FORESIGHT 4 VCT PLC - Foresight Group

Following publication of Internal Control: Guidance for Directors on the Code published in
September 1999 and updated in 2005 (the Turnbull guidance), the Board has established an
ongoing process for identifying, evaluating and managing the significant risks faced by the
Company, and this process is regularly reviewed by the Board and accords with the guidance. The
process is based principally on Foresight’s existing risk-based approach to internal control whereby
a test matrix is created that identifies the key functions carried out by Foresight and other service
providers, the individual activities undertaken within those functions, the risks associated with each
activity and the controls employed to minimise those risks. A residual risk rating is then applied.
The Board is provided with reports highlighting all material changes to the risk ratings and
confirming the action, which has been, or is being, taken. This process covers consideration of the
key business, operational, compliance and financial risks facing the Company and includes
consideration of the risks associated with the Company’s arrangements with Foresight and SGH
Martineau LLP.
The Audit Committee has carried out a review of the effectiveness of the system of internal control,
together with a review of the operational and compliance controls and risk management, as it
operated during the year and reported its conclusions to the Board which was satisfied with the
outcome of the review. The Board has concluded that, given the appointment of Foresight as
Company accountants and the role of the Audit Committee, it is not necessary to establish an
internal audit function at the current time but this policy is kept under review.
Such review procedures have been in place throughout the full financial year and up to the date of
approval of the accounts, and the Board is satisfied with their effectiveness. These procedures are
designed to manage, rather than eliminate, risk and, by their nature, can only provide reasonable,
but not absolute, assurance against material misstatement or loss. The Board monitors the
investment performance of the Company in comparison to its objective at each Board meeting. The
Board also reviews the Company’s activities since the last Board meeting to ensure that Foresight
adheres to the agreed investment policy and approved investment guidelines and, if necessary,
approves changes to such policy and guidelines.
The Board has decided that the systems and procedures employed by Foresight, the Audit
Committee and other third party advisers provide sufficient assurance that a sound system of
internal control, which safeguards shareholders’ investment and the Company’s assets, is
maintained. In addition, the Company’s financial statements are audited by external auditors.
8. TAXATION
8.1 The following paragraphs, which are intended as a general guide only and are based on current
legislation and HMRC practice, summarise advice received by the Board as to the position of the
Company’s Shareholders who hold Shares other than for trading purposes. Any person who is in
any doubt as to his taxation position or may be subject to taxation in any jurisdiction other than the
United Kingdom should consult his professional advisers.
8.2 Taxation of dividends – under current law, no tax will be withheld by the Company when it pays a
dividend.
8.3 Stamp duty and stamp duty reserve tax – the Company has been advised that no stamp duty or
stamp duty reserve tax will be payable on the issue of the New Shares to be issued pursuant to the
merger. The Company has been advised that the transfer of New Shares will, subject to any
applicable exemptions, be liable to ad valorem stamp duty at the rate of 0.5% of the consideration
paid. An unconditional agreement to transfer such New Shares if not completed by a duly stamped
stock transfer will be subject to stamp duty reserve tax generally at the rate of 50p per £100 (or part
thereof) of the consideration paid.
8.4 Close company – the Board believes that the Company is not, and expects that following
completion of the Schemes it will not be, a close company within the meaning of ITA 2007. If the
Company was a close company in any accounting period, approval as a VCT for the Company
would be withdrawn.
9. RELATED PARTY TRANSACTIONS
Save for the fees paid to Foresight, under the arrangements detailed in paragraph 6.1 above, the
fees paid to the Directors as detailed in paragraph 4.4 above, fees paid to Foresight of £66,388
(2009), £241,085 (2010), £558,347 (2011) and £69,372 (current year) in respect of promotion fees
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