Foresight 4 VCT PLC : Half-yearly report

FORESIGHT 4 VCT PLC

Summary

• Net asset value per Ordinary Share at 30 September 2016 was 72.6p (31 March 2016: 70.4p).
   
• The fund provided follow-on funding totalling £1.0 million to two portfolio companies.
   
• The fund realised £0.9 million from sales and loan redemptions from three portfolio companies.

Chairman's Statement

Board Composition
Following the Annual General Meeting, where a number of the resolutions, including that of Director re-election, were passed by a narrow majority the following changes will be made in the coming weeks and months:

With respect to my own position as Chairman and Director, I intend to retire from the Board on the earlier of a new independent Chairman being appointed, the completion of a corporate action or 31 March 2017.

Peter Dicks has also indicated his intention to retire from the Board on the earlier of a corporate action or the annual general meeting in 2017.

A specialist recruitment firm has been engaged by the Board to assist in identifying suitable candidates for appointment.

The intention would be to have only the independent Directors, including any new appointments to the Board, to consider the options available to the Company before any recommendations are made to Shareholders.

Performance
I am pleased to report a third successive quarter of growth in underlying net asset value representing an increase of 5.7% over the nine months and more specifically, for the six months under review to 30 September 2016, the net asset value per Ordinary Share increased by 3.1% to 72.6p from 70.4p at 31 March 2016.

Overall, the Board is pleased with the positive increase in net asset value during the six months under review and believes that the composition of the existing portfolio in the last twelve months will provide the new Board with the platform to deliver growth, underpin future dividends and enhance Shareholder returns. The seven most recent new investments had combined revenues of approximately £62.5m and EBITDA of approximately £8.5m at the time of acquisition and have continued to grow since.

The Company benefitted from good performances by several portfolio companies, principally Datapath, Protean, Specac, TFC and The Business Advisory, supporting an increase in their aggregate valuation of over £2.3 million. Reflecting weaker than expected trading, the valuations of Autologic, Blackstar and Positive Response were reduced by £468,000 in aggregate.

Although the six months under review saw little activity with respect to new or follow-on investments, this has been a wider trend within the VCT sector as both Boards and Investment Managers digested the new VCT regulations published in November 2015. Following the much delayed publication of HMRC's VCT Guidance Manual in May 2016, setting out the new regulations, the wider VCT industry has recently started to see an increase in the completion of new and follow-on deals. Foresight 4 VCT plc is unlikely, in the short term, to invest in any new deals until it has greater liquidity.

More detailed information on the investment portfolio is included within the Investment Manager's Report on page 5.

Dividends
It is 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 largely on successful realisations, refinancings and other forms of cash generation.

The recent success in generating cash from investments within the fund gives the Board confidence that it will be able at least to maintain the same level of dividend and increase future payments of dividends to Shareholders when prudent to do so.

Top-up Share Issues and Share Buy-backs
During the period under review there were no share buybacks or share issues.

Potential Merger with Foresight 3 VCT plc
In the annual report and accounts I mentioned that the Board had been considering whether a merger and the benefits therefrom would be in Shareholders' long term interests. As an update, the Board announced on 20 October 2016 that it had been in discussions with Foresight 3 VCT plc ('Foresight 3') regarding a potential merger and the principal details of a potential merger, should it proceed and be approved by Shareholders, are set out below:

• A combined VCT with assets of approximately £70 million;
• Based on the costs of the merger being in the region of £450,000, a payback period of approximately 12 months is expected;
• A reduction in the aggregate number of Board directors from six to four, possibly to three over time;
• A reduction in the annual management fee from 2.25% to 2.0% of net assets;
• A portfolio of over 25 companies, many of which are making good progress and are profitable and which have delivered the recent improvements in NAV in the Company;
• A reduction in the annual expenses cap from 3.5% to 2.95% of net assets;
• An enlarged entity better positioned to raise further funds and continue with the current investment strategy; and
• The ability to consider realisations within an enlarged entity to assist with creating liquidity events for Shareholders and support dividend payments.

A merger will create an enlarged VCT with enough critical mass which should generate sufficient income and realisations to meet an attractive dividend target, as well as maintaining a regular program of share buybacks aimed at maintaining a discount to NAV in the region of 10%.

It should be noted that a tri-partite merger between Foresight VCT plc, Foresight 3 and the Company would not be possible without the divestment of significant holdings including many of the new investments which, together, being over 50%, would otherwise be non-qualifying under the VCT rules.

The Board anticipates that the following would also be put in place for all Shareholders of the enlarged VCT, following the completion of a merger:
Tender Offer post-Merger
The Board recognises that the discount to NAV at which the Company's shares trade has been too wide for a prolonged period of time. In that regard, the Board anticipates that the enlarged VCT will undertake a tender offer as soon as possible after a merger.

Buyback Commitment post-Merger
In addition to the proposed tender offer referred to above, over time the Board also expects to be in a position following a merger to implement a series of share buybacks to enable the enlarged VCT to achieve its target of a discount to NAV in the region of 10%.

Dividend post-Merger
In addition to the tender offer and share buyback objective noted above, the Board also expects that the enlarged VCT would be in a position to pay a post-merger dividend.

With respect to a potential merger with Foresight 3, the Board wishes to seek Shareholders' views before incurring any significant merger costs and has enclosed with these interim accounts details of a simple online advisory vote open to all Shareholders, which will be carefully considered by the Board in addition to all other options.

Following the advisory vote a recommendation on the preferred option of the independent Directors of the Board will be sent to Shareholders for their consideration.

Brexit
There are two principal areas where the implementation of Brexit could impact the VCT:

• Investee Companies - there has been much debate on the possible impact on trade between Europe and the UK following the Brexit vote and how this will impact UK corporates. Although it is much too early to say how large or small the impact may ultimately be, we do not believe that the impact will be material in the short to medium term; and
• Regulation - many parts of the current VCT legislation has been cast from EU State Aid Directives. However, we do not believe that even following Brexit that changing VCT legislation will be a priority for the UK Government and therefore we do not expect any changes to the existing legislation in the short to medium term.

Shareholder Survey Results
Throughout the calendar year, indirectly through investor forums and directly through a survey, we solicited Shareholder views. We have used these results to help inform the key points we believe are important in the merger considerations. The results of the survey are presented on page 22.

Outlook
The recent result in the Presidential election in the US combined with the Brexit vote in the UK and the potential for this to have a knock-on effect in the political environment in other European countries will cause uncertainty in markets in which our portfolio companies operate but it will take time to gauge the full effect that this may have on the Company.

Currently the UK economy is in reasonable health and we hope that the improvement over the last few years continues, as has been reflected in the improving performance of the portfolio. Within the portfolio, there is an ongoing focus on performance and realisations, refinancings, dividends and loan repayments which underpin the Board's dividend commitment to Shareholders. It has also enabled several new investments to be made over the last 12 months or so, which are delivering robust performance and enhancing Shareholder returns.

Philip Stephens
Chairman
30 November 2016

Investment Manager's Report

During the six months to 30 September 2016, the Net Asset Value increased by 3.1% to 72.6 per share as at 30 September 2016 from 70.4p per Ordinary Share as at 31 March 2016.

The Company benefitted from good performances by several portfolio companies, principally Datapath, Protean, Specac, TFC and The Business Advisory, supporting an increase in their aggregate valuation of over £2.3 million. Reflecting weaker than expected trading, the valuations of Autologic, Blackstar and Positive Response were reduced by £468,000 in aggregate.

Outlook
The referendum on the United Kingdom leaving the European Union is not expected to have any immediate material effect to the overall portfolio. Any prolonged weakness in Sterling is likely to benefit those portfolio companies with a high proportion of exports.
Foresight Group continues to see a number of high quality private equity investment opportunities. Foresight Group believes that, with the UK and US economies slowly recovering, investing in growing, well managed private companies should, based on past experience, generate attractive returns over the longer term. Based on its current deal flow, Foresight Group believes that attractive deals are currently available and a number are currently in exclusivity.

Portfolio review

1. New investments

No new investments were made during the period to 30 September 2016.

2. Follow-on funding

Company	£
Biofortuna Limited	189,000
Iphigenie Limited	800,000
Total	989,000

In July 2016, the second, final tranche of £189,000 into Biofortuna Limited was drawn down as part of a £1.6 million funding round alongside other Foresight VCTs and other co-investors, to finance continuing new product development. £800,000 was also invested into Iphigenie Limited.

3.Exits and realisations

Company	£
Amberfin Holdings Limited	723
Thermotech Solutions Limited	800,000
Trilogy Communications Limited	138,382
Zoo Digital Group plc	1,511
Total	940,616

On 4 August 2016 deferred consideration of £723 was received from Amberfin Holdings Limited.

On 1 July 2016 Thermotech Solutions Limited repaid loans of £800,000. On 4 August 2016 the Company sold its investment in Trilogy Communications Limited realising £138,382.

During the period the Company sold a small number of shares in AiM listed Zoo Digital, realising £1,511.

4. Material provisions to a level below cost in the period

Company	£
Quantel Holdings (2010) Limited	167,549
Total	167,549

Portfolio Company Highlights

In September 2015, as part of a £4.2 million round alongside other Foresight VCTs, the Company invested £1.0 million in ABL Investments Limited ("ABL") to support further growth. ABL, based in Wellingborough, Northants and with a manufacturing subsidiary in Serbia, manufactures and distributes office power supplies and distributes monitor arms, cable tidies and CPU holders to office equipment manufacturers and distributors across the UK. Founded in 2003, ABL has grown strongly over the last five years, achieving an EBITDA of £1.9 million on sales of £5.5 million in its financial year to 31 August 2015, reflecting a strong focus on customer service, speed of delivery and value for money. Trading in the current year is in line with budget. Good progress has been made in shaping the new team following the appointment of a new Chairman and Finance Director in September 2015.

Production facilities have largely been brought in house, enabling the Serbian operations to expand its production offering. The company has relaunched its website to include a greater level of functionality and product detail which will be supported by a new marketing campaign to existing and potential customers.

In June 2013, the Company invested £1.5 million alongside other Foresight VCTs in a £3.5 million investment in Dundee-based Aerospace Tooling Holdings ("ATL"). ATL provides repair, refurbishment and remanufacturing services to large international companies for components in high-specification aerospace and turbine engines. With a heavy focus on quality assurance, the company enjoys well established relationships with companies serving the aerospace, military, marine and industrial markets. In the year to 30 June 2014, a number of large orders underpinned exceptional growth, with turnover doubling and EBITDA profits increasing significantly to a record £4.3 million.

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. Having received full repayment of its loan of £450,000 and dividends of £50,000 equal to the cost of its equity investment, the Company retained its original 7.7% equity shareholding in the company, effectively at nil cost.

Although sales and profitability were expected to be lower in the year to 30 June 2015, the actual trading results were weaker than budgeted, an EBITDA of £2.5 million being achieved on sales of £8.1 million, reflecting weak trading in the final quarter of the year due to a premature reduction of work under a major defence contract. This was subsequently followed by a significant reduction in work for an important customer in the Oil and Gas industries, as a consequence of the falling oil price. With poor order visibility, costs were reduced, management changes made and sales efforts increased substantially.

In the financial year ended 30 June 2016, the company recorded significantly lower sales and incurred EBITDA losses. In the last quarter, sales were in line with the revised budget for the year and EBITDA losses were slightly reduced reflecting an improvement in trading.

The company has since made good progress in the three months to September 2016, generating a modest EBITDA profit. The recently appointed CEO is having a positive impact on ATL with a key focus on sales growth with the team also making progress in diversifying the customer base.

In April 2014, the two Foresight portfolio companies, AlwaysOn Group and Data Continuity Group (together now known as AlwaysOn Group), merged and implemented a major reorganisation, involving significant cost reductions and a subsequent change in the year end to June 2015. The merged business now provides data backup services, connectivity and Microsoft's Skype for Business (formerly known as Lync) collaboration software (AlwaysOn being a Microsoft Gold partner) to SMEs and larger enterprises. For the financial year to 30 June 2016 a small EBITDA loss was incurred on reduced sales of £5.5 million (compared to an EBITDA of £53,000 on sales of £8.0 million in the prior year). Whilst revenues were behind budget, improved operational efficiency and higher margin mix resulted in a lower budgeted EBITDA loss over the financial year. In the current year, trading continues at a similar level, with small losses being incurred.

Following the £48.0 million secondary buy-out of Autologic Diagnostics Group, an automotive diagnostics software company, by Living Bridge (formerly ISIS Private Equity) in January 2012, the Company retained investments in equity and loan stock valued at £2.0 million. For the year to 31 December 2014, an EBITDA of £5.4 million was achieved on sales of £19.7 million, with relatively stronger sales in the UK and Europe compared with the USA. In May 2015, a new business model was launched to generate recurring revenues and improve the quality of the company's earnings from a new product, Assist Plus, and associated Assist Plus service. This change in strategy towards a pure recurring revenue model has resulted in certain exceptional costs being incurred and this impacted EBITDA during 2015, reducing to £4.0 million on revenues of £18.5 million for the year to 31 December 2015.

Following the appointment of a new Chairman, the Company continues to make good progress. A long term licence agreement with a major motor manufacturer has been won while the Autologic Assist App has also been launched.

Reflecting increased competition in the US market along with a slower than expected transition to the new business model, trading in the current year to date is behind budget, although cash balances currently total over £6.2 million.

Biofortuna, established in 2008, is a molecular diagnostics business based in the North West, which has developed unique expertise in the manufacture of freeze dried, stabilised DNA tests. Biofortuna develops and sells both its own proprietary tests and contract develops and manufactures on behalf of customers. A £1.3 million round to finance capital expenditure and working capital was completed in August 2013, in which the Company invested £198,132 in the first tranche and a further £101,859 in the second, final tranche in April 2014. For the year to March 2015, a substantially reduced operating loss of £528,000 was incurred on higher sales of £1.1 million (2014: an operating loss of £1.1 million incurred on sales of £325,000). Trading in the year to 31 March 2016 was well ahead of budget and the previous year, with an improved, reduced EBITDA loss. The profitable Contract Manufacturing division helped offset investment in the proprietary products being developed by the Molecular Diagnostics division.

To finance the development of new products, a £1.6 million round was completed in January 2015, of which £890,000 was committed by the Foresight VCTs. The Ordinary Shares fund invested £256,000 as the first tranche. The second, final tranche of £189,000 was drawn down in July 2016. In the six months to September 2016, the company is performed ahead of the previous year. Owing to the need for more regulatory testing, the launch of the new blood typing product range is now expected in Q3 2017.

In July 2012, the Company 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 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 the year to 30 April 2015, the company achieved an EBITDA of £537,000 on sales of £8.6 million (2014: £323,000 EBITDA on sales of £8.6 million). In the financial year ended 30 April 2016, Blackstar generated sales of £8.2m and EBITDA of £702,000, reflecting improved gross margins and tight management of overheads. New product development remains a key strategic priority for Blackstar and in the current financial year alone, the Company is launching 15 new products. Blackstar continues to be the number two guitar amplifier brand by units sold in the UK and USA. The company currently has a presence in over 35 countries worldwide and its products are stocked in over 2,500 stores globally.

Building on the success of its £48.0 million, 10MW Birmingham Bio Power Limited project ("BBPL") with Carbonarius (a 50:50 joint venture with Plymouth-based Una Group), O-Gen UK has become the UK's leading independent developer of Advanced Conversion Technology waste to energy projects. In March 2015, O-Gen UK and Una Group combined their two teams into a new company, CoGen Limited, to further develop their substantial, combined pipeline of projects. In order 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 22.13% of CoGen's equity, including Foresight 4 VCT (8.55%).

In March 2015, CoGen reached financial close on a £53.0 million, 10MWe waste wood to energy plant in Welland, Northamptonshire, using the same technology and partners as BBPL. 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 while 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 and MITIE plc, on which an £8.0 million 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 50% but with a prior ranking return on the latter's invested capital. In October 2015, CoGen reached financial close on a £98.0 million, 21.5MW project in Ince Park, Merseyside to be fuelled with circa 160,000 tonnes per annum of recycled wood fibre. All of the funding was provided by the Bioenergy Infrastructure Group ("BIG", of which Foresight Group is a co-sponsor) through a combination of shareholder loan and shares which receive a preferential return.

Cogen is developing its pipeline of projects and funding relationships, with active support from Foresight and BIG. The market has become less certain with the Government's changes in renewables policy, in particular uncertainty relating to future CfD auctions. Cogen's primary deal pipeline comprises four projects in Northern England and it plans to bid in the CfD auction due in April 2017, with the aim of closing projects successful in that auction during 2017. BIG is expected to jointly fund this process, requiring a total of £5.0 million of investment.

Project Name	Project size (£m)	Year of financial close	Cogen Shareholding
Birmingham Bio Power Limited	48	2013	20.0%
Plymouth	20	2015	50.0%
Welland	53	2015	12.5%
Ince Park	97	2015	20.0%

Cogen has recently signed a teaming agreement with Lockheed Martin to develop energy from waste projects in the UK using a new advanced gasification technology. Lockheed Martin and Cogen have identified their first potential site for this technology in Cardiff which would convert municipal solid waste and commercial and industrial waste into electricity.

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 shops and signage and entering other new markets such as medical. For the year to 31 March 2015, an operating profit of £6.8 million was achieved on sales of £19.3 million, with the North American division trading ahead of budget (2014: record operating profits of £7.4 million on sales of £18.7 million). In November 2015, Datapath paid dividends of £6.3 million, comprising £2.1 million to the Company and the same amount to each of Foresight 2 VCT and Foresight 3 VCT. This was met principally from the company's own cash resources and short term loans which are expected to be repaid from internally generated cash flow.

Product development continues, with further new products or product variants expected to be launched during 2017. The new sales manager has strengthened the sales team with account managers in the US. For the year to 30 September 2016, operating profit and revenues are ahead of budget and the previous year. This has been supported by the new products which have helped secure two major international projects.

In September 2015, as part of a £3.9 million round alongside other Foresight VCTs, the Company invested £1.4 million in FFX Group Limited to support the continuing growth of this Folkestone based multi-channel distributor of power tools, hand tools, fixings and other building products. Since launching its e-commerce channel in 2011, FFX has grown rapidly supplying a wide range of tools to builders and tradesmen nationally. For the year to 31 March 2015, the company achieved an EBITDA of £1.3 million on sales of £26.9 million. The management team was strengthened by the appointment of two new Joint Managing Directors and a new Chairman, each with experience of successfully developing similar businesses. For the year to September 2016, revenues and gross profit were ahead of budget and the previous year. For the year to 31 March 2016 the company achieved an EBITDA of £940,000 on sales of £29.8 million following the successful relocation into a nearby, much larger warehouse at Lympne in early 2016.

In May 2012, the Company invested £693,000 in Flowrite Refrigeration Holdings alongside other Foresight VCTs to finance the £3.2 million management buy-out of Kent-based Flowrite Services Limited. Flowrite Refrigeration Holdings provides refrigeration and air conditioning maintenance and related services nationally, principally to leisure and commercial businesses such as hotels, clubs, pubs and restaurants. 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 (2013: operating profit of £1.1 million on sales of £10.0 million).

In July 2015, the company completed another recapitalisation, returning £156,000 of accrued interest to the Foresight VCTs, including £23,000 to the Company, taking total cash returned on this investment to 85% of cost. For the 14 months to 31 December 2015, the company achieved a disappointing operating profit of £404,000 on sales of £12.8 million, reflecting difficulties arising from installing a new workflow IT system with the aim of improving operational efficiency and optimising profitability. To drive the business forward, steps were taken in August 2015 to broaden the management team through the appointment of a new Chairman and a new Finance Director. In order to improve profitability, the new management team have focused on reducing costs, delivering operational improvements, stabilising and improving relationships with the customer base and increasing sales efforts. Trading in the current year has been weaker than expected but the new management team are making good progress in improving sales and profitability.

In September 2015, as part of a £4.5 million round alongside other Foresight VCTs, the Company invested £1.2 million in Hospital Services Limited (HSL) to support its continuing growth. Based in Belfast and Dublin, HSL distributes, installs and maintains high quality healthcare equipment supplied by global partners such as Hologic, Fujifilm and Shimadzu, as well as supplying related consumables. HSL has particular expertise in the radiology, ophthalmic, endoscopy and surgical sectors. For the year to 31 March 2015, the company achieved EBITDA of £1.7 million on revenues of £7.2 million. A new, experienced Non-Executive Chairman and a Commercial Director were appointed to the Board. Trading in the current year in line with budget and cash at end of June was a healthy £1.6 million.

Following the period end, the company acquired the trade and assets of Eurosurgical for €600,000 plus stock at valuation, from the liquidator. Eurosurgical specialises in sales and marketing of surgical equipment, instruments and devices into the medical sector with offices in Dublin and Belfast. Following rationalisation of the Eurosurgical cost base, this acquisition is expected to make a significant contribution to profit.

In September 2015, as part of a £4.0 million round alongside other Foresight VCTs, the Company invested £1.0 million in Itad Limited, a long established consulting firm which monitors and evaluates the impact of international development and aid programmes, largely in developing countries. Customers include the UK Government's Department for International Development, other European governments, philanthropic foundations, charities and international NGOs. For the year to 31 January 2016, Itad achieved an EBITDA of £1.9 million on revenues of £12.0 million with significant future growth forecast. A number of significant contracts have been won recently and, as most contracts are long term, this provides good revenue visibility for the current and future years.
Ixaris Systems has developed and operates Entropay, a web-based global prepaid payment service using the VISA network. Ixaris also offers its IxSol product on a 'Platform as a Service' basis to enable enterprises to develop their own customised global applications for payments over various payment networks. 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 customers based on prepaid cards. This division continues to make good progress, Ixaris being awarded an EU grant of €2.5 million, of which €1.6 million will be received over three years, to help fund the existing platform technology roadmap, highlighting the innovative nature of the Payment System.

During the year to 31 December 2015, the company operated at around EBITDA and cash flow break even while continuing to invest further in Ixsol and Ixaris Payment System. For the full year to 31 December 2015, reflecting strong trading and continuing investment in software and systems, an EBITDA loss of £501,000 was incurred on sales of £10.8 million, ahead of budget (2014: EBITDA loss of £622,000 on sales of £9.5 million). In the current year, while investment continues in developing the two platforms, EntroPay continues to perform well with a strong sales pipeline in prospect.

In December 2014, the Company invested £500,000 alongside other Foresight VCTs in a £2.0 million round to finance a shareholder recapitalisation of Positive Response Communications. Established in 1997, the company monitors the safety of people and property through its 24 hour monitoring centre in Dumfries, Scotland. Customers include several major restaurant and retail chains. For the year ended 31 March 2015, an EBITDA of £637,000 was achieved on sales of £2.0 million. In the financial year to 31 March 2016, sales grew modestly to £2.1m, generating a reduced EBITDA of £209,000, reflecting investment in improving efficiency and systems and recruitment of more sales staff. Trading in the current year continues to be weaker than expected and, as a consequence, costs have been reduced and management changes implemented.

In April 2013, the Company invested £650,000 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 to the BBC and ITV. Revenues and profits have grown strongly, following the introduction of new camera formats, acquisitions in both the UK and USA and increased sales and marketing efforts.

In December 2014, Procam acquired True Lens Services, based in Leicester, which specialises in the repair, refurbishment and supply of camera lenses with further support from the Foresight VCTs. 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. These two acquisitions were supported by a further investment of £1.3 million from the Foresight VCTs, of which the Company invested £451,385.

For the year to 31 December 2014, the company achieved an EBITDA of £2.3 million on revenues of £8.1 million, ahead of the prior year, reflecting organic growth and the integration of the Hammerhead acquisition. Trading in the year to 31 December 2015 was also strong, an EBITDA of £3.3 million being achieved on sales of £11.5 million, reflecting both organic growth, driven principally by the strong performance of the London office and impact of the acquisitions during the year. In February 2016, ProCam acquired the trading assets of the film division of Take 2 Films which provides digital and film camera equipment for Film and TV. This was funded by bank debt and asset finance facilities. In the current year the company continues to perform well, with further growth in sales and profitability and two senior projects executives recently joining from a competitor.

In July 2015, as part of a £4.0 million round alongside other Foresight VCTs, the Company invested £1.0 million in Coventry-based Protean Software. Protean develops and sells business management and field service management software, together with related support and maintenance services, to organisations involved in the supply, installation and maintenance of equipment, across a number of sectors including facilities management, HVAC and elevator installation. Protean's software suite offers both desktop and mobile variants used on engineers' Android devices.

A new CEO and an experienced Chairman were appointed at completion and a new Financial Controller recruited subsequently. For the year to 31 March 2015, an EBITDA of £900,000 was achieved on sales of £3.0 million. Trading in the year to 31 March 2016 was ahead of the previous year while profits were at a similar level, reflecting increased investment and overheads while cash remained strong. In the current year, Protean continues to trade ahead of budget with cash continuing to strengthen, currently totaling over £1 million. Further development of Protean Lite, a new SaaS product, continues with the first release planned for Q1 2017.

In April 2015, Foresight funds invested £2.6 million in shares and loan notes in Specac International ("Specac") to finance a management buy-out of Specac Limited from Smiths Group plc. The Company invested £650,000, alongside £1.3 million from Foresight VCT and £650,000 from Foresight 3 VCT, together acquiring a majority equity shareholding with the management team holding the remaining equity. Specac, based in Orpington, Kent, is a long established, leading scientific instrumentation accessories business, manufacturing high specification sample analysis and sample preparation equipment used across a broad range of applications in testing, research and quality control laboratories and other end markets Worldwide. The company's products are primarily focused on supporting IR Spectroscopy, an important analytical technique widely used in research and commercial / industrial laboratories.

For the year to 31 July 2015, the company achieved an EBITDA of £906,000 on sales of £6.9 million. Trading in the year to 31 March 2016 exceeded expectations with profit growth ahead of forecast, reflecting greater focus on sales and costs, an EBITDA of £1.28 million being achieved on sales of £8.1 million. The company has accelerated new product development and successfully launched new products. A  non-executive Chairman was also appointed with a strong sales and marketing background in the scientific instrumentation market who will complement the existing management team and assist them to further develop the business. Trading in the current year has continued to perform ahead of budget.

TFC Europe, a leading distributor of technical fasteners in the UK and Germany, performed satisfactorily during the year to 31 March 2015, achieving an operating profit of £2.8 million on sales of £20.3 million (2014: operating profit of £2.8 million on sales of £19.5 million). However, trading in the year to 31 March 2016 was weaker than expected due to a general downturn in the UK manufacturing sector and particularly the Oil and Gas industry with an EBITDA of £2 million being achieved on sales of £19.3 million.

In July 2015, the company effected a successful recapitalisation and share reorganisation, as a result of which £2.4 million was received by the Foresight VCTs, repaying all their outstanding loans, together with accrued interest and a redemption premium. The overall Foresight shareholding increased from 53.6% to 66.7%. A number of senior management changes and promotions were made to facilitate the planned retirement of the current Chairman, to enable the CEO to drive strategic growth projects, particularly in Germany and focus on new customer targets within Aerospace. In April 2015, two senior managers were promoted to the Sales Director and Commercial Director roles. A Group Operations Manager has been appointed to drive cost efficiencies and introduce best operational practice across the Group. A new, experienced Chairman joined the Board in January 2016 with the aim of improving TFC's sales strategy and industry focus. TFC has continued to trade well in the current financial year, achieving above budget revenues and EBITDA and ahead of the corresponding period in the previous year.

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 2015, an EBITDA of £2.2 million was achieved on sales of £9.6 million (2014: EBITDA of £2.2 million on sales of £9.1 million). Recurring annual revenues presently exceed £9.3 million while cash balances remain healthy. On 31 March 2015, The Bunker repaid all its shareholder loans and outstanding interest totalling £6.5 million, financed through a £5.7 million secured medium term bank loan plus £1.0 million from 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 Company received £2.0 million, comprising £1.5 million of loan principal and £503,000 of interest. The company has now commenced a trial with a large distributor which serves many value added resellers. A new, experienced Sales Manager has been recruited to lead channel sales. In the current year to date, the company is trading in line with budget.
Focus continues on improving the sales strategy and completion of new existing and new customer signups alongside assessing new service offerings.

In September 2015, as part of a £3.3 million round alongside other Foresight VCTs, the Company invested £650,000 in The Business Advisory Limited. This company provides a range of advice and support services to UK-based small businesses seeking to gain access to Government tax incentives, largely on a contingent success fee basis. With a large number of small customers signed up under medium term contracts, the company enjoys a high level of recurring income and good visibility on future revenues.

For the year to 30 September 2015, the company achieved a NPBT of £1.4 million on sales of £4.2 million, well ahead of the prior year. The company continues to trade strongly and has increased its staff reflecting accelerated sales growth.

In August 2013, the Company invested £1.0 million alongside Foresight VCT 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 rebalancing the spread of revenues, with greater emphasis on service and maintenance. For the year to 31 March 2015, an EBITDA of £1.1 million was achieved on sales of £7.8 million, some 40% ahead of the previous year (2014: EBITDA of £717,000 on sales of £4.0 million) reflecting significant contract wins and resultant strong cash generation. Trading in the year to 31 March 2016 resulted in an EBITDA of £706,000 on sales of £6.5 million reflecting delays in winning expected contracts. A new, non-executive Chairman has been appointed, bringing extensive experience from the facilities management and business services sectors.

On 1 July 2016, Thermotech acquired Oakwood, a well-respected local competitor which provides HVAC services. The combined Group will benefit from greater scale, a national footprint and a reduction in customer concentration. The company also repaid the £2.0 million of Foresight loan note principal, of which the Company received £800,000. Combined with interest received, the investment in Thermotech has now returned over 1x cost with the Company still retaining a 10.0% equity stake.

Russell Healey
Head of Private Equity
Foresight Group
30 November 2016

Unaudited Half-Yearly Results and Responsibility Statements

Principal Risks and uncertainties

The principal risks faced by the Company can be divided into various areas as follows:

• Performance;
   
• Regulatory;
   
• Operational; and
   
• Financial.

The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Accounts for the year ended 31 March 2016. A detailed explanation can be found on page 52 of the Annual Report and Accounts which is available on www.foresightgroup.eu or by writing to Foresight Group at The Shard, 32 London Bridge Street, London, SE1 9SG.

In the view of the Board, there have been no changes to the fundamental nature of these risks since the previous report and these principal risks and uncertainties are equally applicable to the remaining six months of the financial year as they were to the six months under review.

Directors' responsibility statement

The Disclosure and Transparency Rules ('DTR') of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Report and financial statements.

The Directors confirm to the best of their knowledge that:

(a) the summarised set of financial statements has been prepared in accordance with the pronouncement on interim reporting issued by the Accounting Standards Board;

(b) the Unaudited Half-Yearly Financial Report for the six month period ended 30 September 2016 includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months of the year and a description of principal risks and uncertainties that the Company faces for the remaining six months of the year);

(c) the summarised set of financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company as required by DTR 4.2.4R; and

(d) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

Going concern

The Company's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Strategic Report of the 31 March 2016 Annual Report. The financial position of the Company, its cash flows, liquidity position and borrowing facilities are described in the Chairman's Statement, Strategic Report and Notes to the Accounts of the 31 March 2016 Annual Report. In addition, the Annual Report includes the Company's objectives, policies and processes for managing its capital; its financial risk management
objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.

The Company has considerable financial resources together with investments and income generated therefrom across a variety of industries and sectors. As a consequence, the Directors believe that the Company is well placed to manage its business risks successfully despite the current uncertain economic outlook.

The Directors have reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

The Half-Yearly Financial Report has not been audited or reviewed by the auditors.

On behalf of the Board

Philip Stephens
Chairman
30 November 2016

Unaudited Income Statement
for the six months ended 30 September 2016

	Six months ended			Six months ended			Year ended
	30 September 2016			30 September 2015			31 March 2016
	(unaudited)			(unaudited)			(audited)
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Realised losses on investments	-	(3,901)	(3,901)	-	(4,659)	(4,659)	-	(10,434)	(10,434)
Investment holding gains	-	5,555	5,555	-	1,168	1,168	-	3,931	3,931
Income	316	-	316	102	-	102	2,570	-	2,570
Investment management fees	(112)	(338)	(450)	(147)	(441)	(588)	(279)	(839)	(1,118)
Other expenses	(183)	-	(183)	(254)	-	(254)	(499)	-	(499)
Return/(loss) on ordinary activities before taxation	21	1,316	1,337	(299)	(3,932)	(4,231)	1,792	(7,342)	(5,550)
Taxation	(4)	4	-	-	-	-	-	-	-
Return/(loss) on ordinary activities after taxation	17	1,320	1,337	(299)	(3,932)	(4,231)	1,792	(7,342)	(5,550)
Return/(loss) per share:
Ordinary Share	0.0p	2.3p	2.3p	(0.5)p	(6.9)p	(7.4)p	3.1p	(12.7)p	(9.6)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 period.

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

Unaudited Balance Sheet
at 30 September 2016

	Registered Number: 03506579
	As at	As at	As at
	30 September 2016	30 September 2015	31 March 2016
	(unaudited)	(restated) (unaudited)	(audited)
	£'000	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	39,410	40,348	37,738
Current assets
Debtors	888	392	959
Money market securities and other deposits	1,236	3,369	1,773
Cash	193	367	62
	2,317	4,128	2,794
Creditors
Amounts falling due within one year	(49)	(314)	(167)
Net current assets	2,268	3,814	2,627
Net assets	41,678	44,162	40,365
Capital and reserves
Called-up share capital	574	576	574
Share premium	5,125	5,170	5,147
Capital redemption reserve	265	263	265
Profit and loss account	35,714	38,183	34,379
Equity shareholders' funds	41,678	44,162	40,365
Net asset value per share:
Ordinary Share	72.6p	76.6p	70.4p

Unaudited Reconciliation of Movements in Shareholders' Funds
for the six months ended 30 September 2016

	Called-up share capital	Share premium account	Capital redemption reserve	Profit and loss account	Total
	£'000	£'000	£'000	£'000	£'000
As at 1 April 2016	574	5,147	265	34,379	40,365
Expenses in relation to previous years share issues*	-	(22)	-	-	(22)
Repurchase of shares	-	-	-	(2)	(2)
Return for the period	-	-	-	1,337	1,337
As at 30 September 2016	574	5,125	265	35,714	41,678

* Trail commission payable to financial advisors

Unaudited Cash Flow Statement
for the six months ended 30 September 2016

	Six months ended	Six months ended	Year ended
	30 September 2016	30 September 2015	31 March 2016
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Cash flow from operating activities
Investment income received	300	357	563
Dividends received from investments	8	-	2,117
Deposit and similar interest received	-	1	24
Investment management fees paid	(453)	(588)	(1,118)
Secretarial fees paid	(78)	(118)	(157)
Other cash payments	(162)	(199)	(379)
Net cash (outflow)/inflow from operating activities and returns on investment	(385)	(547)	1,050
Returns on investment and servicing of finance
Purchase of unquoted investments	(989)	(6,134)	(7,256)
Net proceeds on sale of investments	1,047	717	717
Net proceeds on deferred consideration	1	7	7
Net proceeds on liquidation of investments	-	-	58
Net capital inflow/(outflow) from investing activities	59	(5,410)	(6,474)
Equity dividends paid	-	(4,670)	(6,970)
Management of liquid resources
Movement in money market funds	537	1,031	2,627
	537	1,031	2,627
Financing
Proceeds of fund raising	-	355	355
Expenses of fund raising	(22)	(24)	(47)
Repurchase of own shares	(58)	-	(111)
Net cash (outflow)/inflow from financing activities	(80)	331	197
Increase/(decrease) in cash	131	(9,265)	(9,570)

Reconciliation of net cash flow to movement in net cash
Increase/(decrease) in cash for the period	131	(9,265)	(9,570)
Net cash at start of the period	62	9,632	9,632
Net cash at end of period	193	367	62

Notes to the Half-Yearly Financial Report
for the six months ended 30 September 2016

1. The Unaudited Half-Yearly results have been prepared on the basis of accounting policies set out in the statutory accounts of the Company for the year ended 31 March 2016. Unquoted investments have been valued in accordance with IPEVCV guidelines. Quoted investments are stated at bid prices in accordance with IPEVC guidelines and UK Generally Accepted Accounting Practice.
    
2. These are not statutory accounts in accordance with S436 of the Companies Act 2006 and the financial information for the six months ended 30 September 2016 and 30 September 2015 has been neither audited nor reviewed. Statutory accounts in respect of the year ended 31 March 2016 have been audited and reported on by the Company's auditors and delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under S498(2) or S498(3) of the Companies Act 2006. No statutory accounts in respect of any period after 31 March 2016 have been reported on by the Company's auditors or delivered to the Registrar of Companies.
    
3. Copies of the Half-Yearly Financial Report have been sent to shareholders and are available for inspection at the Registered Office of the Company at The Shard, 32 London Bridge Street, London SE1 9SG.

Copies of the Unaudited Half-Yearly Financial Report are also available electronically at 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 period and on the number of shares in issue at the date.

	Net Assets		Number of shares
	£'000		in issue
30 September 2016	41,678		57,375,499
30 September 2015	44,162		57,631,147
31 March 2016	40,365		57,375,499

5. Return per share

	Six months ended 30 September 2016	Six months ended 30 September 2015		Year ended March 2016
	£'000	£'000		£'000
Total return/(loss) after taxation	1,337	(4,231)		(5,550)
Basic return/(loss) per Ordinary Share (note a)	2.3p	(7.4)p		(9.6)p
Revenue return/(loss) from ordinary activities after taxation	17	(299)		1,792
Revenue return/(loss) per Ordinary Share (note b)	0.0p	(0.5)p		3.1p
Capital return/(loss)  from ordinary activities after taxation	1,320	(3,932)		(7,343)
Capital return/(loss)  per Ordinary Share (note c)	2.3p	(6.9)p		(12.7)p
Weighted average number of Ordinary Shares in issue in the period	57,375,499	57,505,869		57,567,321
Notes:
a) Total return/(loss) per Ordinary Share is total return after taxation divided by the weighted average number of shares in issue during the period.
b) Revenue return/(loss) per Ordinary Share is revenue return after taxation divided by the weighted average number of shares in issue during the period.
c) Capital return/(loss) per Ordinary Share is capital return after taxation divided by the weighted average number of shares in issue during the period.

6. Income

	Six months ended	Six months ended	Year ended
	30 September 2016	30 September 2015	31 March 2016
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Loan stock interest	305	83	428
Dividends receivable	8	-	2,117
Overseas based Open Ended Investment Companies ("OEIC's")	3	18	24
Bank deposits	-	1	1
	316	102	2,570

7. Investments held at fair value through profit or loss

Company

	Quoted	Unquoted	Total
	£'000	£'000	£'000
Book cost at 1 April 2016	827	27,438	28,265
Investment holding (losses)/gains	(545)	10,018	9,473
Valuation at 1 April 2016	282	37,456	37,738
Movements in the period:
Purchases at cost	-	989	989
Disposal proceeds	(2)	(939)	(941)
Realised losses	(4)	(3,897)	(3,901)
Investment holding (losses)/gains*	(42)	5,567	5,525
Valuation at 30 September 2016	234	39,176	39,410
Book cost at 30 September 2016	821	23,591	24,412
Investment holding (losses)/gains	(587)	15,585	14,998
Valuation at 30 September 2016	234	39,176	39,410

* Investment holding gains in the Income Statement includes deferred consideration of £30,000 from the sale of Trilogy Communications.

8. Transactions with the manager

Foresight Group, which acts as investment manager to the Company in respect of its venture capital investments earned fees of £450,000 during the period (30 September 2015: £588,000; 31 March 2016: £1,118,000). Fees excluding VAT of £78,000 (30 September 2015: £78,000; 31 March 2016: £157,000) were received during the period for company secretarial, administrative and custodian services to the Company.

At the balance sheet date there was £4,000 due from Foresight Group (30 September 2015: £10,000 due to Foresight Group; 31 March 2016: £1,000 due from Foresight Group) and £nil due to Foresight Fund Managers Limited (30 September 2015: £nil; 31 March 2016: £nil). No amounts have been written off in the period in respect of debts due to or from related parties.

END

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Source: Foresight 4 VCT PLC via Globenewswire