Foresight VCT PLC : Annual Financial Report

FORESIGHT VCT PLC

Summary Financial Highlights

Net asset value per Ordinary Share at 31 December 2015 was 87.5p after a payment of a 6.0p dividend (31 December 2014: 99.4p).
Net asset value per Planned Exit Share at 31 December 2015 was 36.8p after payment of 22.5p in dividends (31 December 2014: 65.0p).
Net asset value per Infrastructure Share at 31 December 2015 was 92.4p after a payment of a 2.5p dividend (31 December 2014: 92.4p).

Ordinary Shares fund

An interim dividend for the year ended 31 December 2014 of 6.0p per Ordinary Share was paid on 13 March 2015.
An interim dividend for the year ended 31 December 2015 of 7.0p per Ordinary Share was paid on 1 April 2016.
The fund realised £2.9 million from loan repayments from four portfolio companies and £0.7 million in deferred consideration from three portfolio companies.
The fund provided follow-on funding totalling £1.9 million to six portfolio companies and £14.3 million for seven new investments.
A further £15.2 million was raised through the issue of shares and the offer was closed on 8 June 2015.
28,590,057 consideration shares were issued to the Ordinary Shareholders of Foresight 2 VCT plc following the merger on 18 December 2015.

Planned Exit Shares fund

An interim dividend for the year ended 31 December 2014 of 15.0p per Planned Exit Share was paid on 22 May 2015.
An interim dividend for the year ended 31 December 2015 of 7.5p per Planned Exit Share was paid on 25 September 2015.
The fund realised £1.5 million from the sales of three portfolio companies.
5,535,509 consideration shares were issued to the Planned Exit Shareholders of Foresight 2 VCT plc following the merger on 18 December 2015.

Infrastructure Shares fund

An interim dividend for the year ended 31 December 2014 of 2.5p per Infrastructure Share was paid on 22 May 2015.
An interim dividend for the year ended 31 December 2015 of 2.5p per Infrastructure Share was paid on 11 March 2016.
The fund's management fee was reduced from 1.75% to 1.0% from 1 January 2015.
15,975,510 consideration shares were issued to the Infrastructure Shareholders of Foresight 2 VCT plc following the merger on 18 December 2015.

Chairman's Statement

Merger
The merger with Foresight 2 VCT plc was completed on a relative net assets basis on 18 December 2015. Each of the Ordinary Shares, Planned Exit Shares and Infrastructure Shares merged with their respective counterparts in Foresight 2 VCT plc creating a VCT with critical mass and assets in excess of £100 million.

The number of shares issued, resulting from the merger, in each of the share classes was as follows:

Share Class	Net Asset Value	Shares Issued
Ordinary	88.0p	28,590,057
Planned Exit	39.6p	5,535,509
Infrastructure	92.3p	15,975,510

Performance - Ordinary Shares Fund

i. Movement in Net Asset Value of the Ordinary Shares Fund
During the year, the net assets of the Ordinary Shares fund increased to £75.8 million at 31 December 2015 from £44.2 million at 31 December 2014.

Of this net increase, amounting to £31.6 million, the principal contributing factors were a total of £25.2 million through the issue of 28,590,057 Ordinary Shares to the shareholders in Foresight 2 VCT plc, a total of £15.2 million raised from the issue of new shares, (less issue costs of £0.6 million) and investment income of £1.1 million. These increases were offset by payment of dividends totalling £3.0 million, management fees and other expenses of £1.5 million, share buybacks of £1.4 million and a net decrease of £3.4 million from the investment performance of the Ordinary Shares fund portfolio.

The merger with Foresight 2 VCT plc alongside the success of recent fund-raisings contributed to a year of considerable progress which has enabled the Ordinary Shares fund to achieve a size that the Board believes will enable it to more easily sustain the Board's dividend objective to Shareholders and provides sufficient capacity for further new investments. Nevertheless the investment performance of the Ordinary Shares fund portfolio during the year was disappointing and the Board and Manager will be seeking an improvement in performance in the year ending 31 December 2016.

Seven new investments were made by the merged Ordinary Shares fund during the year for a total of £17.0 million and the Board and the Manager are encouraged by the prospects for these, which were made before the VCT legislation changes in November 2015.

ii. Movement in Net Asset Value per Share of the Ordinary Shares Fund
During the year, the net asset value of the Ordinary Shares fund decreased to 87.5p per share at 31 December 2015 from 99.4p per Share at 31 December 2014. The performance of the investment portfolio was disappointing, and, after adding back the dividend payment of 6.0p per Ordinary Share, represented a total reduction of 5.9%.

The investments that contributed significantly (£250,000 or more) to this result were as follows:

Company	£
Blackstar Amplification Holdings Limited	1,533,407
Industrial Efficiency II Limited	636,881
Procam Television Holdings Limited	547,449
TFC Europe Limited	(423,500)
Autologic Diagnostics Group Limited	(467,236)
AlwaysON Group Limited	(578,086)
Aerospace Tooling Holdings Limited	(4,904,279)
Other movements	7,261
Total	(3,648,103)

The valuation of the investment in Aerospace Tooling Holdings Limited was reduced by £4,904,279 during the year due to a reduced level of orders from its two largest customers.

iii. Cash & Deal Flow
During the year the Ordinary Shares fund made the following new private equity and follow-on investments:

New Investments

Company	Ordinary Shares Fund	Foresight 2 VCT Ordinary Shares Fund	Post Merger £
ABL Investments Limited	2,500,000	250,000	2,750,000
FFX Group Limited	2,026,426	650,000	2,676,426
Hospital Services Limited Itad Limited	2,670,000	650,000	3,320,000
Itad Limited	2,500,000	250,000	2,750,000
Protean Software Limited	2,254,000	246,000	2,500,000
Specac International Limited	1,345,000	-	1,345,000
The Business Advisory Limited	1,000,000	650,000	1,650,000
Total	14,295,426	2,696,000	16,991,426

Follow-on funding

Company	£
Autologic Diagnostics Group Limited*	162,680*
Biofortuna Limited	128,002
Closed Loop Recycling Limited	7,193
Industrial Efficiency II Limited	1,237,500
Procam Television Holdings Limited	333,339
The Skills Group Limited	25,170
Total	1,893,884

*Representing capitalised and deferred interest.
The above excludes follow-on funding within Foresight 2 VCT plc pre-merger.

Disposal Proceeds, Deferred Consideration & Loan Repayments

Company	£
Alaric Systems Limited	282,178
AppDNA Limited	392,574
Aquasium Technology Limited	166,667
Cole Henry PE 2 Limited	900,000
i-plas Group Limited	33,618
iCore Limited	50,000
Kingsclere PE 3 Limited	900,000
Whitchurch PE 1 Limited	900,000
The Skills Group Limited	1,000
Total	3,626,037

The above excludes realisations within Foresight 2 VCT plc pre-merger.

Cash Availability
The Ordinary Shares fund had cash and liquid resources of £17.0 million at 31 December 2015, which has increased to £32.0 million at the time of writing. It is anticipated that these funds will be used to make several new private equity investments arising from the Manager's deal flow pipeline of new opportunities.

Additionally, a proportion of cash and liquidity will be reserved for dividends to shareholders, paying annual running expenses and share buybacks.

iv. Investment Gains & Losses
During the year the Ordinary Shares fund realised losses amounting to £8.9 million, which had already been provided for in full, following the liquidation of Aigis Blast Protection Limited and Withion Power Limited, as well as the disposal of Closed Loop Recycling Limited and write off of DSM GeoData Limited.

v. Running Costs
The annual management fee of the Ordinary Shares fund is 2.0%. During the year the management fees totalled £1.1 million, of which £270,000 was charged to the revenue account and £809,000 was charged to the capital account. The average ongoing charges ratio of the Ordinary Shares fund for the year to 31 December 2015, at 2.0%, compares favourably with its VCT peer group. Following the merger the Manager agreed to reduce the annual expenses cap to 2.4%, making it one of the lowest expenses caps of any VCT with total assets over £20 million.

vi. Ordinary Share Dividends
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 will, however, inevitably be dependent on cash being generated from portfolio investments and successful realisations, the timing of which is not predictable.

In accordance with this policy an interim dividend of 7.0p was paid on 1 April 2016 based on an ex-dividend date of 15 March 2016 and a record date of 16 March 2016.

During the year ended 31 December 2015, an interim dividend of 6.0p was paid on 13 March 2015 based on an ex-dividend date of 26 February 2015 and a record date of 27 February 2015.

vii. Ordinary Shares Issues & Buybacks
A prospectus offer to raise £20 million was launched on 31 October 2014. During the year under review, £15.2 million was raised through the issue of 15,080,040 Ordinary Shares, allotted at prices ranging from 93.4p to 100.1p per share.

The Company allotted 106,287 Ordinary Shares under the Company's Dividend Reinvestment Scheme at 99.4p per share.

During the year, 1,667,745 Ordinary Shares were repurchased for cancellation at a cost of £1.4 million at an average discount to NAV of 10.2%. The Board and the Manager consider share buybacks at a suitable discount to be a benefit to shareholders as a whole and an appropriate way to manage the share price discount to NAV at which the Ordinary Shares trade.

viii. Summary Post Year End Update
Following the year end, a total of £23 million has been raised under the current offer for subscription launched on 18 January 2016. The General Meeting to approve the offer for subscription took place on 15 March 2016 and was unanimously passed by Shareholders at that meeting.

As noted in the prospectus (and the merger documentation between the Company and Foresight 2 VCT plc) the Board are considering what, if any, performance incentive arrangements with the Manager should be implemented relating to the Ordinary Shares fund. If, following these deliberations, the Board believes a performance incentive arrangement with the Manager is appropriate, it will seek Shareholder approval for any such arrangements before they are implemented. The Board expects to write to Shareholders definitively on any proposals (or confirmation of lack thereof) during 2016.

In April 2016 the Company received its final tranche of deferred consideration from iCore Limited, totalling £51,247.

Outlook - Ordinary Shares Fund

Although it has been a year of considerable progress for the Ordinary Shares fund through the merger with Foresight 2 VCT plc, a successful fund raising and exceeding our target dividend to Shareholders, this progress was tempered by a disappointing performance from the investment portfolio. The Board and the Manager will be focusing efforts in the coming year on improving investment performance within the existing portfolio and through a combination of the new investments recently made and those pipeline investments still to be made.

Performance - Planned Exit Shares Fund
i. Movement in Net Asset Value of the Planned Exit Shares Fund
During the year, the net assets of the Planned Exit Shares fund increased to £4,248,000 at 31 December 2015 from £3,943,000 at 31 December 2014.

Of this net increase, the Planned Exit Shares fund issued £2.2 million in new shares as part of the merger with Foresight 2 VCT plc, paid out dividends totalling £1.4 million, incurred management fees and expenses of £78,000 and made share buybacks totalling £35,000 during the year. £290,000 in income was written off from underperforming investments during the year, giving a net loss of £150,000, and there was a decrease of £244,000 from the investment performance of the Planned Exit Shares fund portfolio.

ii. Movement in Net Asset Value per share of the Planned Exit Shares Fund
During the year, the net asset value of the Planned Exit Shares fund decreased to 36.8p per share at 31 December 2015 from 65.0p per Share at 31 December 2014, representing a fall of 8.8% after payments of 22.5p per Planned Exit Share in dividends during the year.

iii. Cash & Deal Flow
There were no new investments made during the year.

During the year the Planned Exit Shares fund made the following follow-on investments:

Follow-on funding

Company	£
Closed Loop Recycling Limited	2,865
Total	2,865

Disposal Proceeds, Deferred Consideration & Loan Repayments

Company	£
Channel Safety Systems Group Limited	515,758
Industrial Efficiency Limited	205,500
Leisure Efficiency Limited	793,000
Total	1,514,258

The above excludes realisations within Foresight 2 VCT plc pre-merger.

Cash Availability
The Planned Exit Shares fund had cash and liquid resources of £354,000 at 31 December 2015, which has increased to £369,000 at the time of writing. The Planned Exit Shares fund is considered fully invested and its investments generate a running yield, which is principally utilised for the payment of expenses and dividends.

iv. Investment Gains & Losses
During the year, the Planned Exit Shares fund realised gains amounting to £708,000 from the sales of Industrial Efficiency Limited (£50,000), Leisure Efficiency Limited (£218,000) and Channel Safety Systems Limited (£440,000) and realised losses amounting to £832,000, which had already been provided for in full, following the liquidation of Withion Power Limited, as well as the disposal of Closed Loop Recycling Limited. Further details of these sales are contained in the Manager's Report.

v. Running Costs
The annual management fee of the Planned Exit Shares fund is 1.0%. During the year, management fees totalled £41,000, of which £10,000 was charged to the revenue account and £31,000 was charged to the capital account. The total expense ratio of the Planned Exit Shares fund, for the year ended 31 December 2015 was 1.8%.

vi. Planned Exit Share Dividends
An interim dividend of 15.0p per Planned Exit Share was paid on 22 May 2015. The shares were quoted ex-dividend on 7 May 2015 with a record date of 8 May 2015.

A second interim dividend for the year ended 31 December 2015 of 7.5p per Planned Exit Share was paid on 25 September 2015. The shares were quoted ex-dividend on 10 September 2015 with a record date of 11 September 2015.

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.

vii. Planned Exit Shares Issues & Buybacks
There were no Planned Exit Shares issued during the year, with the exception of the consideration shares issued for the merger.

During the year under review 72,048 Planned Exit Shares were repurchased for cancellation at a cost of £35,000 at an average discount to NAV of 0.7%. The Board and the Manager consider share buybacks to be an effective way to manage the share price discount to NAV at which the Planned Exit Shares trade.

viii Summary Post Year End Update
There were no material post year end items at the time of writing.

Outlook - Planned Exit Shares Fund
The original objective of the Planned Exit Shares fund was to return investors 110p per share through a combination of dividends and share buybacks by the sixth anniversary of the closure of the original offer, which will be June 2016.

There are still three investments held within the Planned Exit Shares portfolio and it is highly unlikely that they will all be sold before 30 June 2016 on terms that would maximize potential returns for Shareholders. Our current expectation is that it could take a further 12 months beyond June 2016 to realise the maximum potential from the remaining portfolio investments.

Furthermore, the total return for shareholders if the fund realised the remaining investments at current valuation would be 79.8p (comprising 43.0p in dividends paid to date and 36.8p representing the remaining NAV at 31 December 2015). To deliver the target return of 110p per share, a significant increase on the current valuations of the three remaining investments would need to be achieved on their disposal. Although this remains a possibility, it seems very unlikely the target 110p will be achieved by the fund.

Performance - Infrastructure Shares Fund
i. Movement in Net Asset Value of the Infrastructure Shares Fund
During the year, the net assets of the Infrastructure Shares fund increased to £30.0 million at 31 December 2015 from £15.3 million at 31 December 2014.

The Infrastructure Shares fund issued £14.7 million in new shares as part of the merger with Foresight 2 VCT plc and paid out dividends totalling £414,000 and management fees and other expenses of £301,000. Income for the year totalled £639,000.

ii. Movement in Net Asset Value per share of the Infrastructure Shares Fund
During the year, the net asset value of the Infrastructure Shares fund increased to 92.4p per share at 31 December 2015, after adjusting for the payment of a 2.5p per Infrastructure Share dividend during the year, from 92.4p per Share at 31 December 2014.

iii. Cash & Deal Flow
There were no new or follow-on investments made during the year.

In April 2015, HMRC clearance was received to merge York Infrastructure 3 Limited and Zagreb Solar Limited (later renamed Drumglass Holdco Limited) and utilise their combined cash resources to invest £1.6 million in the Drumglass PFI project, which was value accretive to shareholders.

The Infrastructure Shares fund had cash and liquid resources of £465,000 at 31 December 2015, which had decreased to £74,000 at the time of writing.

iv. Investment Gains & Losses
There were no realised gains or losses during the year.

v. Running Costs
The annual management fee of the Infrastructure Shares fund, which was 1.75% until 31 December 2014, was reduced to 1% from 1 January 2015. The Board agreed with Foresight Group to make this change following the impact of the delay in investing the original amounts raised in qualifying infrastructure investments, which may impact the fund's future returns. During the year the management fees totalled £157,000, of which £39,000 was charged to the revenue account and £118,000 was charged to the capital account. The ongoing charges ratio of the Infrastructure Shares fund for the year ended 31 December 2015 was 1.0%.

vi. Infrastructure Share Dividends
During the year ended 31 December 2015, an interim dividend of 2.5p per Infrastructure Share was paid on 22 May 2015. The shares were quoted ex-dividend on 7 May 2015 with a record date of 8 May 2015.

Following the year end an interim dividend of 2.5p was paid on 11 March 2016 based on an ex-dividend date of 25 February 2016 and a record date of 26 February 2016.

The Company's original objective was to provide an annual flow of tax-free dividends of 5.0p per share, 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 ability to continue generating sufficient cashflows to satisfy an annual 5.0p per share dividend is uncertain in light of current yields.

vii. Infrastructure Shares Issues & Buybacks
There were no Infrastructure Shares issued during the year, with the exception of the consideration shares issued for the merger.

During the year under review 32,352 Infrastructure Shares were repurchased for cancellation at a cost of £29,000 at an average discount to NAV of 0.6%. The Board and the Manager consider share buybacks to be an effective way to help manage the share price discount to NAV at which the Infrastructure Shares trade.

viii. Summary Post Year End Update
There were no material post year end items at the time of writing.

Outlook - Infrastructure Shares Fund
Following the merger, Foresight VCT now has a controlling holding in each of the five currently qualifying investments, which if left unaddressed would lead to those investments becoming non-qualifying under VCT rules relating to control. However, a one year grace period is allowed to remedy this situation.

To bring the VCT's holding down to 49.9% of each investment and satisfy this control test, a part disposal of each of the five investments is required, as set out in the table below. The aggregate disposal is expected to be approximately £8.12m, representing some 27% of the total valuation of £30.3 million of the Foresight VCT Infrastructure Shares Class as at 18 December 2015.

The Manager will also give consideration to other current investment opportunities and whether any sale proceeds should be reinvested or paid out as dividends to shareholders. The total return may be lower if paid out as dividend because investors would then forego the opportunity to earn additional yield from any new investments made.

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 £12 million; and
Prohibiting VCT investment financing acquisitions (as mentioned above).

Annual General Meeting
The Company's Annual General Meeting will take place on 24 May 2016 at 1.00pm. I look forward to welcoming you to the Meeting, which will be held at the offices of Foresight Group in London. Details can be found on page 78
.
Outlook
The merger with Foresight 2 VCT plc alongside the success of recent fund-raisings contributed to a year of considerable progress which has enabled the Ordinary Shares fund to achieve a size that the Board believes will enable it to more easily sustain the Board's dividend objective to Shareholders and provides sufficient capacity for further new investments. Nevertheless the investment performance of the Ordinary Shares fund portfolio during the year was disappointing and the Board and Manager will be seeking an improvement in performance in the year ending 31 December 2016. The investment phase of the Infrastructure Shares fund and the transition of part of the fund from non-qualifying PFI investments into VCT qualifying Solar Infrastructure is now complete.

The seven new investments made by the Ordinary Shares fund during the year are performing in-line or ahead of original expectations and we expect these to enhance shareholder returns over the medium term. Both the Board and the Manager are optimistic that the portfolio will produce a steady income flow for future dividends, as originally planned.

John Gregory
Chairman
Telephone: 01296 682751
Email: j.greg@btconnect.com
27 April 2016
Strategic Report

Introduction
This Strategic Report, on pages 8 to 14, has been prepared in accordance with the requirements of Section 414 of the Companies Act 2006 and best practice. Its purpose is to inform the members of the Company and help them to assess how the Directors have performed their duty to promote the success of the Company, in accordance with Section 172 of the Companies Act 2006.

Foresight VCT plc Ordinary Shares Fund
Foresight VCT plc originally raised £10.9 million through an Ordinary Share issue in the 1997/98 tax year. Following the merger with Foresight 2 VCT plc in December 2015, this fund currently has investments and assets totalling £76.5 million of which a significant portion is held in cash and is available to make new investments. The number of Ordinary Shares in issue at 31 December 2015 was 86,593,790.

Foresight VCT plc Planned Exit Shares fund
In the 2009/10 tax year, £12 million was raised through a linked offer for the Planned Exit Shares fund, the proceeds of which were divided equally between Foresight VCT plc and Foresight 2 VCT plc. These Funds comprised separate share classes within Foresight VCT plc and Foresight 2 VCT plc with their own investments and income streams.

The number of Planned Exit shares in the Company in issue at 31 December 2015 was 11,527,087.

Foresight VCT plc Infrastructure Shares fund
In the 2011/2012 tax year, £33 million was raised through a linked offer for the Infrastructure Shares fund, the proceeds of which were divided equally between Foresight VCT plc and Foresight 2 VCT plc. These Funds comprised separate share classes within Foresight VCT plc and Foresight 2 VCT plc with their own investments and income streams.

The number of Infrastructure Shares in the Company in issue at 31 December 2015 was 32,510,224.

Summary of the Investment Policy
The Company will target investments in UK unquoted companies which it believes will achieve the objective of producing attractive returns for shareholders.

Investment Objectives
Ordinary Shares fund
The investment objective of the Ordinary Shares fund is to provide private investors with attractive returns from a portfolio of investments in fast-growing unquoted companies in the United Kingdom.

Planned Exit Shares fund
The investment objective of the Planned Exit Shares fund is to combine greater security of capital than is normal within a VCT with the enhancement of investor returns through the VCT tax benefits - income tax relief of 30% of the amount invested, and tax-free distribution of income and capital gains. The key objective of the Planned Exit Shares fund is to distribute 110p per share through a combination of tax-free income, buy-backs and tender offers before the sixth anniversary of the closing date of the original offer.

Infrastructure Shares fund
The investment objective of the Infrastructure Shares fund is to invest in companies which own and operate essential assets and services which enjoy long-term contracts with strong counterparties or through government concessions. To ensure VCT qualification, the Manager will focus on companies where the provision of services is the primary activity and which generate long-term contractual revenues, thereby facilitating the payment of regular and predictable dividends to investors.

Performance and Key Performance Indicators (KPIs)
The Board expects the Manager to deliver a performance which meets the objectives of the three classes of shares. The KPIs covering these objectives are net asset value performance and dividends, which, when combined, give net asset value total return. Additional key performance indicators reviewed by the Board include the discount of the share price relative to the net asset value and total expenses as a proportion of shareholders funds.

A record of some of these indicators is contained on the following page. The total expense ratio for the period was 1.7%. Share buy-backs, have been completed at discounts ranging from 10.0% to 10.7% for Ordinary Shares, 0.6% to 0.9% for Planned Exit Shares and 0.6% to 0.7% for Infrastructure Shares. The level of these KPIs are comparable with the wider VCT marketplace.

A review of the Company's performance during the financial period, the position of the Company at the period end and the outlook for the coming year is contained within the Manager's Report. The Board assesses the performance of the Manager in meeting the Company's objective against the primary KPIs highlighted above.

Clearly, in the Ordinary Share fund, investments in unquoted companies at an early stage of their development may disappoint. Investing the funds raised in companies with high growth characteristics, however, with the potential to become strong performers within their respective fields creates an opportunity for enhanced returns to shareholders.

31 December 2015 31 December 2014

	Ordinary	Planned Exit	Infrastructure	Ordinary	Planned Exit	Infrastructure
	Shares	Shares	Shares	Shares	Shares	Shares
Net asset value per share	87.5p	36.8p	92.4p	99.4p	65.0p	92.4p
Net asset value total return	215.5p	79.8p	99.9p	217.8p	85.5p	97.4p

		Planned			Planned
	Ordinary	Exit	Infrastructure	Ordinary	Exit	Infrastructure
	Shares	Shares	Shares	Shares	Shares	Shares
Share price	80.0p	41.0p	90.0p	86.5p	73.0p	89.0p
Share price total return	212.6p	84.0p	97.5p	212.8p	93.5p	94.0p

		Planned			Planned
Ordinary		Exit	Infrastructure	Ordinary	Exit	Infrastructure
Shares		Shares	Shares	Shares	Shares	Shares

Dividends paid*	182.1p	43.0p	7.5p	179.8p	20.5p	5.0p
Dividends paid in the year	6.0p	22.5p	2.5p	10.0p	7.5p	2.5p
Dividend yield %	7.5	54.9^	2.8	11.6	10.8	2.8
* From inception to 31 December 2015 ^In realisation mode.

Ordinary Shares fund
Discount to NAV at 31 December 2015	8.6%
Average discount on buybacks	10.2%
Shares bought back during the year under review	1,667,745
Decrease in net asset value during year (after adding back 6.0p dividend)	5.9%
Ongoing charges ratio (based on assets at 31 December 2015)	2.0%
Planned Exit Shares fund
Premium to NAV at 31 December 2015	11.4%
Average discount on buybacks	0.7%
Shares bought back during the year under review	72,048
Decrease in net asset value during year (after adding back 22.5p dividend)	8.8%
Ongoing charges ratio (based on assets at 31 December 2015)	1.8%
Infrastructure Shares fund
Discount to NAV at 31 December 2015	2.6%
Average discount on buybacks	0.6%
Shares bought back during the year under review	32,352
Increase in net asset value during year (after adding back 2.5p dividend)	2.7%
Ongoing charges ratio (based on assets at 31 December 2015)	1.0%

Strategies for achieving objectives
Investment Policy
The Company will target UK unquoted companies which it believes will achieve the objective of producing attractive returns for shareholders.

Investment securities
The Company invests in a range of securities including, but not limited to, ordinary and preference shares, loan stock, convertible securities, and fixed-interest securities as well as cash. Unquoted investments are usually structured as a combination of ordinary shares and loan stocks, while AiM investments are primarily held in ordinary shares. Pending investment in unquoted and AiM listed securities, cash is primarily held in interest bearing accounts as well as in a range of permitted liquidity investments.

UK companies
Investments are primarily made in companies which are substantially based in the UK, although many will trade overseas. The companies in which investments are made must satisfy a number of tests set out in Part 6 of the Income Tax Act 2007 to be classed as VCT qualifying holdings.

Asset mix
The Company aims to be significantly invested in growth businesses, subject always to the quality of investment opportunities and the timing of realisations. Any uninvested funds are held in cash and a range of permitted liquidity investments. It is intended that the significant majority (no less than 70%) of any funds raised by the Company will ultimately be invested in VCT qualifying investments.

Risk diversification and maximum exposures
Risk is spread by investing in a number of different businesses within different industry sectors at different stages of development, using a mixture of securities. The maximum amount invested in any one company including any guarantees to banks or third parties providing loans or other investment to such a company, is limited to 15% of the Company's investments by VCT value at the time of investment.

Investment style
Investments are selected in the expectation that value will be enhanced by the application of private equity disciplines, including an active management style for unquoted companies through the placement of an investor director on investee company boards.

Borrowing powers
The Company has a borrowing limit of an amount not exceeding an amount equal to the adjusted capital and reserves (being the aggregate of the amount paid up on the issued share capital of the Company and the amount standing to the credit of its reserves). Whilst the Company does not currently borrow, its policy allows it to do so.

Co-investment
The Company aims to invest in larger, more mature, unquoted and AiM companies and, in order to achieve this, often invests alongside other Foresight funds. Consequently, at the time of initial investment, the combined investment can currently total up to a maximum of £5.0 million per annum for unquoted and for AIM investments.

VCT regulation
The investment policy is designed to ensure that the Company continues to qualify and is approved as a VCT by HM Revenue & Customs. Amongst other conditions, the Company may not invest more than 15% of its total investments at the time of making any investment in a single company and must have at least 70% by value of its investments throughout the period in shares or securities in qualifying holdings, of which 70% by value in aggregate must be in ordinary shares which carry no preferential rights (although only 10% of any individual investment needs to be in the ordinary shares of that Company).

Management
The Board has engaged Foresight Group CI Limited as manager. Foresight Fund Managers Limited also provides or procures the provision of company secretarial, administration and custodian services to the Company. The Manager prefers to take a lead role in the companies in which it invests. Larger investments may be syndicated with other investing institutions, or strategic partners with similar investment criteria. In considering a prospective investment in a company, particular regard will be paid to:

Ordinary Shares fund
· Evidence of high-margin products or services capable of addressing fast-growing markets;
· The company's ability to sustain a competitive advantage;
· The strength of the management team;
· The existence of proprietary technology;
· The company's prospects of being sold or achieving a flotation within three to five years.

Planned Exit Shares fund
· Security of income and capital;
· Asset backing;
· The company's ability to provide an attractive yield for the fund;
· The prospects of achieving an exit within five years;
· The strength of the management team.

Infrastructure Shares fund
· Long-term contracts with Governmental or strong counter-parties;
· Protection from competition;
· Inflation-linked revenues over 10-50 year contract durations.

Environmental, Human Rights, Employee, Social and Community Issues
The Board recognises the requirement under Section 414 of the Act to provide information about environmental matters (including the impact of the Company's business on the environment), employee, human rights, social and community issues; including information about any policies it has in relation to these matters and effectiveness of these policies. As the Company has no employees or policies in these matters this requirement does not apply.

Gender diversity
The Board currently comprises four male Directors. The Board is, however, conscious of the need for diversity and will consider both male and female candidates when appointing new Directors.

The Manager has an equal opportunities policy and currently employs 78 men and 53 women.

Dividend policy
A proportion of realised gains will normally be retained for reinvestment and to meet future costs. Subject to this, the Company will endeavour to maintain a flow of dividend payments of the order of 5p per share across all share classes, although a greater or lesser sum may be paid in any year. It is the intention to maximise the Company's tax-free income for investors from a combination of dividends and interest received on investments and the distribution of capital gains arising from trade sales or flotations.

Purchase of own shares
It is the Company's policy, subject to adequate cash availability, to consider repurchasing shares when they become available in order to help provide liquidity to the market in the Company's shares.

Principal risks, risk management and regulatory environment
The Board believes that the principal risks faced by the Company are:
· Economic risk
· Loss of approval as a Venture Capital Trust
· Investment and strategic
· Regulatory
· Reputational
· Operational
· Financial
· Market risk
· Liquidity risk
Further detail on these principal risks is given in note 16 on page 69.
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 these 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 framework of internal controls which is designed to monitor the principal risks and uncertainties facing the Company and to 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.

Viability Statement
In accordance with principle 21 of the AIC Code of Corporate Governance published by the AIC in February 2015, the Directors have assessed the prospects of the Company over the three year period to 31 December 2018. This three year period is used by the Board during the strategic planning process and is considered reasonable for a business of its nature and size.

In making this statement, the Board carried out an assessment of the principal risks facing the Company, including those that might threaten its business model, future performance, solvency, or liquidity.

The Board also considered the ability of the Company to raise finance and deploy capital. This assessment took account of the availability and likely effectiveness of the mitigating actions that could be taken to avoid or reduce the impact of the underlying risks, including the Manager adapting their investment process to take account of the more restrictive VCT investment rules.

This review has considered the principal risks which were identified by the Board. The Board concentrated its efforts on the major factors that affect the economic, regulatory and political environment.

The Directors have also considered the Company's income and expenditure projections and underlying assumptions for the next three years and found these to be realistic and sensible.

Based on the Company's processes for monitoring cash flow, share price discount, ongoing review of the investment objective and policy, asset allocation, sector weightings and portfolio risk profile, the Board has concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the three years to 31 December 2018.

Performance-related incentives
As noted in the prospectus (and the merger documentation between the Company and Foresight 2 VCT plc) the Board are considering what, if any, performance incentive arrangements with the Manager should be implemented relating to the Ordinary Shares fund. If, following these deliberations, the Board believes a performance incentive arrangement with the Manager is appropriate, it will seek Shareholder approval for any such arrangements before they are implemented. The Board expects to write to Shareholders definitively on any proposals (or confirmation of lack thereof) during 2016.

Valuation Policy
Investments held by the Company have been valued in accordance with the International Private Equity and Venture Capital Valuation ("IPEVCV") guidelines (December 2012) developed by the British Venture Capital Association and other organisations. Through these guidelines, investments are valued as defined at 'fair value'. Ordinarily, unquoted investments will be valued at cost for a limited period following the date of acquisition, being the most suitable approximation of fair value unless there is an impairment or significant accretion in value during the period. Quoted investments and investments traded on AiM and ISDX Growth Market (formerly PLUS) are valued at the bid price as at 31 December 2015. The portfolio valuations are prepared by Foresight Group, reviewed and approved by the Board quarterly and subject to annual review by the auditors.

VCT Tax Benefit for Shareholders
To obtain VCT tax reliefs on subscriptions up to £200,000 per annum, a VCT investor must be a 'qualifying' individual over the age of 18 with UK taxable income. The tax reliefs for subscriptions since 6 April 2006 are:
· Income tax relief of 30% on subscription for new shares, which is forfeit by shareholders if the shares are not held for more than five years;
· VCT dividends (including capital distributions of realised gains on investments) are not subject to income tax in the hands of qualifying holders;
· Capital gains on disposal of VCT shares are tax-free, whenever the disposal occurs.

Venture Capital Trust Status
Foresight VCT plc has been granted approval as a Venture Capital Trust (VCT) under S274-S280A of the Income Tax Act 2007 for the year ended 31 December 2014. The next complete review will be carried out for the year ended 31 December 2015. It is intended that the business of the Company be carried on so as to maintain its VCT status.

The Directors have managed, and continue to manage, the business in order to comply with the legislation applicable to VCTs. The Board has appointed Shakespeare Martineau LLP to monitor and provide continuing advice in respect of the Company's compliance with applicable VCT legislation and regulation. As at 31 December 2015 the Company had 78.1% (by VCT valuation) of its funds in such VCT qualifying holdings.

Future Strategy
The Board and the Manager believe that the strategy of focusing on traditional private equity investments is currently in the best interests of Ordinary Shareholders and the historical information reproduced in this report is evidence of positive recent performance in this area.

Furthermore, the Board expects that the transition of the Infrastructure Shares' fund from solely PFI investments to a mix of PFI, solar infrastructure and other infrastructure investments will enhance returns to shareholders.

The Company's performance relative to its peer group and benchmarks will depend on the Manager's ability to allocate the Company's assets effectively, make successful investments and manage its liquidity appropriately.

John Gregory
Director

27 April 2016

Manager's Report

In the year under review to 31 December 2015, besides making several new investments and raising new funds, the Company experienced two important changes in the latter part of the year. These were the merger on a relative net asset basis with Foresight 2 VCT which completed on 18 December 2015, creating one of the larger VCTs with net assets of some £112 million at that date, and EU driven changes in the VCT Scheme rules which took effect on 18 November 2015 and will affect future investments. The Company's performance during the year and the impact of these changes are discussed in detail below.

Performance during the year

Ordinary Shares Fund
The net asset value per Ordinary Share decreased by 5.9% to 87.5p per share as at 31 December 2015 from 99.4p per Ordinary Share as at 31 December 2014 (after adding back the interim dividend of 6.0p per Ordinary Share paid on 13 March 2015). The Ordinary Shares fund benefitted during the year from good performances by several portfolio companies but was negatively impacted in particular by a large reduction in the valuation of one investment, Aerospace Tooling Corporation, which was reduced by £4,904,279 during the year due to a reduced level of orders from its two largest customers.

An interim dividend of 7.0p per Ordinary share was paid on 1 April 2016 to shareholders on the Register on 18 March 2016. A further Ordinary Share Offer to raise up to £30 million was announced on 18 January 2016, of which £23 million has been subscribed to date.

Having realised a significant number of investments over recent years and raised £19 million from the issue of new Ordinary Shares through the Offer which closed in June 2015, the principal focus in the year under review was making new investments. Seven new investments were made during the year and several of these are already making encouraging progress, particularly Itad and Specac. Further details of these new investments 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 decreased during the year to 31 December 2015 by 8.8% to 36.8p per share from 65.0p, after adjusting for the 15.0p per share dividend paid on 22 May 2015 and 7.5p per share dividend paid on 25 September 2015. This reflected the successful sales of Industrial Efficiency, Leisure Efficiency and Channel Safety Systems Group. This increase was counterbalanced by the disappointingly weak performance of Trilogy Communications, due to continuing delays in expected defence orders, and slower than expected progress in the turnaround of Industrial Engineering Plastics during the year. Further details can be found in the Planned Exit Shares Portfolio Review later in this report.

Foresight Group is working to realise these investments and is monitoring the performance and likely returns from the three remaining investments and the planned capital repayment timetable.

Infrastructure Shares Fund
During the year, the net asset value per Infrastructure Share increased by 2.7% to 92.4p per share as at 31 December 2015, after adjusting for the 2.5p interim dividend paid on 22 May 2015, from 92.4p as at 31 December 2014. Holders of Foresight 2 VCT Infrastructure shares received a 2.5p interim dividend on 22 May 2015 and a further 2.5p interim dividend on 4 December 2015.

Following the year end, a further interim dividend of 2.5p per Infrastructure share was paid on 11 March 2016 to holders on the Register at 26 February 2016.

The portfolio, which comprises investments in four ground mounted solar plants and in eight operating PFI projects in the health and education sectors, performed in line with expectations during the year.

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

Fund raising for the Ordinary Shares Fund
Foresight Group continues to see a number of high quality private equity investment opportunities.

On 31 October 2014, the Board launched a full prospectus to raise up to £20 million by the issue of new Ordinary Shares. The issue was well received by both new and existing investors, with £19 million raised by the closing date of 8 June 2015 from the issue of 19.4 million new Ordinary Shares during the offer period. Seven new investments totalling over £14 million were made by the Ordinary Shares fund by September 2015.

To take advantage of other, current investment opportunities, on 18 January 2016, the Board launched a further full prospectus to raise up to £30 million by the issue of new Ordinary Shares. The issue has been well received by both new and existing investors, with £23 million raised from the issue of 25.7 million new Ordinary Shares to date and the offer remains open.

Foresight Group believes that, with the UK and US economies slowly recovering, 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. Based on its current deal flow, Foresight Group believes that attractive deals are currently available.

Merger of Foresight VCT with Foresight 2 VCT
On 18 December 2015, the Company merged with Foresight 2 VCT to create one of the larger VCTs, with net assets totalling some £112 million. The merger was effected by way of a scheme of reconstruction of Foresight 2 VCT pursuant to section 110 of the Insolvency Act 1986. Foresight 2 VCT was placed in members' voluntary liquidation and all of its assets and liabilities transferred by its appointed liquidator to the Company in consideration for the issue of new shares in the Company to the shareholders of Foresight 2 VCT. Full details of the merger were contained in a prospectus and in circulars to the shareholders of the Companies, all dated 13 November 2015.

As both Companies have three equivalent share classes (Ordinary Shares, Planned Exit Shares and Infrastructure Shares), each existing share class in Foresight 2 VCT was merged into the corresponding share class in the Company on a relative net asset basis on 18 December 2015. The net asset value per Share as at that date is shown in the table below:

Net Asset Value per Share	Foresight VCT	Foresight 2 VCT
Ordinary	88.0p	55.0p
Planned Exit	39.6p	36.0p
Infrastructure	92.3p	89.0p

The assets and liabilities of Foresight 2 VCT were accordingly transferred to the Company in consideration for the issue of new Shares on the basis shown in the table below:

Foresight 2 VCT Share Class	Foresight VCT Consideration Shares
For each Ordinary Share:	0.6244 Ordinary Share
For each Planned Exit Share:	0.9095 Planned Exit Share
For each Infrastructure Share:	0.9644 Infrastructure Share

The enlarged Investment Portfolio is reviewed below. Where the Company and Foresight 2 VCT were both invested in a particular portfolio company at the date of the merger, this is noted as such in the review. Investments formerly held prior to the merger solely by Foresight 2 VCT are similarly noted in the review.

Consequential Changes to certain Infrastructure Share Class investments
As noted earlier, a consequence of the merger of the Company and Foresight 2 VCT in December 2015 will mean that parts of five qualifying investments held within the Infrastructure Shares Class of each VCT will need to be sold within a year i.e. by no later than December 2016. The fifth anniversary of the close of fundraising for the Infrastructure Shares Class is in July 2017, beyond which date Foresight would in any event endeavour to provide an exit for those investors wishing to do so.

The part disposals of the five qualifying holdings will be made to either a third party investor or to another fund managed by Foresight Group at an independently verified valuation. If sold to a fund managed by Foresight Group, this would need to be to a non VCT or EIS fund as recent rule changes prevent the acquisition of a trade or existing shares. In order to continue to generate yield, any such part disposals would be expected to take place towards the end of 2016.

Both Infrastructure Share classes held mirror shareholdings, being equally invested in four VCT qualifying solar projects and eight secondary PFI projects, one of which is VCT qualifying. Approximately 70.5% of the Infrastructure investments are VCT qualifying holdings.

Following the merger, Foresight VCT now has a controlling holding in each of the five currently qualifying investments, which if left unaddressed would lead to those investments becoming non-qualifying under VCT rules relating to control. However, a one year grace period is allowed to remedy this situation.

Holdings as at 17 December 2015:

Investee Company	Foresight VCT (£)	Foresight VCT 2 (£)	Combined Holding (£)	Combined Ownership	Required disposal (£)
FS Ford Farm Ltd	1,952,524	1,952,524	3,905,048	67%	981,827
FS Hayford Farm Ltd	2,049,018	2,049,018	4,098,036	65%	928,600
FS Pentre Ltd	2,306,061	2,306,061	4,612,122	100%	2,306,062
FS Tope Ltd	2,053,091	2,053,091	4,106,182	91%	1,859,981
Drumglass HoldCo Ltd	2,039,802	2,039,802	4,079,604	100%	2,039,803
Total			8,116,273

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. The latter restrictions are designed to encourage more development capital transactions and investment in generally younger, less mature companies, by precluding replacement capital transactions, such as shareholder recapitalisations, management buy-outs and buy-ins and funding acquisitions by investee 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 Group 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 Group has a strong track record in development capital transactions, having been investing 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 refocussed 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 generate acceptable returns and comply with the VCT rules.

While all the 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 would lead to an increase in the VCTs' risk profile. However, over the medium term, any such increase in risk profile could be tempered by opportunities to invest alongside the Foresight regional institutional funds and hopefully 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 and Foresight Regional Institutional Funds Strategy
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 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 and possible consultation process are expected to start in the near future. At this early stage, it is not possible to forecast the ultimate outcome of the review, particularly since any proposed amendments will require both EU State Aid and Parliamentary approval. This process is currently 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: Ordinary Shares Fund

1. New Investments

Company	Ordinary Shares Fund	Foresight 2 VCT Ordinary Shares Fund	Combined £
ABL Investments Limited	2,500,000	250,000	2,750,000
FFX Group Limited	2,026,426	650,000	2,676,426
Hospital Services Limited Itad Limited	2,670,000	650,000	3,320,000
Itad Limited	2,500,000	250,000	2,750,000
Protean Software Limited	2,254,000	246,000	2,500,000
Specac International Limited	1,345,000	-	1,345,000
The Business Advisory Limited	1,000,000	650,000	1,650,000
Total	14,295,426	2,696,000	16,991,426

In September 2015, as part of a £4.225 million round alongside other Foresight VCTs, the Ordinary Shares fund invested £2.75 million (including £250,000 from Foresight 2 VCT) 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 £3.9 million round alongside other Foresight VCTs, the Ordinary Shares fund invested £2.68 million (including £650,000 from Foresight 2 VCT) in FFX Group Limited ("FFX") 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.

In September 2015, as part of a £4.5 million round alongside other Foresight VCTs, the Ordinary Shares fund invested £3.32 million (including £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. HSL has particular expertise in the radiology, ophthalmic, endoscopy and surgical sectors.

In September 2015, as part of a £4.0 million round alongside other Foresight VCTs, the Ordinary Shares fund invested £2.75 million (including £250,000 from Foresight 2 VCT) 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 well-travelled consultants.

In July 2015, the Ordinary Shares fund invested £2.5 million (including £246,000 from Foresight 2 VCT) as part of a £4 million round alongside other Foresight VCTs to finance a management buy-in buy-out of Coventry based Protean Software Limited ("Protean") and fund planned growth. 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 will work alongside three of the current directors to drive the business forward and execute their growth plans.

In April 2015, the Ordinary Shares fund invested £1.345 million in shares and loan notes, alongside a further £1.3 million invested equally by Foresight 3 VCT and Foresight 4 VCT, in Specac International Limited ("Specac") to finance a £2.775 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, 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.

In September 2015, as part of a £3.3 million round alongside other Foresight VCTs, the Ordinary Shares fund invested £1.65 million (including £650,000 from Foresight 2 VCT) 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	£
Autologic Diagnostics Group Limited*	162,680*
Biofortuna Limited	128,002
Closed Loop Recycling Limited	7,193
Industrial Efficiency II Limited	1,237,500
Procam Television Holdings Limited	333,339
The Skills Group Limited	25,170
Total	1,893,884

*Representing capitalised and deferred interest.

3. Realisations
A loan repayment of £166,667 was received from Aquasium Technologies. Cole Henry PE 2, Kingsclere PE 3 and Whitchurch PE 1, all acquisition vehicles preparing to trade, each repaid loans of £900,000. The resultant funds were utilised in making new investments during the year. Amounts of £33,618 and £1,000 were received from the administrators of i-plas Group and The Skills Group (formerly AtFutsal) respectively during the year.

In November 2015, prior to the merger, the Foresight 2 VCT Ordinary Shares fund received a dividend of £2,111,929 from Datapath.

4. Material Provisions to a level below cost (including take-on cost) in the year

Company	£
AlwaysON Group Limited	578,086
Autologic Diagnostics Group Limited	467,236
O-Gen Acme Trek Limited	64,009
TFC Europe Limited	423,500
The Skills Group Limited	116,460
Trilogy Communications Limited	151,562
Total	1,800,853

The valuation of the investment in Aerospace Tooling Holdings Limited was reduced by £4,904,279 during the year due to a reduced level of orders from its two largest customers. The cost of investment at the year end was £150,000.

5. Performance Summary
The net asset value per Ordinary Share decreased by 5.9% to 87.5p per share as at 31 December 2015 from 99.4p per Ordinary Share as at 31 December 2014 (after adding back the interim dividend of 6.0p per Ordinary Share paid on 13 March 2015). The Ordinary Shares fund benefitted during the year from good performances by several portfolio companies but was negatively impacted in particular by a large reduction in the valuation of one investment, Aerospace Tooling Corporation. Seven new investments totalling some £17.0 million were made during the year and several of these are already making encouraging progress, particularly Itad and Specac. Itad has recently 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.

Blackstar Amplification, Industrial Efficiency II, Procam Television Holdings and Thermotech Solutions all performed well, supporting an increase in their aggregate valuation of over £2.7 million. Blackstar Amplification improved efficiency and margins while Thermotech enjoyed strong organic growth. Procam similarly enjoyed good organic growth as well as benefitting from three recent acquisitions, all of which are being successfully integrated into the enlarged Group. The most recent acquisition, Hotcam New York, partially funded by the Ordinary Shares fund in March 2015, was made to service the US requirements of existing UK customers and enter the large US market for TV camera rentals.

This was more than counterbalanced by the large reduction in the valuation of Aerospace Tooling Corporation ("ATL") and provisions made against the investments in Autologic Diagnostics Group and AlwaysOn Group. ATL performed exceptionally well in the year to 30 June 2014, with turnover doubling and record profits of £4.3 million. This performance enabled the Ordinary Shares fund's entire £1.5 million investment to be repaid in full in September 2014. Although ATL's sales and profitability were expected to be lower in the year to 30 June 2015 after this exceptional performance, the actual trading results were weaker than budgeted, due to a premature reduction of work under a major defence contract and a continuing reduction in work for an important customer in the oil and gas industries, as a consequence of falling energy prices. In the light of this much weaker performance, the valuation was reduced by £4.9 million during the year.

In May 2015, Autologic Diagnostics Group finally launched its new, service oriented product to change its business towards a recurring revenue model and so ultimately create greater shareholder value. Management are transitioning customers onto this new service platform and initial signs are promising with largely positive feedback from both new and existing customers. This change in strategy towards a pure recurring revenue model resulted in certain exceptional costs being incurred, reducing EBITDA during 2015 and, depending on the level of new customer sales, is also likely to impact EBITDA in 2016 while helping to drive longer term shareholder value. Reflecting this reduced profitability, a provision of £467,236 was made against the cost of the investment during the year. A provision of £578,086 was made against the investment in AlwaysOn Group, due to continuing weak trading.

As a consequence of the VCT rule changes referred to above, Foresight's marketing efforts have already been refocussed 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 Review: Planned Exit Shares Fund
1. New Investments

No new investments were made during the year.

2. Follow-on funding

Company	£
Closed Loop Recycling Limited	2,865
Total	2,865

3. Realisations

Company	£
Channel Safety Systems Group Limited	515,758
Industrial Efficiency Limited	205,500
Leisure Efficiency Limited	793,000
Total	1,514,258

4. Material Provisions to a level below cost in the year

Company	£
AlwaysON Group Limited	49,180
Industrial Engineering Plastics Limited	41,615
Trilogy Communications Limited	238,074
Total	328,869

5. Performance Summary
The net asset value per Planned Exit Share decreased by 8.8% during the year to 36.8p per share as at 31 December 2015 from 65.0p as at 31 December 2014, after adjusting for the 15.0p per share dividend paid on 22 May 2015 and 7.5p per share dividend paid on 25 September 2015. This reflected the successful sales of Industrial Efficiency, Leisure Efficiency and Channel Safety Systems Group, counterbalanced by the disappointing performance of Trilogy Communications and slower than expected progress in the turnaround of Industrial Engineering Plastics.

In January 2015, the investments in Industrial Efficiency and Leisure Efficiency were sold to another Foresight managed fund, based on an independent third party valuation. The investment in Industrial Efficiency was sold for £205,500, realising a profit of £85,215, generating a total return of 1.5 times original cost of £180,000 after including interest received. The investment in Leisure Efficiency was sold for £793,000, realising a profit of £470,975 and generating a total return of 1.7 times original cost of £690,000 after including interest received.

In April 2015, Channel Safety Systems Group was sold to Newbury Investments (UK) Limited, realising £515,758 for the Planned Exit Shares fund, which compares with the remaining equity cost of £75,750. This followed the earlier sale of its subsidiary, Channel Technical Services, in October 2014 for £1.6 million of which the Planned Exit Shares fund received £641,647, comprising a loan repayment of £614,250 and interest of £27,397. The Planned Exit Shares fund's investment in Channel Safety Systems Group returned in aggregate 2.0 times cost and an IRR of 22%.

Following cost reductions and some recovery in defence orders, Trilogy Communications had been operating at, or near, EBITDA breakeven on a monthly basis in early 2015 but trading has since been appreciably weaker than expected owing principally to delays in expected defence orders. Management have reduced costs further and, although significant new defence orders have recently been received, cash continues to be managed closely. The company is pursuing various strategic options, including joint ventures, licensing its technology and possibly a trade sale.

With a view to improving trading, operational efficiency and systems at Industrial Engineering Plastics, a new Chairman and experienced turnaround CEO were appointed in late 2014. Performance improved subsequently and good progress was made in improving efficiency, cost control and sales channels, with an increasing focus on higher margin fabrication work. However, the company experienced weaker than expected trading in late 2015 due to lower demand, resulting in slower than expected progress in implementing this turnaround.

Foresight Group is working to realise investments and is monitoring the performance and likely returns from the three remaining investments and the planned capital repayment timetable.

Portfolio Review: Infrastructure Shares Fund

Background
By the closing offer date of 18 July 2012, a total of £33,295,716 had been raised for the Infrastructure Shares fund jointly with Foresight 2 VCT's Infrastructure Shares fund (i.e. some £16.6 million for each fund). The two Infrastructure Shares funds were combined following the merger on 18 December 2015.

The strategy of the Infrastructure Shares fund is to invest in infrastructure assets in the secondary PFI, solar infrastructure, energy efficiency and on-site power generation markets.

The Infrastructure Shares fund holds shareholdings in eight operating PFI companies, four in the education sector holding interests in 13 schools and four in the health sector, comprising three acute hospitals and one forensic psychiatry unit. All of the projects are contracted under UK PFI standard form and the counterparties are various Local Authorities and NHS Trusts. These investments have strong operating records and have remaining contract terms ranging from 11 to 26 years. All have project finance debt in place with long term interest rate hedging contracts and also long term facilities management subcontracts which pass all operational risks through to major, well established companies.

Reflecting increased competition from other PFI infrastructure funds, asset prices rose and yields fell significantly to lower than originally forecast levels, driven by increasing investor appetite for PFI investments and a contraction in the supply of new infrastructure assets. To help lower costs and improve investor returns, Foresight Group agreed with the Board to reduce its management fee from 1.75% to 1% per annum with effect from 1 January 2015. The total return will, however, depend on the prices achieved on an ultimate sale or refinancing (with suitable debt finance) of the assets.

As previously indicated, in order to increase the VCT qualifying proportion of the Infrastructure Shares fund to over 70% by July 2014 to meet the VCT qualification test, £4.5 million of non-qualifying PFI assets were refinanced with loans from the Foresight Inheritance Tax Service to reduce the non-qualifying holdings. The proceeds were then invested in four qualifying operating solar projects and also into the qualifying Drumglass PFI project. These solar assets share many of the characteristics of the existing PFI assets, including RPI-linked revenues, low correlation to economic conditions and low counterparty risk, although there is exposure to wholesale electricity prices. These investments diversified the infrastructure risk/return profile while reducing the proportion of non-qualifying investments to less than 30% of the Infrastructure Shares fund. Reflecting increased competition, higher prices than expected had to be paid for such PFI and solar assets, resulting in correspondingly lower yields. Depending on the prices obtained on the ultimate sale of these assets, the combination of these various factors is likely to reduce overall ultimate returns to investors.

Portfolio Developments
During the year, the net asset value per Infrastructure Share increased by 2.7% to 92.4p per share as at 31 December 2015, after adjusting for the 2.5p interim dividend paid on 22 May 2015, from 92.4p as at 31 December 2014. Holders of Foresight 2 VCT Infrastructure shares received a 2.5p interim dividend on 22 May 2015 and a further 2.5p interim dividend on 4 December 2015.

Following the year end, a further interim dividend of 2.5p per Infrastructure share was paid on 11 March 2016 to holders on the Register at 26 February 2016.

The portfolio, comprising yielding, qualifying investments in four ground mounted solar plants and in eight operating PFI projects in the health and education sectors, performed in line with expectations during the year.

As referred to in both the last published annual and interim accounts, higher prices than expected had to be paid for such PFI and solar assets due to increased competition, resulting in correspondingly lower yields. Reflecting lower gas prices during 2015, UK wholesale power prices fell significantly, reducing solar plant revenues. In August 2015, the Government removed the Climate Change Levy, resulting in a c.3% reduction in future cash flows at a project level, impacting both existing and new solar investments. These reduced assumptions for solar plants' future revenues have had a negative impact on their net asset values. The combination of these various factors is likely to reduce overall ultimate returns to investors.

Against this challenging market backdrop, we remain focused on capital preservation and portfolio optimisation, using operational and maintenance efficiencies to drive cost savings and quality benefits to the Infrastructure Shares fund. The current low interest rate environment presents the opportunity to refinance (with suitable debt finance) and to generate a value uplift on the ultimate exit of the solar assets in the Infrastructure Shares fund. Total return will also depend on prices achieved on the ultimate sale of the PFI and solar assets and we continue to work hard to position the assets for sale at the best possible price.

New and Follow-on Investments
No new investments were made in the year. On 1 April 2015, Zagreb Solar Limited merged with York Infrastructure 3 Limited and was renamed Drumglass Holdco Limited, the cash resources of which were used for further investment in the qualifying Drumglass PFI project.

Outlook
As explained in further detail above, as a consequence of the merger of the Company and Foresight 2 VCT in December 2015, parts of five qualifying investments held within the Infrastructure Shares Class of each VCT will need to be sold within a year i.e. by no later than December 2016. The aggregate disposal is expected to be approximately £8.12m, representing some 27% of the total valuation of the Foresight VCT Infrastructure Share Class.

Portfolio Company Highlights
In September 2015, as part of a £4.2 million round alongside other Foresight VCTs, the Ordinary Shares fund invested £2.5 million (alongside £250,000 from Foresight 2 VCT) 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. 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. Held in the Ordinary Shares fund (and also formerly held in the Foresight 2 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 oil price. With poor order visibility, costs were reduced, management changes made and sales efforts increased substantially.

Trading in the current year continues to be weak, with EBITDA losses being incurred on much reduced sales. Although encouraging progress is being made in winning orders and new customers, this process and the related sales cycles inevitably takes time. With a view to improving sales and returning the company to profitability, a new experienced CEO was appointed in January 2016. In April 2016, the Foresight VCTs indicated their willingness to provide loan facilities of up to £650,000 (including up to £278,571 for the Ordinary Shares fund) to fund the company's working capital requirements, providing certain conditions are achieved. In light of the above much weaker performance, ATL's valuation was reduced to £1.0 million during the 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. In the 15 months to 30 June 2015, losses were successfully stemmed, with a small EBITDA profit being achieved on sales of £8.0 million and reasonable cash balances at that date. Trading in the current year is similar. Held in the Ordinary Shares and Planned Exit Shares funds (and also formerly held in the Foresight 2 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).

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 31 December 2015 the Ordinary Shares fund held a loan of £166,667, due for repayment in July 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.

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. As part of a £355,000 funding round to support the planned growth of the Educational division and a related share reorganisation, the Foresight VCTs invested a further £300,000 (£100,000 in February 2015 and £200,000 in April 2015). The Ordinary Shares fund invested £25,170 (alongside £172,789 from Foresight 2 VCT Ordinary Shares fund). Despite changes made to senior management and reflecting the weak trading, a full provision of £116,460 was made against the cost of the investment during the year, reducing the valuation to nil. Held in the Ordinary Shares fund (and also formerly held in the Foresight 2 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 £1.486 million (alongside £1.98 million from Foresight 2 VCT) 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. At 31 December 2015, the company had cash balances of over £5 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. Held in the Ordinary Shares fund (and also formerly held in the Foresight 2 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 both its own proprietary tests and contract develops and contract manufactures on behalf of customers. A £1.3 million round to finance capital expenditure and working capital was completed in August 2013, in which the Ordinary Shares fund invested £99,066 in the first tranche and a further £50,929 in the second, final tranche in April 2014. For the year to March 2015, a substantially reduced operating loss of £528,000 was incurred on higher sales of £1.05 million (2014: an operating loss of £1.05 million incurred on sales of £325,000). Trading in the year to 31 March 2016 was well ahead of budget and the previous year, with an improved, reduced EBITDA loss, the profitable Contract Manufacturing division 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 committed to invest £202,505, of which £128,002 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 mid 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). Trading to date in the current year to 30 April 2016 is ahead of budget and a significant improvement in profitability is expected for the full year, reflecting cost reductions and increased margins, particularly on 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.

In December 2010, the Planned Exit Shares fund provided £565,000 to partially fund a management buy-in of long established Petersfield based Channel Safety Systems Group, which designs and distributes emergency lighting and fire safety systems, as well as providing associated installation and maintenance services through its subsidiary, Channel Technical Services ("CTS"). For the year to 31 October 2013, the company performed well, achieving an EBITDA of £580,000 on sales of £8.58 million. In the year to 31 October 2014, the group traded well ahead of the previous year and had a strong cash balance. CTS was sold for £1.6 million in October 2014, of which the Planned Exit Shares fund received £641,647, comprising a loan repayment of £614,250 and interest of £27,397. In April 2015, the parent company itself was sold to Newbury Investments (UK) Limited, realising £515,758 for the Planned Exit Shares fund, which compares with the remaining equity cost of £75,750. Combined with the above mentioned sale of CTS, the Planned Exit Shares fund's investment in Channel Safety Systems Group returned 2.0 times cost and an IRR of 22%. Formerly held in the Planned Exit Shares fund.

As previously reported in the Annual Report for the year ended 31 December 2014, during 2013/14, Closed Loop Recycling successfully doubled the capacity of its Dagenham plant, processing c. 1,000 tonnes per week of waste plastic bottles. However, the company's performance was impacted by adverse movements in the price of waste plastic bottles reflecting overseas demand for such bottles and weaker prices for virgin resin, indirectly reflecting the falling price of oil. The latter impacted the price customers paid for the company's competing recycled HDPE and PET pellets. Following weaker than projected financial performance by the company and thus reduced short term profit projections, full provisions were made in the year to 31 December 2014 against the costs of the respective investments in the Ordinary and Planned Exit Shares funds, reducing these to nil.

Despite actively pursuing various strategic options, including raising capital from third parties, an outright sale and seeking supply chain support, no viable solution was ultimately achieved, resulting in the company being placed into administration on 30 April 2015, with no prospect of any recoveries. Held in the Ordinary and Planned Exit Shares funds.

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. 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 uncertainty 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 of financial close	Shareholding
Birmingham Biopower Limited	48	2013	20.0%
Plymouth	20	2015	50.0%
Welland	53	2015	12.5%
Ince Park	97	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. Held in the Ordinary Shares fund (formerly held solely in the Foresight 2 VCT 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 proved however 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. Held in the Ordinary Shares fund (formerly held solely in the Foresight 2 VCT 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 markets such as medical. For the year to 31 March 2015, an operating profit of £6.8 million was achieved on sales of £19.3 million, with the North American division trading ahead of budget (2014: record operating profits of £7.4 million on sales of £18.7 million). In November 2015, prior to the merger with Foresight VCT, Datapath paid dividends of £6.3 million, comprising £2.11 million to the Foresight 2 VCT Ordinary shares fund and the same amount to each of Foresight 3 VCT and Foresight 4 VCT. This was met principally from the company's own cash resources and short term loans which are expected to repaid from internally generated cash flow over the next year. Held in the Ordinary Shares fund (formerly held solely in the Foresight 2 VCT 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 £23.0 million. The management team has been strengthened by the appointment of two new Joint Managing Directors and a new Chairman, each with experience of successfully developing similar businesses. The relocation into a nearby, much larger warehouse at Lympne in early 2016 was completed successfully. Held in the Ordinary Shares fund (and also formerly held in the Foresight 2 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: an 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 new Finance Director. 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 have been appointed to the Board. Held in the Ordinary Shares fund (and also formerly held in the Foresight 2 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 an EBITDA of £645,000 being achieved on sales of £3,700,000 (2014: EBITDA of £561,000 on sales of £3,000,000). 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 £600,000 to be repaid. The recapitalisation was financed through a £1 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. Held in the Ordinary Shares fund (formerly held solely in the Foresight 2 VCT Ordinary Shares fund).

As part of a £360,000 funding round in April 2013, the Planned Exit Shares fund invested £180,000 in Industrial Efficiency, alongside £180,000 from the Foresight 2 VCT Planned Exit Shares fund. The company installs and maintains proven and robust energy switching equipment, allowing customers to reduce emissions and make significant cost savings. The company completed its first energy cost reduction project in September 2013. Returns are based solely on the cost savings made and do not depend on government subsidies or Feed-in-Tariffs. In January 2015, the investment in Industrial Efficiency was sold for £205,500 to another Foresight managed fund, based on an independent third party valuation. The sale of Industrial Efficiency realised a profit of £85,215 and generated a total return of 1.5 times original cost. Formerly held in the Planned Exit Shares fund.

In July 2014, as part of the first £1.38 million tranche of a phased funding round totalling up to £4.4 million by three Foresight managed funds, a new investment of £990,760 was made by the Ordinary Shares fund in Industrial Efficiency II, alongside £326,740 from Foresight 3 VCT. In December 2014, the Ordinary Shares fund invested a further £375,000 and during 2015, a further £1,237,500 in tranches. 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. 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 Liphook-based plastics distributor and fabricator to 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 with a view to improving trading, operational efficiency and systems. 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 by focussing on higher margin fabrication work and good progress was made in improving efficiency, cost control and sales channels. Fabrication capacity was increased and suppliers reviewed to improve margins. However, trading in the three months to 31 December 2015 was particularly challenging, reflecting a significant reduction in market demand for plastic sheeting and delays to large fabrication contracts. Sales efforts have since been increased and further cost reductions implemented. 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 £2.5 million (alongside £250,000 from Foresight 2 VCT) 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 current and future years. Held in the Ordinary Shares fund (and also formerly held in the Foresight 2 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. This division continues to make good progress, with the first deployment going live in late 2015, the second in early 2016 and third expected shortly. 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, 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 £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). Held in the Ordinary Shares fund (formerly held solely in the Foresight 2 VCT Ordinary Shares fund).

As part of a £1.38 million funding round in January 2012, the Planned Exit Shares fund invested £690,000 in Leisure Efficiency. The company installs and maintains energy efficiency equipment, including voltage optimisers and heat exchangers, in 34 David Lloyd Leisure ("DLL") sites across the UK. The contract with DLL has a life of seven years during which the company will generate a strong yield. In January 2015, the investment in Leisure Efficiency was sold for £793,000 to another Foresight managed fund, based on an independent third party valuation. The sale of Leisure Efficiency realised a profit of £470,975 and generated a total return of 1.7 times original cost. Formerly held in the Planned Exit 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 more sales staff. The management team has been strengthened with the appointment of three experienced executives as Chairman, CEO and Finance Director respectively. Held in the Ordinary Shares fund.

In April 2013, the Ordinary Shares fund invested £900,000 (including £100,000 from Foresight 2 VCT) alongside other Foresight VCTs in a £1.8 million round to finance a management buy-out of Procam Television Holdings. Procam is one of the UK's leading broadcast hire companies, supplying equipment and crews for UK location TV production to broadcasters, production companies and other businesses for over 20 years. Headquartered in Battersea, London, with additional facilities in Manchester, Edinburgh and Glasgow, Procam is a preferred supplier to BSkyB and an approved supplier to the BBC and ITV. Revenues and profits have grown strongly, following the introduction of new camera formats, acquisitions in both the UK and USA and increased sales and marketing efforts.

In December 2014, Procam acquired True Lens Services, based in Leicester, which specialises in the repair, refurbishment and supply of camera lenses with further support from the Foresight VCTs. In March 2015, in order to service the requirements of many of its existing UK customers and enter the large US market, Procam acquired HotCam New York. This acquisition was supported by a further investment of £750,000 from the Foresight VCTs, of which the Ordinary Shares fund invested £333,339 (alongside £41,667 from Foresight 2 VCT). Other acquisition opportunities are under active consideration.

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 good with 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. Held in the Ordinary Shares fund (and also formerly held in the Foresight 2 Ordinary Shares fund).

In July 2015, as part of a £4.0 million round alongside other Foresight VCTs, the Ordinary Shares fund invested £2.254 million (alongside £246,000 from Foresight 2 VCT) 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 in line with the previous year, reflecting increased investment and overheads while cash remains strong. Held in the Ordinary Shares fund (and also formerly held in the Foresight 2 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 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 them to further develop the business. 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). However, 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.

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%. Foresight 2 VCT received £946,973 and increased its shareholding from 21.44% to 26.67%. 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 and is already evaluating TFC's sales strategy and industry focus. Reflecting recent weaker trading, a provision of £423,500 was made against the cost of the investment. Held in the Ordinary Shares fund (formerly held solely in the Foresight 2 VCT 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. 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. Held in the Ordinary Shares fund (formerly held solely in the Foresight 2 VCT Ordinary Shares fund).

In September 2015, as part of a £3.3 million round alongside other Foresight VCTs, the Ordinary Shares fund invested £1.0 million (alongside £650,000 from Foresight 2 VCT) 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. Management has been strengthened by the appointment of a new COO/MD designate in January 2016 and a new experienced, non executive Chairman. Held in the Ordinary Shares fund (and also formerly held in the Foresight 2 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, 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 was similar. A new, non-executive Chairman has been appointed, bringing extensive experience from the facilities management and business services sectors. Terms have been agreed on a small, synergistic acquisition which, if completed, would be financed from bank debt and the company's own cash resources. Held in the Ordinary Shares fund.

Trilogy Communications continues to face a difficult trading environment in the broadcast sector, however the defence pipeline is improving, with significant new defence orders having been received recently, and there is more visibility on the timing of these orders. The company continues to manage costs and cash closely and released significant cash from stock during the year. Cash is currently particularly tight, but is projected to improve with improvements in defence revenues through 2016, which also have the potential to deliver profitability. The Chairman has taken an executive role and is making progress in addressing the company's issues and stabilising the business. Reflecting the recent changes in the company's prospects, but the ongoing relative uncertainty around the timing of large orders, provisions of £151,562 and £238,074 respectively were made during the year against the cost of the investments in the Ordinary Shares fund and the Planned Exit Shares fund. Held in the Ordinary Shares and Planned Exit Shares funds (and also formerly held in the Foresight 2 Ordinary Shares and Planned Exit Shares funds).

David Hughes
Chief Investment Officer
Foresight Group
27 April 2016

The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority require certain disclosures in relation to the annual financial report, as follows:

Principal risks, risk management and regulatoryenvironment

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.
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.
Investment and strategic - inappropriate strategy, poor asset allocation or consistently weak stock selection leading to under performance and poor returns to shareholders.
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.
Reputational - inadequate or failed controls might result in breaches of regulations or loss of shareholder trust.
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.
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 Markets 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.

Statement of Directors' Responsibilities

Statement of Directors' Responsibilities in respect of the Annual Report and Financial Statements

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice) including FRS 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland.

Under company law the directors must not approve the financial statements unless they are satisfied they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the directors are required to:

select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the directors are also responsible for preparing the Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website (which is delegated to Foresight Group and incorporated into their website). Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Statement of Directors' in respect of the AnnualFinancial Report

We confirm that to the best of our knowledge:

the financial statements, prepared in accordance with the applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;
the Directors' Report and Strategic Report include a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that the Company faces.

We consider the annual report and accounts, taken as a whole, are fair, balanced, and understandable and provide the necessary information for shareholders to assess the Company's position and performance, business model and strategy.

On behalf of the Board

John Gregory
Chairman
27 April 2016

Unaudited Non-Statutory Analysis of the Share Classes

Income Statements
for the year ended 31 December 2015

	Ordinary Shares Fund			Planned Exit Shares Fund			Infrastructure Shares Fund
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000

Realised losses on investments	-	(8,525)	(8,525)	-	(124)	(124)	-	-	-
Investment holding gains/(losses)	-	5,120	5,120	-	(120)	(120)	-	183	183
Income	1,072	-	1,072	(150)	-	(150)	639	-	639
Investment management fees	(270)	(809)	(1,079)	(10)	(31)	(41)	(39)	(118)	(157)
Other expenses	(435)	-	(435)	(37)	-	(37)	(144)	-	(144)

Return/(loss) on ordinary activities before taxation	367	(4,214)	(3,847)	(197)	(275)	(472)	456	65	521

Taxation	24	-	24	-	-	-	(76)	52	(24)


Return/(loss) on ordinary activities after taxation	391	(4,214)	(3,823)	(197)	(275)	(472)	380	117	497

Return/(loss) per share	0.7p	(7.4)p	(6.7)p	(3.1)p	(4.4)p	(7.5)p	2.2p	0.7p	2.9p

Balance Sheets
at 31 December 2015

	Ordinary Shares Fund	Planned Exit Shares Fund	Infrastructure Shares Fund
	£'000	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	58,112	3,822	30,303

Current assets
Debtors	1,445	91	383
Money market securities and other deposits	14,812	76	-
Cash	2,138	278	465
	18,395	445	848
Creditors
Amounts falling due within one year	(709)	(19)	(1,119)

Net current assets/(liabilities)	17,686	426	(271)

Net assets	75,798	4,248	30,032

Capital and reserves
Called-up share capital	866	115	324
Share premium account	60,383	2,118	14,515
Capital redemption reserve	418	2	1
Distributable reserve	13,133	3,316	15,205
Capital reserve	62	(289)	(378)
Revaluation reserve	936	(1,014)	365

Equity shareholders' funds	75,798	4,248	30,032

Number of shares in issue	86,593,790	11,527,087	32,510,224

Net asset value per share	87.5p	36.8p	92.4p

At 31 December 2015 there was an inter-share debtor/creditor of £503,000 which has been eliminated on aggregation.
Reconciliations of Movements in Shareholders' Funds
for the year ended 31 December 2015

	Called-up share capital	Share premium account	Capital redemption reserve	Distributable reserve	Capital reserve	Revaluation reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Ordinary Shares Fund
As at 1 January 2015	445	21,032	401	17,118	9,396	(4,184)	44,208
Share issues in the year	438	39,950	-	-	-	-	40,388
Expenses in relation to share issues	-	(599)	-	-	-	-	(599)
Repurchase of shares	(17)	-	17	(1,354)	-	-	(1,354)
Net realised losses on disposal of investments	-	-	-	-	(8,525)	-	(8,525)
Investment holding gains	-	-	-	-	-	5,120	5,120
Dividends	-	-	-	(3,022)	-	-	(3,022)
Management fees charged to capital	-	-	-	-	(809)	-	(809)
Revenue return for the year	-	-	-	391	-	-	391
As at 31 December 2015	866	60,383	418	13,133	62	936	75,798


	Called-up share capital	Share premium account	Capital redemption reserve	Distributable reserve	Capital reserve	Revaluation reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Planned Exit Shares Fund
As at 1 January 2015	61	-	1	4,909	(134)	(894)	3,943
Share issues in the year	55	2,137	-	-	-	-	2,192
Expenses in relation to share issues	-	(19)	-	-	-	-	(19)
Repurchase of shares	(1)	-	1	(35)	-	-	(35)
Net realised losses on disposal of investments	-	-	-	-	(124)	-	(124)
Investment holding losses	-	-	-	-	-	(120)	(120)
Dividends	-	-	-	(1,361)	-	-	(1,361)
Management fees charged to capital	-	-	-	-	(31)	-	(31)
Revenue loss for the year	-	-	-	(197)	-	-	(197)
As at 31 December 2015	115	2,118	2	3,316	(289)	(1,014)	4,248


	Called-up share capital	Share premium account	Capital redemption reserve	Distributable reserve	Capital reserve	Revaluation reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Infrastructure Shares Fund
As at 1 January 2015	165	-	1	15,268	(312)	182	15,304
Share issues in the year	159	14,587	-	-	-	-	14,746
Expenses in relation to share issues	-	(72)	-	-	-	-	(72)
Repurchase of shares	-	-	-	(29)	-	-	(29)
Investment holding gains	-	-	-	-	-	183	183
Dividends	-	-	-	(414)	-	-	(414)
Management fees charged to capital	-	-	-	-	(118)	-	(118)
Tax credited to capital	-	-	-	-	52	-	52
Revenue return for the year	-	-	-	380	-	-	380
As at 31 December 2015	324	14,515	1	15,205	(378)	365	30,032

Audited Income Statement
for the year ended 31 December 2015

	Year ended			Year ended
	31 December 2015			31 December 2014
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000

Realised losses on investments	-	(8,649)	(8,649)	-	(2,460)	(2,460)
Investment holding gains	-	5,183	5,183	-	5,219	5,219
Income	1,561	-	1,561	2,215	-	2,215
Investment management fees	(319)	(958)	(1,277)	(250)	(750)	(1,000)
Other expenses	(616)	-	(616)	(374)	-	(374)

Return/(loss) on ordinary activities before taxation	626	(4,424)	(3,798)	1,591	2,009	3,600

Taxation	(52)	52	-	(250)	250	-


Return/(loss) on ordinary activities after taxation	574	(4,372)	(3,798)	1,341	2,259	3,600

Return/(loss) per share:
Ordinary Share	0.7p	(7.4)p	(6.7)p	1.9p	7.4p	9.3p

Planned Exit Share	(3.1)p	(4.4)p	(7.5)p	2.6p	(12.0)p	(9.4)p

Infrastructure Share	2.2p	0.7p	2.9p	2.8p	1.0p	3.8p

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.

Audited Reconciliation of Movements in Shareholders' Funds

	Called-up share capital	Share premium account	Capital redemption reserve	Distributable reserve	Capital reserve	Revaluation reserve	Total
Year ended 31 December 2015	£'000	£'000	£'000	£'000	£'000	£'000	£'000
As at 1 January 2015	671	21,032	403	37,295	8,950	(4,896)	63,455
Share issues in the year	652	56,674	-	-	-	-	57,326
Expenses in relation to share issues	-	(690)	-	-	-	-	(690)
Repurchase of shares	(18)	-	18	(1,418)	-	-	(1,418)
Net realised losses on disposal of investments	-	-	-	-	(8,649)	-	(8,649)
Investment holding gains	-	-	-	-	-	5,183	5,183
Dividends	-	-	-	(4,797)	-	-	(4,797)
Management fees charged to capital	-	-	-	-	(958)	-	(958)
Tax credited to capital	-	-	-	-	52	-	52
Revenue return for the year	-	-	-	574	-	-	574
As at 31 December 2015	1,305	77,016	421	31,654	(605)	287	110,078

	Called-up share capital	Share premium account	Capital redemption reserve	Distributable reserve	Capital reserve	Revaluation reserve	Total
Year ended 31 December 2014	£'000	£'000	£'000	£'000	£'000	£'000	£'000
As at 1 January 2014	535	7,660	397	46,512	6,415	(10,115)	51,404
Share issues in the year	142	13,964	-	-	-	-	14,106
Expenses in relation to share issues	-	(592)	-	(101)	-	-	(693)
Repurchase of shares	(6)	-	6	(576)	-	-	(576)
Net realised losses on disposal of investments	-	-	-	-	(2,460)	-	(2,460)
Investment holding gains	-	-	-	-	-	5,219	5,219
Dividends	-	-	-	(4,406)	-	-	(4,406)
Reallocation of dividends	-	-	-	(8,432)	8,432	-	-
Investment transaction costs	-	-	-	20	-	-	20
Management fees charged to capital	-	-	-	-	(750)	-	(750)
Reallocation of management fees charged to capital	-	-	-	2,937	(2,937)	-	-
Tax credited to capital	-	-	-	-	250	-	250
Revenue return for the year	-	-	-	1,341	-	-	1,341
As at 31 December 2014	671	21,032	403	37,295	8,950	(4,896)	63,455

Audited Balance Sheet
at 31 December 2015

		Registered Number: 03421340

	As at	As at
	31 December 2015	31 December 2014
	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	92,237	43,370

Current assets
Debtors	1,416	5,849
Money market securities and other deposits	14,888	7,156
Cash	2,881	7,352
	19,185	20,357

Creditors
Amounts falling due within one year	(1,344)	(272)
Net current assets	17,841	20,085
Net assets	110,078	63,455

Capital and reserves
Called-up share capital	1,305	671
Share premium account	77,016	21,032
Capital redemption reserve	421	403
Distributable reserve	31,654	37,295
Capital reserve	(605)	8,950
Revaluation reserve	287	(4,896)

Equity shareholders' funds	110,078	63,455


Net asset value per share:

Ordinary Share	87.5p	99.4p

Planned Exit Share	36.8p	65.0p

Infrastructure Share	92.4p	92.4p

The financial statements on pages 55 to 76 of the Annual Report and Accounts were approved by the Board of Directors and authorised for issue on 27 April 2016 and were signed on its behalf by:

John Gregory
Director

Audited Cash Flow Statement
for the year ended 31 December 2015

	Year ended	Year ended
	31 December 2015	31 December 2014
	£'000	£'000
Cash flow from operating activities
Deposit and similar interest received	71	32
Investment management fees paid	(1,277)	(980)
Secretarial fees paid	(100)	(100)
Other cash payments	(340)	(118)
Taxation	-	-
Net cash outflow from operating activities	(1,646)	(1,166)

Returns on investing activities
Purchase of unquoted investments and investments quoted on AiM	(16,028)	(10,652)
Net proceeds on sale of investments	4,415	7,615
Net proceeds from deferred consideration	725	644
Investment income received	1,762	1,483
Cash held on behalf of investee companies	213	-
Net capital outflow from investing activities	(8,913)	(910)

Financing
Proceeds of fund raising	18,936	9,613
Expenses of fund raising	(517)	(453)
Repurchase of own shares	(1,068)	(579)
Equity dividends paid	(4,690)	(4,290)
Cash acquired on merger with Foresight 2 VCT plc	1,159	-
Movement in money market funds	(7,732)	(26)
	6,088	4,265
Net (outflow)/inflow of cash in the year	(4,471)	2,189

Reconciliation of net cash flow to movement in net funds
(Decrease)/increase in cash and cash equivalents for the year	(4,471)	2,189
Net cash and cash equivalents at start of year	7,352	5,163
Net cash and cash equivalentsat end of year	2,881	7,352

Analysis of changes in net debt	At 1 January 2015	Cashflow	At 31 December 2015
	£'000	£'000	£'000
Cash and cash equivalents	7,352	(4,471)	2,881

Notes

1. The audited Annual Financial Report has been prepared on the basis of accounting policies set out in the statutory accounts of the Company for the year ended 31 December 2015. 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.

2. These are not statutory accounts in accordance with S436 of the Companies Act 2006. The full audited accounts for the year ended 31 December 2015, which were unqualified and did not contain statements under S498(2) of the Companies Act 2006 or S498(3) of the Companies Act 2006, will be lodged with the Registrar of Companies. Statutory accounts for the year ended 31 December 2015 including an unqualified audit report and containing no statements under the Companies Act 2006 will be delivered to the Registrar of Companies in due course.

3. Copies of the Annual Report will be sent to shareholders and will be available for inspection at the Registered Office of the Company at The Shard, 32 London Bridge Street, London, SE1 9SG and can be accessed on the following website: www.foresightgroup.eu

4. Net asset value per share

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

	31 December 2015			31 December 2014

	Ordinary Shares Fund	Planned Exit Shares Fund	Infrastructure Shares Fund	Ordinary Shares Fund	Planned Exit Shares Fund	Infrastructure Shares Fund

Net assets	£75,798,000	£4,248,000	£30,032,000	£44,208,000	£3,943,000	£15,304,000
No. of shares at year end	86,593,790	11,527,087	32,510,224	44,485,151	6,063,626	16,567,066
Net asset value per share	87.5p	36.8p	92.4p	99.4p	65.0p	92.4p

5. Return per share

	Year ended			Year ended
	31 December 2015			31 December 2014
	Ordinary Share	Planned Exit Share	Infrastructure Share	Ordinary Share	Planned Exit Share	Infrastructure Share
	£'000	£'000	£'000	£'000	£'000	£'000

Total return after taxation	(3,823)	(472)	497	3,551	(576)	625
Total return per share (note a)	(6.7)p	(7.5)p	2.9p	9.3p	(9.4)p	3.8p

Revenue return from ordinary activities after taxation	391	(197)	380	713	158	470
Revenue return per share (note b)	0.7p	(3.1)p	2.2p	1.9p	2.6p	2.8p

Capital return from ordinary shares after taxation	(4,214)	275	117	2,838	(734)	155
Capital return per share (note c)	(7.4)p	(4.4)p	0.7p	7.4p	(12.0)p	1.0p

Weighted average number of shares in issue in the year	56,855,338	6,256,492	17,169,610	38,040,734	6,095,558	16,613,023

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

6. Annual General Meeting

The Annual General Meeting will be held at 1.00pm on 24 May 2016 at the offices of Foresight Group LLP, The Shard, 32 London Bridge Street, London, SE1 9SG.

7. Income

	Year ended	Year ended
	31 December 2015	31 December 2014
	£'000	£'000

Loan Stock interest	1,435	1,869
Dividends	55	314
Overseas based Open Ended Investment Companies ("OEICs")	71	32
	1,561	2,215

8. Investments

	2015	2014
	£'000	£'000
Company
Quoted investments	47	-
Unquoted investments	92,190	43,370

	92,237	43,370


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

Book cost as at 1 January 2015	-	48,647	48,647
Investment holding losses	-	(5,277)	(5,277)
Valuation at 1 January 2015	-	43,370	43,370

Movements in the period:
Purchases at cost*	-	16,182	16,182
Acquired on merger	44	40,764	40,808
Disposal proceeds	-	(4,415)	(4,415)
Realised losses**	-	(9,073)	(9,073)
Investment holding gains**	3	5,362	5,365
Valuation at 31 December 2015	47	92,190	92,237

Book cost at 31 December 2015	44	92,105	92,149
Investment holding gains	3	85	88
Valuation at 31 December 2015	47	92,190	92,237


Ordinary Shares Fund	Quoted	Unquoted	Total
	£'000	£'000	£'000

Book cost as at 1 January 2015	-	29,339	29,339
Investment holding losses	-	(4,565)	(4,565)
Valuation at 1 January 2015	-	24,774	24,774

Movements in the period:
Purchases at cost*	-	16,180	16,180
Acquired on merger	44	23,662	23,706
Disposal proceeds	-	(2,901)	(2,901)
Realised losses**	-	(8,949)	(8,949)
Investment holding gains**	3	5,299	5,302
Valuation at 31 December 2015	47	58,065	58,112

Book cost at 31 December 2015	44	57,331	57,375
Investment holding gains	3	734	737
Valuation at 31 December 2015	47	58,065	58,112

* Capitalised interest of £153,000 was recognised by the Ordinary Shares fund in the year, and is included within purchases at cost. ** Deferred consideration of £725,000 was received by the Ordinary Shares fund in the year and is included within realised losses in the income statement. This was offset by a decrease in the deferred consideration debtor of £483,000, of which £182,000 is included within investment holding gains in the income statement.





Planned Exit Shares Fund	Quoted	Unquoted	Total
	£'000	£'000	£'000

Book cost as at 1 January 2015	-	4,514	4,514
Investment holding losses	-	(894)	(894)
Valuation at 1 January 2015	-	3,620	3,620

Movements in the period:
Purchases at cost	-	2	2
Acquired on merger	-	1,958	1,958
Disposal proceeds	-	(1,514)	(1,514)
Realised losses	-	(124)	(124)
Investment holding losses	-	(120)	(120)
Valuation at 31 December 2015	-	3,822	3,822

Book cost at 31 December 2015	-	4,836	4,836
Investment holding losses	-	(1,014)	(1,014)
Valuation at 31 December 2015	-	3,822	3,822


Infrastructure Shares Fund	Quoted	Unquoted	Total
	£'000	£'000	£'000

Book cost as at 1 January 2015	-	14,794	14,794
Investment holding gains	-	182	182
Valuation at 1 January 2015	-	14,976	14,976

Movements in the period:
Acquired on merger	-	15,144	15,144
Investment holding gains	-	183	183
Valuation at 31 December 2015	-	30,303	30,303

Book cost at 31 December 2015	-	29,938	29,938
Investment holding gains	-	365	365
Valuation at 31 December 2015	-	30,303	30,303

9. Related party transactions

No Director has an interest in any contract to which the Company is a party.

10. Transactions with the manager

Foresight Group CI Limited, which acts as investment manager to the Company in respect of its venture capital and other investments, earned fees of £1,227,000 during the year (2014: £1,000,000). Foresight Fund Managers Limited, Company Secretary, received fees excluding VAT of £100,000 (2014: £100,000) during the year.

At the balance sheet date, there was £nil (2014: £159,000) due to Foresight Group CI Limited and £nil (2014: £nil) due to Foresight Fund Managers Limited. No amounts have been written off in the year in respect of debts due to or from the related parties.

END

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 VCT PLC via Globenewswire

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