Foresight 3 VCT PLC Foresight 3 Vct Plc : Annual Financial Report

 
TIDMFTD 
 
 
   FORESIGHT 3 VCT PLC 
 
   2016 Highlights 
 
 
   -- Net asset value per Ordinary Share at 31 March 2016 was 59.6p (31 March 
      2015: 66.8p). After allowing for the 3.0p per share dividend paid on 24 
      March 2016, this represented a fall in net asset value of 6.3% for the 
      year. 
 
   -- The Ordinary Shares fund provided follow-on funding totalling GBP0.38 
      million to three portfolio companies and invested GBP2.5 million in five 
      new investments. 
 
   -- The Ordinary Shares fund realised GBP2.1 million from sales and loan 
      redemptions from seven portfolio companies. 
 
 
   Chairman's Statement 
 
   Performance 
 
   During the year to 31 March 2016, the net asset value per Ordinary Share 
decreased by 6.3% to 59.6p from 66.8p at 31 March 2015, after allowing 
for the 3.0p per share dividend paid in March 2016. 
 
   Overall, the Board is happy with the composition of the portfolio 
including the recent addition of five new investments for a total 
consideration of GBP2.5 million. Several of these investments are 
already making encouraging progress, particularly Itad and Specac. The 
performance in the last quarter of the year under review demonstrated 
some of this portfolio improvement showing a small increase in 
underlying NAV of 1.6%. 
 
   The Board believes the portfolio is well placed to deliver growth, 
underpin future dividends and enhance shareholder returns. 
 
   The fall in the year, however, is disappointing but effectively reflects 
poor performance of one portfolio company, Aerospace Tooling, which has 
seen a reduction or delay in orders from some of its customers who have 
been severely impacted by the significant drop in the price of oil. 
Although it did not feel the impact as acutely as Aerospace Tooling, TFC 
Europe also suffered a drop in revenues from market driven factors 
related to the fall in the price of oil. Aerospace Tooling was reduced 
by GBP1.76 million or 3.5p per share. Some encouraging progress has been 
made in winning orders and new customers but the related sales cycles 
inevitably takes time. A new experienced CEO was appointed in January 
2016 and the company has since seen improving sales and returning to 
profitability. Despite the further provisions against the valuation of 
ATL following the period of sustained difficult trading condition, the 
company has previously repaid the entire cost of the original investment 
to the VCT. 
 
   Derby-based Datapath Group is the largest holding in the portfolio 
valued at GBP8.7 million. The company 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 
itsmarket share in control rooms, betting shops and signage and entering 
other new areas such as the medical market. For the year to 31 March 
2015, an operating profit of GBP6.8 million was achieved on sales of 
GBP20.3 million, with the North American division trading ahead of 
budget. 
 
   The Board and Manager continue to focus on derisking large portfolio 
exposures such as Datapath and, in November 2015, Datapath paid a 
special dividend of GBP2.1 million to the Company. This was met 
principally from the company's own cash resources and management loans 
which are expected to be repaid from internally generated cash flow over 
the next year. 
 
   For a detailed review of all of the Company's investments I refer you to 
the Manager's Report that starts on page 11 of the Annual Report and 
Accounts. 
 
   Dividends 
 
   An interim dividend of 3.0p per Ordinary Share for the year ended 31 
March 2016 was paid on 24 March 2016. The shares were quoted ex dividend 
on 10 March 2016 and the record date for payment was 11 March 2016. It 
continues to be the Company's policy to provide a flow of tax-free 
dividends, generated from income and from capital profits realised on 
the sale of investments. Distributions, however, will inevitably be 
dependent on cash being generated from portfolio investments and 
successful realisations. 
 
   The recent success in generating cash from portfolio investments within 
the Ordinary Shares fund gives the Board confidence that it will be able 
maintain the future payment of dividends to Shareholders. 
 
   Share Buybacks 
 
   During the period under review 533,877 Ordinary Shares were repurchased 
for cancellation at a cost of GBP235,000. These were purchased at a 
discount to NAV ranging from 22.5% to to 34.9%. There were no shares 
issued during the year. 
 
   VCT Legislation 
 
   As previously discussed, changes to VCT regulations were finally 
confirmed on 18 November 2015. There were no material changes to those 
detailed in my interim report. One of the principal purposes of the 
changes was to prevent VCT investment being used to acquire existing 
shares or the principal trade or assets of businesses. 
 
   The key aspects of the proposed new rules are as follows: 
 
 
   -- Introducing an 'age of company' restriction of a maximum of seven years 
      at the time of first VCT investment; 
 
   -- Introducing a lifetime state aided investment limit of GBP12 million; and 
 
   -- Prohibiting VCT investment financing acquisitions (as mentioned above). 
 
 
   Although the recent rule changes preclude VCTs investing in replacement 
capital transactions, the Treasury and HMRC have since agreed to review 
this policy following representations from inter alia the British 
Venture Capital Association, the Association of Investment 
 
   Companies, a number of legal firms and VCT managers, including Foresight 
Group. 
 
   Rather than an absolute restriction on replacement capital transactions, 
this review will consider relaxing the current rules to enable VCTs to 
invest an element of replacement capital alongside a significant element 
of growth capital in any particular transaction, possibly up to a 
maximum of 50% of the total amount invested. This review is currently 
expected to take up to two years and shareholders will be kept informed 
of any significant developments. 
 
   If concluded satisfactorily, the range of potential investment 
opportunities for VCTs would be widened, compared to the more 
restrictive regime that currently applies. 
 
   Brexit 
 
   There are two principal areas where the implementation of Brexit could 
impact the VCT: 
 
 
   1. 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 
 
   2. 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. 
 
 
   Merger Consideration 
 
   The Board has been closely monitoring the successful merger of Foresight 
VCT plc and Foresight 2 VCT plc following Shareholder approval in 
December 2015. Although the Board has not formally engaged with another 
company at this time, it is considering whether a merger and the 
benefits therefrom would be in Shareholders' long term interests and 
hopes to provide a further update in that regard in due course. 
 
   Annual General Meeting 
 
   The Company's Annual General Meeting will take place on 30 August 2016 
at 1.00pm. I look forward to welcoming you to the Meeting, which will be 
held at the offices of Shakespeare Martineau LLP in London. 
 
   Details can be found on page 61 of the Annual Report and Accounts. 
 
   Prior to the formal business of the Annual General Meeting, Foresight 
Group, the investment Manager and two investee companies will give 
presentations between 12.00pm and 1.00pm. 
 
   Outlook 
 
   Although there is still considerable uncertainty in continental Europe 
as a result of stresses within the Euro area, the UK economy is in 
reasonable health and many businesses are making steady progress. The 
recent decision resulting from the referendum on 23 June, for the UK to 
begin negotiations to leave the European Union has also given rise to 
further uncertainty and it will take time to gauge the full effect that 
this may have for the Company. Many of the familiar risks, both 
financial and political, remain and there can be no grounds for 
complacency as all of our investments operate in competitive 
environments. 
 
   We hope that the effect of the improvement in the economy over the last 
few years continues, as this has been reflected in the improving 
performance of the private equity part of the Ordinary Shares 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 which we anticipate will further 
enhance Shareholder returns. 
 
   Raymond Abbott 
 
   Chairman 
 
   28 July 2016 
 
   Manager's Report 
 
   In the year under review for 31 March 2016, the net asset value per 
Ordinary Share decreased by 6.3% to 59.6p per share as at 31 March 2016 
from 66.8p per Ordinary Share as at 31 March 2015 (after taking into 
account the 3.0p per share dividend paid in March 2016). During the year 
the Company benefitted from good performances by several portfolio 
companies, the receipt of a GBP2.1 million dividend from Datapath and a 
recapitalisation of GBP565,000 from TFC, but was negatively impacted by 
a GBP1.76 million reduction in the valuation of one investment, 
Aerospace Tooling Holdings due to a reduced level of orders from its two 
largest customers. 
 
   An interim dividend of 3.0p per Ordinary Share was paid on 24 March 2016 
to shareholders on the Register on 10 March 2016. 
 

   Having realised a significant number of investments over recent years, 
the principal focus in the year under review was to make new 
investments. Five new investments were made during the period, several 
of which are already making encouraging progress, particularly Itad and 
Specac. Further details of these new investments can be found in the 
Portfolio Review later in this report. 
 
   Foresight Group continues to see a number of high quality private equity 
investment opportunities. Foresight 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. 
 
   The recent referendum results on the United Kingdom leaving the European 
Union is not expected to result in any immediate material changes to the 
overall portfolio. Any prolonged weakness in Sterling will benefit those 
companies in the portfolio with a high proportion of exports. 
 
   Impact of recent changes to VCT legislation 
 
   The budget in July 2015 introduced a number of significant changes to 
VCT legislation. Following receipt of EU State Aid approval, these 
regulatory changes took effect from 18 November 2015, the date of Royal 
Assent to the Finance Act 2015. Two of these changes in particular are 
expected to impact the future management of all VCTs. First the 
restriction on the age of a company that is eligible for investment by a 
VCT (generally no more than seven years from the date of the company's 
first commercial sale) and second, restrictions on VCT funds being used 
in acquiring an interest in another company or existing business. By 
precluding replacement capital transactions, such as shareholder 
recapitalisations, management buy-outs or buy-ins and funding 
acquisitions by investee companies, the restrictions are designed to 
encourage more development capital transactions and investment in 
generally younger, less mature companies. 
 
   Foresight VCTs already invest in all these types of transactions so, 
although the proposed changes will result in a change of investment 
emphasis, they are not expected to have a material impact. The VCTs will 
continue to focus on investing in established, growing, profitable 
companies with an attractive risk/return profile as at present but will 
change emphasis from replacement capital transactions to development 
capital investments, including investing in earlier stage companies with 
a clear path to profitability. It will not be the policy, except in 
exceptional circumstances, to invest in start up companies. 
 
   Foresight has a strong track record in development capital transactions, 
having invested in both growth capital and replacement capital 
transactions since its formation over 30 years ago. For example, 
 
   40% of all investments made since 2010 were development capital 
transactions. Since then, 14 of these investments have been successfully 
realised, generating an average return of 2.2 times original cost. 
 
   With this long and successful track record, Foresight's marketing 
efforts have been refocused towards finding suitable, later stage 
development capital investment opportunities, with the aim of 
accelerating their growth. A number of such opportunities are currently 
under active consideration. Foresight remains confident that sufficient, 
suitable new and attractive investment opportunities can be sourced 
which will meet its return criteria and comply with the VCT rules. 
 
   While the full implications of the new rules have yet to be established, 
it is clear that, over the medium term, as existing investments are 
realised, this change in investment emphasis and the nature of new 
investments may lead to an increase in the VCTs' risk profile. Over the 
medium term, however, any such increase in risk profile could be 
tempered by a favourable outcome to the proposed VCT policy review, as 
mentioned below. The rule changes will, however, make the VCTs' 
operating environment more complicated and could limit the number of 
opportunities available for investment. Similarly, the Company may not 
necessarily be able to provide further investment funds for companies 
already in its portfolio. 
 
   Proposed VCT Policy Review 
 
   Although the recent rule changes preclude VCTs investing in replacement 
capital transactions, the Treasury and HMRC have since agreed to review 
this policy following representations from inter alia the British 
Venture Capital Association, the Association of Investment Companies and 
a number of legal firms and VCT managers, including Foresight. Rather 
than an absolute restriction on replacement capital transactions, this 
review will consider relaxing the current rules to enable VCTs to invest 
an element of replacement capital alongside a significant element of 
growth capital in any particular transaction, possibly up to a maximum 
of 50% of the total amount invested. This review and possible 
consultation process are expected to start in the near future. At this 
stage, it is not possible to forecast the ultimate outcome of the review, 
particularly since any proposed amendments will currently require both 
EU State Aid and Parliamentary approval. This process is expected to 
take up to two years and shareholders will be kept informed of any 
significant developments. 
 
   If this review concludes satisfactorily, the range of potential 
investment opportunities for VCTs would be widened, compared to the more 
restrictive regime that currently applies. 
 
   Portfolio Review 
 
 
   1. New investments 
 
 
 
 
Company                            GBP 
ABL Investments Limited           475,000 
Itad Limited                      250,000 
Protean Software Limited          500,000 
Specac International Limited      650,000 
The Business Advisory Limited     650,000 
Total                           2,525,000 
 
 
   In September 2015, as part of a GBP4.2 million round alongside other 
Foresight VCTs, the Company invested GBP475,000 in ABL Investments 
Limited ("ABL") to support its continuing 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. 
 
   In September 2015, as part of a GBP4.0 million round alongside other 
Foresight VCTs, the Company invested GBP250,000 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. Most contracts are long 
term, providing good revenue visibility, while more than half of the 
employees are experienced consultants. 
 
   In July 2015, the Company invested GBP500,000 as part of a GBP4.0 
million round alongside other Foresight VCTs to finance a management buy 
in/buy out of Coventry based Protean Software Limited ("Protean"). 
Protean develops and sells business management and field service 
management software for organisations involved in the supply, 
installation and maintenance of equipment, across sectors including 
facilities management, HVAC and elevator installation. Foresight has 
introduced two experienced software executives as CEO and Chairman 
respectively, who are working alongside three of the current directors 
to drive the business forward and execute growth plans. 
 
   In April 2015, the Company and Foresight 4 VCT each invested GBP650,000 
in shares and loan notes, alongside a further a GBP1.3 million 
investment by Foresight VCT, in Specac International Limited ("Specac") 
to finance a GBP2.6 million management buy-out of Specac Limited from 
Smiths Group plc. The three Foresight VCTs together acquired a majority 
equity shareholding with the management team holding the remaining 
equity. 
 
   Specac, based in Orpington, Kent, is a long established, 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. 
 
   In September 2015, as part of a GBP3.3 million round alongside other 
Foresight VCTs, the Company invested GBP650,000 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. 
 
   2.  Follow-on funding 
 
 
 
 
Company                                             GBP 
The SkillsGroup (formerly named AtFutsal Group)    34,014 
Industrial Efficiency II Limited                  187,500 
Autologic Diagnostic Group Limited*               158,820 
Total                                             380,334 
 
 
   * Representing capitalised interest. 
 
   3.  Realisations 
 
   Cole Henry PE 2, Kingsclere PE 3 and Whitchurch PE 1, all acquisition 
vehicles preparing to trade, repaid loans totaling GBP1,322,000. The 
resultant funds were utilised in making new investments during the year. 
 
   In November 2015, the Company received a dividend of GBP2,111,929 from 
Datapath. 
 
   In March 2016 the Company's interest in O-Gen Acme Trek was sold to 
Blackmead Infrastructure Limited, a subsidiary of Foresight's 
Inheritance Tax Solution, at book value for an initial cash 

consideration and a deferred consideration. 
 
   In July 2015, TFC effected a successful recapitalisation and share 
reorganisation, through which the Foresight VCTs were repaid all their 
outstanding loans, together with accrued interest and a redemption 
premium. The company was repaid GBP568,165 and increased its 
shareholding from 14.29% to 17.78%. 
 
   During the year, 71,313 ordinary shares in AIM listed Zoo Digital were 
sold, realising GBP8,023. 
 
   Loan repayments of GBP93,096 were received from the administrators of 
i-plas Group. 
 
   After financial year end, on 8 July 2016, the investment in Integrated 
Environmental Solutions Limited was sold for the current valuation 
amount GBP425,000, realising a profit of GBP100,000 on original cost. 
 
   4. Material provisions to a level below cost 
 
 
 
 
Company                                             GBP 
The SkillsGroup (formerly named AtFutsal Group)   411,679 
MplSystems Limited                                113,530 
Total                                             525,209 
 
 
   The valuation of the investment in Aerospace Tooling Holdings Limited 
was reduced by GBP1,755,797 to GBP93,000 during the year due to a lower 
level of orders from its two largest customers. The cost of investment 
at the year end was GBP50,000. The full original cost of the investment 
has already been repaid to Foresight 3 VCT plc. 
 
   5. Performance Summary 
 
   The net asset value per Ordinary Share decreased by 6.3% to 59.6p per 
share as at 31 March 2016 from 66.8p per Ordinary Share as at 31 March 
2015 (after incorporating the 3p per share dividend paid in March 2016). 
As explained below, the net asset value was negatively impacted by a 
GBP1.76m reduction in the valuation of Aerospace Tooling Holdings. 
During the year the Company benefitted from good performances by several 
portfolio companies. Together with Itad and Specac, CoGen Limited, 
Industrial Efficiency II, Ixaris Systems Limited, Positive Response 
Communications Limited, and The Bunker Secure Hosting Limited all 
performed well, supporting an increase in their aggregate valuation of 
over GBP1.7 million. Five new investments totalling GBP2.5 million were 
made during the year and are already making encouraging progress, 
particularly Itad and Specac. 
 
   Itad has won several large long term contracts, providing good revenue 
visibility for the current and future years, while Specac has 
successfully launched new products and increased sales, particularly in 
the important US market. 
 
   TFC's valuation was reduced by GBP1.13 million during the year 
reflecting reduced demand from the Oil & Gas sector in marked contrast 
to positive signs of improvement across a variety of other industry 
sectors. 
 
   As a consequence of the VCT rule changes referred to above, Foresight's 
marketing efforts have already been refocused towards finding more 
suitable, later stage development capital investment opportunities, with 
the aim of accelerating the growth of established, profitable companies. 
A number of such opportunities are currently under active consideration. 
The M&A market continues to be active, providing opportunities for 
future realisations. 
 
   Portfolio Company Highlights 
 
   In September 2015, as part of a GBP4.2 million round alongside other 
Foresight VCTs, the Company invested GBP475,000 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 GBP1.9 million on sales of 
GBP5.5 million in its financial year to 31 August 2015, reflecting a 
strong focus on customer service, speed of delivery and value for money. 
Growth is forecast to be achieved by broadening both the product range 
and customer base in the UK, improving efficiency, marketing materials 
and the website and, in due course, expanding internationally. A new 
Chairman with experience of the office supplies market has been 
appointed to the Board, alongside a new Finance Director, with plans in 
hand to recruit a COO. A Financial Controller and additional salesmen 
have been recruited. 
 
   In June 2013, the Company invested GBP500,000 alongside other Foresight 
VCTs in a GBP3.5 million investment in Dundee-based Aerospace Tooling 
Holdings ("ATL"), a well-established specialist engineering company. 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 GBP4.3 million. 
 
   Reflecting particularly strong cash generation, the company effected a 
recapitalisation and dividend distribution in September 2014, returning 
the entire GBP3.5 million cost of the Foresight VCTs' investments made 
only 15 months previously. Having received full repayment of its loan of 
GBP450,000 and dividends of GBP50,000 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, 
EBITDA of GBP2.5 million being achieved on sales of GBP8.1 million, 
reflecting weak trading in the final quarter of the year due to a 
premature reduction of work under a major defence contract. This 
unexpected early contract termination 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. 
 
   Trading in the first half to December 2015 continued to be weak, with 
EBITDA losses being incurred on significantly lower sales. A new 
experienced CEO was appointed in January 2016 and the company has since 
seen improving sales, winning customers and returning to profitability. 
 
   Following the GBP48.0 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 GBP1.98 million. For the 
year to 31 December 2014, an EBITDA of GBP5.4 million was achieved on 
sales of GBP19.7 million, with sales relatively stronger 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 impacted EBITDA during 2015, reducing this to GBP4.0 million on 
revenues of GBP18.5 million for the year to 31 December 2015, in line 
with expectations. At 31 March 2016, the company had cash balances of 
over GBP6.0 million. Management are transitioning the existing customer 
base onto the new support service platform and growing sales of the new 
product and service to both new and existing customers. Depending on the 
number of existing customers transitioning onto the new product and 
service and level of new customer sales, this change in strategy will 
also impact EBITDA in 2016 but is expected to increase shareholder value 
over the longer term. Initial signs are promising, with largely positive 
feedback from customers. 
 
   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 as well as a comprehensive 
range of contract manufacturing services. A GBP1.3 million round to 
finance capital expenditure and working capital was completed in August 
2013, in which the Company invested GBP99,066 in the first tranche and a 
further GBP50,901 in the second, final tranche in April 2014. For the 
year to March 2015, a substantially reduced operating loss of GBP528,000 
was incurred on higher sales of GBP1.1 million (2014: an operating loss 
of GBP1.1 million incurred on sales of GBP325,000). 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 helping to offset investment in the proprietary products being 
developed by the Molecular Diagnostics division. 
 
   To finance the development of new products, a GBP1.6 million round was 
concluded in January 2015, of which GBP890,000 was committed by the 
Foresight VCTs. The Company committed to invest GBP214,335, of which 
GBP127,997 was invested as the first tranche. With a lower than planned 
cash outflow, the second, final tranche is now expected to be drawn down 
during late 2016. 
 
   Building on the success of its GBP48.0 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 GBP750,000 for 

equity in CoGen, alongside a loan of GBP500,000 from Una Group. Funds 
managed by Foresight hold 22.13% of CoGen's equity, including Foresight 
VCT (3.53%), Foresight 3 VCT (7.73%), Foresight 4 VCT (8.55%) and the 
Foresight UK Sustainable EIS fund (2.32%). O-Gen UK remains the 
shareholder in BBPL. 
 
   In March 2015, CoGen reached financial close on a GBP53.0 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 GBP8.0 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 GBP98.0 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 more 
uncertain with the Government's changes in renewables policy, in 
particular uncertainty relating to future CfD auctions. Cogen was 
unfortunately not able to close its final, potential GBP120.0 million 
Renewable Obligation Certificates ("ROC") project as time expired under 
the ROC deadline. Cogen's primary deal pipeline comprises four projects 
in Northern England and it plans to bid in the CfD auction due at the 
end of 2016, with the aim of closing projects, if successful in that 
auction, during 2017. BIG is expected to jointly fund this process, 
requiring a total of GBP5.0 million of investment. 
 
 
 
 
                                             Year of financial 
Project Name           Project size (GBPm)         close          Shareholding 
Birmingham Bio Power 
 Limited                                48                  2013         20.0% 
Plymouth                                20                  2015         50.0% 
Welland                                 53                  2015         12.5% 
Ince Park                               98                  2015         20.0% 
 
 
   It is unlikely that full value will be secured for Foresight VCT's 
stakes in Cogen and O-Gen UK until the portfolio of plants is fully 
operational. However, Foresight Group will keep this situation under 
review. 
 
   In February 2014, the O-Gen Acme Trek facility in Stoke-on-Trent was 
granted planning permission for an enlarged 8MW waste wood to energy 
plant. It was not possible, however, to finance and redevelop the site 
as a project qualifying for ROCs in time for the ROC deadline. In March 
2016 the Company's interest in O-Gen Acme Trek was sold to Blackmead 
Infrastructure Limited, a subsidiary of Foresight's Inheritance Tax 
Solution, at book value based on an independent valuation for an initial 
cash consideration and a deferred consideration element. 
 
   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 
GBP6.8 million was achieved on sales of GBP19.3 million, with the North 
American division trading ahead of budget (2014: record operating 
profits of GBP7.4 million on sales of GBP18.7 million). In November 
2015, Datapath paid dividends of GBP6.3 million, comprising GBP2.1 
million to the Company and the same amount to each of Foresight 2 VCT 
and Foresight 4 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 over the next year. For the year to March 
2016, the company made an operating profit of GBP5.9 million on sales of 
GBP19.9 million. 
 
   In May 2012, the Company invested GBP200,000 in Flowrite Refrigeration 
Holdings alongside other Foresight VCTs to finance the GBP3.2 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 GBP740,000 on sales of GBP10.8 million after 
substantial investment in new engineers and systems. 
 
   In July 2015, the company completed another recapitalisation, returning 
GBP156,000 of accrued interest to the Foresight VCTs, including 
GBP23,000 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 GBP404,000 on sales of 
GBP12.8 million, reflecting difficulties arising from installing a new 
workflow IT system to improve operational efficiency and optimise 
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. 
 
   ICA Group is a leading document management solutions provider in the 
South East of England, reselling and maintaining office printing 
equipment to customers in the commercial and public sectors. For the 
year to 31 January 2015, trading was strong and ahead of budget, with an 
EBITDA of GBP645,000 being achieved on sales of GBP3.7 million (2014: 
EBITDA of GBP561,000 on sales of GBP3.0 million). Trading in the year to 
31 January 2016 was in line with expectations and reflected continuing 
investment in developing the sales team. With stronger demand from 
 
   SMEs and good cash generation, ICA completed a recapitalisation and 
reorganisation in December 2014, enabling loans and interest totalling 
GBP600,000 to be repaid. The recapitalisation was financed through a 
GBP1.0 million bank loan facility and the company's cash resources. As 
part of the reorganisation, Steven Hallisey, a seasoned executive with 
relevant sector experience, was appointed Executive Chairman in January 
2015. 
 
   In July 2014, as part of the first GBP1.4 million tranche of a phased 
funding round totalling up to GBP4.4 million by three Foresight managed 
funds, a new investment of GBP326,740 was made by the Company in 
Industrial Efficiency II, alongside GBP990,760 from Foresight VCT. In 
December 2014, the second GBP500,000 tranche was advanced, GBP125,000 
from the Company and GBP375,000 from Foresight VCT. Industrial 
Efficiency II provides energy efficiency fuel switching services, 
enabling customers to make significant cost savings and reduce 
emissions. Once each installation is completed, the company charges the 
customer based on the volume of fuel and electricity consumed at each 
site up to a pre agreed level, which is expected to be reached after 
five years, at which time the contract will terminate and payments 
reduce to a nominal level. The company is trading well to date, with 
healthy cash balances. 
 
   In September 2015, as part of a GBP4.0 million round alongside other 
Foresight VCTs, the Company invested GBP250,000 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 2015, Itad achieved an EBITDA of 
 
   GBP1.5 million on revenues of GBP8.8 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. The first 
deployment went live in late 2015, the second in early 2016 with a third 
expected shortly. Ixaris was awarded an EU grant of EUR2.5 million, of 
which EUR1.6 million will be received over three years, to help fund the 
existing platform technology roadmap, which highlights the innovative 
nature of the Payment System. 
 
   For part of 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 GBP501,000 was incurred on sales of GBP10.8 
million, ahead of budget (2014: an EBITDA loss of GBP622,000 on sales of 
GBP9.5 million). 
 
   Mplsystems Limited (formerly The Message Pad) develops and sells contact 

centre and customer service software on a SaaS (Software as a Service) 
basis to improve the efficiency of its customers' call centres and 
customer experience. For the year to 31 May 2015, the company incurred a 
small operating loss on sales of GBP2.4 million, appreciably ahead of 
the budgeted loss (2014: operating loss of GBP777,000 on sales of GBP1.8 
million). The transition towards a SaaS business model continues to 
progress well in the current year to date with a number of new contracts 
and customers being won. The focus remains on sales, principally 
expanding initial ticket sizes for larger customers in order to justify 
a relatively high cost of customer acquisition. 
 
   For the year to the 31st May 2016, mplsystems achieved generated revenue 
of GBP2.9 million, 22% ahead of revenue for the same period last year. 
Focus remains on new business sales signing more SaaS deals. In terms of 
the full year outlook, management forecast strong growth momentum to 
continue. An experienced business development manager from IBM is due to 
join the sales team in June 2016. Mplsystems has been included for the 
second year running in the prestigious Gartner CRM Magic Quadrant. 
 
   In December 2014, the Company invested GBP500,000 alongside other 
Foresight VCTs in a GBP2.0 million round to finance a shareholder 
recapitalisation of Positive Response Communications. Established in 
1997, the company monitors the safety of people and property from 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 GBP637,000 was achieved on sales of GBP2.0 million. In the 
financial year to 31 March 2016, sales grew modestly with reduced EBITDA 
profits, reflecting investment in improving efficiency and systems and 
recruitment of more sales staff. The management team has been 
strengthened with the appointment of three experienced executives as 
Chairman, CEO and Finance Director respectively. 
 
   In April 2013, the Company invested GBP650,000 alongside other Foresight 
VCTs in a GBP1.8 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 Acton, 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 City 
which provides camera, audio and lighting rental for TV production, plus 
crew and related production services. These two acquisitions were 
supported by a further investment of GBP1.3 million from the Foresight 
VCTs, of which the Company invested GBP451,385. 
 
   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. 
 
   For the year to 31 December 2014, the company achieved an EBITDA of 
GBP2.3 million on revenues of GBP8.1 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 strong with an 
EBITDA of GBP3.3 million being achieved on sales of GBP11.5 million, 
reflecting both organic growth, driven principally by the strong 
performance of the London office, and impact of the acquisitions during 
the year. 
 
   In July 2015, as part of a GBP4.0 million round alongside other 
Foresight VCTs, the Company invested GBP500,000 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, EBITDA of GBP900,000 was 
achieved on sales of GBP3.0 million. Trading in the year to 31 March 
2016 was ahead of the previous year while profits were in line with the 
previous year, reflecting increased investment and overheads. 
 
   In April 2015, Foresight funds invested GBP2.6 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 
GBP650,000, alongside GBP1.3 million from Foresight VCT and 
 
   GBP650,000 from Foresight 4 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 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 EBITDA of GBP906,000 
on sales of GBP6.9 million. Trading in the current year to date has 
exceeded expectations with profit growth ahead of forecast, reflecting 
greater focus on sales and costs. The company has accelerated new 
product development and successfully launched new products. A 
non-executive Chairman has also been appointed with a strong sales and 
marketing background in the scientific instrumentation market who will 
complement the existing management team and assist in further developing 
the business. 
 
   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 GBP2.8 million on sales of GBP20.3 
million (2014: operating profit of GBP2.8 million on sales of GBP19.5 
million). Trading in the year to 31 March 2016, however, was appreciably 
weaker than budgeted due to a general downturn in the UK manufacturing 
sector, particularly the Oil and Gas sector. 
 
   In July 2015, the company effected a successful recapitalisation, as a 
result of which GBP2.4 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%. The Company received GBP568,165 and increased its 
shareholding from 14.29% to 17.78%. A number of senior management 
changes and promotions were made to facilitate the planned retirement of 
the Chairman, helping the CEO to drive strategic growth projects, 
particularly in Germany and focus on new customer targets within the 
aerospace sector. In April 2015, two senior managers were promoted to 
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. 
 
   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 GBP2.2 million was achieved on 
sales of GBP9.6 million (2014: EBITDA of GBP2.2 million on sales of 
GBP9.3 million). Recurring annual revenues presently exceed GBP9.3 
million while cash balances remain healthy. On 31 March 2015, The Bunker 
repaid all its shareholder loans and outstanding interest totalling 
GBP6.5 million, financed through a GBP5.7 million secured medium term 
bank loan plus GBP1.0 million from its own cash resources. In total, 
GBP5.1 million was repaid to the Foresight VCTs, comprising GBP3.0 
million of loan principal and GBP2.1 million of interest. The Company 
received GBP1.7 million, comprising GBP1.3 million of loan principal and 
GBP408,994 of interest and retains an 10.3% shareholding. 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. A number of acquisitions have been 
reviewed with a view to increasing the scale of operations. 
 
   In September 2015, as part of a GBP3.3 million round alongside other 
Foresight VCTs, the Company invested GBP650,000 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, a net profit before tax of GBP1.4 
million on sales of GBP4.2 million was achieved, well ahead of the prior 
year. Management has been strengthened by the appointment of a new COO 
in January 2016 and a new experienced, non-executive Chairman. 
 
   Reflecting a decline in trading in the second half of the year, The 
SkillsGroup (formerly named AtFutsal Group) was placed into 
administration on 10 December 2015, with the prospect of only minimal 

recoveries. The company ran government-approved education programmes for 
students aged 16-18 years old, sourced from Football clubs, colleges, 
academies and training/accreditation organisations, the funding for 
which was provided by the Education Funding Agency. Arenas in Birmingham, 
Leeds and Swindon were used in part for these education programmes. 
 
   Trading during 2015 was weak, resulting in a small EBITDA loss being 
incurred, compounded by the number of students undertaking programmes 
for the new academic year which began in September 2015 falling by 50% 
compared to the previous year. In early 2015, as part of a GBP355,000 
funding round to support the planned growth of the Educational division 
and a related share reorganisation, the Foresight VCTs invested a 
further GBP300,000 (GBP100,000 in February 2015 and GBP200,000 in April 
2015) of which the Company invested GBP34,014. Despite changes made to 
senior management trading remained weak and the decision was made to 
make a full provision of GBP411,679 against the cost of the investment, 
reducing the valuation to nil. 
 
   Russell Healey 
 
   Head of Private Equity Foresight Group 
 
   28 July 2016 
 
   Principal risks, risk management and regulatory environment 
 
   The Board believes that the principal risks faced by the Company are: 
 
 
   -- Economic risk - events such as an economic recession and movement in 
      interest rates could affect smaller companies' performance and 
      valuations. The Company mitigates this risk by investing in a diversified 
      portfolio of companies across a variety of sectors which provides 
      protection against such events. 
 
   -- Loss of approval as a Venture Capital Trust - the Company must comply 
      with Section 274 of the Income Tax Act 2007 which allows it to be 
      exempted from corporation tax on investment gains. Any breach of these 
      rules may lead to: the Company losing its approval as a VCT; qualifying 
      shareholders who have not held their shares for the designated holding 
      period having to repay the income tax relief they obtained; and future 
      dividends paid by the Company becoming subject to tax in the hands of 
      investors. The Company would also lose its exemption from corporation tax 
      on capital gains. To mitigate this risk the company employs specialists 
      lawyers to monitor and advise on matters that may impact qualifying 
      status. 
 
   -- Investment and strategic - inappropriate strategy, poor asset allocation 
      or consistently weak stock selection leading to under performance and 
      poor returns to shareholders. To mitigate this risk the Company ensures 
      its directors have the appropriate qualities and experience to make 
      decisions that maximise shareholder benefit. 
 
   -- Regulatory - the Company is required to comply with the Companies Acts 
      2006, the rules of the UK Listing Authority and United Kingdom Accounting 
      Standards. Breach of any of these might lead to suspension of the 
      Company's Stock Exchange listing, financial penalties or a qualified 
      audit report. To mitigate this risk the company ensures the staff of the 
      Investment Manager have the appropriate knowledge and experience to 
      prevent breaches of any required standards and where appropriate will 
      seek professional advice on regulatory matters concerning the company. 
 
   -- Reputational - inadequate or failed controls might result in breaches of 
      regulations or loss of shareholder trust. To mitigate this risk the 
      Company maintains a transparent relationship with its shareholders and 
      regularly solicits their views. 
 
   -- Operational - failure of the Manager's or Company Secretary's accounting 
      systems or disruption to its business leading to an inability to provide 
      accurate reporting and monitoring. To mitigate this risk the Company has 
      a business continuity plan in place and regularly reviews all third party 
      service providers to ensure they have similar plans and procedures in 
      place. 
 
   -- Financial - inadequate controls might lead to misappropriation or loss of 
      assets. Inappropriate accounting policies might lead to misreporting or 
      breaches of regulations. Additional financial risks, including interest 
      rate, credit, market price and currency, are detailed later in this note. 
 
   -- Market risk - investment in AIM traded, ISDX Growth Market traded and 
      unquoted companies by its nature involves a higher degree of risk than 
      investment in companies traded on the main market. In particular, smaller 
      companies often have limited product lines, markets or financial 
      resources and may be dependent for their management on a small number of 
      key individuals. In addition, the market for stock in smaller companies 
      is often less liquid than that for stock in larger companies, bringing 
      with it potential difficulties in acquiring, valuing and disposing of 
      such stock. 
 
   -- Liquidity risk - the Company's investments, both unquoted and quoted, may 
      be difficult to realise. Furthermore, the fact that a share is traded on 
      AIM or ISDX Growth Markets does not guarantee that it can be realised. 
      The spread between the buying and selling price of such shares may not 
      reflect the price that any realisation is actually made. 
 
   The Board regularly reviews the principal risks and uncertainties facing 
the Company which the Board and the Manager have identified and the 
Board sets out delegated controls designed to manage those risks and 
uncertainties. Key risks within investment strategy are managed by the 
Board through a defined investment policy, with guidelines and 
restrictions, and by the process of oversight at each Board meeting. 
Operational disruption, accounting and legal risks are also covered at 
least annually and regulatory compliance is reviewed at each Board 
meeting. The Directors have adopted a robust framework of internal 
controls which is designed to monitor the principal risks and 
uncertainties facing the Company and provide a monitoring system to 
enable the Directors to mitigate these risks as far as possible. Details 
of the Company's internal controls are contained in the Corporate 
Governance and Internal Control sections. 
 
 
 
   Income Statement 
 
   for the year ended 31 March 2016 
 
 
 
 
                Notes    Year ended 31 March 2016     Year ended 31 March 2015 
                       Revenue   Capital     Total    Revenue   Capital     Total 
                       GBP'000   GBP'000    GBP'000   GBP'000   GBP'000    GBP'000 
Realised 
 losses on 
 investments        8        -   (10,922)   (10,922)        -   (10,012)   (10,012) 
Investment 
 holding 
 gains              8        -      7,466      7,466        -      7,607      7,607 
Income              2    2,360          -      2,360      864          -        864 
Investment 
 management 
 fees               3    (186)      (559)      (745)    (216)      (648)      (864) 
Other expenses      4    (360)          -      (360)    (420)          -      (420) 
Return/(loss) 
on ordinary 
activities 
before 
taxation                 1,814    (4,015)    (2,201)      228    (3,053)    (2,825) 
Taxation            5        -          -          -     (35)         35          - 
Return/(loss) on 
 ordinary activities     1,814    (4,015)    (2,201)    193      (3,018)    (2,825) 
 after taxation 
Return/(loss) 
 per Ordinary     7      3.6p     (8.0)p     (4.4)p     0.4p     (6.0)p     (5.6)p 
 Share 
 
 
   The total column of this statement is the profit and loss account of the 
Company and the revenue and capital columns represent supplementary 
information. 
 
   All revenue and capital items in the above Income Statement are derived 
from continuing operations. No operations were acquired or discontinued 
in the year. 
 
   The Company has no recognised gains or losses other than those shown 
above, therefore no separate statement of total recognised gains and 
losses has been presented. 
 
   Reconciliation of Movements in Shareholders' Funds 
 
 
 
 
                                                                            Capital 
                                                             Share         redemption 
                               Called-up share capital   premium account    reserve      Profit and loss account     Total 
  Year ended 31 March 2015             GBP'000               GBP'000        GBP'000              GBP'000            GBP'000 
 
  As at 1 April 2014                     512                  8,899           1,972              26,648             38,031 
Expenses in relation to 
 previous years share 
 issues*                                             -              (31)            -                          -       (31) 
Repurchase of shares                               (8)                 -            8                      (490)      (490) 
Dividends                                            -                 -            -                    (1,010)    (1,010) 
Transaction costs                                    -                 -            -                       (12)       (12) 
Loss for the year                                    -                 -            -                    (2,825)    (2,825) 
As at 31 March 2015                                504             8,868        1,980                   22,311**     33,663 
 
 
   * Trail commission payable to financial advisors in the year. 
 
   ** Of this amount GBP5,417,000 (2015: GBP16,815,000) is realised and 
distributable. 
 
 
 
 
                                                                            Capital 
                                                             Share         redemption 
                               Called-up share capital   premium account    reserve      Profit and loss account     Total 
  Year ended 31 March 2016             GBP'000               GBP'000        GBP'000              GBP'000            GBP'000 

 
  As at 1 April 2015                     504                  8,868           1,980              22,311             33,663 
Expenses in relation to 
 previous years share 
 issues*                                             -              (36)            -                          -       (36) 
Repurchase of shares                               (6)                 -            6                      (235)      (235) 
Dividends                                            -                 -            -                    (1,504)    (1,504) 
Transaction costs                                    -                 -            -                          8          8 
Loss for the year                                    -                 -            -                    (2,201)    (2,201) 
As at 31 March 2016                                498             8,832        1,986                   18,379**     29,695 
 
 
   Balance Sheet 
 
   at 31 March 2016 
 
 
 
 
                                                            As at      As at 
                                                           31 March   31 March 
                                                             2016       2015 
                                                   Notes   GBP'000    GBP'000 
 
Fixed assets                                                28,340     31,532 
Investments held at fair value through profit 
 or loss                                               8 
 
  Current assets                                             28,340     31,532 
Debtors                                                9        941        730 
Cash                                                            620      1,507 
 
  Creditors                                                   1,561      2,237 
Amounts falling due within one year                   10      (206)      (106) 
Net current assets                                            1,355      2,131 
Net assets                                                   29,695     33,663 
 
  Capital and reserves 
Called-up share capital                               11        498        504 
Share premium account                                         8,832      8,868 
Capital redemption reserve                                    1,986      1,980 
Profit and loss account                                      18,379     22,311 
Equity shareholders' funds                                   29,695     33,663 
Net asset value per Ordinary Share                    12      59.6p      66.8p 
 
 
   Cash Flow Statement 
 
   for the year ended 31 March 2016 
 
 
 
 
                                                          Year ended  Year ended 
                                                           31 March    31 March 
                                                             2016        2015 
                                                            GBP'000     GBP'000 
 
  Cash flow from operating activities 
Investment income received                                       306         942 
Dividends received from investments                            2,112          50 
Deposit and similar interest received                              1           1 
Investment management fees paid                                (745)       (864) 
Secretarial fees paid                                          (127)       (127) 
Other cash payments                                            (238)       (262) 
Net cash inflow/(outflow) from operating activities 
 and returns on investment                                     1,309       (260) 
Taxation                                                           -           - 
Investing activities 
Purchase of unquoted investments and investments quoted 
 on AIM                                                      (2,747)     (1,825) 
Net proceeds on sale of unquoted investments                   1,890       4,566 
Net proceeds on sale of quoted investments                         8          19 
Net proceeds on deferred consideration and liquidation 
 of investments                                                  314         295 
Net capital (outflow)/inflow from financial investment         (535)       3,055 
 
  Equity dividends paid                                      (1,504)     (1,010) 
 
Management of liquid resources                                     -         277 
Movement in money market funds 
 
  Financing                                                        -         277 
Expenses of previous years fund raising                         (36)        (57) 
Repurchase of own shares                                       (121)       (585) 
                                                               (157)       (642) 
(Decrease)/Increase in cash                                    (887)       1,420 
 
   Reconciliation of net cash flow to movement in net cash 
 
 
 
 
 
 
(Decrease)/increase in cash for the year   (887)  1,420 
Net cash at start of the year              1,507     87 
Net cash at end of year                      620  1,507 
 
 
   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 
March 2016, which were unmodified and did not contain any statements 
under S498(2) of Companies Act 2006 or S498(3) of Companies Act 2006, 
will be lodged with the Registrar of Companies. Statutory accounts for 
the year ended 31 March 2016 including an unmodified audit report and 
containing no statements under the Companies Act 2006 will be delivered 
to the Registrar of Companies in due course. 
 
   2.  The disclosures in this announcement 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. 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 Financial 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 Ordinary Share 
 
   Net asset value per Ordinary Share is based on net assets at the year 
end of GBP29,695,000 (2015: GBP33,663,000), and on 49,836,524 Ordinary 
Shares (2015: 50,370,401 Ordinary Shares), being the number of Ordinary 
Shares in issue at that date. 
 
   5.    Return per Ordinary Share 
 
 
 
 
                                                        Year ended  Year ended 
                                                         31 March    31 March 
                                                           2016        2015 
                                                          GBP'000     GBP'000 
 
  Total loss after taxation                               (2,201)     (2,825) 
Basic (loss)/return per share (note a)                      (4.4)p      (5.6)p 
Revenue return from ordinary activities after taxation       1,814         193 
Revenue return per share (note b)                             3.6p        0.4p 
Capital loss from ordinary activities after taxation       (4,015)     (3,018) 
Capital loss per share (note c)                             (8.0)p      (6.0)p 
Weighted average number of shares in issue in the 
 year                                                   50,254,735  50,900,357 
 
   Notes: 
 
   a) Total loss 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 loss 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 Company's Annual General Meeting will take place on 30 August 2016 
at 1.00pm. I look forward to welcoming you to the Meeting, which will be 
held at the offices of Shakespeare Martineau LLP in London. 
 
   Prior to the formal business of the Annual General Meeting, Foresight 
Group, the investment Manager and two investee companies will give 
presentations between 12.00pm and 1.00pm. 
 
   7.    Income 
 
 
 
 
                      Year ended  Year ended 
                       31 March    31 March 
                         2016        2015 
                        GBP'000     GBP'000 
Loan stock interest          247         813 
Dividend income            2,112          50 
Bank deposits                  1           1 
                           2,360         864 
 
 
   8.    Investments held at fair value through profit or loss 
 
 
 
 
                                     Quoted   Unquoted   Total 
                                     GBP'000   GBP'000   GBP'000 
Book cost as at 1 April 2015           2,486    30,990    33,476 
Investment holding losses            (2,152)       208   (1,944) 
Valuation at 1 April 2015                334    31,198    31,532 
Movements in the year: 
Purchases at cost**                        -     2,906     2,906 
Disposal proceeds                        (8)   (2,080)   (2,088) 
Realised losses*                        (18)  (10,992)  (11,010) 
Investment holding gains***               11     6,989     7,000 
Valuation at 31 March 2016               319    28,021    28,340 
Book cost at 31 March 2016             2,460    20,824    23,284 
Investment holding (losses)/gains    (2,141)     7,197     5,056 
Valuation at 31 March 2016               319    28,021    28,340 
 
 
   * Included within realised gains/(losses) on investments in the Income 
Statement is GBP88,000 of deferred consideration in relation to the 
disposal of Alaric Systems Limited in a previous year. 
 
   ** Not included within purchases of investments in the cashflow 

statement is GBP159,000 of capitalised interest which was recognised in 
the year. 
 
   *** Investment holding gains in the income statement includes GBP466,000 
of deferred consideration recognised in the year. 
 
   9.  Transactions with the manager 
 
   Foresight Group, acting as investment manager to the Company in respect 
of its venture capital investments, earned fees of GBP745,000 during the 
year (2015: GBP864,000). Fees excluding VAT of GBP127,000 (2015: 
GBP127,000) were received during the year for company secretarial, 
administrative and custodian services to the Company. 
 
   At the balance sheet date, there was GBP1,839 due from Foresight Group 
(2015: GBP14,446 due to Foresight Group) and GBPnil due to Foresight 
Fund Managers Limited (2015: GBPnil due to Foresight Fund Managers). No 
amounts have been written off in the year in respect of debts due to or 
from these parties. 
 
   Foresight Group also received from investee companies arrangement fees 
of GBP75,750 (2015: GBP41,828). VCF partners, an associate of Foresight 
Group, received from investee companies, Directors' fees of GBP113,072 
(2014: GBP144,795). 
 
   10.    Related party transactions 
 
   No Director has an interest in any contract to which the Company is a 
party. 
 
   This announcement is distributed by NASDAQ OMX Corporate Solutions on 
behalf of NASDAQ OMX Corporate Solutions clients. 
 
   The issuer of this announcement warrants that they are solely 
responsible for the content, accuracy and originality of the information 
contained therein. 
 
   Source: Foresight 3 VCT PLC via Globenewswire 
 
   HUG#2031656 
 
 
  http://www.foresightgroup.eu/ 
 

(END) Dow Jones Newswires

July 28, 2016 13:58 ET (17:58 GMT)

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