Interim Results

Foresight 4 VCT PLC
29 October 2004


To: RNS
Date: 29 October 2004
From: Foresight 4 VCT plc

Interim Results for the six months to 31 August 2004

Investment Objective

The objective of Foresight 4 VCT plc (formerly Advent 2 VCT plc) is to provide
investors with an attractive return, principally by maximising the stream of
dividend distributions from the income and capital gains generated by a
portfolio of investments mainly in established unquoted companies in the United
Kingdom.
                    
Summary

• The Company invested £310,673 in follow on funding rounds in five portfolio
  companies, namely Advanced Visual Technology (£50,000), EnSeal Systems
  (£100,018), Internet Pro Video (IPV) (£42,222), Nomad Software (£100,000) and
  Reqio (£18,433).
• A prudent basis of valuation and continuing difficult market conditions for
  some portfolio companies have contributed to provisions of £5.96m being made
  against the previous valuations of twelve investments.
• During the six-month period, upward revaluations were made to three
  investments totalling £1.13m as a result of improved trading performance or 
  exit prospects.
• A number of portfolio companies now have stronger sales pipelines and order
  books, reflecting increased customer demand.
• Preliminary approaches have been received from possible purchasers or merger
  partners for certain portfolio companies, a number of which are being pursued
  and which could lead to exits being achieved in due course.
• A final dividend is not being recommended.
• The Company continues to exceed the 70% requirement for investment in
  qualifying holdings set by the Inland Revenue.

The Chairman, Roger Brooke, stated:

Change of Manager, Name and Directors

On 30 June 2004, I wrote to you explaining and seeking shareholders' approval to
a proposed change of the manager of the Company and a change of name. At the
Extraordinary General Meeting held on 26 July, shareholders approved these
changes. On 30 July, VCF Partners took over the management of the Company from
Advent Fund Managers Limited, the name of the Company was subsequently changed
from Advent 2 VCT plc to Foresight 4 VCT plc, the resolution for continuation as
a VCT was deferred for five years and a new carried interest scheme was
introduced for VCF. Sir Peter Williams and Sir David Cooksey then resigned as
directors while Philip Stephens and I agreed to remain as a Director and
Chairman respectively. Following the election of Bernard Fairman and Peter
Dicks, I now welcome both of them to the Board. Bernard is one of the two
founder partners of VCF Partners, which was established twenty years ago to
invest in the technology sector. VCF has a well established reputation as a
successful manager in the technology sector, having launched and managed
Foresight Technology VCT plc, the most successful VCT since launch in 1997.
Peter was a founder director in 1973 of Abingworth PLC, a successful venture
capital company, and is a director of a number of listed and unquoted companies;
he is also Chairman of Foresight Technology VCT plc and Unicorn AIM VCT plc. I
am confident that VCF will help to improve the prospects for the portfolio and
increase the likelihood of generating positive returns for shareholders. VCF has
plans to raise further funds for the Company and is being proactive in arranging
banking finance. VCF is currently developing its strategy to maximise returns
from each portfolio company.

Introduction

I indicated in my last annual statement in April that our portfolio companies
were experiencing improving market conditions and that there were clear signs
that the recovery was building further. A number of portfolio companies have
benefited from these conditions but others have still found trading conditions
difficult. A detailed review of portfolio valuations by VCF as at 31 August 2004
has comtributed to a number of changes to previous valuations - both upwards and
downwards - with the overall effect of substantially reducing the net asset
value of the Company from 44.3p per share as at 29 February 2004 to 30.4p per
share as at 31 August 2004.

Investment Activity

During this six month period, £310,673 was invested in follow-on funding rounds
in five portfolio companies, namely Advanced Visual Technology (£50,000), EnSeal
Systems (£100,018), IPV (£42,222), Nomad Software (£100,000) and Reqio (£18,433)
and no new investments were made. A prudent basis of valuation and continuing
difficult market conditions have contributed to provisions of £5.96m being made
against the previous valuations of twelve investments. These included provisions
of £474,000 against the investment in Adeptra which is making slower progress
than originally expected; £774,000 against the investment in IPV reflecting its
failure to complete a proposed refinancing; £727,000 against the investment in
PrismTech reflecting the news of a proposed refinancing; and £811,000 against
the investment in Reqio which continues to experience very difficult trading
conditions. However, improved trading and exit prospects enabled upward
revaluations to be made to the investments in Healthgain Solutions, Snell &
Wilcox and DNA Research Innovations, totalling £1.13m.

The prospects of several portfolio companies continue to improve gradually.
Footfall, INCA Digital Printers, The Casella Group and Healthgain Solutions have
all produced good trading performances. However, whilst EnSeal Systems and
Elam-T Ltd have achieved key milestones for their technologies and are
progressing to commercialisation, this is likely to take considerable further
time.

On 28 October 2004, the investment in DNA Research Innovations Limited was
successfully realised when the company, which has developed and patented its own
DNA purification/extraction technology, was acquired by Invitrogen Corporation
of the USA - one of the largest life science technology groups in the World.
This realised £1.4m in cash at completion while a further £1.4m may be realised
if certain technical milestones are achieved. This would then represent a return
of nearly three times the original cost of investment of £1m. The proceeds from
this realisation have reduced the Company's bank borrowing requirements
appreciably.

The Company continues to exceed the 70% minimum requirement set by the Inland
Revenue for qualifying holdings, thereby maintaining Venture Capital Trust
status.

Balance Sheet

The net asset value per share as at 31 August 2004 was 30.4p compared with 44.3p
as at 29 February 2004.

Valuation Policy

Unquoted investments have been valued in accordance with guidelines issued by
the British Venture Capital Association (BVCA)except that listed securities are 
valued at mid market prices with no discount applied.

Dividend

The Company realised no gains and had a low level of income during the period.
The Board is therefore not recommending a dividend. Gross cumulative dividends
paid since the inception of the Company amount to 21.8p per share.

Purchase of Own Shares

It continues to be the Company's policy to consider repurchasing shares when
they become available in order to provide liquidity for the Company's shares and
it is hoped that this may be possible in the medium term. However, the need to
maintain cash resources for follow on investments has not enabled the Company to
repurchase any shares during this six months period and the existence of a loan,
as referred to below, further compounded this situation.

Borrowing

In the last annual report, I highlighted the lack of cash available within the
Company. The Company has a borrowing facility with its bankers, of which some £1
million was drawn as at 31 August 2004. Following the realisation of the
investment in DNA Research Innovations Limited the Company intends to repay its
bank debt whilst maintaining access to ongoing borrowing facilities.

Outlook

A number of portfolio companies are benefiting from more stable economic
conditions after a long period of difficult trading, careful cost control and
cash preservation. Portfolio companies are now increasing their sales and
marketing efforts and ensuring they have sufficient resources to manage growing
order books and sales. I believe that a number of companies in the portfolio
have the potential to generate value provided that circumstances continue to
improve, particularly corporate spending on IT and services. Preliminary
approaches have been received from possible purchasers or merger partners for
certain companies in the portfolio, a number of which are being pursued and
these approaches could lead to exits being achieved in due course.

The Board is disappointed at the substantial further decline in the net asset
value of the Company but believes that this represents the application of robust
and prudent valuations in line with BVCA guidelines and that the recent
appointment of VCF, a VCT manager with a strong performance record, is an
important milestone in building and realising value from the portfolio.

29 October 2004
For further information please contact:
VCF Partners, Tel:[phone]
Teather and Greenwood, Tel: [phone]

Profit and Loss Account
for the six months to 31 August 2004

                                   6 Months to       Year to        6 Months to
                                     31 August   29 February          31 August
                                          2004          2004               2003
                                    (unaudited)     (audited)       ( unaudited)
                                         £'000         £'000              £'000

Investment income and
    deposit interest                        44           137                90
Investment management fees                 (81)         (309)             (177)
Other expenses                            (157)         (247)             (108)
                                    -----------      --------          --------

Operating loss                            (194)         (419)             (195)

Profit/(loss) on
realisation of
investments                                 25        (5,636)             (424)
                                    -----------      --------          --------

Loss on ordinary
activities
before taxation                           (169)       (6,055)             (619)

Tax on ordinary activities                    -             -                 -
                                    -----------      --------          --------

Loss on ordinary
activities after
taxation                                  (169)       (6,055)             (619)

Dividends                                     -             -                 -
                                    -----------      --------          --------

Balance
transferred from
reserves                                  (169)       (6,055)             (619)
                                    -----------      --------          --------

Earnings per
share                                     (0.5)p       (16.9)p            (1.7)p
                                    -----------      --------          --------

Statement of Total Recognised Gains and Losses
for the six months to 31 August 2004         

                                    6 Months to      Year to        6 Months to
                                      31 August  29 February          31 August
                                           2004         2004               2003
                                     (unaudited)    (audited)        (unaudited)
                                          £'000        £'000              £'000

Loss for the period                       (169)       (6,055)             (619)
Unrealised(losses)/gains
  on revaluation of investments         (4,828)        3,643            (1,415)
                                     ----------      --------          --------

Total recognised losses relating
  to the period                         (4,997)       (2,412)           (2,034)
                                     ----------      --------          --------

All items in the above statement derive from continuing operations. No 
operations were acquired or discontinued in the period.

The Company has only one class of business and derives its income from 
investments made in shares, securities and bank deposits. Income from 
investments is recognised on an accruals basis. In particular, income from gilts
and other fixed interest securities intended to be held to maturity is stated
after amortisation of a due proportion of the premium or discount to nominal 
value at which the security was purchased.


Balance Sheet
                                    As at              As at              As at
                                31 August        29 February          31 August
                                     2004               2004               2003
                               (unaudited)          (audited)        (unaudited)
                                    £'000              £'000              £'000
Fixed assets
  Venture capital investments
    Listed                            133                182                733
    Unquoted                       11,788             16,256             15,777
                                  -------              -----             ------
                                   11,921             16,438             16,510
Current assets
  Debtors                             376                438                162
  Money market and other deposits       -                  -                  3
  Cash                                271                350                156
                                  -------              -----             ------
                                      647                788                321
Creditors: amounts
falling due within one year        (1,676)            (1,337)              (564)
                                  -------              -----             ------

Net current
liabilities                        (1,029)              (549)              (243)
                                  -------              -----             ------
Net assets                         10,892             15,889             16,267
                                  -------              -----             ------

Capital and reserves
  Called up share capital           1,793              1,793              1,793
  Share premium account            23,581             23,581             23,581
  Capital redemption reserve            9                  9                  9
  Revaluation reserve             (10,893)            (6,065)           (11,123)
  Profit and loss account          (3,598)            (3,429)             2,007

Equity
shareholders'                     -------              -----             ------
funds                              10,892             15,889             16,267
                                  -------              -----             ------
Net asset value
per ordinary share                  30.4p              44.3p              45.4p
                                    -----              -----              -----


Summarised Statement of Cashflows

                              6 months to          Year to          6 months to
                                31 August      29 February            31 August
                                     2004             2004                 2003
                               (unaudited)        (audited)          (unaudited)
                                    £'000            £'000                £'000

Net cash (outflow)/inflow
    from operating activities       (161)             (24)                  117
Taxation                                -                -                    -
Net capital expenditure
    and financial investment        (286)            (432)                (350)
Equity dividends paid                   -                -                    -

Net cash outflow before
financing and liquid                ----             ----                 ----
resource management                 (447)            (456)                (233)

Management of liquid
resources
    Movement in money market
    and other deposits                  -                2                    -

Financing
    Short term borrowing              368              614                  199

(Decrease)/increase in               ----             ----                 ----
cash                                 (79)             160                  (34)
                                     ----             ----                 ----
Reconciliation of net cashflow
to movement in net funds
    (Decrease)/increase in
      cash                           (79)              160                 (34)
    Net funds at start of
      period                          350              190                  190
                                     ----             ----                 ----
Net funds at end of period            271              350                  156
                                     ----             ----                 ----

Reconciliation of operating loss to net
cashflow from operating activities

Operating loss                       (194)            (419)                (195)
Changes in working capital             33              395                  312
Net cash (outflow)/inflow            -----             ----                ----
from operating activities            (161)             (24)                 117
                                     -----             ----                ----

Notes to the Interim Results

1.  The unaudited interim results have been prepared on the basis of accounting
    policies set out in the statutory accounts of the Company for the year 
    ended 29 February 2004. Unquoted investments have been valued in accordance
    with BVCA guidelines. Quoted investments are stated at middlemarket prices
    in accordance with Generally Accepted Accounting Practice.

2.  These are not statutory accounts in accordance with section 240 of the
    Companies Act 1985 and are unaudited. The full audited accounts for the 
    year ended 29 February 2004, which were unqualified, have been lodged with
    the Registrar of Companies. No statutory accounts in respect of any period
    after 29 February 2004 have been reported on by the Company's auditors or 
    delivered to the Registrar of Companies.

3.  Copies of the interim report, which has been reviewed by the Company's 
    auditors, will be sent to shareholders and will be available for inspection 
    at the Registered Office of the Company at Swiss Life House, South Park,
    Sevenoaks, Kent TN13 1DU.

4.  Number of shares in issue 35,862,753 (2003: 35,862,753).

5.  Earnings for the first six months should not be taken as a guide to the 
    results for the full year.

6.  Movement in reserves

                      Called     Share      Capital  Revaluation Profit    Total
                          up   premium   redemption     reserve     and
                       share   account      reserve                loss
                     capital                                    account        
                       £'000     £'000        £'000       £'000   £'000    £'000

    As at 1 March      1,793    23,581            9     (6,065)  (3,429)  15,889
      2004
    Net decrease in                                                            
      the value of         -         -            -     (4,828)       -  (4,828)
      investments
    Retained loss          -         -            -          -     (169)   (169)
      for the period
                       -----    ------          ----    -------  -------  ------
    As at 31 August    1,793    23,581            9     (10,893) (3,598)  10,892
    2004               -----    ------          ----    -------  -------  ------

7.  Summary of investments during the period

                                               Quoted        Unquoted     Total
                                                £'000           £'000     £'000

    Book cost as at 1 March 2004                  475          22,028    22,503
    
    Unrealised depreciation                      (293)         (5,772)   (6,065)
                                                 -----         -------  --------
    Valuation at 1 March 2004                     182          16,256    16,438
    Movements in the year:
    Purchases at cost                               -             311       311
    
    Disposal proceeds                               -               -         -
    
             realised gains / (losses)              -               -         -
    
    Unrealised depreciation                       (49)         (4,779)   (4,828)
    
                                                 -----        -------    -------
    Valuation at 31 August 2004                   133          11,788    11,921
                                                 -----        -------    -------

    Book cost at 31 August 2004                   475          22,339    22,814
    
    Unrealised depreciation                     (342)        (10,551)  (10,893)
                                                 -----        -------   -------
    Valuation at 31 August 2004                   133          11,788    11,921
                                                 -----        -------   -------



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