	£
AlwaysON Group Limited	130,000
AtFutsal Limited	17,007
Biofortuna Limited	50,930
Closed Loop Recycling Limited	263,684
CoGen Limited	45,914
Procam Television Holdings Limited	69,444
Total	576,979

Capitalised interest was recognised during the year for Autologic Diagnostics Group (£98,391) and Closed Loop Recycling (£434,030).            

3. Exits and realisations

Company	£
Abacuswood Limited	45,446
Aerospace Tooling Corporation Limited	540,000
Amberfin Holding Limited*	54,148
Evance Wind Turbines Limited	232,812
O-Gen Acme Trek Limited	33,270
The Bunker Secure Hosting Limited	1,549,281
Zoo Digital Group plc	16,637
Total	2,471,594

In September 2014, Aerospace Tooling Corporation effected a recapitalisation and dividend distribution, returning the entire £3.5 million cost of the Foresight VCTs' investment made only 15 months previously. The Ordinary Shares fund received full repayment of its £540,000 loan and a dividend of £60,000 being equal to the £600,000 cost of its equity investment, while retaining its original 9.21% equity shareholding in the company.

In April 2014, Amberfin Holdings was acquired by Dalet SA, a Paris based media asset management software company. The Ordinary Shares fund received £54,148 at completion for its 1.8% shareholding in the company.

In March 2015, The Bunker repaid all its shareholder loans and outstanding interest totalling £6.5 million, of which £5.1 million was repaid to the Foresight VCTs, comprising £3.0 million of loan principal and £2.1 million of interest. The Ordinary Shares fund received £2,052,691, comprising £1,549,281 of loan principal and £503,410 of interest.

Loan repayments totalling £232,812 were received from the administrator of Evance Wind Turbines. Similarly, a loan repayment of £45,446 was received in September 2014 from the administrator of Abacuswood.

During the year, 146,937 ordinary shares in AIM listed Zoo Digital were sold, realising £16,637.

4. Material provisions to a level below cost

Company	£
AlwaysON Group Limited	65,245
Closed Loop Recycling Limited	3,997,363
Trilogy Communications Holdings Limited	202,899
Total	4,265,507

Portfolio Review: C Shares fund

1. New investments

Company	£
Positive Response Communications Limited	500,000
Total	500,000

2. Follow-on funding

Company	£
Biofortuna Limited	306,928
Procam Television Holdings Limited	381,941
Total	688,869

3. Exits and realisations

Company	£
Aerospace Tooling Corporation Limited	810,000
Defaqto Group Limited	9,715,461
Total	10,525,461

As explained above, Aerospace Tooling Corporation effected a recapitalisation and dividend distribution in September 2014. The C Shares fund received repayment of its £810,000 loan and a dividend of £90,000 equal to the cost (£900,000) of its equity investment, retaining its original 13.81% equity shareholding in the company.

On 31 March 2015, Defaqto Group was sold through a management buyout backed by a UK private equity firm, with the company's shareholders receiving gross proceeds of £27.6 million. The C Shares fund received £9,460,661, realising a profit of £4.7 million. Previously in August 2014, the company repaid loan principal of £254,800.

4. Material provisions to a level below cost

No provisions were made during the year.

Outlook for the Portfolios

Foresight Group is pleased by the recent strong performance of the C Shares fund which, in part, reflects the quality of the private equity investments made by Foresight since taking over the management of the fund and the benefits of a hands-on investment approach. Following the sale of Defaqto Group, the C Shares fund now has significant cash resources for further investment. The payment of a significant 25p per share dividend on 6 August 2015 has been agreed by the Board, while still leaving its fund in a position to make further investments.

Following the full provision made against the investment in Closed Loop Recycling, the Ordinary Shares portfolio effectively has no significant remaining direct exposure to environmental investments, the portfolio now comprises traditional private equity investments operating across a range of different sectors. With a strong pipeline of high quality investment opportunities, Foresight Group is focusing on making further similar private equity investments. Efforts will be concentrated on successful realisations from the existing investments to facilitate further shareholder distributions.

Foresight remains positive about the overall prospects for both investment portfolios, which are well positioned for growth.

Portfolio Review

In June 2013, the Ordinary Shares fund invested £600,000 and the C Shares fund £900,000 alongside other Foresight VCTs in a £3.5 million investment in Dundee based Aerospace Tooling Corporation (ATL), a well-established specialist engineering company. ATL provides repair, refurbishment and remanufacturing services to large international companies in high-specification aerospace and turbine engines. With a heavy focus on quality assurance, the company enjoys strong relationships with companies serving the aerospace, military, marine and industrial markets. In the year to 30 June 2014, a number of significant orders underpinned growth, with turnover and profits increasing substantially. Although sales and profitability are forecast to be lower in the current financial year, this strong performance supported an increase in valuation of £1.7 million in the Ordinary Shares fund and £2.5 million in the C Shares fund during the year.

Reflecting particularly strong cash generation, the company effected a recapitalisation and dividend distribution in September 2014, returning the entire £3.5 million cost of the Foresight VCTs' investments made only 15 months previously. The Ordinary Shares fund and the C Shares fund received full repayment of their respective loans of £540,000 and £810,000 and respective dividends of £60,000 and £90,000, equal to the cost of their equity investments. The Ordinary Shares fund and the C Shares fund retain their respective original 9.21% equity shareholding and 13.81% equity shareholding in the company, effectively at nil cost. Held in the Ordinary and C Shares funds.

In March 2014, the two Foresight portfolio companies, AlwaysOn Group and Data Continuity Group (now known as AlwaysOn Group), merged and implemented a major reorganisation, involving significant cost reductions and a change in the year end to March 2015. As part of the transaction, a further £500,000 was invested by the Foresight VCTs into AlwaysOn in two tranches, of which the Ordinary Shares fund invested £130,000 in March 2014 and a further £130,000 in April 2014, to ensure that the enlarged Group had sufficient resources for growth. The merged business now provides data backup services, connectivity and Microsoft's Lync collaboration software (AlwaysOn being a Microsoft Gold partner) to SMEs and larger enterprises. In the year to 31 March 2015, losses were successfully stemmed, with a small EBITDA profit being achieved on sales of £6.6 million and reasonable cash balances at that date.

Sales were slightly behind budget, due to weaker product sales and data back up renewals, whilst the managed services performed ahead of expectations. To improve the company's digital presence and channel sales of Lync (to be rebranded Skype for Business), a new Head of Marketing has been recruited, who has already made a beneficial impact on sales. With a number of significant pipeline opportunities generated through partners, performance is expected to improve significantly once some of these prospects convert into orders. Reflecting the above, a provision of £65,245 was made against the cost of the investment during the year. Held in the Ordinary Shares fund.

In April 2014, the entire issued share capital of Amberfin Holdings was acquired by Dalet SA, a Paris based media asset management software company. The Ordinary Shares fund received £54,148 at completion for its small 1.8% shareholding and loan and a further £7,264 was received in April 2015, making a total of £61,412. Held in the Ordinary Shares fund.

AtFutsal Group runs government approved education programmes for students aged 16-18 years old, principally as part of a consortium made up of Football League clubs, colleges and academies and training/accreditation organisations. Funding for these programmes is sourced from the Education Funding Agency. The company's three arenas in Birmingham, Leeds and Swindon are used in part for these education programmes. AtFutsal has introduced a wider range of government approved BTech courses and is using its own online education software platform to provide a broader range of educational services. A separate English Colleges education programme has been established to provide additional futsal related courses for 16-18 year olds at sixth form colleges, with an increasing number of courses being offered. Courses for other age groups are also being developed. For the current student year which commenced in September 2014, the company registered some 1,400 students on its futsal related courses, compared with 1,200 in the previous academic year and some 100 for its new English Colleges programme. AtFutsal is also improving its capacity utilisation across its three arenas with a variety of different sports being regularly played at each arena alongside futsal at both child and adult level.

For the year ended 31 December 2014, a small operating profit was achieved on sales of £5.0 million, with the growing Education Division generating the majority of the profit and cash flow within the Group. Trading in the current year has started well, a key focus for the education team being to ensure that student enrolment for September 2015 is as strong as possible. As part of a £355,000 funding round to support the continuing growth of the Education division and a related share reorganisation, the Foresight VCTs invested a further £300,000 (£100,000 in February 2015 and £200,000 in April 2015). The Ordinary Shares fund invested £51,021 in total (£17,007 in February and £34,014 in April 2015) and increased its equity shareholding from 7.5% to 10.6%. Management is focussed on improving profitability by increasing the number of students and range of education programmes and also the usage of its online education platform. Held in the Ordinary Shares fund.

Following the £48 million secondary buy-out by Living Bridge (formerly ISIS Private Equity) in January 2012, investments in equity and loan stock valued at £1.98 million were retained in Autologic Diagnostics Group. The company generated reduced profits for the year to December 2013, achieving an EBITDA of £5.4 million on sales of £18.8 million (an EBITDA of £5.9 million on revenues of £17.2 million in 2012). Similar trading results were achieved during 2014, with relatively stronger sales in the UK and Europe compared with the USA. As at 31 December 2014, the company had a healthy cash balance of £7.9 million. Trading in the current year to date is in line with budget. Management continues to develop a business model to generate recurring revenues and improve the quality of the company's earnings through a new service-oriented product, to be launched in May 2015. In the short term, this change in strategy towards a pure recurring revenue model will result in certain exceptional costs being incurred and, depending on the level of new customer sales, this is likely to impact EBITDA in 2015 and 2016 while helping to drive longer term shareholder value. During the year, interest of £98,391 deferred under the terms of the loan agreement with Autologic Diagnostics Group was capitalised. Held in the Ordinary Shares fund.

Biofortuna, an early stage molecular diagnostics business based in the Wirral, has developed unique expertise in the important area of enzyme stabilisation, effectively hi-tech freeze drying. Its first range of products, SSPGo, is a series of tests for genetic diseases and organ transplant compatibility. Because of the company's stabilisation and freeze drying technology, its products can be transported easily (in the post if needed) and stored at room temperature for up to two years. A £1.3 million round to finance capital expenditure and working capital was completed in August 2013, in which £99,066 was initially invested by each of the Ordinary Shares fund and the C Shares fund and then £50,930 similarly as the second, final tranche in April 2014. For the year to 31 March 2015, a substantially reduced operating loss of £528,000 was incurred on higher sales of £1.1 million (compared to an operating loss of £1.1 million on sales of £0.3 million in the previous year).

The Custom Services division, engaged in contract research, freeze-dried product development for customers and contract manufacturing, continues to mature with paid for feasibility studies and various contract discussions. Several customers are now ordering, or moving towards, production volumes, while additional sales resource has been recruited. Investment continues in improving and increasing production capacity. The manufacturing facility has successfully obtained FDA registration. The New Product Development division, which develops the company's proprietary products, is progressing in a number of areas, including assessing new markets and broadening the product range. To finance the development of new products, a £1.6 million round was concluded in January 2015, of which £890,000 was committed by the Foresight VCTs. The C Shares fund committed to invest £428,714, of which £255,998 was invested as the first tranche. Held in the Ordinary and C Shares funds.

In July 2012, the C Shares fund invested £1.0 million in Northampton based Blackstar Amplification Holdings alongside £2.5 million from Foresight VCT to finance a management buy-out and provide growth capital. Blackstar Amplification was founded in 2004 by four senior members of the new product development team at Marshall Amplification to design and manufacture a range of innovative guitar amplifiers. Following commercial launch in 2007, sales grew rapidly, reflecting new product launches and entry into new markets, and a global brand was soon established. In its financial year to 30 April 2014, the company achieved an EBITDA of £0.3 million on sales of £8.6 million (cf. an EBITDA of £0.4 million on sales of £9.7 million in the previous year, reflecting channel restocking). In the year to 30 April 2015, costs were reduced appreciably, resulting in a substantial increase in EBITDA being achieved on sales of £8.6 million. In the US market, the largest guitar amplifier market globally, Blackstar is now the number two guitar amplifier brand by monthly sales volumes. Management are focused on increasing sales and improving margins, including selectively replacing distributors where appropriate. The company currently has a presence in over 35 countries worldwide and its products are stocked in over 2,500 stores globally. New product development remains a key focus and two new ID: Core products, at the high growth value end of the market, were launched, the first in time for the Christmas season in 2014 and the second in February 2015. Held in the C Shares fund.

During 2013/14, Closed Loop Recycling successfully doubled the capacity of its Dagenham plant, which processed approaching 1,000 tonnes per week of waste plastic bottles. During the year, as part of a £710,000 further funding round, the Ordinary Shares fund invested a further £240,000 alongside other Foresight VCTs. In October 2014, following protracted negotiations, the shareholders entered into a confidential, conditional sale and purchase agreement with a purchaser planning to seek a public listing simultaneously with the conclusion of the acquisition, at a price higher than the then carrying valuation. One of the purchase conditions related to the financial performance of the company during the listing process. However, the company's short-term projected performance was impacted by adverse movements in the price of waste plastic bottles reflecting overseas demand for such bottles and weaker prices for virgin resin, indirectly reflecting the falling price of oil. The latter impacted the price customers paid for the company's competing recycled HDPE and PET pellets. To mitigate the impact of these price movements, price surcharges were negotiated with key customers. The conditional sale and purchase agreement was formally terminated in December 2014, following a weaker than projected financial performance by the company and reduced short-term profit projections.

During the first quarter of 2015, the macroeconomic position as it related to the company worsened further with oil prices declining to below $50 per barrel. This indirectly led to a substantial fall in the price of virgin HDPE polymer and lower prices for the company's recycled HDPE pellets. This markedly increased the pressure on the company's margins and business model and worsened the P&L and cash position. Waste bottle prices also fell, but to a lesser extent than the reduction in oil and virgin pellet prices, which, combined with a time lag, meant that the price surcharge increased from £200 per tonne in December 2014 to over £300 per tonne in March 2015. This continuing pricing pressure cast doubt on the continuing viability of the company's business model.

The company focused its efforts on current trading and improving profitability, whilst also actively pursuing various strategic options, including raising capital from third party sources, an outright sale and further supply chain support. Discussions and negotiations were held with various parties with regard to raising new capital but were hindered by lack of sufficient support from various parties within the entire customer supply chain. Reflecting these conditions, other experienced and credible recyclers experienced similar challenges to their long-standing business models.

A Government sponsored summit was held in March 2015 with the major supermarkets and retailers, dairies and bottle manufacturers to discuss this worsening market position and risk that food-grade recycled HDPE production in the UK could well cease in the near future. This summit was a clear indication that the Government was taking very seriously the potential market impact that such an event would have. Unfortunately, however, the summit did not result in any firm commitment or any further signs of industry support.

Reflecting the above, provisions totalling £3,997,363 were made against the cost of the investment in the company, reducing the valuation to nil. Notwithstanding the above efforts, the company failed to raise new capital and was placed into administration on 30 April 2015, with no prospect of any recoveries. Held in the Ordinary Shares fund.

Connect 2 Media develops and publishes digital media entertainment on a range of devices, such as mobile phones and games consoles. As a result of the continuing decline in the feature phone market and following the failure of the company to raise up to £4 million to commercialise and launch its new Platform as a Service, Brain Game, a restructuring was implemented and costs reduced substantially. Reflecting the above, a full provision was made against the value of this investment in a prior year, reducing the valuation to nil. With the continuing decline in the pay-per-download mobile gaming market and continuing trading losses, the investment was sold to management in March 2015 for a nominal consideration. Held in the C Shares fund.

Derby based Datapath Group is a world leading innovator in the field of computer graphics and video-wall display technology utilised in a number of international markets. The company is increasing its market share in control rooms, betting and signage and is entering other new markets. For the year to 31 March 2014, record operating profits of £7.4 million were achieved on sales of £19.6 million (for the year ended 31 March 2013, record operating profits of £5.1 million were achieved on sales of £14.1 million). Trading and cash generation in the year to 31 March 2015 was strong, with the company continuing to enjoy good demand from its main OEM partners and distributors. The company acquired its US distributor and established an office in Philadelphia to develop more US sales and distributorships. In February 2015, the company launched its range of leading new IP products at the ISE show, meeting a warm response from OEMs and distributors. Management are working to improve sales efforts and processes as well as project management and product delivery times. Held in the Ordinary Shares fund.

Defaqto Group, based in Haddenham, is an information provider to the financial services industry, offering intelligence products and services to support better decision-making by UK retail financial product providers. Having returned to profitability during 2013, the company achieved an EBITDA of £1.3 million on sales of £8 million in the year to 31 March 2014, well ahead of the previous year's EBITDA of £0.8 million on sales of £7.2 million. In the year to 31 March 2015, the company performed particularly strongly, comfortably exceeding its demanding budget. In August 2014, the company repaid loan principal of £254,800 and interest of £145,200, totalling £400,000.

On 31 March 2015, the company was sold through a management buyout backed by a UK private equity firm at an enterprise value of £24.3 million. Gross proceeds of £27.6 million were received by the company's shareholders. The C Shares fund received £9.5 million, realising a profit of £4.7 million. This compares to a valuation of £4.3 million at 31 March 2011 when Foresight was appointed Manager. A further £37,000 is held in escrow for 20 months. Held in the C Shares fund.

Following the appointment of administrators to Evance Wind Turbines in April 2014 as a result of reductions in the Feed-in-Tariff for small wind turbines which started in October 2012, loan repayments totalling £232,812 were received during the year. Held in the Ordinary Shares fund.

In May 2012, the Ordinary Shares fund and the C Shares fund invested £200,000 and £492,500 respectively in Kent based Flowrite Refrigeration Holdings alongside other Foresight VCTs to finance a £3.2 million management buyout. Flowrite Refrigeration Holdings provides refrigeration and air conditioning maintenance services nationally, principally to leisure and commercial businesses such as hotels, clubs, pubs and restaurants. Management has accelerated sales efforts, won significant new contracts, additional customers and reviewed several potential acquisitions with the aim of broadening its national coverage. In the year to 31 October 2014, the company traded well, achieving an operating profit of £740,000 on sales of £10.8 million after substantial investment in new engineers and systems (cf. an operating profit of £1.06 million on sales of £10.0 million in 2013). Trading in the current year is ahead of budget. Management has increased sales efforts, particularly targeting more installation work, and won a number of significant new contracts and customers. Held in the Ordinary and C Shares funds.

Ixaris Systems has developed and operates Entropay, a web based global prepaid payment service using the VISA network, whose revenues and profits have continued to grow. The company also offers its IxSol product (formerly known as Opn) on a 'Platform as a Service' basis to enable enterprises to develop their own customised global applications for payments over various payment networks. IxSol is trading satisfactorily with a number of deployments in progress and a good sales pipeline. IxSol is being used by companies in the affiliate marketing and travel sectors and sales efforts are now also focussing on the international e-commerce and financial services sectors.

During 2013, the company invested in developing and marketing its Ixaris Payment System, the platform that runs IxSol, to financial institutions. The platform enables financial institutions to offer payment services to their customers based on prepaid cards. The first deployment of the Payment System is expected in mid 2015. A pipeline of sales opportunities is being developed in three applications i.e. corporate prepaid, consumer virtual prepaid and payment innovations. Ixaris was awarded an EU grant of €2.5m, of which €1.6m will be received over three years, to help fund the existing platform technology roadmap which highlights the innovative nature of the Payment System.

In the year to 31 December 2014, reflecting continuing investment in software and systems, an EBITDA loss of £622,000 was incurred on revenues of £9.4 million (cf. an EBITDA loss of £617,000 on sales of £9.5 million in the previous year). Following a reduction in the cost base in July 2014, the company is operating at cash flow break even and had £3.1 million of cash at 31 December 2014. Held in the Ordinary Shares fund.

In February 2014, the O-Gen Acme Trek facility in Stoke-on Trent was granted planning permission for an enlarged 7MW waste wood to energy plant. Management is currently working with the selected technology provider and a major EPC contractor to develop the project to the next stage, but this is taking longer than anticipated. Accordingly, it is expected that the project will now need to qualify under the Contract for Difference (CfD) subsidy regime rather than the ROC subsidy regime. Both Foresight and CoGen (see O-Gen UK below) are working together to establish how best to develop the project under this new regime. In view of the delays described above, the company is actively seeking other competitive bids for the project. Held in the Ordinary Shares fund.

O-Gen UK continues to make good progress. Working together with Carbonarius (its 50:50 joint venture with Plymouth based Una Group), O-Gen UK has built on the success of its £48 million, 10MW Birmingham BioPower project ("BBPL") to become the UK's leading independent developer of Advanced Conversion Technology waste to energy projects. In March 2015, O-Gen UK formalised this partnership with Una Group by combining the two management teams and staff in a new company, CoGen Limited, to further develop their substantial, combined pipeline of projects. To accelerate growth and provide additional working capital, a new investor subscribed £750,000 for equity in CoGen, alongside a loan of £500,000 from Una Group. Funds managed by Foresight hold 24.59% of CoGen's equity, including the Ordinary Shares class (9.50%), Foresight 3 VCT plc (8.59%), Foresight 2 VCT plc (3.92%) and the Foresight UK Sustainable EIS fund (2.58%). Reflecting the above progress, the CoGen valuation has been increased by £1.5 million to £1.9 million. O-Gen remains the shareholder in BBPL. This merger will help O-Gen UK demonstrate the sufficient scale, track record and project pipeline to secure an appropriate exit in due course.

In March 2015, CoGen reached financial close on its most recent project, a £53.0 million, 10MWe waste wood to energy plant in Welland, Northamptonshire, using the same technology and partners as in the BBPL project. This latest project was funded with investment from Balfour Beatty plc, Equitix and Noy (an Israeli investment fund), with CoGen earning development fees on the transaction whilst retaining a 12.5% shareholding in the project. Also in March, CoGen completed the acquisition of the entire O-Gen Plymtrek site in Plymouth, originally developed by Carbonarius with MITIE plc, on which a 4.5MW waste to energy plant is planned to be built utilising much of the footprint of the existing plant. The funding for this transaction was provided by Aurium Capital Markets, with CoGen owning 50% of the acquisition vehicle and Aurium owning 50% but with a prior ranking return on the latter's invested capital. CoGen has also recently agreed terms to develop a 25MW project in Merseyside using refuse derived fuel. Held in the Ordinary Shares fund.

In December 2014, the C Shares fund invested £500,000 alongside other Foresight VCTs in a £2 million round to finance a shareholder recapitalisation of Positive Response Corporation. Established in 1997, the company monitors the safety of people and property through its 24 hour monitoring centre in Dumfries, Scotland. The flagship product, StaffSafe, provides increased staff safety and protection in customer facing environments by supporting workers, particularly 'lone workers', in dealing with verbal abuse, harassment and anti-social behaviour, by enabling them to call for help utilising high quality two way audio communication and a CCTV feed linked to the monitoring centre. Customers include several major restaurant and retail chains. Revenues are generated from both initial installation fees and monitoring and maintenance fees. In the financial year ended 31 March 2015, an EBITDA of £0.6 million was achieved on sales of £2.0 million. Significant growth is expected in the current financial year, reflecting a strong sales pipeline including both existing and potential new customers. The management team has been strengthened with the appointment of a new CEO, Finance Director and additional sales resource is also being recruited. Held in the C Shares fund.

In April 2013, the Ordinary Shares fund and the C Shares fund invested £250,000 and £400,000 respectively alongside other Foresight VCTs in a £1.8 million round to finance a management buy-out of Procam Television Holdings. Procam is one of the UK's leading broadcast hire companies, supplying equipment and crews for UK location

TV production to broadcasters, production companies and other businesses for over 20 years. Headquartered in Battersea, London, with additional facilities in Manchester, Edinburgh and Glasgow, Procam is a preferred supplier to BSkyB and an approved supplier for BBC and ITV. Over the last four years revenues have doubled, following the introduction of new camera formats and increased sales and marketing efforts.

In September 2013, Hammerhead, a competitor with facilities in London, Manchester and Edinburgh and Glasgow, was acquired in order to broaden the customer base, increase national coverage and realise various synergistic benefits. For the year to 31 December 2013, an EBITDA of £1.8 million was achieved on sales of £6.4 million, well ahead of trading in 2012. In the year to 31 December 2014, significant growth in sales and profits was achieved, again, well ahead of the prior year, reflecting both strong organic growth and the successful integration of the Hammerhead acquisition. Continuing strong growth is expected in the current financial year which will necessitate expansion into larger premises in due course.

In December 2014, Procam acquired True Lens Services, based in Leicester, which specialises in the repair, refurbishment and supply of camera lenses to the film and television industries in the UK and overseas. In March 2015, in order to service the requirements of many of its existing UK customers and enter the large US market, Procam acquired HotCam New York, which provides camera, audio and lighting rental for TV production, plus crew and related production services from its premises in Manhattan. These acquisitions were supported by further investment of £1.3 million from the Foresight VCTs, of which the Ordinary Shares fund and the C Shares fund invested £69,444 and £381,941 respectively. Integration of both acquisitions is making good progress and initial trading is in line with plan. Other acquisition opportunities are under consideration. Held in the Ordinary and C Shares funds.

TFC Europe, a leading distributor of technical fasteners in the UK and Germany, performed well during the year to 31 March 2014, achieving record operating profits of £2.8 million on sales of £19.5 million (cf. a record operating profit of £2.5 million on sales of £18.1 million in 2013). Trading in the year to 31 March 2015 continued to be strong, with record profits and sales again being achieved. The budget for the current year shows continuing good growth. With effective national coverage through five service centres in the UK, management is focussed on increasing sales efforts and expansion in Germany, the largest market in Europe. A new full service centre was opened in Bochum near Dusseldorf in October 2013 and TFC is expanding its business with existing customers. The seventh service centre, acquired in October 2014 in Singen, near Stuttgart, has already won a new substantial customer with potential for further growth. This acquisition provides increased opportunities to service existing Southern German customers and target new customers with a wider product range. This strong physical presence in Europe's largest manufacturing market is expected to assist TFC in growing its sales and profits substantially. The order book remains strong and the new project pipeline is healthy showing good prospects for the coming months. Held in the Ordinary Shares fund.

The Bunker Secure Hosting, which operates two ultra secure data centres, continues to generate substantial profits at the EBITDA level. For the year to 31 December 2014, an EBITDA of £2.2 million was achieved on sales of £9.3 million, identical to the previous year. Sales growth slowed during the year but is now recovering. Recurring annual revenues presently exceed £9.3 million. For the year to date, trading continues in line with budget.

On 31 March 2015, The Bunker repaid all its shareholder loans and outstanding interest totalling £6.45 million, financed through a £5.7 million secured medium term bank loan plus £1 million of its own cash resources. In total, £5.1 million was repaid to the Foresight VCTs, comprising £3.0 million of loan principal and £2.1 million of interest. The Ordinary Shares fund received £2,052,691, comprising £1,549,281 of loan principal and £503,410 of interest.

To meet growing customer demand, a number of new Cloud based services have been launched, including Secure Archive, Secure Hosted Desktop, Backup and Disaster Recovery as a Service. A number of Channel partners and customers have already been signed and a growing pipeline has been developed through Channel partners for these Cloud 2.0 services. Secure Archive is being marketed through Channel partners to major corporates which generate and hold large amounts of data such as marketing agencies, film/photo libraries and government bodies. The sales and marketing strategy has been reassessed and sales team strengthened.

A power upgrade at the Newbury Data Centre was successfully completed in March 2015. To increase capacity and resilience, the core network was similarly upgraded and capacity to internet service providers substantially increased during the year. Held in the Ordinary Shares fund.

In August 2013, the Ordinary Share fund and C Share fund each invested £500,000 alongside other Foresight VCTs in a £2.5 million shareholder recapitalisation of Stockport based Thermotech Solutions (formerly Fire and Air Services). Thermotech is a hard facilities management provider with two divisions, Mechanical Services and Fire Protection, which designs, installs and services air conditioning and fire sprinkler systems for retail, commercial and residential properties through a national network of engineers. The company focusses primarily on the retail sector and enjoys long term customer relationships and multi-year preferred supplier contracts with various blue chip high street retailers, giving good revenue visibility. Since investment, good progress has been made in diversifying and re-balancing the spread of revenues, with greater emphasis on service and maintenance. For the year to 31 March 2014, an EBITDA of £0.7 million was achieved on sales of £4.0 million. In the year to 31 March 2015, sales and profits were significantly ahead reflecting a number of significant new contract wins with major retailers, roll outs of existing contracts and a growing sales pipeline. The recently appointed CEO has already made good progress in developing the business, including revamping the brand and marketing collateral, strengthening the finance, marketing, health and safety and quality management functions while also introducing GPS tracking of engineers and electronic job sheets with the aim of enhancing business information and reporting. A new Chairman with extensive facilities management experience has also been appointed. Held in the Ordinary and C Shares funds.

Reflecting defence contract orders from partners such as Northrop Grumman and Raytheon, Trilogy Communications achieved strong trading results up to 2012. Trading was subsequently affected by delays in long-term US defence programme orders. For the year to 28 February 2015, an EBITDA loss of £0.5 million was incurred on sales of £3.9 million (cf. an EBITDA loss of £0.8 million on sales of £4.0 million in 2014). Following further cost reductions and some recovery in defence orders, losses have been reduced while cash is being closely managed. A new non-executive Chairman was appointed and the Chief Operating Officer was promoted to the position of Chief Executive Officer. A new Sales Director has been recruited to increase broadcast sales. Discussions are in progress in relation to further defence programmes and the company continues to develop its range of communication equipment and related services, including the planned launch of a software only variant. Although significant orders are in prospect from defence customers, these continue to be subject to delay, resulting in losses being incurred. Reflecting this, a provision of £202,899 was made against the cost of the investment during the year. Management are pursuing various strategic options, including further cost reductions and possible sale or merger discussions. Held in the Ordinary Shares fund.

David Hughes

Foresight Group

Chief Investment Officer

27 July 2015

The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority require certain disclosures in relation to the annual financial report, as follows:

Principal risks, risk management and regulatoryenvironment

The Board believes that the principal risks faced by the Company are:

• Economic risk - events such as an economic recession and movement in interest rates could affect smaller companies' performance and valuations.
   
• Loss of approval as a Venture Capital Trust - the Company must comply with Section 274 of the Income Tax Act 2007 which allows it to be exempted from corporation tax on investment gains. Any breach of these rules may lead to: the Company losing its approval as a VCT; qualifying shareholders who have not held their shares for the designated holding period having to repay the income tax relief they obtained; and future dividends paid by the Company becoming subject to tax in the hands of investors. The Company would also lose its exemption from corporation tax on capital gains.
   
• Investment and strategic - inappropriate strategy, poor asset allocation or consistently weak stock selection leading to under performance and poor returns to shareholders.
   
• Regulatory - the Company is required to comply with the Companies Acts 2006, the rules of the UK Listing Authority and United Kingdom Accounting Standards. Breach of any of these might lead to suspension of the Company's Stock Exchange listing, financial penalties or a qualified audit report.
   
• Reputational - inadequate or failed controls might result in breaches of regulations or loss of shareholder trust.
   
• Operational - failure of the Manager's or Company Secretary's accounting systems or disruption to its business leading to an inability to provide accurate reporting and monitoring.
   
• Financial - inadequate controls might lead to misappropriation or loss of assets. Inappropriate accounting policies might lead to misreporting or breaches of regulations. Additional financial risks, including interest rate, credit, market price and currency, are detailed later in this note.
   
• Market risk - investment in AIM traded, ISDX Growth Market traded and unquoted companies by its nature involves a higher degree of risk than investment in companies traded on the main market. In particular, smaller companies often have limited product lines, markets or financial resources and may be dependent for their management on a small number of key individuals. In addition, the market for stock in smaller companies is often less liquid than that for stock in larger companies, bringing with it potential difficulties in acquiring, valuing and disposing of such stock.
   
• Liquidity risk - the Company's investments, both unquoted and quoted, may be difficult to realise. Furthermore, the fact that a share is traded on AIM or ISDX Growth Markets does not guarantee that it can be realised. The spread between the buying and selling price of such shares may not reflect the price that any realisation is actually made.

The Board regularly reviews the principal risks and uncertainties facing the Company which the Board and the Manager have identified and the Board sets out delegated controls designed to manage those risks and uncertainties. Key risks within investment strategy are managed by the Board through a defined investment policy, with guidelines and restrictions, and by the process of oversight at each Board meeting. Operational disruption, accounting and legal risks are also covered at least annually and regulatory compliance is reviewed at each Board meeting. The Directors have adopted a robust framework of internal controls which is designed to monitor the principal risks and uncertainties facing the Company and provide a monitoring system to enable the Directors to mitigate these risks as far as possible. Details of the Company's internal controls are contained in the Corporate Governance and Internal Control sections.

The Company's financial instruments comprise:

• Equity shares, debt securities and fixed interest securities that are held in accordance with the Company's investment objective as set out in the Directors' Report.
• Cash, liquid resources, short-term debtors, creditors and derivatives that arise directly from the Company's operations.

Statement of Directors' Responsibilities

Statement of Directors' Responsibilities in respect of the Annual Report and Financial Statements

The Directors are responsible for preparing the Annual Report and financial statements, in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice).

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;
   
• make judgements and estimates that are reasonable and prudent;
   
• state whether UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
   
• prepare the financial statements on the going concern basis unless it is inappropriate that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website (which is delegated to Foresight Group and incorporated into their website). Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Statement of Directors' in respect of the Annual Financial Report

We confirm that to the best of our knowledge:

• the financial statements, prepared in accordance with the applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;
   
• the Annual Report includes a fair review of the development and performance of the business and the position of the Company together with a description of the principal risks and uncertainties that the Company faces; and
   
• the report and accounts, taken as a whole, are fair, balanced, and understandable and provide the necessary information for shareholders to assess the company's performance, business model and strategy.

On behalf of the Board

Philip Stephens

Chairman

27 July 2015

Unaudited Non-Statutory Analysis of the Share Classes

Income Statements
for the year ended 31 March 2015
			Ordinary Shares Fund			C Shares Fund
			Revenue	Capital	Total	Revenue		Capital		Total
			£'000	£'000	£'000	£'000		£'000		£'000
Investment holding gains			-	304	304	-		9,018		9,018
Realised losses on investments			-	(1,002)	(1,002)	-		(699)		(699)
Income			685	-	685	462		-		462
Investment management fees			(189)	(567)	(756)	(76)		(227)		(303)
Transaction costs			(11)	-	(11)	-		-		-
Other expenses			(311)	-	(311)	(115)		-		(115)
Return/(loss) on ordinary activities before taxation			174	(1,265)	(1,091)	271		8,092		8,363
Taxation			(25)	25	-	(36)		36		-
Return/(loss) on ordinary activities after taxation			149	(1,240)	(1,091)	235		8,128		8,363
Return per share			0.4p	(3.2)p	(2.8)p	1.3p		43.5p		44.8p

Balance Sheets
at 31 March 2015
				Ordinary Shares Fund			C Shares Fund
				£'000			£'000
Fixed assets
Investments held at fair value through profit or loss				29,472			8,751
Current assets
Debtors				527			245
Money market securities and other deposits				2,200			2,200
Cash				103			9,529
				2,830			11,974
Creditors: Amounts falling due within one year				(163)			(21)
Net current assets				2,667			11,953
Net assets				32,139			20,704
Capital and reserves
Called-up share capital				383			187
Share premium account				10,251			25,559
Capital redemption reserve				1,941			71
Profit and loss account				19,564			(5,113)
Equity shareholders' funds				32,139			20,704
Number of shares in issue				38,284,414			18,680,907
Net asset value per share				83.9p			110.8p

At 31 March 2015 there was an inter-share debtor/creditor of £36,000 which has been eliminated on aggregation.

Unaudited Non-Statutory Analysis of the Share Classes

Reconciliations of Movements in Shareholders' Funds

for the year ended 31 March 2015

	Called-up share capital	Share premium account	Capital redemption reserve	Profit and loss account	Total
	£'000	£'000	£'000	£'000	£'000
Ordinary Shares
As at 1 April 2014	386	10,314	1,938	20,818	33,456
Expenses in relation to previous years share issues	-	(63)	-	-	(63)
Repurchase of shares	(3)	-	3	(163)	(163)
Loss for the year	-	-	-	(1,091)	(1,091)
As at 31 March 2015	383	10,251	1,941	19,564	32,139
	Called-up share capital	Share premium account	Capital redemption reserve	Profit and loss account	Total
	£'000	£'000	£'000	£'000	£'000
C Shares
As at 1 April 2014	187	25,567	71	(13,476)	12,349
Expenses in relation to previous years share issues	-	(8)	-	-	(8)
Return for the year	-	-	-	8,363	8,363
As at 31 March 2015	187	25,559	71	(5,113)	20,704

Audited Income Statement

for the year ended 31 March 2015

	Year ended				Year ended
	31 March 2015				31 March 2014
	Revenue	Capital	Total		Revenue	Capital	Total
	£'000	£'000	£'000		£'000	£'000	£'000
Investment holding gains	-	9,322	9,322		-	(2,176)	(2,176)
Realised losses on investments	-	(1,701)	(1,701)		-	(1,412)	(1,412)
Income	1,147	-	1,147		826	-	826
Investment management fees	(265)	(794)	(1,059)		(291)	(871)	(1,162)
Transaction costs	(11)	-	(11)		-	-	-
Other expenses	(426)	-	(426)		(433)	-	(433)
Return/(loss) on ordinary activities before taxation	445	6,827	7,272		102	(4,459)	(4,357)
Taxation	(61)	61	-		-	-	-
Return/(loss) on ordinary activities after taxation	384	6,888	7,272		102	(4,459)	(4,357)
Return per share:
Ordinary Share	0.4p	(3.2)p	(2.8)p		0.3p	3.3p	3.6p
C Share	1.3p	43.5p	44.8p		(0.2)p	(30.6)p	(30.8)p

The total column of this statement is the profit and loss account of the Company and the revenue and capital columns represent supplementary information.

All revenue and capital items in the above Income Statement are derived from continuing operations. No operations were acquired or discontinued in the year.

The Company has no recognised gains or losses other than those shown above, therefore no separate statement of total recognised gains and losses has been presented.

Audited Reconciliation of Movements in Shareholders' Funds

	Called-up share capital	Share premium account	Capital redemption reserve	Profit and loss account	Total
Year ended 31 March 2014 Company	£'000	£'000	£'000	£'000	£'000
As at 1 April 2013	571	31,518	1,963	17,417	51,469
Share issues in the year	48	4,387	-	-	4,435
Expenses in relation to previous share issues	-	(24)	-	-	(24)
Repurchase of shares	(46)	-	46	(4,163)	(4,163)
Investment transaction costs	-	-	-	(12)	(12)
Dividends	-	-	-	(1,543)	(1,543)
Loss for the year	-	-	-	(4,357)	(4,357)
As at 31 March 2014	573	35,881	2,009	7,342**	45,805

	Called-up share capital	Share premium account	Capital redemption reserve	Profit and loss account	Total
Year ended 31 March 2015 Company	£'000	£'000	£'000	£'000	£'000
As at 1 April 2014	573	35,881	2,009	7,342	45,805
Expenses in relation to previous years share issues*	-	(71)	-	-	(71)
Repurchase of shares	(3)	-	3	(163)	(163)
Return for the year	-	-	-	7,272	7,272
As at 31 March 2015	570	35,810	2,012	14,451**	52,843

* Trail commission payable to financial advisors in the year.

** Of this amount £4,951,000 (2014: £12,323,000) is realised and distributable.

Audited Balance Sheet

at 31 March 2015

			Registered Number: 03506579
			As at		As at
			31 March 2015		31 March 2014
			£'000		£'000
Fixed assets
Investments held at fair value through profit or loss			38,223		41,415
Current assets
Debtors			736		2,001
Money market securities and other deposits			4,400		637
Cash			9,632		1,848
			14,768		4,486
Creditors
Amounts falling due within one year			(148)		(96)
Net current assets			14,620		4,390
Net assets			52,843		45,805
Capital and reserves
Called-up share capital			570		573
Share premium account			35,810		35,881
Capital redemption reserve			2,012		2,009
Profit and loss account			14,451		7,342
Equity shareholders' funds			52,843		45,805
Net asset value per share:
Ordinary Share			83.9p		86.7p
C Share			110.8p		66.1p

Audited Cash Flow Statement

for the year ended 31 March 2015

	Year ended	Year ended
	31 March 2015	31 March 2014
	£'000	£'000
Cash flow from operating activities
Investment income received	1,000	380
Dividends received from investments	150	-
Deposit and similar interest received	4	2
Investment management fees paid	(1,059)	(1,157)
Secretarial fees paid	(117)	(155)
Other cash payments	(260)	(553)
Net cash outflow from operating activities and returns on investment	(282)	(1,483)
Returns on investment and servicing of finance
Purchase of unquoted investments	(1,766)	(5,641)
Net proceeds on sale of investments	13,742	4,643
Net proceeds on deferred consideration	87	1,052
Net capital inflow from financial investment	12,063	54
Equity dividends paid	-	(1,543)
Management of liquid resources
Movement in money market funds	(3,763)	(101)
	(3,763)	(101)
Financing
Proceeds of fund raising	-	1,208
Expenses of fund raising for previous years	(71)	(77)
Repurchase of own shares	(163)	(205)
	(234)	926
Net inflow/(outflow) of cash for the year	7,784	(2,147)
Reconciliation of net cash flow to movement in net funds
Increase/(decrease) in cash for the year	7,784	(2,147)
Net cash at start of year	1,848	3,995
Net cash at end of year	9,632	1,848

Analysis of changes in net debt
	At 1 April 2014	Cash flow	At 31 March 2015
	£'000	£'000	£'000
Cash and cash equivalents	1,848	7,784	9,632

Notes to the accounts

1.     The audited Annual Financial Report has been prepared on the basis of accounting policies set out in the statutory accounts of the Company for the year ended 31 March 2015.  All investments held by the Company are classified as 'fair value through the profit and loss'. Unquoted investments have been valued in accordance with IPEVC guidelines. Quoted investments are stated at bid prices in accordance with the IPEVC guidelines and Generally Accepted Accounting Practice.

2.    These are not statutory accounts in accordance with S436 of the Companies Act 2006. The full audited accounts for the year ended 31 March 2015, which were unmodified and did not contain any statements under S498(2) of Companies Act 2006 or S498(3) of Companies Act 2006, will be lodged with the Registrar of Companies. Statutory accounts for the year ended 31 March 2015, including an unmodified audit report and containing no statements under the Companies Act 2006, will be delivered to the Registrar of Companies in due course.  

 

 

3.    Copies of the Annual Report will be sent to shareholders and will be available for inspection at the Registered Office of the Company at The Shard, 32 London Bridge Street, London, SE1 9SG and can be accessed on the following website: www.foresightgroup.eu

 

 

4.    Net asset value per share

 

Net asset value per Ordinary Share is based on net assets at the year end of £32,139,000 (2014: £33,456,000) and on 38,284,414 (2014: 38,569,414) Ordinary Shares, being the number of Ordinary Shares in issue at that date.

Net asset value per C Share is based on net assets at the year end of £20,704,898 (2014: £12,349,000) and on 18,680,907 (2014: 18,680,907) C Shares, being the number of C Shares in issue at that date.

 

 

5.    Return per share

	Year ended   31 March 2015		Year ended   31 March 2014
	Ordinary Shares	C Shares	Ordinary Shares	C Shares
	£'000	£'000	£'000	£'000
Total return/(loss) after taxation	(1,091)	8,363	1,402	(5,759)
Total return/(loss) per share (note a)	(2.8)p	44.8p	3.6p	(30.8)p
Revenue return/(loss) from ordinary activities after taxation	149	235	136	(34)
Revenue return/(loss) per share (note b)	0.4p	1.3p	0.3p	(0.2)p
Capital return/(loss) from ordinary activities after taxation	(1,240)	8,128	1,266	(5,725)
Capital return/(loss) per share (note c)	(3.2)p	43.5p	3.3p	(30.6)p
Weighted average number of shares in issue in the period	38,445,770	18,680,907	38,590,648	18,687,245

Notes:

a) Total return/(loss) per share is total return after taxation divided by the weighted average number of shares in issue during the year.

b) Revenue return/(loss) per share is revenue return after taxation divided by the weighted average number of shares in issue during the year.

c) Capital return/(loss) per share is capital return after taxation divided by the weighted average number of shares in issue during the year.

 

 

6.    The Annual General Meeting will be held at 11.00am on 2 October 2015 at the offices of Shakespeare Martineau LLP, One America Square, Crosswall, London EC3N 2SG.

7.    Income

		Year ended 31 March	Year ended  31 March
		2015	2014
		£'000	£'000
Loan stock interest		993	822
Dividends receivable		150	-
Overseas based Open Ended Investment Companies ("OEICS")		4	2
Bank deposits		-	2
		1,147	826

8.    Investments held at fair value through profit or loss

2015

2014

£'000

£'000

Quoted investments

289

212

Unquoted investments

37,934

41,203

38,223

41,415

	Quoted	Unquoted	Total
Company	£'000	£'000	£'000
Book cost as at 1 April 2014	893	43,757	44,650
Investment holding losses	(681)	(2,554)	(3,235)
Book cost as at 1 April 2014	212	41,203	41,415
Movements in the year:
Purchases at cost***	-	2,298	2,298
Disposal proceeds****	(17)	(12,985)	(13,002)
Realised losses*	(29)	(1,759)	(1,788)
Investment holding gains**	123	9,177	9,300
Valuation at 31 March 2015	289	37,934	38,223
Book cost at 31 March 2015	847	31,311	32,158
Investment holding (losses)/gains	(558)	6,623	6,065
Valuation at 31 March 2015	289	37,934	38,223
	Quoted	Unquoted	Total
Ordinary Shares	£'000	£'000	£'000
Book cost as at 1 April 2014	893	26,881	27,774
Investment holding (losses)/gains	(681)	4,531	3,850
Valuation at 1 April 2014	212	31,412	31,624
Movements in the year:
Purchases at cost***	-	1,109	1,109
Disposal proceeds****	(17)	(2,456)	(2,473)
Realised losses*	(29)	(1,060)	(1,089)
Investment holding gains**	123	178	301
Valuation at 31 March 2015	289	29,183	29,472
Book cost at 31 March 2015	847	24,474	25,321
Investment holding (losses)/gains	(558)	4,709	4,151
Valuation at 31 March 2015	289	29,183	29,472
* Deferred consideration of £87,000 was recognised by the Ordinary Shares fund in the year.   ** Investment holding gains in the income statement includes £3,000 of deferred consideration recognised in the year by the Ordinary Shares fund and £19,000 by the C Shares fund. *** Capitalised interest of £532,000 was recognised by the Ordinary Shares fund in the year and is included within purchases at cost.   **** Disposal proceeds in the cash flow statement contains £746,000 proceeds relating to a 2014 debtor; and does not include £6,000 rolled up interest for which cash was not received.
	Quoted	Unquoted	Total
C Shares	£'000	£'000	£'000
Book cost as at 1 April 2014	-	16,876	16,876
Investment holding losses	-	(7,085)	(7,085)
Valuation at 1 April 2014	-	9,791	9,791
Movements in the year:
Purchases at cost	-	1,189	1,189
Disposal proceeds	-	(10,529)	(10,529)
Realised gains	-	(699)	(699)
Investment holding gains	-	8,999	8,999
Valuation at 31 March 2015	-	8,751	8,751
Book cost at 31 March 2015	-	6,837	6,837
Investment holdinggains	-	1,914	1,914
Valuation at 31 March 2015	-	8,751	8,751
Deferred consideration of £19,000 was also recognised in the year by the C Shares fund through investment holding gains in the income statement.

9.    Transactions with the manager

Foresight Group, which acts as investment manager to the Company in respect of its investments earned fees of £1,059,000 during the year (2014: £1,162,000).

Foresight Fund Managers Limited, Company Secretary, received fees of £157,000 (2014: £155,000) during the year. The annual secretarial fee (which is payable together with any applicable VAT) is adjusted annually in line with the UK Retail Prices Index.

At the balance sheet date there was £20,000 (2014: £10,000 due from) due to Foresight Group and £40,000 (2014: £nil) due to Foresight Fund Managers Limited. No amounts have been written off in the year in respect of debts due to or from related parties.

END

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This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Foresight 4 VCT PLC via Globenewswire

HUG#1941487