Foresight VCT plc - Annual Financial Report

FORESIGHT VCT PLC

Final Results
31 December 2018

Foresight VCT plc, managed by Foresight Group CI Limited, today announces the final results for the year ended 31 December 2018.
These results were approved by the Board of Directors on 10 April 2019.
The Annual Report will shortly be available in full at www.foresightgroup.eu. All other statutory information can also be found there.

Highlights

• Total net assets £136.7 million.
• Net Asset Value per Ordinary Share increased by 3.9% from 80.0p at 31 December 2017 to 83.1p before dividends. After payment of a 5.0p dividend made on 4 May 2018, NAV per share at 31 December 2018 was 78.1p.
• The investment portfolio has seen an uplift in valuation of £6.8 million during the year.
• Seven new investments totalling £13.2 million and five follow-on investments totalling £4.5 million made during the year.
• The Company successfully exited ICA Group, Thermotech Solutions and CoGen realising a total of £3.4 million.
• The Board has declared an interim dividend relating to the year ended 31 December 2018 of 5.0p per share, to be paid on 3 May 2019.

Chairman’s Statement

I am pleased to present the Company’s Audited Annual Report and Accounts for the year ended 31 December 2018. In last year’s Annual Report, I provided shareholders with detailed information on the wind-down of both the Planned Exit and Infrastructure Share classes, which were removed in January 2018. As a consequence, the issued share capital now consists solely of Ordinary Shares.

STRATEGY
The Directors, together with the Manager, have been pursuing a long-term strategy for the Company which includes the following four key objectives:

 • Increasing and then maintaining the Company’s net asset value (NAV) significantly above £150 million;
 • Paying an annual dividend to shareholders of at least 5.0p per share and endeavouring to maintain, or increase, NAV per share year on year, after payment of dividends;
 • Completing a significant number of new and follow on qualifying investments every year; and
 • Offering a programme of regular share buy backs at a discount of approximately 10% to the prevailing NAV.

The Directors and the Manager believe that these key objectives remain appropriate and the Company’s performance in relation to each of them over the past year is reviewed more fully below.

NET ASSET VALUE
During the year ended 31 December 2018 the NAV per share rose by 3.1p, an increase of 3.9%. However, following the payment of a 5.0p per share dividend on 4 May 2018, which came to a total of £8.7 million, including shares allotted under the dividend reinvestment scheme, the NAV of the Company decreased from £140.4m at 31 December 2017 to £136.7 million as at 31 December 2018. The Directors believe that it would be beneficial to increase the Company’s net assets over the coming years but with some £33.2 million of funds available for investment at the time of writing, it is not the Board’s present intention to seek new money by way of an offer for subscription.

DIVIDENDS
The interim dividend of 5.0p per share was paid on 4 May 2018 based on an ex-dividend date of 19 April 2018, with a record date of 20 April 2018. This is in line with the Board’s objective on dividend payments.

The Company has achieved or exceeded its target of paying an annual dividend of at least 5.0p per share for each of the past eight years.

If you had invested five years ago, your NAV total return per share would have increased by 14.0%. It is the combined achievement of dividend payments and the maintenance or increase in NAV per share which is now at the centre of the Company’s current and future portfolio management.

The Board has declared an interim dividend relating to the year ended 31 December 2018 of 5.0p per share, to be paid on 3 May 2019 based on an ex-dividend date of 11 April 2019, with a record date of 12 April 2019.

INVESTMENT PERFORMANCE AND PORTFOLIO ACTIVITY

A detailed analysis of the investment portfolio performance over the period is given in the Manager’s Review.

Before the payment of dividends, the Company’s NAV increased last year by £5.0 million. The Board believes that this reflects the benefit of the enlarged and diversified portfolio of qualifying investments which the Manager has built up over the past few years. The Company started the current year with nearly 72% of its available resources invested in a range of unquoted growth capital investments; the Board and Manager believe that, in aggregate, these investments will continue to mature and should help improve the future rate of growth in NAV.

During the year under review the Manager completed seven new investments amounting to £13.2 million and two new investments totalling £3.7 million have been made since the end of the year. Details of each of these new portfolio companies can be found in the Manager’s Review.

The Manager expects that the current pipeline of opportunities should support completion of a significantly increased number of new investments during the current year.

The complexity surrounding qualification for VCT investment inevitably limits the opportunity for the Company to make new investments and the Manager’s ongoing ability to source new deals is pivotal to the Company’s future performance. As a consequence, investments made under the new VCT rules will change the risk profile of the portfolio because the rules now incline us towards investments in earlier stage businesses.

The Board is aware that Foresight 4 VCT plc (‘Foresight 4’) has over the past two years raised a considerable amount of new money, much of which needs to be invested in the near future. The Company and Foresight 4 have the same Manager and share similar investment policies. The Board closely monitors the extent and nature of the pipeline of investment opportunities and is reassured by the Manager’s confidence in being able to increase the level of new investments without compromising quality during 2019 and beyond, so as to be in a position to satisfy the needs of both the Company and Foresight 4.

BUYBACKS
During the year the Company repurchased 2.6 million shares for cancellation at an average discount of 10.1%. The Board and the Manager consider that the ability to offer to buy back shares at a target discount of approximately 10% is fair to both continuing and selling shareholders and is an appropriate way to help underpin the discount to NAV at which the shares trade.

MANAGEMENT CHARGES, CO-INVESTMENT AND INCENTIVE ARRANGEMENTS
The annual management fee is an amount equal to 2.0% of net assets, excluding cash balances above £20 million, which are charged at a reduced rate of 1.0%. This has resulted in ongoing charges for the year ended 31 December 2018 being 2.1% of net assets, which is at the lower end of the range when compared to competitor VCTs.

Since March 2017, co-investments made by the Manager and individual members of Foresight Group’s private equity team have totalled £0.5 million alongside the Company’s investments of £32.4 million. Currently the ‘Total NAV Return Hurdle’, as detailed in note 14 to the accounts, has not been achieved and no performance incentive payment is due.

BOARD COMPOSITION
As announced in last year’s Annual Report, Peter Dicks, a founder member of the Board and a past chairman retired at the Annual General Meeting held in May 2018.

The Board continues regularly to review its own performance and undertakes succession planning to maintain an appropriate level of independence, experience, diversity and skills in order to be in a position to discharge all its responsibilities.

OUTLOOK
Economic uncertainty is, in general, not good for UK businesses and Brexit has and will continue to cause economic uncertainty for some time. Notwithstanding this, the Manager and the Directors are confident in the ability of the current portfolio companies to produce good returns.

The Board and the Manager believe that the value of investments currently held within the portfolio should grow further during the current year and that the pipeline of new investment opportunities will provide worthwhile new investments in the months ahead. In these circumstances the Board believes that the Company is well positioned to work towards meeting its key objectives and in particular to provide shareholders with regular dividends alongside maintained growth in NAV per share.

SHAREHOLDER COMMUNICATION
As part of its commitment to high quality investor relations, Foresight Group continues to host its popular investor forums. In addition to an annual event in London, several regional investor forums have been or will be held around the country. Details of regional events will be sent to shareholders resident in the locality as and when they are organised.

ANNUAL GENERAL MEETING
The Company’s Annual General Meeting will take place on 23 May 2019 at 1.00pm. I look forward to welcoming you to the meeting, which will be held at the offices of Foresight Group in London. Details can be found on page 70 of the accounts.

John Gregory

Chairman
Telephone: [phone]
Email: [e-mail]
10 April 2019

Manager’s Review

The Company has appointed Foresight Group CI Limited as its manager (“The Manager”) to provide investment management and administration services. Foresight Group CI Limited has appointed Foresight Group LLP to be its investment adviser. The Manager has also delegated secretarial, accounting and other administration services to Foresight Group LLP. References to “the Manager” throughout this report refer to the activities of Foresight Group CI Limited and include the activities of Foresight Group LLP when acting as the Manager’s investment adviser and administrative delegate.

Portfolio Summary
As at 31 December 2018 the Company’s portfolio comprised 33 actively managed investments with a total cost of £80.5 million and a valuation of £99.1 million. The portfolio is diversified by sector, transaction type and maturity profile. Details of the ten largest investments by valuation, including an update on their performance, are provided on pages 12 to 16 of the accounts.

NEW INVESTMENTS
The Company invested a total of £13.2 million in seven new portfolio companies during 2018: Luminet Networks, a provider of fixed wireless internet access, Mologic, a health diagnostics company, The Naked Deli, a Newcastle-based group of ‘clean eating’ restaurants, Codeplay, a software developer and consultancy specialising in Artificial Intelligence, Accrosoft, a software provider with a focus on HR and education, Fertility Focus, an ovulation monitoring company and most recently Spektrix, a performing arts software business. Post-year end, the Company completed a £1.3 million investment into sports management software company, ClubSpark and a £2.4 million investment into Steamforged Games, a developer and retailer of tabletop games.

LUMINET
In April, the Company committed £2.4 million to a Foresight Group-led £3.0 million development capital investment into Luminet Networks, an award-winning provider of connectivity and managed IT services to businesses. Founded in 2005, Luminet was one of the first companies to offer commercial wireless broadband solutions to businesses and has grown its client base to more than 550.

MOLOGIC
Also in April, the Company committed £2.4 million to a Foresight Group-led £4.0 million growth capital investment round in Bedford-based Mologic. The business is a Point of Care diagnostics company that provides contract research and manufacturing services, as well as developing proprietary diagnostics.

THE NAKED DELI
In May, the Company completed a £1.7 million growth capital investment in The Naked Deli, a Newcastle based group of ‘clean eating’ restaurants offering eat-in casual dining and grab-and-go options. Established in 2014, The Naked Deli serves a tasty range of healthy gluten and dairy-free, vegan and paleo dishes. The group uses unprocessed whole and natural state foods, with a clear pathway from origin to plate. Since investment, management have continued to extend the pipeline of new potential sites and in December 2018, opened a fifth site in Newcastle city centre.

CODEPLAY
In July, the Company invested £0.7 million in Codeplay, a software developer specialising in Artificial Intelligence. Building on its proven expertise in the fields of games and mobile phones, Codeplay has developed a new technology which supports the deployment of Artificial Intelligence applications into mass produced devices, with an initial focus on the automotive sector and, specifically, Advanced Driver Assistance Systems (“ADAS”) and autonomous vehicles.

ACCROSOFT
In August, the Company completed a new investment totalling £1.7 million in Accrosoft. Based in Loughborough, Accrosoft offers two Software as a Service (“SaaS”) products, Vacancy Filler, an Applicant Tracking System which improves the recruitment process for organisations and Weduc, an engagement tool to enable parent-teacher communication. The business will use the investment to drive continued growth across both products through new hires and initiatives.

FERTILITY FOCUS
In December, the Company invested £0.9 million in Fertility Focus, a leading fertility monitoring technology company that has developed OvuSense, a registered medical device that enables women to predict ovulation. Fertility Focus was established in 2005 to commercialise the intellectual property developed by a team from Bristol University that identified the ability to determine and predict ovulation. The growth capital investment will be primarily used to invest in sales and marketing and will also fund a clinical trial to further prove the benefits of OvuSense as a tool to diagnose ovulatory issues.

SPEKTRIX
Also in December, the Company invested £3.4 million in Spektrix, the UK’s leading provider of cloud-based ticketing, marketing and fundraising software for the arts sector. Founded in 2007, Spektrix was an early pioneer in bringing cloud technology to the arts. The investment will be used to accelerate product development and support Spektrix’s international expansion, particularly in North America where it is already working with nearly 100 arts organisations.

CLUBSPARK
Post-year end the Company made a £1.3 million investment into Sportlabs Technology Limited, trading as ClubSpark, a specialist software company providing sports management software to sports clubs, venues, coaches and participants. ClubSpark was founded in 2012 by two ex-Lawn Tennis Association employees who spotted an opportunity to develop a platform to manage operations for the LTA member clubs. The investment will be used to establish an international presence, enhance the platform and expand into new sports markets.

STEAMFORGED GAMES
In March 2019 the Company invested £2.4 million in Steamforged Games, a developer and retailer of tabletop games with a portfolio of miniature role playing, board and card games. Founded in 2014, Steamforged Games has successfully carved out a niche in the market developing tabletop games based on popular video game titles, as well as their own original content. The investment will be used to fund growth through product development and international expansion.

FOLLOW ON INVESTMENTS
Follow-on investments totalling £4.5 million were also made in five existing portfolio companies throughout the year. Further details of each of these are provided below.

OLLIE QUINN
Portfolio company Ollie Quinn, a branded retailer of prescription glasses and sunglasses which the Company first committed to in March 2017, received four follow-on funding rounds from the Company throughout 2018, totalling £2.7 million. This supported Ollie Quinn’s working capital needs and site optimisation strategy, which focuses on increasing the footprint in Canada. Management restructured towards the end of 2018 putting the business in a stronger position to improve overall site performance and develop its product range across the stores.

IDIO
During the year the Company made a £0.1 million follow-on investment in data analysis software platform, Idio, as part of a larger funding round. This additional investment enabled Idio to invest in new technologies and provided support for further growth.

BIOFORTUNA
In August, molecular diagnostics business, Biofortuna, drew down the second tranche of the 2017 round of investment, with the Company providing £0.2 million of capital. This investment round was focused on supporting the growth of a differentiated contract services business, under new management, and maximising value from the potential product collaboration with a global diagnostics company.

200 DEGREES
Also in August, the Company provided 200 Degrees, an artisan coffee chain headquartered in Nottingham, with c. £0.5 million of capital. This was the second tranche of committed capital from the original investment, approved in November 2017. This additional investment will support the targeted retail store expansion in the UK and associated growth in the company’s B2B wholesale and B2C subscription offerings. Since investment, the business has opened two new stores with a pipeline of new sites to come.

ONLINE POUNDSHOP
In September, the Company made a follow-on investment of £0.9 million into Online Poundshop. This funding followed a management restructuring in May and enabled Online Poundshop to continue to fund growth, increase its product lines and stock and make several key hires with a stronger team in place.

PIPELINE
Foresight Group continues to see a strong pipeline of potential investments and has started the year with a number of opportunities under exclusivity or in due diligence. Our investment team currently consists of 24 experienced private equity professionals operating from five offices in the UK, due to be expanded to six in 2019. During 2018 we reviewed nearly 1,500 business plans of potential investee companies, with an increasing number of prospects originated directly by our investment team, which will continue to be at the core of our investment sourcing strategy. The Company focuses on SME’s in all sectors across the UK, seeking funding of £1-5 million. At the time of writing, the Company has cash balances of £33.2 million, which will be used to fund new and follow-on investments, buybacks and running expenses.

EXITSANDREALISATIONS
During the year, total proceeds of £3.4 million were generated from the disposal of three investments.

ICA GROUP
In February, ICA, which provides document management solutions to businesses in London and the South East, was acquired by Automated Systems Ltd, a large independent print solution business. ICA became part of the Company’s portfolio through the merger with Foresight 2 VCT plc in December 2015, at a holding value of £0.9 million following an original investment of £1 million made in 2009. Overall, including returns pre-merger, the ICA investment generated a 2.4x return.

THERMOTECH
In May, the Company completed the successful sale of facilities management provider Thermotech to Servest Group, a global facilities management group headquartered in South Africa, generating a return of 2.3x original investment of £1.5 million. Thermotech, in which the Company invested in August 2013, provides customised air conditioning and fire sprinkler systems for retail, commercial and residential properties, with clients including M&S, John Lewis and Selfridges & Co. Under the Company’s ownership Thermotech was able to expand its high-quality customer base and develop further recurring maintenance revenue streams, as well as complete a strategic acquisition.

COGEN
In December, the Company disposed of CoGen, a developer of Waste to Energy plants in the UK. CoGen, largely financed to date by loans from other shareholders, carries significant costs and overheads as plants are developed and built and had been operating at a loss. Further funding would have been required from other shareholders to continue to develop the pipeline of new opportunities. In these circumstances, to avoid further dilution, the investment was realised. The Company received £0.2 million for its holding against a cost of £1.6 million.

Foresight Group continues to engage with a range of potential acquirers of several portfolio companies, with demand for the high growth businesses demonstrated by both private equity and trade buyers.

DISPOSALS IN THE YEAR ENDED 31 DECEMBER 2018

Company	Detail		Original Cost/ Take-On Value (£)	Proceeds (£)	Realised (Loss)/Gain (£)	Valuation at 31 December 2017 (£)
CoGen Limited	Full disposal		1,603,491	199,832	(1,403,659)	550,734
ICA Group Limited	Full disposal		885,232	1,200,088*	314,856	1,290,701
Thermotech Solutions Limited	Full disposal		300,000	1,980,206^	1,680,206	1,915,331
Total disposals			2,788,723	3,380,126	591,403	3,756,766

*In addition £158,411 of shareholder loan interest was received on completion and £1,029,671 had been received by Foresight 2 VCT plc pre-merger.
^£1,452,828 had also been received by way of interest and loan payments in prior years.

Deferred consideration of £257,846 was also received by the Company from the sale of Simulity Labs and £51,547 from the sale of O-Gen Acme Trek.

Final administration proceeds totalling £20,320 were received in relation to the liquidation of Evance Wind Turbines, Closed Loop Recycling and Global Immersion.

KEY PORTFOLIO DEVELOPMENTS

Overall, the value of investments held rose to £99.1 million, driven by a deployment of £17.7 million and an increase in value of the portfolio by £6.8 million including realisations. Material changes in valuation, defined as increasing or decreasing by £1 million or more since 31 December 2017, are detailed below.

Company	Valuation Methodology	Valuation Change (£)
Itad Limited	Discounted earnings multiple	1,362,619
Fresh Relevance Limited	Discounted revenue multiple	1,281,686
Dhalia Limited	Net assets	1,251,150
TFC Europe Limited	Discounted earnings multiple	1,246,184
Specac International Limited	Discounted earnings multiple	1,212,768
FFX Group Limited	Discounted earnings multiple	1,037,397
Powerlinks Media Limited	Discounted revenue multiple	(1,168,336)

OUTLOOK

Whilst UK inflation fell to a two-year low, the jobs market remained robust as the UK reached record levels of employment. The demand for labour continued to bolster wage growth, as real wages climbed at their strongest pace since 2016. However, the backdrop of Brexit means that consumer and business confidence is weakening in the UK amid ongoing uncertainty over the UK’s future trading position with Europe, and indeed the rest of the world.

At the time of writing, parliament had yet to reach a consensus on how the UK’s departure from the EU is to be realised. Although the majority of MPs oppose a ‘hard Brexit’ this remains a near-term possibility, as does the Government’s proposed deal. However, the lack of progress towards an agreed Brexit route is increasing the likelihood of a general election and a further delay to Brexit, thereby prolonging and exacerbating the current uncertainty. We will therefore continue to support portfolio management teams in planning for a variety of Brexit scenarios. Whilst the direct impact of a ‘hard’ or ‘soft’ Brexit would vary across the portfolio, some potentially heavily impacted, some potentially benefitting, a wider recession would inevitably cause broader issues and there is likely to be a period of volatility ahead.

Nonetheless, we remain positive about the prospects for the existing portfolio and continues to see encouraging levels of activity from smaller UK companies seeking growth capital, as well as from potential acquirers of portfolio companies. We remain focused on targeting companies in markets with sound fundamentals, with attractive growth attributes and strong management teams. We will continue to monitor and adapt to market and regulatory changes to ensure the Company’s portfolio is well-placed to deliver returns to its investors.

Russell Healey

Head of Private Equity
Foresight Group
10 April 2019

Audited Income Statement
for the year ended 31 December 2018

	Year ended 31 December 2018   Revenue  Capital   £’000  £’000		Total £’000	Year ended 31 December 2017^   Revenue  Capital   £’000  £’000		Total £’000
Realised gains on investments	—	921	921	—	12,550	12,550
Investment holding gains	—	5,916	5,916	—	4,107	4,107
Income	1,398	—	1,398	1,570	—	1,570
Investment management fees	(595)	(1,784)	(2,379)	(729)	(3,051)*	(3,780)
Other expenses	(472)	—	(472)	(1,199)	—	(1,199)
Return/ (loss) on ordinary activities	331	5,053	5,384	(358)	13,606	13,248
Taxation	(34)	34	—	—	—	—
Return/ (loss) on ordinary activities after taxation	297	5,087	5,385	(358)	13,606	13,248
Return/ (loss) per share:
Ordinary Share	0.2p	2.9p	3.1p	(0.3)p	6.0p	5.7p
Planned Exit Share	—	—	—	(0.4)p	0.3p	(0.1)p
Infrastructure Share	—	—	—	0.8p	10.9p	11.7p

^Comparative includes Planned Exit Shares Fund and Infrastructure Shares Fund.
*Includes £863,000 performance incentive fee relating to the Infrastructure Shares Fund.

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 comprehensive income has been presented.

Audited Reconciliation of Movements in Shareholders’ Funds

Year ended 31 December 2018	Called-up share capital £’000	Share premium account £’000	Capital redemption reserve £’000	Distributable reserve £’000	Capital reserve £’000	Revaluation reserve £’000	Total £’000
As at 1 January 2018	2,194	97,687	455	23,169	4,251	12,673	140,429
Share issues in the year*	22	1,523	—	—	—	—	1,545
Removal of shares	(439)	—	439	—	—	—	—
Expenses in relation to share issues**	—	(95)	—	—	—	—	(95)
Repurchase of shares	(26)	—	26	(1,817)	—	—	(1,817)
Realised gains on disposal of investments	—	—	—	—	921	—	921
Investment holding gains	—	—	—	—	—	5,916	5,916
Dividends paid	—	—	—	(8,720)	—	—	(8,720)
Management fees charged to capital	—	—	—	—	(1,784)	—	(1,784)
Tax credited to capital	—	—	—	—	34	—	34
Revenue return for the year	—	—	—	297	—-	—	297
As at 31 December 2018	1,751	99,115	920	12,929	3,422	18,589	136,726
*Relating to the dividend reinvestment scheme. **Expenses in relation to share issues relate to trail commission for prior years fund raising.   Total distributable reserves at 31 December 2018 total £16,351,000 (2017: £27,420,000).
Year ended 31 December 2017^	Called-up share capital £’000	Share premium account £’000	Capital redemption reserve £’000	Distributable reserve £’000	Capital reserve £’000	Revaluation reserve £’000	Total £’000
As at 1 January 2017	1,718	112,541	435	18,543	(5,248)	8,566	136,555
Share issues in the year	496	42,110	—	—	—	—	42,606
Expenses in relation to share issues*	—	(1,759)	—	(95)	—	—	(1,854)
Repurchase of shares	(20)	—	20	(1,476)	—	—	(1,476)
Cancellation of share premium	—	(55,205)	—	55,205	—	—	—
Realised gains on disposal of investments	—	—	—	—	12,550	—	12,550
Investment holding gains	—	—	—	—	—	4,107	4,107
Dividends paid	—	—	—	(48,650)	—	—	(48,650)
Management fees charged to capital	—	—	—	—	(3,051)	—	(3,051)
Revenue loss for the year	—	—	—	(358)	—	—	(358)
As at 31 December 2017	2,194	97,687	455	23,169	4,251	12,673	140,429

^Comparative includes Planned Exit Shares Fund and Infrastructures Share Fund.
*Expenses in relation to share issues include advisor fees (£686,000) and promoters fees (£958,000) for the 2017 Ordinary Shares Fund raise and trail commission for prior years fund raising (£115,000).

Audited Balance Sheet

at 31 December 2018

Registered Number: 03421340   As at                               As at   31 December                   31 December   2018                               2017   £’000                               £’000
Fixed assets
Investments held at fair value through profit or loss	99,065	77,963
Current assets
Debtors	542	887
Money market securities and other deposits	34,723	60,482
Cash	2,696	1,517
	37,961	62,886
Creditors
Amounts falling due within one year	(300)	(420)
Net current assets	37,661	62,466
Net assets	136,726	140,429
Capital and reserves
Called-up share capital	1,751	2,194
Share premium account	99,115	97,687
Capital redemption reserve	920	455
Distributable reserve	12,929	23,169
Capital reserve	3,422	4,251
Revaluation reserve	18,589	12,673
Equity Shareholders’ funds	136,726	140,429
Net asset value per share:
Ordinary Share	78.1p	80.0p

The financial statements were approved by the Board of Directors and authorised for issue on 10 April 2019 and were signed on its behalf by:

John Gregory
Chairman

Audited Cash Flow Statement
for the year ended 31 December 2018

Year                     Year   ended                   ended   31 December       31 December   2018                   2017^   £’000                   £’000
Cash flow from operating activities
Investment income received	1,180	2,457
Deposit and similar interest received	258	113
Investment management fees paid	(2,379)	(3,797)
Secretarial fees paid	(115)	(113)
Other cash payments	(495)	(902)
Net cash outflow from operating activities	(1,551)	(2,242)
Cash flow from investing activities
Purchase of investments	(17,705)	(17,869)
Net proceeds on sale of investments	3,380	48,394
Net proceeds on deferred consideration	310	561
Net proceeds on liquidation of investments	20	—
Net cash (outflow)/ inflow from investing activities	(13,995)	31,086
Cash flow from financing activities
Proceeds of fund raising	—	39,384
Expenses of fund raising	(95)	(1,247)
Repurchase of own shares	(1,763)	(1,336)
Equity dividends paid	(7,176)	(45,983)
Movement in money market funds	25,759	(29,506)
Net cash inflow/(outflow) from financing activities	16,725	(38,688)
Net inflow/(outflow) of cash in the year	1,179	(9,844)
Reconciliation of net cash flow to movement in net funds
Increase/(decrease) in cash and cash equivalents for the year	1,179	(9,844)
Net cash and cash equivalents at start of year	1,517	11,361
Net cash and cash equivalents at end of year	2,696	1,517

^Comparative includes Planned Exit Shares Fund and Infrastructure Shares Fund.

Analysis of changes in net debt	At 1 January 2018	Cashflow	At 31 December 2018
	£'000	£'000	£'000
Cash and cash equivalents	1,517	1,179	2,696

Notes

1.     These are not statutory accounts in accordance with S436 of the Companies Act 2006. The full audited accounts for the year ended 31 December 2018, which were unqualified and did not contain statements under S498(2) of the Companies Act 2006 or S498(3) of the Companies Act 2006, will be lodged with the Registrar of Companies. Statutory accounts for the year ended 31 December 2018 including an unqualified audit report and containing no statements under the Companies Act 2006 will be delivered to the Registrar of Companies in due course. 

2.    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 December 2018.  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.

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

The net asset value per share is based on net assets at the end of the year and on the number of shares in issue at that date.

	31 December 2018	31 December 2017
	Ordinary	Ordinary	Planned	Infrastructure
	Shares	Shares	Exit Shares	Shares
	Fund	Fund	Fund	Fund
Net assets	£136,726,000	£140,429,000	£nil	£nil
No. of shares at year end	175,051,026	175,601,977	11,404,314	32,495,246
Net asset value per share	78.1p	80.0p	0.0p	0.0p

5.    Return per share

	Year ended 31 December 2018	Year ended 31 December 2017
	Ordinary Share	Ordinary Share	Planned Exit Share	Infrastructure Share
	£'000	£'000	£'000	£'000
Total return after taxation	5,384	9,452	(9)	3,805
Total return per share (note a)	3.1p	5.7p	(0.1)p	11.7p
Revenue return from ordinary activities after taxation	297	(561)	(45)	248
Revenue return per share (note b)	0.2p	(0.3)p	(0.4)p	0.8p
Capital return from ordinary shares after taxation	5,087	10,013	36	3,557
Capital return per share (note c)	2.9p	6.0p	0.3p	10.9p
Weighted average number of shares in issue in the year	175,834,593	165,748,167	11,404,314	32,495,246

Notes:
a) Total return per share is total return after taxation divided by the weighted average number of shares in issue during the year.
b) Revenue return per share is revenue return after taxation divided by the weighted average number of shares in issue during the year.
c) Capital return per share is capital return after taxation divided by the weighted average number of shares in issue during the year.

6.    Annual General Meeting

The Annual General Meeting will be held at 1.00pm on 23 May 2019 at the offices of Foresight Group LLP, The Shard, 32 London Bridge Street, London, SE1 9SG.

7.    Income

Year ended           Year ended   31 December       31 December   2018                   2017^   £’000                     £’000
Loan stock interest	985	820
Dividends receivable	155	637
Overseas based Open Ended Investments Companies (“OEICs”)	241	113
Bank interest received	17	-
	1,398	1,570

^Comparative includes Planned Exit Shares Fund and Infrastructure Shares Fund

8.    Investments

		2018 £’000	2017 £’000
Unquoted investments		99,065	77,963
		99,065	77,963

	Total
	£’000
Book cost as at 1 January 2018	65,611
Investment holding gains	12,352
Valuation at 1 January 2018	77,963
Movements in the year:
Purchases at cost	17,705
Disposal proceeds	(3,380)
Realised gains*	591
Investment holding gains**	6,186
Valuation at 31 December 2018	99,065
Book cost at 31 December 2018	80,527
Investment holding gains	18,538
Valuation at 31 December 2018	99,065

*Realised gains in the income statement include deferred consideration received of £258,000 (Simulity) and £52,000 (O-Gen Acme Trek) as well as final administration proceeds of £10,000 (Evance Wind Turbines), £7,000 (Closed Loop Recycling) and £3,000 (Global Immersion) received in the year.

** Investment holding gains in the income statement have been reduced by the offset in the deferred consideration debtor of £258,000 (Simulity) and £19,000 (O-Gen Acme Trek) and have been increased by an adjustment to the deferred consideration debtor for Trilogy of £7,000.

9.    Related party transactions

No Director has an interest in any contract to which the Company is a party other than their appointment as directors.

10.  Transactions with the manager

Foresight Group CI Limited acts as manager of the Company. During the year, services of a total cost of £2,379,000 (2017: £3,780,000 including an £863,000 performance incentive fee in relation to the Infrastructure Shares Fund) were purchased by the Company from Foresight Group CI Limited. At 31 December 2018, the amount due to Foresight Group CI Limited was £nil (2017: £nil).

During the year, services of a total cost of £117,000 (2017: £113,000) were indirectly delivered to the Company by Foresight Group LLP. At 31 December 2018, the amount due to Foresight Group LLP was £2,000 (2017: £nil).

No amounts have been written off in the year in respect of debts due to or from the Manager.

END