FORESIGHT 4 VCT PLC - Foresight Group

securities, cash is primarily held in an interest bearing money market open ended investment company
(OEIC).
UK companies
Investments are primarily made in companies which are substantially based in the UK, although many of
these investees will trade overseas. The companies in which investments are made must have no more
than £15 million of gross assets at the time of investment (or £7 million if the funds being invested were
raised after 5 April 2006) to be classed as a VCT qualifying holding.
VCT regulation
The investment policy is designed to ensure that the Company continues to qualify and is approved as a
VCT by HMRC. Amongst other conditions, the Company may not invest more than 15% of its
investments in a single company and must have at least 70% by value of its investments throughout the
period in shares or securities comprised in Qualifying Investments, of which 30% by value in aggregate
across the portfolio must be ordinary shares which carry no preferential rights (although only a minimum
of 10% needs to be in ordinary shares on a per investment basis).
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
interest bearing securities. It is intended that the significant majority of any funds raised by the Company
will 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 using a
mixture of securities. The maximum amount invested in any one company is limited to £1 million in a
fiscal year (or, if lower, 15% of the portfolio at the time of investment) and generally no more than
£2.5 million at cost is invested in the same company (or, if lower, 15% of the portfolio at the time of
investment). The value of an individual investment is expected to increase over time as a result of trading
progress and a continuous assessment is made of its suitability for sale.
Investment style
Investments are selected in the expectation that 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, will enhance value.
Co-investment
The Company aims to invest in larger, more mature, unquoted and AIM companies and to achieve this it
invests alongside the other VCTs managed by Foresight and the Foresight Sustainable UK Investment
Fund. As such, at the time of initial investment, the combined investment can currently total up to a
maximum of £6.0 million for unquoted and for AIM investees.
Borrowing powers
The Company’s Articles permit borrowing to give a degree of investment flexibility. The Company’s
policy is not to use borrowing.
Proposed 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 stocks, convertible securities, and fixed-interest securities as well as cash. Unquoted
investments are usually structured as a combination of ordinary shares and loan stock, while AIM
investments are primarily held in ordinary shares. Pending investment in unquoted and AIM listed
securities, cash is primarily held in interest-bearing money market open ended investment companies
(OEICs) as well as in a range of non-qualifying companies. Non qualifying investments may include
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