Foresight Solar & Infrastructure VCT plc : Final R

FORESIGHT SOLAR & INFRASTRUCTURE VCT PLC

Summary Financial Highlights

      ORDINARY SHARES FUND

• Two interim dividends of 3.0p per share were paid during the year, on 18 November 2016 and 7 April 2017.
• After payment of 6.0p in dividends, net asset value per Ordinary Share was 95.9p (30 June 2016: 100.7p).
• An interim dividend of 3.0p per share will be paid on 24 November 2017, based on an ex-dividend date of 9 November 2017 and a record date of 10 November 2017.
• The Company completed a tender offer in May 2017, allowing holders of Ordinary Shares an opportunity to exit their investment at a price of 100.19p per share, which represents a total return of 129p per share, net of all expenses and performance fees.
• In December 2016, the sale of the fund's Italian and Spanish solar assets was completed.
• At 30 June 2017, the Ordinary Shares fund held positions in six UK solar assets, with a total installed capacity of 24MW. During the period the portfolio generated 31Gwh of clean energy, sufficient to power approximately 9,400 UK homes for a year.
• Post-period end, two further UK solar assets were acquired, increasing the portfolio's capacity by 19MW

      C SHARES FUND

• Two interim dividends of 2.5p per share were paid during the year, on 18 November 2016 and 7 April 2017.
• After payment of 5.0p in dividends, net asset value per C Share was 90.1p (30 June 2016: 80.5p).
• An interim dividend of 2.5p per share will be paid on 24 November 2017, based on an ex-dividend date of 9 November 2017 and a record date of 10 November 2017.
• At 30 June 2017, the C Shares fund held positions in four solar assets in the UK and US, with an installed capacity of 17MW. During the period the portfolio generated 12Gwh of clean energy, sufficient to power approximately 3,600 UK homes for a year.

      D SHARES FUND

• The D Shares fund raised a total £3.7m during the period.
•  Net asset value per D Share at 30 June 2017 was 96.8p (30 June 2016: 99.4p).

Chairman's Statement

Introduction

The last 12 months has been a period of change for the Company and specifically the Ordinary Shares fund, which delivered on its prospectus objective to enable an exit, via a tender offer, for those shareholders who wished to sell after satisfying the 5 year minimum qualifying hold period. Although the Ordinary Shares fund and the Company are now smaller than before, the Board and the Investment Manager believe that the stable platform created will allow them to continue to actively manage the portfolio with a view to maximising long term future returns for remaining Shareholders.

The tender offer, completed during May 2017, enabled 411 shareholders to sell 10,966,024 ordinary shares (approximately 29% of shares in issue) at NAV less costs generating a total return (net of all costs, management fees and performance incentive fees) of 129p per Ordinary Share.

This performance represents the results of the key ongoing focus of the Board and the Investment Manager, namely to optimise the portfolio's performance and valuation through a number of concurrent processes including: · optimising the debt content of investments through refinancing at historically low interest rates; · extending leases and planning permissions from 25 years to 35 years to reflect the expected useful life of the plants; · the disposal of certain FiT projects and the utilisation of the proceeds for the acquisition of new projects by investee companies; and · entering into power price agreements (PPAs) that maximise revenues but retain flexibility to appropriately manage a rapidly growing portfolio.

The company has been successful in this regard having completed the refinancing of two assets on favourable terms, extended leases and planning permissions for several investee company projects and post year end has seen both a sale of existing projects and the acquisition of new projects that has realised profits for the Ordinary Shares fund as well as creating the potential in the future for further returns.

Ordinary Shares Fund Performance

The underlying net asset value increased by 1.2p per Ordinary Share before deducting the 6.0p per Ordinary share dividend paid during the year but after the payment of all expenses, including the performance incentive fee paid to the Investment Manager which was approved by Shareholders at a general meeting on 4 May 2017.

The value of the UK portfolio increased by approximately £2.8m, principally as a result of improvements in the efficiency and revenue generation of the solar sites, created by of the Investment Manager's active asset management approach described above, as well as reduced operating costs such as business rates. 

The Company is also in the advanced stages of completing the sale of its FiT assets which will realise further value for Shareholders.

In December 2016 the Company successfully disposed of its Italian and Spanish assets realising approximately £5.6m.

The overall performance of the Ordinary Shares fund remains robust and the total return since inception as at 30 June 2017 was 124.9p per Ordinary Share.

Movement in Net Asset Value of the Ordinary Shares Fund

During the year, stated net asset value of the Ordinary Shares fund decreased to 95.9p per share (£26.2m) at 30 June 2017 from 100.7p per share (£38.6m) at 30 June 2016. The main factors driving the fall in net assets were a combination of the dividends paid (£2.3m), performance fee paid (£3.3m), the valuation increase of the ordinary share portfolio (£2.6 m) and the tender offer proceeds distributed to investors, which totalled £11.0m. Despite the tender offer, the total net assets of the Ordinary Shares fund remains substantial and provides a platform to the manager to maximise long term future returns for Shareholders. The Net Asset Value is also calculated on a lower number of shares following the tender offer.

Cash & Deal Flow

The Ordinary Shares fund had cash and liquid resources of £0.5m at 30 June 2017. The Company receives regular interest and loan stock payments and dividends from its underlying investments enabling it to continue to fund its dividend policy as well as meeting expenses in the ordinary course of business as they fall due.

Investment Gains & Losses

During the period the Ordinary Shares fund recognised unrealised gains of £4.1m. Further information regarding the breakdown of this amount is contained in the Investment Manager's Report. During the period the Ordinary Shares Fund recognised realised losses of £1.4m, which had no impact on NAV as it was a transfer from unrealised losses following the sale of an investment.

Running Costs

The annual management fee of the Ordinary Shares fund is calculated as 1.5% of Net Assets. During the period the management fees (excluding the performance incentive fee) totalled £563,000, of which £141,000 was charged to the revenue account and £422,000 was charged to the capital account.

Dividends

The Board originally planned to pay dividends of 5.0p per Ordinary Share each year throughout the life of Foresight Solar & Infrastructure VCT plc after the first year, payable bi-annually via dividends of 2.5p per Ordinary Share in April and October each year. The level of dividends is not, however, guaranteed. The Board is pleased to announce that the next interim dividend, of 3.0p per Ordinary Share, will be paid on 24 November 2017 based on an ex-dividend date of 9 November 2017 and a record date of 10 November 2017, which means that total dividends of 32.0p per Ordinary Share will have been paid since launch.

Ordinary Shareholder Tender Offer

As noted above the Company completed the tender offer in May 2017, allowing 411 Shareholders (29% of total ordinary shares held) to exit their investment totalling 10,966,024 ordinary shares at a price of 100.19p per share for a total return of 129p per share net of all expenses and performance fees. This represented a very satisfactory outcome for Ordinary Shareholders that chose to realise their shares.

Performance Incentive Fee

At a general meeting on 4 May 2017, Shareholders approved the performance incentive agreement enabling a performance incentive fee of £3.3m to be paid on all shares tendered or eligible to be tendered under the tender offer in line with the original intention of the performance fee arrangements.

As part of discussions on this matter, the Board negotiated to replace the existing hurdle with a new growth hurdle before any further performance incentive payments are due. Following Shareholder approval, the Total Return threshold of 130p per Ordinary Share will no longer be a fixed target but it will increase by a simple 5% per annum going forward: 136.5p for the Company's financial year ending 30 June 2018, 143.0p for the year ending 30 June 2019 and so on.

Ordinary Share Issues & Buybacks

During the year under review, 10,966,024 Ordinary Shares were repurchased for cancellation as part of the tender offer. No new shares were issued.

C Shares Fund Performance

The underlying net asset value increased by 14.6p per 'C' Share before deducting the 5.0p per 'C' share dividend paid during the year, but after the payment of all expenses.

The valuation of the UK portfolio increased by approximately £1.8m (14.6p per C Share). This increase in valuation was driven principally by the refinancing of the debt content of investee company projects on significantly improved terms; production and irradiation levels above expectations flowing through to revenues generated; as well as reduced operating costs. The C shares fund has a greater exposure to Renewable Obligation Certificates ("ROC") subsidised projects than the Ordinary Shares Fund resulting in a greater proportion of project revenues being exposed to changes in power prices.

The overall performance of the C Shares fund is improving and net asset value total return increased by 16.1% during the period to 105.1p per C. Despite this improvement the original target of 120p per C Share remains challenging.

Movement in Net Asset Value of the C Shares Fund

During the period, the net assets of the C Shares fund increased to 90.1p per share (£11.3m) at 30 June 2017 from 80.5p per share (£10.1 m) as at 30 June 2016, largely due to the overall performance of the investment portfolio. This is summarised further in the table below:

Deal Flow

During the year, the C share fund completed a £3.7m investment in a 5 MW project at Marchington, Staffordshire. The site was connected to the grid in March 2016 and benefits from a ROC subsidy.

Investment Gains & Losses

During the period the C Shares fund recognised net gains of £2.0m across its investments and further information regarding the breakdown of this amount is contained in the Investment Manager's Report.

Running Costs

The annual management fee of the C Shares fund is calculated as 1.75% of Net Assets. During the year the management fees totalled £189,000, of which £47,000 was charged to the revenue account and £142,000 was charged to the capital account.

C Share Dividends

The Board is pleased to announce that the next interim dividend, of 2.5p per C Share, will be paid on 24 November 2017 based on an ex-dividend date of 9 November 2017 and a record date of 10 November 2017, which means that total dividends of 17.5p per C Share will have been paid since launch.

Outlook - C Shares Fund The proceeds of the C Share offer have now been fully deployed and the plants performed above expectations during the period. A combination of the ongoing optimisation programme for assets and a decline in power prices has resulted in the total return of the C Shares increasing in the period from 90.5p per share to 105.1p per C Share.

The Board is progressing plans to sell the US asset and this is expected to complete during 2018.

D Shares Fund

The D Shares fund offer opened on 1 February 2016, following a window of opportunity to invest in energy generating investments (subject to them not benefitting from any form of Government subsidy) for a very short period until 5 April 2016, after which time they were prohibited for VCTs. The D Shares fund raised £4.9m before it closed on 31 January 2017. A small top-up offer in March 2017 led to the D share fund's total fund raising increasing to £5.6m.

Annual General Meeting The Company's Annual General Meeting will take place on 7 December 2017 at 12.30pm. I look forward to welcoming you to the Meeting, which will be held at the offices of Foresight Group in London.

Overall Company Outlook

The major changes to the Ordinary Share portfolio of investments noted in my previous reports have now been completed and we believe that the stable platform created will underpin the future performance of the fund as well as maintain a regular stream of dividends.

The performance of the C Share portfolio during the year is pleasing and demonstrates the ongoing efforts of the Board and the Investment Manager to focus on a combination of operational and financing improvements within the portfolio.

David Hurst-Brown Chairman 31 October 2017 Investment Manager's Review

Ordinary Shares Fund

In December 2016 the Company completed the sale of the Italian and Spanish investments, which may be redeployed further into Euro denominated assets. The Investment Manager also previously reported that it was exploring opportunities to refinance its Turweston asset in the current low interest rate environment. The Turweston refinancing process completed in March 2017 and a drawdown from the facility occured in May 2017. The refinancing was provided by Royal Bank of Scotland and the proceeds were used to finance the tender offer described below and also to facilitate further acquisitions made by the Company, as described below.

The fifth anniversary of the final closing of the original public offer for subscription for the Ordinary Share class of the Company occurred on 8 November 2016. During March 2017, the Company's shareholders were invited to participate in a tender offer and the shareholders who elected to exit were provided liquidity on 11 May 2017 when 10,570,589 Ordinary Shares were bought back at a price of 100.19p per share. A further 395,435 Ordinary Shares were bought back on 27 June 2017 also at a price of 100.19p. A total of 10,966,024 Shares were bought back through the tender offer.

Portfolio Performance

For the period 1 July 2016 to 30 June 2017 total electricity production was 7% below expectations against irradiation levels that were 2% below expectations.

Malmesbury's annual production was 15.3% down against expectations due to a transformer malfunction, though the effect of this at a portfolio level is not material.

Kent's annual production was 4.4% lower than expected due to a High Voltage cable incident, however this was covered by insurance.

These specific issues were identified early on by the Investment Manager and are not expected to impact the long term performance of the assets.

Following Period End

Existing investee companies acquired two solar projects post period end; Littlewood and Laurel Hill.

Littlewood was purchased from Goldbeck and completed in August 2017. Littlewood is a 5MW plant located near Mansfield, Nottinghamshire. Littlewood presented an attractive investment opportunity given the quality of Goldbeck projects and the fact that Foresight already had precedent contracts from which to transact. The site connected to the grid in March 2017 and all revenues generated from the point of connection are to the benefit of the Company.

Laurel Hill reached financial completion on 30 September 2017. Laurel Hill is a 14.2MW solar plant located near Donaghcloney, Northern Ireland. The project benefits from 1.4 ROCs and is expected to connect to the grid in February 2018.

The Investment Manager is in advanced stages of dispensing of the four FiT assets in the portfolio in order to capitalise on current market pricing of such assets.

C Shares Fund

On 1 July 2016, the Investment Manager invested £3.7m in a 5MW solar project at Marchington, Staffordshire. The site was connected to the grid in March 2016 and benefits from a ROC subsidy.

As reported in March 2017, the Investment Manager began the process of evaluating the potential sale of the C Shares US asset known as EOSOL Solar. The sale process is now underway and is expected to complete by Q1 2018.

During the period Saron's existing Investec debt facility was refinanced on significantly improved terms. The refinancing was provided by Royal Bank of Scotland.

D Shares Fund

The D Share class offer was closed to new subscriptions in early 2017. A total of £5.6m has been raised following the issuance of a supplemental prospectus in March 2017. The Investment Manager is continuing to explore investment opportunities that will be value accretive for the Company.

Regulatory and Market Changes

Over the year the UK has seen new records being set for the level of solar production as well as in relation to the wider energy mix with historic lows for coal generation. According to the National Grid, Friday 21 April 2017 was the first working day without coal power since the Industrial Revolution.

The UK's total solar capacity has continued to grow even after the closure of the Renewable Obligation scheme, which closed to new solar projects at the end of March 2017. The ROC deadline led to many acquisitions and installations and while there is often a lag in the official statistics until all newly commissioned projects have been accredited which can take some months, there is now c.12GW of solar capacity in Great Britain with over 8GW in ground mounted solar.

Following the significant reduction of the Feed in Tariff for large scale solar and the lack of visibility of future Contract for Difference ("CfD") auctions, it is expected that there will be very limited new solar capacity added in the near future. However, there has been a marked increase in secondary market activity.

With the reduction in solar installation costs experienced in recent periods, industry participants are also working to develop unsubsidised projects and it is expected that the first of these projects will be commissioned in the next 12 months, either benefitting from private wire or Power Purchase agreements ("PPA") arrangements with corporates. In the short term however, the economic viability of unsubsidised projects will remain marginal and limited projects will be realised. This situation is expected to shift over time as the cost of solar panels continues to reduce, making projects cost competitive with other forms of electricity generation.

The UK triggered Article 50 of the Lisbon Treaty on 29 March 2017 to formally initiate the two year process for withdrawing from the European Union ('Brexit'). The uncertainty generated by Brexit continues to effect the UK power market. It's unclear to what extent the UK market will remain integrated with the wider EU power market and therefore what the impact on wholesale power prices will be. For the moment however, a number of interconnector projects with EU members are still being progressed, which is a positive indication. The Company will continue to carefully monitor any potential effects of Brexit.

On 8 June 2017, the UK voted in a snap General Election in which the governing Conservative party lost its parliamentary majority. The purpose of calling the snap election was an attempt by the Prime Minister to strengthen the Government's position in Brexit negotiations, but this unexpectedly resulted in a hung parliament with the Conservatives forming a minority government and having to team up with the Democratic Unionist Party of Northern Ireland. The effects of this election result are currently uncertain; however, the Company will continue to monitor the newly formed Government's renewable energy policies.

The General Election campaigns saw a focus on consumer energy costs, but limited discussion of decarbonisation or energy policy more generally so it is yet to be seen what direction the Government will take. The Government's Emissions Reduction Plan which is due to set out how it intends to meet the targets detailed in the Fifth Carbon Budget, was due to be released in the first half of 2017, but is now expected prior to the end of the year. Given the expectation that further renewable generation will be required to comply with the budget, the Commission for Energy Regulation may point to future markets or mechanisms to enable new renewable generating capacity, including solar.

Power Prices

Following a winter of relatively high power prices, the spot price has now returned to £42 per MWh as at 30 June 2017 (£50 per MWh in December 2016).

The average power price achieved across the portfolio during the reporting period was £41.36 per MWh.

 During the period 1 July 2016 to 30 June 2017 there was a downward movement of 3.3% in the medium to long term power price forecast. The Investment Manager uses forward looking power price assumptions to assess the likely future income of the portfolio assets for valuation purposes. The Company's assumptions are formed from a blended average of the forecasts provided by third party consultants and are updated on a quarterly basis. The Investment Manager's forecasts continue to assume an increase in power prices in real terms over the medium to long-term of 1.7% per annum (31 December 2016: 1.7%), driven by higher gas and carbon prices.

During the period, 79% of the Company's operational portfolio revenue came from the FiT subsidy or sale of ROCs and other green benefits to an offtaker. These revenues are directly and explicitly linked to inflation for 20 years from the accreditation date under the ROC regime and subject to Retail Price Index ("RPI") inflationary increases applied by Ofgem in April of each year.

The majority of the remaining 21% of revenues derive from electricity sales which are subject to wholesale electricity price movements. Electricity prices in the UK are a component of the RPI index basket of goods and services and as a result present a degree of correlation with the long term RPI. This direct indexation of revenues derived from ROC benefits and the degree of inflation linkage of the wholesale electricity price provides a significant percentage of cash flows correlated with long-term inflation.

PPAs are entered into between each individual solar power asset and offtakers in the UK electricity supply market. Under the PPAs, each asset will sell the entirety of the generated electricity and ROCs to the designated offtaker. The Company's PPA strategy seeks to optimise revenues from the power generated, while keeping the flexibility to manage the portfolio appropriately. As at 30 June 2017, the four FiT sites have fixed PPA prices in place and the remaining assets in the portfolio have floating rate PPAs, which track market power prices.

The Investment Manager is constantly reassessing conditions in the electricity market and updating its view on likely future movements. The Company retains the option to fix the PPAs of its portfolio assets at any time. As part of the Investment Manager's ongoing efforts to maximise the commercial performance of the portfolio, a PPA tendering process across all assets has been undertaken. This process has seen a significant reduction in fees charged by our offtakers.

Environmental Social and Governance Considerations

The Company believes Environmental, Social and Governance ("ESG") considerations play an important part in delivering responsible and sustainable growth for the long term. These factors have been integrated into all stages of the investment process, and are actively supported by all involved, regardless of seniority. With that in mind, the Company has adopted a Responsible Investment Framework to provide a suitable operational framework in matters related to the investment process, such that ESG has become part of the normal day-to-day operations. Further to the environmental advantages of large scale renewable energy, each investment is closely scrutinised for localised environmental impact. Where improvements can be made, the Company will work with planning and local authorities to minimise visual and auditory impact of sites.

Land Management

The Investment Manager is a working partner of the Solar Trade Association's Large Scale Asset Management Working Group. Foresight is a signatory to the Solar Farm Land Management Charter and ensures that all of its solar farms are managed in a manner that maximizes the agricultural, landscaping, biodiversity and wildlife potential, which can also contribute to lowering maintenance costs and enhancing security. As such, the Investment Manager regularly inspects sites and develops site specific land management and biodiversity enhancement plans to secure long term gains for wildlife and ensure that the land and environment are maintained to a high standard. This includes: · Management of grassland areas within the security fencing to promote wildflower meadows and sustainable sheep grazing; · Planting and management of hedgerows and associated hedge banks; · Management of field boundaries between security fencing and hedgerows; · Sustainable land drainage and pond restoration;  · Installation of insect hotels and reptile hibernacula; · Installation of boxes for bats, owls and kestrels; and · Installation of beehives by local beekeepers.

Most solar parks are designed to enable sheep grazing and the remaining plants are investigated for alterations to ensure that the farmland on which the solar assets are located can remain useful in agricultural production, which is a frequent desire of local communities.

Social and Community Engagement

The Investment Manager actively seeks to engage with the local communities around the Company's solar assets and regularly attends parish meetings to encourage community engagement and promote the benefits of the solar assets.

Health and Safety

There were no reportable health and safety incidents during the period.

Safety, Health, Environment and Quality ('SHEQ") performance and risk management are a top priority at all levels for Foresight Group. To further improve the management of SHEQ risks, reinforce best practice and ensure non-compliance with regulations is avoided, the Asset Manager has appointed an independent health and safety consultant who regularly visits the portfolio assets to ensure they not only meet, but exceed, industry and legal standards. The consultant has confirmed that all sites are in compliance with all applicable regulations. Recommendations that have been implemented to help raise standards further include improvements to the safety signage on the fence of two plants.

Outlook   The UK solar sector experienced another period of significant growth driven by the closure of the Renewable Obligation scheme to new solar projects in March 2017. This resulted in the total installed solar capacity in the UK reaching c.12GW, with over 8GW of large scale solar.

The Investment Manager believes that the level of activity in the secondary market will continue in the short and medium term with 1 to 2GW of operational projects expected to be sold in the next 12 to 18 months. With the scarcity value of UK operational portfolios increasing, the Company will maintain a prudent approach to acquisitions in the UK secondary market.

During the financial year ended 30 June 2017, the Investment Manager continued to focus on the optimisation of the existing portfolio, both from an operational perspective and in respect of the capital structure of the assets. As previously discussed the Investment Manager is considering selling certain assets in the portfolio in order to provide liquidity to allow the Company to explore new acquisition opportunities that the Investment Manager believes will be accretive to the value of the Company and benefit the shareholders in the long term.

While there remains political uncertainty following the UK's decision in June 2016 to withdraw from the European Union and the recent snap election, which resulted in a hung parliament, current indications suggest that the UK Government remains committed to a carbon reduction agenda.

Dan Wells Partner 31 October 2017

Unaudited Non-Statutory Analysis of the Share Classes

At 30 June 2017 there was an inter-share debtor/creditor of £387,000 which has been eliminated on aggregation.

Reconciliations of Movements in Shareholders' Funds for the year ended 30 June 2017

Unaudited Income Statement for the year ended 30 June 2017

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.

Unaudited Reconciliation of Movements in Shareholders' Funds

*Of this amount £14,219,000 (2016: £33,390,000) is distributable.

Una udited Balance Sheet at 30 June 2017

Registered Number: 07289280

Una udited Cash Flow Statement for the year ended 30 June 2017

*£16,000 of these proceeds were transferred from investments to debtors and therefore are not included in the proceeds on sale of investments in note 8. **At the year end, £28,000 of expenses in relation to the tender offer remained unpaid. ***Including money market securities and other deposits. 

Notes to the accounts

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 30 June 2017.  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 ,as updated in December 2015. 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 30 June 2017, which were unqualified and did not contain any statements under S498(2) or S498(3) of Companies Act 2006, will be lodged with the Registrar of Companies. Statutory accounts for the year ended 30 June 2017 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

Net asset value per Ordinary Share is based on net assets at the year end of £26,197,000 (2016: £38,553,000) and on 27,324,838 Ordinary Shares (2016: 38,290,862), being the number of Ordinary Shares in issue at that date.

Net asset value per C Share is based on net assets at the year end of £11,267,000 (2016: £10,067,000) and on 12,509,247 C Shares (2016: 12,509,247), being the number of C Shares in issue at that date.

Net asset value per D Share is based on net assets at the year end of £5,455,000 (2016: £1,986,000) and on 5,636,181 D Shares (2016: 1,997,691), being the number of D Shares in issue at that date.

5.    Return per share

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.    The Annual General Meeting will be held at 12.30pm on 7 December 2017 at the offices of Foresight Group LLP, The Shard, 32 London Bridge Street, London, SE1 9SG.

7.    Income

8.     Investments held at fair value through profit or loss

*Purchased at cost represent legal costs incurred in relation to the disposal of the FiT assets and refinancing of Turweston assets. These costs will reduce the net realised gains on disposal of the assets.

9.    Transactions with the manager

Foresight Group, which acts as investment manager to the Company in respect of its venture capital investments earned fees of £820,000 in the year (2016: £808,000). It also earned performance incentive fees of £1,053,000 (2016: £2,270,000). £3,323,000 (2016: nil) of performance incentive payments were made to Foresight Group in the year.

Foresight Fund Managers Limited provides administration services to the Company, and received fees of £211,000 during the year (2016: £170,000). The annual administration and accounting fee (which is payable together with any applicable VAT) is 0.3% of the net funds raised by the offer (subject to a minimum index linked fee of £60,000 for each of the Ordinary, C Share and D Share funds).

At the balance sheet date there was £104,000 due to Foresight Group (2016: £3,000 due from Foresight Group) and £61,000 (2016: £nil) due to Foresight Fund Managers Limited.

Foresight Group is responsible for external costs such as legal and accounting fees, incurred on transactions that do not proceed to completion ('abort expenses'). In line with industry practice, Foresight Group retain the right to charge arrangement and syndication fees and Directors' or monitoring fees ('deal fees') to companies in which the Company invests. From this, Foresight Group received from investee companies arrangement fees of £nil in the year (2016: £49,000).

END