STRICTLY PRIVATE AND CONFIDENTIAL

VCT Investing & Foresight VCT Offer AIC Seminar

January 2016

Agenda

1. An overview of Foresight Group

2. Investment team

3. Investment strategy

4. Case studies

5. Evolution of VCT legislation

6. The ‘case’ for investing in a generalist VCT

7. Foresight VCT Portfolio

8. Summary and Q&A

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1. An overview of Foresight Group

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Private Equity Environmental Infrastructure Funds Managed • £163m Foresight VCTs

• £40m Foresight Nottingham LP Fund (FNF)

• £40m Foresight North West Fund

• £60m Foresight Environmental Fund (FEF)

• Green Investment Bank – £78m UKWREI, £50m RAW

• £208m Bio Infrastructure Group

• £100m CEFC • £25m Anaerobic Digestion EIS

• £52m Solar VCT and £200m Solar EISs

• £30m FVCT Infra Shares • £285m Foresight Solar Fund –

Main Board Listed • £34m ForVEI (Italy) • Managed Accounts (various)

Investment • Portfolio of 38 UK headquartered SMEs

• Up to £25m of turnover

• 18 UK waste-to-energy and recycling projects

• 1m tonnes pa waste processing capacity

• Ground mounted solar focus • 578MW UK, 100MW Europe,

10MW USA

Highlights • Active investment manager targeting 5-10 new deals and exits each year

• Multiple award-winning team

• The UK’s market leading equity provider for waste projects

• One of the UK’s leading ground mounted solar equity investors

• Team exploring other infrastructure markets

30+ years of investment experience, now £1.8bn under management and growing

2. Investment team overview

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Team

David Hughes CIO 40 years’ experience, Previously 3i, Advent, Framlington

Russell Healey Head of Private Equity Joined 2007 Previously 12 years in technology

Tom Thorp Director Joined 2008 Previously 8 years at KPMG

Darrel Connell Director Joined in 2010 Previously 9 years at Grant Thornton and Joost

Peter English Partner, Co-founder 30 years’ experience Previously 3i, Industry

James Livingston Partner Joined in 2007 Previously 4 years at Deloitte strategy

Matt Smith Director Joined in 2010 Previously 6 years at Rothschild

Chris Wardle Investment Analyst Joined 2014 Previously 4 years at Accenture M&A

Seb Saywood Senior IM Joined in 2013. Previously 9 years at Clearwater Corporate Finance and Zolfo Cooper

Elizabeth Ryan Investment Manager Joined in 2015 Previously 6 years at Synova Capital and Deloitte

• Experienced team of private equity professionals ─ Team of 10 experienced executives, from blue chip advisers &

consultants

─ Between us, we have managed 140 investments ─ Won the management contracts of 8 separate private equity

funds since 2004 – recognition of management expertise

• Amongst the most active investment managers in the market ─ Focused on UK small cap private investments of £1m - £5m

─ Invested in more than 20 new businesses since 2012 ─ A further 20+ follow-on investments into investee companies

for acquisitions and growth

─ Current portfolio of more than 35 companies, across sectors and geographies

• Averaging 3.5x return on realisations since 2010 from investments we have made

─ 2.6x on all investments including investments from the distressed portfolios we have managed

─ Across 21 exits (35 including those from distressed portfolios) ─ Through recapitalisations, trade exits, secondary buyouts

Experienced team of PE professionals

2. Investment team - realisations

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Foresight private equity team exits since 2010 Company Sector Entry year Exit year Invested Cash return Carrying value Total return Multiple Actimax TMT 1999 2011 546,668 2,119,264 2,119,264 3.9x AdIQ TMT 2006 2010 1,198,373 0.0x Aerospace Tooling Engineering / Industrials 2013 2014 3,500,000 3,896,986 15,954,441 19,651,427 5.6x Aigis Blast Protection Engineering / Industrials 2004 2013 2,470,187 13,750 13,750 0.0x Alaric Systems TMT 2002 2013 2,188,085 11,590,890 11,590,890 5.3x appDNA TMT 2003 2011 771,135 24,656,382 24,656,382 32.0x Aquasium Engineering / Industrials 2001 2012 1,930,000 3,930,360 2,288,611 6,218,971 3.2x Autologic TMT 2009 2012 3,750,000 15,980,082 9,670,533 25,650,615 6.8x Camwood TMT 2003 2012 771,135 2,407,000 2,407,000 3.1x Clarity TMT 2000 2011 674,900 159,000 159,000 0.2x Convivial Consumer / Leisure 2006 2014 550,000 546,950 546,950 1.0x Datapath Engineering / Industrials 2007 2012 3,000,000 5,754,287 31,043,406 36,797,693 12.3x Defaqto TMT 2011 2015 4,300,000 9,450,000 9,450,000 2.2x Digital Healthcare Engineering / Industrials 2005 2013 2,525,800 1,969,300 1,969,300 0.8x Factory Media TMT 2006 2012 3,850,000 9,126,012 9,126,012 2.4x Ffastfill TMT 2000 2011 877,199 736,278 736,278 0.8x Fin Machine Engineering / Industrials 2011 2013 6,280,400 0.0x Financial News Publishing TMT 2011 2012 665,896 591,888 591,888 0.9x Flowrite Business Services 2012 2013 1,385,000 1,018,418 1,572,274 2,590,692 1.9x Global Immersion Business Services 2007 2013 2,000,000 653,217 653,217 0.3x Hallmarq Healthcare 2011 2014 1,177,000 1,491,848 1,491,848 1.3x Heritage House Consumer / Leisure 2007 2011 2,670,000 15,000 15,000 0.0x High Integrity Solutions TMT 2005 2010 1,750,000 10,248 10,248 0.0x ICA Business Services 2009 2014 2,500,000 1,661,252 2,119,019 3,780,271 1.5x iCore TMT 2000 2014 750,000 300,000 300,000 0.4x Irisys Consumer / Leisure 2005 2012 1,249,995 3,526,719 3,526,719 2.8x Lab 901 Healthcare 2006 2011 1,425,998 1,206,183 1,206,183 0.8x Nanotecture TMT 2005 2012 2,000,000 0.0x Onyx Scientific Healthcare 2007 2011 850,000 977,790 977,790 1.2x Orthoview Healthcare 2003 2014 2,017,815 5,754,360 5,754,360 2.9x Plum Baby Consumer / Leisure 2007 2010 849,148 1,527,662 1,527,662 1.8x Portchester Equity Business Services 2011 2012 1,250,000 1,394,166 1,394,166 1.1x Skillsmarket Business Services 2005 2011 4,352,000 1,387 1,387 0.0x Smartfocus TMT 2001 2011 2,120,417 5,815,176 5,815,176 2.7x The Bunker TMT 2006 2015 4,677,574 5,134,925 4,784,299 9,919,224 2.1x Average return achieved, including investments managed from distressed portfolios from other managers 72,874,725 123,416,778 67,432,583 190,849,361 2.6x

Average return achieved, Foresight only investments 44,759,395 90,605,537 67,432,583 158,038,121 3.5x

Note: Carrying Valuations as at 31/12/14

3. Investment strategy – portfolio management process

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Investee Company

Network of over 1,000 advisers

500 business plans / year

Meet and investigate 50 opportunities

Complete 5 - 10 deals / year – investment of £1m

to £5m

• Foresight team member as Investor Director

• Sets strategy and targets

• Directs recruitment, including industry chair

• Moves rapidly to solve issues

• Drives value generation towards exit

• Leads company through exit negotiations

We are very picky.... …and are careful with investments

Established growth businesses. Flexible on sector

Investment criteria Sectors

• Typical investment size of £1m-£5m • Growth capital transaction • Targeting established growth companies • Proven, resilient business model, with the

potential for further growth • High quality management teams, we can

support to achieve their objectives • Seeking sustainable competitive advantage

• Diverse sector spread including ‒ Business services, consumer & leisure,

software, IT services, engineering • Exclusions

‒ Financial services, property ‒ Early stage (pre profit) tech or Biotech

• Customer concentration • Project based revenues • Lack of differentiation • Particular customer groups e.g.

supermarkets, automotive • Husband wife management teams • Financial metrics.. Growth, margin, profits..

Characteristics we find attractive Characteristics that make us nervous..

• Recurring / predictable revenue • Price insensitive customers • Market leadership • Large markets • Exporters • Scalability • Strong cash flow

3. Investment strategy - criteria

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3. Investment strategy – typical timeline and best practice

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Filter Execute Manage & exit

Foresight investment process

Initial business plan review

Further business plan review Due Diligence

Legal Drafting

Investment Paper

1st meeting 2nd meeting

With Foresight Investment Committee members

Professional Internal and external due diligence: - Financial and legal (always) - Commercial and Management (as required)

Agree offer letter Rapid review and engagement reduces competition

Initial Foresight Investment Committee

Completion

Final Foresight Investment Committee

Pre-completion note

100 day Plan review

3. Investment strategy – downside protection, uncapped upside

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Portfolio Individual Investments Foresight’s Management • Diversity • Sectors • Geographies

• Structuring – yielding shareholder loans and preference shares

• Robust cash flow

• Track record of selling at more than holding cost

• Big winners – Alaric, AppDNA

• Technology • Market positioning • Entry valuation

• Experts in exits ‒ Sourcing strategic

buyers ‒ Recapitalisations ‒ Secondary sales

• Careful, robust investment process

• Careful management – on the board of each portfolio company

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Sector: Technology

Business description: Ultra-secure data centre and provider of IT services

Investment Period: 2006 – Current

Transaction: Growth Capital

Financials at investment: T/O: £1.7m, EBIT: £0.5m loss

Total investment: £4.5m

Returns: 2.4x, 10% IRR (retained valued plus cash returned)

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Summary

Investment Opportunity

Background/Product: Established in August 2004, The Bunker provides ultra-secure data storage and services. It is highly regarded for its technical skills by its customers, which include top financial institutions and telecoms operators

Market: BH provides a range of services, competing against a number of companies in each sector, including co-location providers (e.g Redbus, Telecity, Rackspace, iX)

Team: The highly experienced team had previously built a number of technical businesses previously, and is renowned for its technical skills

Growth Opportunity: Growing market for secure hosted data, large opportunity in add-on services

4. Case Studies – The Bunker

5. Updated VCT rules

• Recent changes to rules for all VCTs – Will place emphasis onto growth capital transactions going forward – Helping companies grow existing products and attack new markets – Foresight’s focus will be on established, revenue generating companies, with an attractive risk/return

profile

• History of investing in growth capital deals – Whereas competitors have often focused on replacement capital investments, the Foresight Private

Equity team has a strong track record of making minority investments (40% of deals made since 2010 are Growth Capital)

• These investments have generated healthy returns

– Weighted average exit from 14 Foresight-led growth capital deals exited since 2010 = 2.4x

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Investment Alaric Actimax Irisys The Bunker

Sector TMT TMT TMT Engineering TMT

Returns Multiple 32x 5.3x 3.9x 2.9x 2.4x

6. The case for investing in a generalist VCT

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• Returns profile – Targeting dividends of 5p per annum

• Ready made portfolio

– Mature portfolio of 27 companies with annual revenues in excess of £200m

• Backing real businesses

– Job creation – UK plc

• Diversification

– Investing across five sectors

• Occasional big winners – AppDNA x32, Alaric x5

• Buy-back policy – seek to buy back at 10% discount to NAV

Radiology maintenance, Belfast c.£8m t/o

Tax Advisory, Hove, c.£8m t/o

Tax Advisory, East Grinstead, c.£6m

t/o

Refrigeration & HVAC services Kent, c.£8m t/o

Fire and HVAC services, Stockport, c.£6m t/o

Business services

Employee Monitoring Systems, Dundee, c.£2m t/o

Software / hardware vehicle servicing

Oxon, c. £17 m t/o

Broadcast & defence communications,

Hampshire, c.£4m t/o

Multi screen graphics, Derby, c. £17m t/o

Hosted Microsoft & datacentre solutions, Berkshire, c. £8m t/o

Media software, USA & Europe, c. $10m t/o

Engineering, Industrial and Defence / Software, Hampshire, c. £2m t/o Camera rental and crew,

London, c. £12m t/o

Contact Centre and Customer Service

Software c. £2.5m t/o

Engineering software, Glasgow, c. £8m t/o

Datacentres, Kent & Berkshire,

c. £7.5m t/o

TMT

Electron beam welding, Cambridgeshire, c.£8m t/o

Distribution of specialist fasteners,

East Sussex, c.£20m t/o

Aircraft refurbishment, Dundee, c.£13m t/o

Plastics fabrication and distribution,

London, c.£4.5m t/o

Industrials & manufacturing

Office supplies manufacturer, Northamptonshire, c. £5.5m

t/o

Infrared Spectrometers, Orpington, c. £7m t/o

Freeze-drying technology Wirral, c.£1m t/o

Healthcare

Guitar Amplifiers, Northampton, c.£9m t/o

Five aside football arena Birmingham, c.£5m t/o

Consumer Payment Solutions, London, c.£10m t/o

Consumer & leisure

Powertool retailing, Folkestone, c.£25m t/o

Engineering Software, Coventry, c. £3m t/o

Photocopier leasing, Surrey, c.£5m t/o

Intentionally sector diverse, all with exciting growth prospects

7. Foresight VCT Portfolio

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8. Summary - Q&A

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Strong diverse portfolio of profitable companies with a total value of c.£60m

Market leading VCT manager

30 years of experience

Foresight VCT, the best performing VCT ever

Market leading small cap private equity team with an excellent track record

Averaging 3.5x return on realisations since 2010 from investments we have made and 2.6x on all investments including investments from the distressed portfolios we have managed

Foresight VCT £30m offer

Strong diverse portfolio of profitable companies with combined revenues over £200m

Target growth capital opportunities

Continue excellent dividend track record