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Performance during the period

Ordinary Shares Fund

The net asset value per Ordinary Share increased by 2.4% (after adding back the interim dividend of 7.0p per Ordinary Share paid on 1 April 2016) to 82.6p per share as at 30 June 2016, from 87.5p at 31
December 2015. The Ordinary Shares fund benefitted during the period from good performances by several portfolio companies, most notably Datapath, Protean and Specac which performed particularly strongly, resulting in an increase in their aggregate valuation of £4.7 million, or 4.1p per share.

Having completed seven investments during the previous year, the Ordinary Shares fund continues to focus on new opportunities.
However, uncertainty following the recent changes to VCT rules and more recently the EU referendum have delayed completing further deals. We are currently in exclusivity and in due diligence on two new investments for the Ordinary Shares fund with offers on funding under negotiation on several other investments.

Further details can be found in the Ordinary Shares Portfolio Review later in this report.

Planned Exit Shares Fund

The net asset value per Planned Exit Share increased during the period to 30 June 2016 by 23.9% to 45.6p per share from 36.8p at 31 December 2015. This reflected the successful sale of Trilogy

Communications Limited after the period end, providing an uplift of over £1.3 million for the fund. We are working to realise the two remaining investments. Further details can be found in the Planned Exit Shares Portfolio Review later in this report.

Infrastructure Shares Fund

During the period, the net asset value per Infrastructure Share increased by 1.3% (after adding back the 2.5p interim dividend paid on 11 March 2016) to 91.1p per share as at 30 June 2016, from 92.4p at 31 December 2015.

On 1 July 2016, the Infrastructure Shares fund successfully completed the sale of FS Pentre Limited, the holding company of the Pentre solar farm project, for £4.3 million which represented a premium of
£0.4 million above book value.

The portfolio which, following the Pentre sale comprises investments in three ground mounted solar plants and eight operating PFI projects in the health and education sectors, performed in line with expectations during the period.

Further details can be found in the Infrastructure Shares Portfolio Review later in this report.

Fund raising for the Ordinary Shares Fund

We continue to see a number of high quality private equity investment opportunities. In order to take advantage of current opportunities, on 18 January 2016, the Board launched a full prospectus to raise up to £30 million through the issue of new Ordinary Shares. The issue has been well received by both new and existing investors, with £25.3 million raised through the issue of 27.5 million new Ordinary Shares in the period. The offer currently remains open.

We believe that, with the UK and US economies slowly recovering and reducing UK uncertainty post Brexit, investing in growing, well managed private companies in this phase of the economic cycle should, based on past experience, generate attractive returns over the longer term.

Consequential Changes to certain Infrastructure Share Class investments

A consequence of the merger of the Company and Foresight 2 VCT in December 2015 meant that the Infrastructure Share Class had

controlling positions in four of its five qualifying investments. Under VCT rules, the Company benefits from a 12 month grace period within which to reduce its holdings in each asset to below 50% which could be achieved through partial or full disposals by December 2016.

On 1 July 2016, the Infrastructure Shares fund successfully completed the sale of FS Pentre Limited, the holding company of the Pentre
solar farm project, for £4.3 million which represented a premium of
£0.4 million above book value. Pentre was sold to another Foresight managed investment vehicle for an attractive premium reflecting an independent third party valuation. Pentre was one of the qualifying investments in which the Company held a controlling position.

The whole or part disposal of three of the remaining qualifying holdings is likely to be made to either a third party investor or to another fund managed by Foresight Group at an independently verified valuation. In order to continue to generate yield, any such part disposals would be expected to take place towards the end of 2016.

To bring the VCT’s holding down to 49.9% or less of each investment and satisfy this control test, a whole or part disposal of each of the three remaining controlled investments is required, as set out in the table below.


Estimated value to be disposed as at 30 June 2016:

Investee Company
Holding (£)
Fully Diluted Ownership
Required Disposal (£)
FS Hayford Farm Ltd
FS Tope Ltd
Drumglass HoldCo Ltd



The Board and Manager have given consideration to other current investment opportunities and whether any sale proceeds should be reinvested or paid out as dividends to Shareholders, and concluded that any sales proceeds should (subject to VCT implications for both the Company and Shareholders and any other statutory and regulatory constraints) be paid out as dividends to Shareholders. The rationale behind this decision is that the asset type which can be held within the fund is of a nature suited to longer term investment and the Board and Manager believe that Shareholders individually are in the best position to decide on what form of future investment is most suited to their needs. Shareholders are, therefore, likely to receive back a substantial proportion of their investment sooner than originally anticipated, and the total return from an investment in the fund is expected to be lower because of the shorter period that a part of their funds would be earning a return from infrastructure investments.

Impact of recent changes to VCT legislation

The budget in July 2015 introduced a number of significant changes to VCT legislation. Following 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 and 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.

The 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. Foresight VCTs will continue to focus on investing in established, growing, profitable companies with an attractive risk/return profile. The emphasis will change 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 Group 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, successful, track record, Foresight’s marketing efforts have already been refocused towards finding more 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 Group 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 all the implications of the new rules have yet to be clarified, it is clear that, over the medium term, as existing investments are realised, the change in investment emphasis and the nature of new investments will 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 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. We hope that in due course the current rules to enable VCTs to invest will be relaxed to allow an element of replacement capital alongside a significant element of growth capital
in any particular transaction. At this early stage, it is not possible to forecast the ultimate outcome of the review 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.

Click here to see a more in depth portfolio review.

Portfolio Company Highlights

Portfolio Highlights

In September 2015, as part of a £4.2 million round alongside other Foresight VCTs, the Ordinary Shares fund invested £2.75 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 year is in line with budget. Good progress has been made in shaping the new team and corporate structures 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. Held in the Ordinary Shares fund.

In June 2013, the Ordinary Shares fund invested £1.5 million alongside other Foresight VCTs in a £3.5 million investment in Dundee based Aerospace Tooling Corporation ("ATL"), a well-established specialist engineering company. ATL provides repair, refurbishment and remanufacturing services to large international companies 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 £1.35 million and dividends of £150,000 equal to the cost of its equity investment, the Ordinary Shares fund retained its original 23% 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 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 energy prices. 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. Sales were in line with the revised budget for the year and EBITDA losses were slightly reduced reflecting an improvement in trading in the last quarter. The new recently appointed CEO is continuing to have a positive impact on ATL with a key focus on sales growth, via new customer acquisition initiatives, in addition to exploring opportunities with the Company’s existing customers. The company is forecasting a return to profitability in the current year. Held in the Ordinary Shares fund.

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, as a Gold partner, Microsoft's Lync collaboration software (rebranded as Skype for Business) 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. Held in the Ordinary Shares and Planned Exit Shares funds.

For the year to December 2015, Aquasium Technology achieved an operating profit of £1.2 million on sales of £9.1 million, reflecting strong spares and service revenues with good visibility on the order pipeline for the current year (2014: £845,000 operating profit on sales of £10.1 million). Although trading was behind budget for the first half to June 2016, a number of significant orders have been won subsequently.

Aquasium is continuing the development of new electron beam technologies which are expected to have considerable commercial potential. During the year, the Ebflow (reduced pressure vacuum) machine was demonstrated to various potential customers, successfully welding thick steel in minutes rather than several hours. Although good progress is being made with potential international buyers of Ebflow machines, the sales cycle for this disruptive technology is expected to be slow and so investment in marketing and business development has been increased to accelerate sales of these machines.

In July 2015, the company repaid a loan of £166,667. At 30 June 2016 the Ordinary Shares fund held a loan of £166,667, due for repayment in Q3 2016, and 33% of Aquasium's equity. The investment in Aquasium has to date returned £3.8m, representing a multiple of over 2.0x cost. Held in the Ordinary Shares fund.

Following the £48 million secondary buy-out by Living Bridge (formerly ISIS Private Equity) in January 2012, the Ordinary Shares fund retained investments in equity and loan stock valued at £3.46 million in Autologic Diagnostics Group. 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 impacted EBITDA during 2015, reducing this to £4 million on revenues of £18.5 million for the year to 31 December 2015, in line with expectations.

Trading in the current year to date is at a similar level, with cash balances currently over £6.5 million. The company continues to make progress following the appointment of a new Chairman to further develop the strategy for growth over the coming months. This has included the newly launched Autologic Assist App in the period, which currently has 10,000 users. Held in the Ordinary Shares fund.

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 its own proprietary tests as well as contract developing and manufacturing on behalf of customers. An initial £1.3 million round to finance capital expenditure and working capital was completed in August 2013, in which the Ordinary Shares fund invested £99,066 in the first tranche and a further £50,929 in the second tranche in April 2014. For the year to March 2015, sales increased sharply to £1.05 million, with a reduced operating loss of £528,000 (2014: sales of £325,000, operating loss £1.05 million). For the year to 31 March 2016, trading was well ahead of budget, with 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 £1.6 million round was concluded in January 2015, of which £890,000 was committed by the Foresight VCTs. The Ordinary Shares fund invested £128,002 as the first tranche. The final tranche of £94,503 was drawn down in July 2016. Held in the Ordinary Shares fund.

In July 2012, the Ordinary Shares fund invested £2.5 million in Northampton based Blackstar Amplification Holdings alongside £1 million from Foresight 4 VCT to finance a management buy-out and provide growth capital. In the year to 30 April 2015, the company achieved an EBITDA of £537,000 on sales of £8.6 million (2014: £300,000 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. Held in the Ordinary Shares fund. 

Building on the success of its £48 million, 10MW Birmingham BioPower 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 in April 2016. Funds managed by Foresight hold 22.13% of CoGen's equity, including the Ordinary Shares fund (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 £53.0 million, 10MWe waste wood to energy plant in Welland, Northamptonshire, using the same technology and partners as in the BBPL project. This latest project was funded with investment from Balfour Beatty plc, Equitix and Noy (an Israeli investment fund), with CoGen earning development fees on the transaction whilst retaining a 12.5% shareholding in the project. Also in March, CoGen completed the acquisition of the entire O-Gen Plymtrek site in Plymouth, originally developed by Carbonarius and MITIE plc, on which an £8 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 more uncertain with the Government's changes in renewables policy, in particular relating to future CfD auctions. Cogen was unfortunately not able to close its final, potential £120 million ROC project as time expired under the ROC deadline. Cogen's primary deal pipeline comprises four projects in Northern England and plans to bid in the CfD auction due at the end of 2016, 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 million of investment.

Project Name
Project Size (£m)
Year Financial Close
Birmingham Biopower Limited
Ince Park

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. Held in the Ordinary Shares fund.

In February 2014, the O-Gen Acme Trek facility in Stoke-on-Trent was granted planning permission for an enlarged 8MW waste wood to energy plant but it was not possible to finance and redevelop the site as a project qualifying for Renewable Obligation Certificates ("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 Service, at book value for an initial cash consideration and a deferred consideration element due when certain conditions are met. Previously held in the Ordinary Shares fund.

Derby based Datapath Group is a world leading innovator in the field of computer graphics and video-wall display technology utilised in a number of international markets. The company is increasing its market share in control rooms, betting shops and signage and entering other new areas such as the medical market. 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, prior to the merger with Foresight VCT, Datapath paid dividends of £6.3 million, split equally between Foresight 2 VCT, Foresight 3 VCT and Foresight 4 VCT.

For the year to 31 March 2016, an operating profit of £5.9 million was achieved on sales of £19.9 million. Product development continues at a high rate, with seven new products or product variants expected to enter production by the end of the year. The new sales manager has recently strengthened the sales team with two new account managers in the US and two sales executives are being recruited for the Asia Pacific region. Held in the Ordinary Shares fund.

In September 2015, as part of a £3.9 million round alongside other Foresight VCTs, the Ordinary Shares fund invested £2.026 million (alongside £650,000 from Foresight 2 VCT) 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 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. Held in the Ordinary Shares  fund.

In May 2012, the Ordinary Shares fund invested £492,500 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 £1.06 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 £56,000 to the Ordinary Shares fund, 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 to improve operational efficiency and optimised 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 Finance Director. In order to improve profitability, the new management team are focused on cost reductions and delivering operational improvements through the peak summer trading period. Held in the Ordinary Shares  fund.

In September 2015, as part of a £4.5 million round alongside other Foresight VCTs, the Ordinary Shares fund invested £2.67 million (alongside £650,000 from Foresight 2 VCT) 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. 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. Held in the Ordinary Shares fund.

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 EBITDA of £645,000 being achieved on sales of £3,700,000 (2014: EBITDA of £561,000 on sales of £3,000,000). With stronger demand from SMEs and good cash generation, ICA completed a recapitalisation and reorganisation in December 2014, enabling loans and interest totalling £600,000 to be repaid. The recapitalisation was financed through a £1 million bank loan facility and the company’s cash resources. Trading in the year to 31 January 2016 was in line with expectations and reflected continuing investment in developing the sales team. As part of the reorganisation, Steven Hallisey, a seasoned executive with relevant sector experience, was appointed Executive Chairman in January 2015.

Trading in the relevant year to date is ahead of budget. Recruitment continues in the sales team, with a new business development person appointed while the sales team are generally performing well. The company has recently won an order for 60 machines at a large secondary school. Held in the Ordinary Shares fund.

Since July 2014, the Ordinary Shares fund invested £2.6 million in tranches in Industrial Efficiency II as part of a £4.4 million funding round alongside other Foresight managed funds. Industrial Efficiency II provides energy efficiency fuel switching services, enabling customers to make significant cost savings and reduce emissions and the company effectively receives a percentage of these savings. Held in the Ordinary Shares fund.

In December 2011 and March 2012, the Planned Exit Shares fund invested £875,000 by way of loans and equity to help fund a management buy-in at Industrial Engineering Plastics. The company is a long established plastics distributor and fabricator supplying a wide range of industries nationally, principally supplying ventilation and pipe fittings, plastic welding rods, hygienic wall cladding, plastic tanks and sheets. For the 18 month period ended 31 May 2014, following increased competition in its plastics distribution and industrial fabrication markets, the company achieved a reduced EBITDA
of £205,000 on sales of £6.7 million. Performance continued to deteriorate during summer 2014 and a new Chairman and experienced turnaround CEO were appointed. For the year to 31 May 2015, an EBITDA of £191,000 was achieved on sales of £4.5 million, after accounting for exceptional costs. Performance subsequently improved substantially through focussing on higher margin fabrication work.
Good progress was made in improving efficiency, cost control and sales channels. Fabrication capacity was increased and suppliers reviewed to improve margins.

Results for the year to May 2016 were disappointing, with a lower EBITDA on sales also lower at £3.6 million. This decline resulted from a fall in distribution revenues and slower progress on growing fabrication sales than originally budgeted, reflecting competitive pressures. Recent structural changes to the business are, however, beginning to result in signs of an improvement in sales. Held in the Planned Exit Shares fund.

In September 2015, as part of a £4.0 million round alongside other Foresight VCTs, the Ordinary Shares fund invested £2.75 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 2015, Itad achieved an EBITDA of £1.5 million on revenues of £8.8 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 year to 30 January 2016 the company achieved an EBITDA of £1.9 million on revenues of £12.1 million. Held in the Ordinary Shares  fund.

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. Ixaris was 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, 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: an EBITDA loss of £622,000 on sales of £9.5 million). EntroPay continues to perform well with a strong sales pipeline in prospect. Held in the Ordinary Shares  fund.

In December 2014, the Ordinary Shares fund invested £1 million alongside other Foresight VCTs in a £2 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 £2.04 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 additional sales staff. The management team has been strengthened with the appointment of three experienced executives as Chairman, CEO and Finance Director respectively. The company is trading in line with budget and continues to invest significantly in sales resource in anticipation of future growth. Held in the Ordinary Shares fund.

In April 2013, the Ordinary Shares fund invested £1.0 million 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 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. This acquisition was supported by a further investment of £750,000 from the Foresight VCTs, of which the Ordinary Shares fund invested £375,006.

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 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. Held in the Ordinary Shares fund.

In July 2015, as part of a £4.0 million round alongside other Foresight VCTs, the Ordinary Shares fund invested £2.5 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 similar, reflecting increased investment and overheads while cash remained strong. In the current year Protean continues to trade ahead of budget while cash continues to strengthen and currently totals £1.2 million. Held in the Ordinary Shares fund.

In April 2015, Foresight funds invested £2.645 million in shares and loan notes in Specac International ("Specac”) to finance a management buy-out of Specac Limited from Smiths Group plc. The Ordinary
Shares fund invested £1.345 million, alongside £650,000 from each of Foresight 3 VCT and 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 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. The company 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 has continued to perform ahead of budget following the strong full year performance to 31 March 2016. Held in the Ordinary Shares fund.

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). Trading in the year to 31 March 2016 was appreciably weaker than budgeted due to a general downturn in the UK manufacturing sector, most particularly the oil and gas industry.

The company has made an encouraging start to the current financial year, achieving above budget revenues and EBITDA. Key initiatives include strengthening the sales team, development of new product ranges and supplier price renegotiations. The Group is now showing good signs of improvement across a variety of industry sectors and higher margin products.

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 of 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 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 an aim to improve TFC’s sales strategy and industry focus. Held in the Ordinary Shares fund.

The Bunker Secure Hosting, which operates two ultra-secure data centres, continues to generate substantial profits at the EBITDA level.

For the year to 31 December 2015, an EBITDA of £2.2 million was achieved on sales of £9.6 million (2014: EBITDA of £2.2 million on sales of £9.3 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 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. Foresight 2 VCT received £1.41 million, comprising £1.065 million of loan principal and £345,000 of interest and retains an 8.69% shareholding. A new, experienced Sales Manager was 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. Held in the Ordinary Shares fund.

In September 2015, as part of a £3.3 million round alongside other Foresight VCTs, the Ordinary Shares fund invested £1.65 million 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 overheads in anticipation of accelerated sales growth. Management has been strengthened by the appointment of a new interim COO a new experienced, non-executive Chairman. Held in the Ordinary Shares fund.

In August 2013, the Ordinary Shares fund invested £1.5 million alongside Foresight 4 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. 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 Ordinary Shares fund received £1.2 million. Combined with interest received, the investment in Thermotech has now returned over 1x cost with the Ordinary Shares fund still retaining a 15.3% equity stake. Held in the Ordinary Shares fund.

Following period end, the Company successfully completed the sale of Trilogy Communications to California based Clear-Com LLC. Trilogy designs and sells market leading, real time video and audio solutions for the broadcast and defence markets, globally. The Ordinary Shares fund received £574,000 in cash following completion (as compared with a carrying value of £337,264 at 31 March 2016) and the Planned Exit Shares fund received £1,372,000 in cash following completion (compared with a carrying value of £799,029 at 31 March 2016), with further deferred consideration payable to each fund subject to warranty claims and tax claims. This result represents a remarkable turnaround in Trilogy’s fortunes and demonstrates the benefit of active asset management by the Foresight investment management team. Held in the Ordinary Shares and Planned Exit Shares funds.

Russell Healey
Head of Private Equity Foresight Group
31 August 2016

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About Us

The information contained on these website pages (this "Site”) is communicated and issued by Foresight Group LLP and Foresight Group CI Limited (details below) in accordance with the following terms and conditions. By accessing any part of this Site, you will be deemed to have accepted these Terms and Conditions in full. If you do not accept these Terms and Conditions please do not continue to access this Site.

Foresight Group LLP

Foresight Group LLP is authorised and regulated by the Financial Conduct Authority ("FCA”). FCA firm reference number 198020. The website of the FCA can be accessed at

Foresight Group LLP is a limited liability partnership incorporated in England and Wales (registered number 0C300878). Its registered office is at The Shard, 32 London Bridge Street, London, SE1 9SG.

Foresight Group CI Limited

Foresight Group CI Limited is licensed by the Guernsey Financial Services Commission (reference number 2006518) to undertake controlled investment business as defined in The Protection of Investors (Bailiwick of Guernsey) Law 1987.

Foresight Group CI Limited is a private company registered in Guernsey (registered number 51471). Its registered office is Ground Floor, Dorey Court, Admiral Park, St Peter Port, Guernsey, GY1 2HT.

Save as mentioned below, references to "Foresight”, "Foresight Group”, "The Manager”, "we” and "our” are to Foresight Group LLP and/or Foresight Group CI Limited as the context dictates.

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The information contained within this Site does not constitute an offer to invest or an invitation to apply for securities:

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The information has been issued and approved by Foresight Group LLP and Foresight Group CI Limited and does not in any way constitute investment, tax, legal or other advice. Investors should not rely on any information or opinions contained in this Site in making an investment or other decision but should obtain appropriate and specific professional advice.

Nothing contained on this Site constitutes or should be construed to constitute investment, legal, tax or other advice. The information contained on this Site shall in no way be construed to constitute a recommendation with respect to the purchase or sale of any investment.

The website is provided for the main purpose of providing generic information on Foresight Group LLP and Foresight Group CI Limited and on the products and funds we currently manage. Persons accessing specific information about the funds and investment products referred to on this website are strongly advised to refer to the relevant terms and conditions of access, including any relevant risk warnings and disclaimers, and in the event that they do not accept them, should not proceed to access the material to which they are applicable.

Certain products or investment services managed by Foresight are not generally considered suitable for private investors. Therefore, certain areas of the website are password protected or require additional confirmation that you are an appropriately experienced or qualified investor. This website also contains links that lead to other websites. These links are provided solely for your convenience and do not constitute any endorsement, sponsorship or approval of the materials appearing in such sites.

You should note that investment in any of the Foresight Funds or Foresight Products should ONLY be made on the basis of reading any applicable Documentation (including any Brochure, Fund Prospectus, Offer Documents and Disclosure Documentation) or Terms and Conditions of Investment as appropriate.

Risk Factors

The following list of risk factors is provided as an indication of the variety of risks which exist with investment in the funds and products featured on this website ("Foresight Funds”, "Foresight Products”). Not all risks as stated will necessarily apply to each of the Foresight Funds or Foresight Products. Investors' attention is nevertheless drawn to these risks as investments in the Foresight Funds or Foresight Products may not be suitable for all investors.

Risks Applicable to All Foresight Funds and Products

  • The value of shares/investments and the income from them can go down as well as up. An investor may not get back the amount originally invested.
  • Past performance is not a guide to future performance.
  • Changes in exchange rates may cause the value of investments to go up or down.
  • Investments in derivative Instruments, including futures, options or contracts for differences, carries a high risk of loss, the markets in these investments being highly volatile
  • Investing in smaller companies, including AIM companies, can carry greater risks than those usually associated with large capitalisation companies.
  • If you exercise any cancellation rights you may have, you may not get back the full amount of your investment.
  • Where income is insufficient to pay charges the residual is taken from capital which will reduce the rate of capital growth.
  • Tax assumptions are subject to statutory change and the value of tax reliefs will depend upon individual circumstances.

Risks Applicable to Venture Capital Funds (VCTs)

Existing and prospective investors should consider carefully the following VCT-specific risk factors. If any of the risks described below were to occur, it could have a material effect on a VCT's business, financial condition or results of operations. The risks and uncertainties described below are not the only ones that VCT and investors may face. Additional risks not currently known to the Foresight, or that the Foresight currently believes are not material, may also adversely affect its business, financial condition and results of operations and those of the VCTs it manages or operates. The value of shares in Foresight Funds could decline due to any of these risk factors, and investors could lose part or all of their investment.

Prospective investors should be aware that the value of shares and the income from them can fluctuate and that they may not get back the amount they invested. In addition, there is no certainty that the market price of a VCT's shares will fully reflect the underlying net asset value of the VCT in question, that shareholders will be able to realise their shareholding, or that dividends will be paid. Investment in a VCT should be seen as a long term investment. Investors who are in doubt should consult their independent financial adviser. The attention of prospective investors is drawn to the following risks:

  • The past performance of funds managed by Foresight is not necessarily an indication of the future performance of such funds.
  • Although VCT shares are admitted to the Official List and traded on the London Stock Exchange's market for listed securities, it is possible that there will not be a liquid market as there is a limited secondary market for VCT shares and investors may find it difficult to realise their investment. In addition, the market value of a share may not fully reflect the underlying net asset value of such share.
  • Whilst it is the intention of the directors of each Foresight VCT that they will be managed so as to continue to qualify as venture capital trusts, there can be no guarantee that such status will be maintained. A failure to meet the qualifying requirements could result in a VCT losing its status as a venture capital trust, resulting in adverse tax consequences for investors, including a requirement to repay the income tax relief obtained on subscription and could cause a VCT to lose its exemption from corporation tax.
  • The information, including tax rules, contained in this publication is based on existing legislation. The tax rules or their interpretation in relation to an investment in a VCT and/or the rates of tax, or other statutory provisions to which a VCT is subject, may change during the life of a VCT and such changes could be retrospective.
  • If an investor who subscribes for shares in a VCT disposes of those shares within five years from subscription, the investor will be subject to clawback by HM Revenue & Customs of any income tax relief obtained on subscription.
  • Although a VCT may receive conventional venture capital rights in connection with some of their investments, as minority investors it may not be in a position fully to protect its interests.
  • Realisation of investments in unquoted companies can be difficult and may take considerable time. There may also be constraints imposed on the realisation of investments in order to maintain the venture capital trust status of which may restrict a VCT's ability to obtain maximum value from its investments.
  • To be qualifying holdings, VCT funds raised after 5 April 2012 must be invested in smaller companies with gross assets of not more than £15 million prior to the investment and £16 million post investment and which have no more than 250 full time (equivalent) employees. VCTs may not invest in companies who have received more than £5 million of investment from VCTs and other state aided risk capital providers in the rolling 12 month period ending on the date of the VCTs investment or their VCT status may be lost.
  • Investment in unquoted companies, AIM-traded and PLUS Markets companies, by its nature involves a higher degree of risk than investment in companies traded on the main market of the London Stock Exchange. In particular, markets for such companies and smaller companies generally may not be regulated and are often less liquid and there may be difficulties in valuing and disposing of investments in such companies. Disposing of such companies and smaller companies generally through trade sales may be difficult and may not produce hoped for returns and investors could get back less than they invested.
  • In addition, such companies and smaller companies generally may have limited product lines, markets or financial resources and may be more dependent on their management or key individuals than larger companies.
  • Where more than one of the funds managed or advised by Foresight wishes to participate in an investment opportunity, allocations will generally be made in proportion to the net cash raised for each fund, other than where investments are proposed to be made in a company where a fund has a pre-existing investment where the incumbent investor will have priority. Implementation of this policy will be subject to the availability of monies to make the investment and other portfolio considerations such as sector exposure and the requirement to achieve or maintain a minimum of 70% of a particular VCT's portfolio in VCT qualifying companies. This may mean that a company may receive a greater or lesser allocation than would otherwise be the case under the normal co-investment policy.
  • There can be no guarantee that sufficient suitable investment opportunities will be identified in order to meet the investment objectives of a VCT or venture capital trust requirements.
  • In general, investment in technology companies can carry a greater degree of risk than investing in non-technology companies. In particular: the technology may not be able to be developed within the timescale required by the market, at an acceptable cost, or at all and alternative or competing technologies may emerge before full commercial exploitation of the products or services of such companies has taken place.

Disclaimers and Exclusion of Liability

Foresight Group LLP and Foresight Group CI Limited act for the funds and clients they manage or advise and not for anyone else. They will not act for, advise or be responsible for providing the protections afforded to their customers to anyone other than such funds and clients. Entrepreneurs and others working for Foresight should be aware of this and should not expect that they will be treated as customers of Foresight.

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To the fullest extent allowed by law, Foresight and its members and employees shall not be liable, whether in tort (including negligence) or otherwise howsoever, for any losses, damages, costs or expenses of whatever nature (including (without limitation) any consequential, indirect or unforeseeable loss or loss of bargain, opportunity or profit) incurred or suffered by you or any third party arising out of or in connection with the access to or use of, or linking to other Sites from, this Site or reliance on any information contained on this Site. Nothing in this legal notice shall limit our liability for death or personal injury resulting from any negligence of Foresight.

Nothing in this legal notice excludes or restricts any duty or liability that Foresight may have under the regulatory system (as defined in the glossary to FCA's Handbook of Rules and Guidance) and which may not be excluded or restricted thereunder.

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