FTD Foresight 3

 
TIDMFTD 
 
 
   FORESIGHT 3 VCT PLC 
 
   2014 Highlights 
 
 
   -- Net asset value per Ordinary Share at 31 March 2014 was 74.2p (31 March 
      2013: 75.2p). 
 
   -- An interim dividend for the year ended 31 March 2014 of 2.0p per Ordinary 
      Share was paid on 28 March 2014 based on an ex-dividend date of 12 March 
      2014 and a record date of 14 March 2014. 
 
   -- Follow-on funding totalling GBP1.03 million was provided to six portfolio 
      companies and GBP3.75 million for five new investments, GBP3 million of 
      which was in acquisition vehicles preparing to trade at the year end. 
 
   -- The Ordinary Shares fund realised GBP4.7 million from nine portfolio 
      companies. 
 
   -- During the year, 429,636 Ordinary Shares were allotted for gross proceeds 
      of GBP339,833. 
 
 
   Chairman's Statement 
 
   Strategic Report 
 
   This is the first time that my annual Statement has been produced under 
the recently introduced UK 'narrative reporting' framework. This 
includes a requirement to provide a separate Strategic Report with 
certain prescribed content in accordance with regulations made under the 
provisions of the Companies Act 2006. This now brings together various 
governance disclosures and related matters and you will find it 
immediately following this statement. Some of the information previously 
contained in my statement will therefore be found elsewhere in the 
Report and Accounts. 
 
   Performance 
 
   During the year, our private equity investments benefited from the 
recent economic upturn both in the UK and traditional export markets and 
their performance outweighed the poor performance of the environmental 
investments such that, after taking into account the payment of a 
dividend of 2.0p per share on 28 March 2014, the overall net asset value 
of the fund at 31 March 2014 increased by 1.3% to 74.2p per share from 
75.2p per Ordinary Share at 31 March 2013. 
 
   It has been another difficult year for our environmental investments, 
although the portfolio's exposure is limited to just three remaining 
investments, namely Closed Loop Recycling, O-Gen Acme Trek and O-Gen UK. 
When our Manager, Foresight Group, started to focus on investments in 
environmental infrastructure in 2007 it appeared that there would be 
attractive opportunities to develop substantial new businesses 
particularly through the application of technologies used elsewhere in 
the world. It was envisaged that these businesses would benefit from 
growing regulation and awareness of the need to find ways to reduce the 
environmental impact of human economic activity and facilitate 
sustainable development. However as I said in my statement with the half 
year accounts, it has proved very difficult with the capital available 
to create viable businesses in the power generation and materials 
recycling sectors in which the Company has invested. This has been 
partly because the technology needed more development effort than any of 
those originally involved had anticipated and partly because following 
the severe problems in the banking sector the additional loan finance 
needed to set up full scale facilities was not forthcoming. 
 
   For a detailed review of the Company's investments I would refer you to 
the Manager's Report that starts on page 11. 
 
   Dividends 
 
   An interim dividend of 2.0p per Ordinary Share for the year ended 31 
March 2014 was paid on 28 March 2014. The shares were quoted ex dividend 
on 12 March 2014 and the record date for payment was 14 March 2014. 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. However distributions will inevitably be 
dependent on cash being generated from portfolio investments and 
successful realisations. 
 
   Top-up Share Issues and Share Buy-Backs 
 
   The Company launched an Ordinary Share top-up offer on 3 December 2012 
and 429,636 Ordinary Shares were allotted during the year ended 31 March 
2014, based on prices ranging from 75.2p to 78.3p per Ordinary Share. 
These allotments raised gross proceeds of GBP339,833. 
 
   During the period under review 675,000 Ordinary Shares were repurchased 
for cancellation at a cost of GBP429,000. 
 
   Alternative Investment Fund Management Registration 
 
   The Board has considered the impact on the Company of an EU directive 
regulating Alternative Investment Fund Managers (AIFM) which applies to 
most UK investment funds including the Company. To minimise the 
regulatory and financial cost of compliance as a 'full scope UK AIFM', 
with this legislation the Board has decided that the Company will 
register directly with the Financial Conduct Authority as permitted by 
the rules as a 'small registered UK AIFM'. The application process, 
which must be completed by July 2014, has been completed. This will not 
affect the current arrangements with the Manager which will continue to 
report to the Board and manage the Company's investments on a 
discretionary basis. 
 
   Management Fees 
 
   During the year, the Board and Foresight Group agreed that investment 
management fees would be reduced by 0.25% to 2.25% per annum, for an 
initial period of 5 years. The effective date for the reduction in 
management fees was 1 October 2013. 
 
   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 are valued at the bid price as at 31 March 2014. The 
portfolio valuations are prepared by Foresight Group, reviewed and 
approved by the Board quarterly and subject to review by the auditors 
annually. 
 
   Annual General Meeting 
 
   The Company's Annual General Meeting will take place on 16 September 
2014 at 1pm. 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 60. 
 
   Outlook 
 
   It is encouraging that the UK economy is continuing to recover and we 
believe that this should help the development of the businesses in which 
we have invested. A number of the investments in the fund are well 
managed and are well placed to continue their successful expansion. 
However many of the familiar risks, both financial and political, remain 
and there can be no grounds for complacency as all operate in 
competitive environments. 
 
   The fund is, on the back of recent realisations, considering new 
investment opportunities and several potential investments are currently 
going through the selection process. Additionally, the Manager continues 
to concentrate on improving the performance of the existing portfolio 
and continues to look for appropriate opportunities to realise gains 
from the disposal of successful investments. 
 
   Following the successful realisation of Alaric, the Board was pleased to 
resume the payment of dividends to Shareholders and future dividends to 
Shareholders remain a priority. This in turn should improve the 
liquidity of the Ordinary Shares and reduce the discount to net asset 
value, which continues at a higher level than the Board still feels is 
justified by the prospects of the underlying investments. 
 
   Graham Ross Russell 
 
   Chairman 
 
   24 July 2014 
 
   Strategic Report 
 
   Introduction 
 
   This Strategic Report, on pages 5 to 10, 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 3 VCT plc 
 
   Foresight Group was appointed manager of Advent VCT plc on 30 July 2004 
and the fund was renamed Foresight 3 VCT plc. 
 
   Foresight Group was appointed manager of Noble VCT plc (formerly 
Enterprise VCT plc) on 1 April 2008 and the Company temporarily reverted 
to its former name of Enterprise VCT plc. On 10 September 2008 Foresight 
3 VCT plc acquired the assets and liabilities of Enterprise VCT plc and 
the Company was partially merged into Foresight 3 VCT plc as a separate 
C Share class. On 24 July 2009 the Foresight 3 VCT plc Ordinary and C 
Shares were merged together to create new Ordinary shares. 
 
   The number of Ordinary Shares in issue at 31 March 2014 was 51,226,401. 
 
   Investment Policy 
 
   The Manager (Foresight Group) will target UK unquoted companies which 
depend to a significant extent on the application of scientific and 
technological skills or knowledge as a major source of competitive 
advantage. A proportion of realised gains will normally be retained for 
re-investment and to meet future costs. Subject to this, the Company 
will endeavour to maintain a flow of dividend payments. 
 
   Investment Objectives 
 
   The investment objective of the Company is to provide private investors 
with attractive returns from a portfolio of investments in fast-growing 
unquoted companies in the United Kingdom. 
 
   It is the intention to maximise tax free income available to investors 
from a combination of dividends and interest received on investments and 
distribution of capital gains arising from trade sales or flotations. 
 
   Performance and key performance indicators (KPIs) 
 
   The Board expects the Manager to deliver a performance which meets the 
objectives of the fund. The KPIs covering these objectives are net asset 
value performance and dividends paid, which, when combined, give net 

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