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FORESIGHT ENTERPRISE VCT PLC
Final results
31 December 2021
Foresight Enterprise VCT plc, managed by Foresight Group LLP,
today announces the final results for the year ended 31 December
2021.
These results were approved by the Board of Directors on 28
April 2022.
The Annual Report will shortly be available in full at
www.foresightenter
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. All other statutory information can also be found there.
Highlights
-- In February 2021, the Company changed its accounting reference date from
31 March to 31 December for operational efficiency reasons. Given this
change, the comparative results shown throughout the Annual Report and
Accounts are for the nine-month period from 1 April 2020 to 31 December
2020
-- Net Asset Value per share increased by 11.3% in the year from 62.1p at 31
December 2020 to 69.1p at 31 December 2021. After adding back the payment
of a 4.2p dividend made on 18 June 2021, NAV Total Return per share at 31
December 2021 was 73.3p, representing a positive total return of 18.0% in
the year
-- Six new investments totalling GBP10.0 million and five follow-on
investments totalling GBP3.2 million were made during the year
-- The Company fully exited its investments in FFX Group Limited, Mologic
Ltd. and Ixaris Systems Ltd and partially exited its investment in
Accrosoft Limited, realising a total of GBP12.7 million during the year
-- An interim dividend of 4.2p per share was paid on 18 June 2021, returning
GBP8.1 million to Shareholders
Chair's statement
I am pleased to present the audited Annual Report and Accounts
for the year ended 31 December 2021.
Impact of the COVID-19 pandemic
Whilst market conditions and the COVID-19 pandemic made 2020 and
2021 a challenging period, overall the companies within the
portfolio have weathered the storm well.
After a sharp drop in portfolio value in the quarter to March
2020, this being at the peak of uncertainty around COVID-19, the
Company's portfolio, in aggregate, saw a recovery by the end of
2020. Many of the portfolio companies successfully navigated the
new economic landscape, with some performing extremely strongly and
some continuing to be adversely impacted by COVID-19. The portfolio
continued to perform well during 2021 and was supplemented with new
investments and realisations referred to in the Manager's
Review.
Throughout the last two years, the Manager increased its
oversight of the portfolio companies by working more closely with
all the businesses and guiding their management teams to minimise
any adverse impact of the pandemic. It is a great credit to the
quality of the management of the portfolio companies that the
fallout from the pandemic on these companies has not been more
significant.
The Manager had expected that many of the portfolio companies
would need additional capital to support them through difficult
trading conditions resulting from the various lockdowns. To date,
however, there have been limited requirements for follow-on funding
in order to support companies through the economic downturn as a
result of the pandemic. Many companies took advantage of Government
support, such as the furlough scheme and the Coronavirus Business
Interruption Loan Scheme, which reduced the need for additional
equity injections. As these schemes unwind, and while the economic
climate remains difficult, the Manager anticipates some
requirements for follow-on investment in the coming months.
Overall, the portfolio has remained relatively resilient to
date.
Strategy
The Board believes that it is in the best interests of
Shareholders to continue to pursue a strategy of:
-- Further development of Net Asset Value Total Return while continuing to
grow the Company's assets
-- Payment of annual dividends of at least 5% of the NAV per share per annum
based on the opening NAV of that financial year
-- Implementation of a significant number of new and follow-on qualifying
investments every year
-- Maintaining a programme of regular share buybacks
Central to the Company being able to achieve these objectives is
the ability of the Manager to source and complete attractive new
qualifying investment opportunities.
Whilst this task has not been made easier by the changes to VCT
legislation since 2015, which (amongst other requirements) place
greater emphasis on growth or development capital investment into
younger companies, the Company is fortunate in that it has pursued
a policy of seeking growth capital investments for several years
prior to the rule changes and the Manager has an established track
record in this area.
Performance and portfolio activity
During the year Net Asset Value per share increased by 11.3%
from 62.1p at 31 December 2020 to 69.1p at 31 December 2021. After
adding back the payment of a 4.2p dividend made on 18 June 2021,
NAV Total Return per share at 31 December 2021 was 73.3p,
representing a positive total return of 18.0%. This positive
movement is a result of the strategy and business changes
throughout the portfolio alluded to above.
During the year the Manager completed six new investments and
five follow-on investments costing GBP10.0 million and GBP3.2
million respectively. The Manager also fully disposed of three
investments, and partially disposed of one investment generating
proceeds of GBP12.7 million with a further GBP0.9 million of
deferred consideration included within debtors at the year end.
After the year end, a new investment of GBP1.1 million was made
into Homelink Healthcare Limited and a further follow-on investment
of GBP0.5 million was made into Rovco Limited.
The Board and the Manager are confident that a number of new and
follow--on investments can be achieved this year, particularly with
the increased investment activity noted above. Details of each of
these new, existing and former portfolio companies can be found in
the Manager's Review.
The Manager continues to see a strong pipeline of potential
investments sourced through its regional networks and well
developed relationships with advisers and the SME community;
however, it is also focused on supporting the existing portfolio
through the pandemic. Following the successful fundraises launched
in May 2017 and June 2018 as well as the ongoing January 2022
offer, the Company is in a position to fully support the portfolio,
where appropriate, and exploit potential attractive investment
opportunities.
At the date of this report, the Company has raised gross funds
of GBP3.0 million, all of which has been raised post year end, as
detailed in the post-balance sheet events note 20 of the Annual
Report and Accounts. We would like to thank those existing
Shareholders who have already supported this offer and welcome all
new Shareholders to the Company.
In advance of the post year end allotment on 11 March 2022, the
Board announced that the unaudited NAV as at 28 February 2022 was
67.6p per share.
Responsible investing
The analysis of environmental, social and governance ("ESG")
issues is embedded in the Manager's investment process and these
factors are considered key in determining the quality of a business
and its long-term success. Central to the Manager's responsible
investment approach are five ESG principles that are applied to
evaluate investee companies, acquired since May 2018, throughout
the lifecycle of their investment, from their initial review and
acquisition to their final sale. Every year, these portfolio
companies are assessed and progress measured against these
principles. More detailed information about the process can be
found on page 34 of the Manager's Review in the Annual Report and
Accounts.
Dividends
An interim dividend of 4.2p per share was declared on 20 May
2021 based on an ex-dividend date of 3 June 2021 and a record date
of 4 June 2021. The dividend was paid on 18 June 2021.
As noted in the prior Annual Report and Accounts and in light of
the change in portfolio towards earlier stage, higher risk
companies as required by the new VCT rules, the Board felt it
prudent to adjust the dividend policy towards a targeted annual
dividend yield of 5% of NAV per annum. The Board and the Manager
hope that this may be enhanced by additional "special" dividends as
and when particularly successful portfolio exits are made. The
impact of COVID-19 will be taken into consideration when the Board
considers dividends in the near term.
Buybacks
The Board is pleased to have achieved an average discount across
all buybacks of 7.5% to the Net Asset Value per share in the year,
but continues to have an objective of achieving and maintaining
buybacks at a discount of 5% over the medium term, subject to
market conditions.
Shareholder communication
We were disappointed that we were not able to meet with
Shareholders in person in 2021 as a result of the travel
restrictions imposed due to the pandemic. As an alternative,
Shareholders were invited to our virtual AGM in July, as well as an
online investor forum facilitated by the Manager in June.
We appreciate how popular such events are with our investors and
hope to hold similar events in person if considered safe to do so.
Details of any such future events will be communicated to
investors.
Board composition
The Board continues to review its own performance and undertakes
succession planning to maintain an appropriate level of
independence, experience, diversity and skills in order to be in a
position to discharge all its responsibilities.
Annual General Meeting
The Company's Annual General Meeting will take place on 9 June
2022 at 1.00pm and we look forward to meeting as many of you as
possible in person, providing rules permit. Please refer to the
formal notice on pages 85 to 88 of the Annual Report and Accounts
for further details in relation to the format of this year's
meeting, including remote attendance. We would encourage those of
you who are unable to attend in person or virtually to submit your
votes by proxy ahead of the deadline of 1.00pm on 7 June 2022 and
to forward any questions by email to
InvestorRelations@foresightgroup.eu in advance of the meeting.
Outlook
The persisting uncertainty over the full impact of COVID-19 and
the ongoing changes related to Brexit create truly exceptional
challenges for every business. The Company invests primarily in
developing companies which by their nature benefit from general
economic growth and the current environment places considerable
demands upon them and their management teams. The Manager's private
equity team is well aware of the management and business needs of
each of the companies in the investment portfolio and is working
closely with them to help them progress during these testing
times.
It is likely that there will continue to be bumps in the road
due to COVID-19, the economy and inflation. Notwithstanding this,
the Board and the Manager have been impressed by the resilience
shown by the significant majority of the Company's investments and
are optimistic that the existing portfolio has potential to add
value once the virus has been successfully contained.
The Russian invasion of Ukraine has brought further pressure on
inflation and energy prices, as well as the potential for further
market turmoil and increased cyber risks. The Company's portfolio
has some direct exposure to Russia and Ukraine, but this remains
manageable. The Manager is working closely with management teams to
ensure scenario planning for a wider economic impact has been
undertaken.
Whilst of continuing concern to the Board, the Manager and
portfolio companies, the impact of the crisis has not been
considered material to the overall portfolio. This can be seen in
the 2.2% reduction in the unaudited NAV per share of 67.6p as at 28
February 2022, announced 10 March 2022, compared to the NAV per
share of 69.1p as at the date of this report.
Raymond Abbott
Chair
28 April 2022
Manager's review
As at 31 December 2021 the Company's portfolio comprised 39
investments with a total cost of GBP64.6 million and a valuation of
GBP115.2 million.
Portfolio summary
The portfolio is diversified by sector, transaction type and
maturity profile. Details of the ten largest investments by
valuation, including an update on their performance, are provided
on pages 20 to 24 of the Annual Report and Accounts.
During the year there was an increase in the value of existing
investments of GBP22.3 million, new and follow-on investments of
GBP13.2 million and four disposals which returned GBP12.7 million.
This resulted, in aggregate, in an increase in the value of the
portfolio of GBP22.8 million. Overall, the portfolio has performed
well as markets reopened following the impact of COVID-19.
In line with the Board's strategic objectives, the Investment
Manager remains focused on growing the Company through further
development of NAV whilst paying an annual dividend to Shareholders
of at least 5% of the NAV per share. In the year, net assets
increased 11.3% to GBP133.2 million and an annual dividend of at
least 5% of the NAV per share as at 31 December 2020 was paid,
meaning that the Company successfully met these objectives.
New investments
The Investment Manager was able to meet prospective companies in
person again, an important part of assessing investments and
developing relationships with management teams. Many management
teams have successfully steered their businesses through the
pandemic whilst developing clearer medium and longer--term growth
plans. The Manager has also invested further in its origination
capabilities and identified a large number of appropriate
investment opportunities during the year.
Over the course of 2021, six new investments were completed; a
total investment of GBP10 million. Behind these, there continues to
be a strong pipeline of opportunities that Foresight expects to
convert during the next 12 months.
Additive Manufacturing Technologies
In June 2021, the Company invested GBP1.7 million into Additive
Manufacturing Technologies ("AMT"), which manufactures systems that
automate the post-processing of 3D printed parts. AMT originally
received seed funding from Foresight Williams EIS in September
2019. The additional investment, made alongside further investment
from Foresight Williams and other institutions, will be used to
further accelerate its commercial progress.
Hexarad Group
In June 2021, the Company invested GBP0.85 million into Hexarad
Group, an early-stage, high-growth healthcare technology company,
providing teleradiology services to NHS Trusts and UK private
healthcare customers. Headquartered in London, the company was
founded in 2016 by a team of NHS consultant radiologists and
differentiates itself through its clinical leadership and
technology-led proposition. The investment into Hexarad Group will
enable the company to support more NHS and private healthcare
customers and further improve how they use the technology which is
core to its customer and radiologist experience.
NorthWest EHealth
In June 2021, the Company invested GBP1.5 million into NorthWest
EHealth, which provides software and services to the clinical
trials market, allowing pharmaceutical companies and contract
research organisations to conduct feasibility studies, recruit
patients and run trials. The investment will be used to expand the
current data network, enabling the company to support a larger
number of trials at a global level, increase product development
and expand the sales and marketing team to help build long-term,
strategic relationships.
Callen-Lenz Associates
In August 2021, the Company made a GBP2.4 million investment
into Callen-Lenz Associates, a developer, designer and manufacturer
of high performance unmanned aerial vehicles ("UAVs") as well as
components and navigation and communication software for UAVs.
Callen-Lenz Associates delivers research and development contracts
for large public and private sector clients, which create
regulatory-approved technologies that are made into products and
sold to other commercial customers. Founded in 2007, it has four
revenue segments: research and development, hardware, software and
services which are mutually supportive to clients as they move
through the design and sales process with the engineering team. The
investment will enable Callen-Lenz Associates to scale the business
through new hires in key operating and engineering functions.
Newsflare
In December 2021, the Company invested GBP2.0 million into
Newsflare, a marketplace for the monetisation of user generated
video ("UGV") and which currently has one of the largest fully
rights cleared video libraries in the world, with over 244,000
licensable videos on its platform. Newsflare was founded in 2011
and is headquartered in London, with staff in Los Angeles, New York
and a technology team in Bulgaria. This investment will allow the
company to focus on building its video library, attract new
customers by expanding the sales and marketing teams as well as
improving their platform and technology.
Crosstown Dough
In December 2021, the Company invested GBP1.5 million into
Crosstown Dough, a premium sweet treat brand offering a range of
doughnuts, recently complemented by cookies and ice cream, with a
growing vegan offering. Founded in 2014, it has 14
bricks-and-mortar stores and 12 market stalls and food trucks, plus
its goods are sold online through its website, providing customers
with an on--demand or pre-order delivery service, which traded well
during the pandemic. The investment will support the further
rollout of the retail network as well as growing the digital,
wholesale and corporate/events revenue streams.
HomeLink Healthcare Limited
Post year end, in March 2022, GBP1.1 million of growth capital
was invested into HomeLink Healthcare, a specialist provider of
Hospital-at-Home and Virtual Ward services. The company employs
highly qualified and experienced nurses and rehabilitation teams to
provide services to patients in their own homes, through contracts
with the NHS. These services deliver a range of clinical
interventions, including wound care, intravenous therapies,
physiotherapy, and rehabilitation. The clinical services offered
alleviate pressure on the NHS by freeing up vital bed space, saving
time and reducing costs.
Follow-on investments
Foresight had expected that more portfolio companies would need
additional capital to support them through continued difficult
trading conditions resulting from the lockdown, driving an increase
in follow-on investment. However, the portfolio has remained
relatively resilient, supported by the Investment Manager.
Foresight made follow-on investments into five companies during
2021, totalling GBP3.2 million. Further details of each of these
are provided below.
The additional equity injections in the period were mainly used
to support each company's further growth plans, such as launching
new products or to expand into new markets. As markets continue to
open up, the Manager remains cautiously optimistic about the health
of the rest of the portfolio and the need for follow-on funding
over the coming months.
Clubspark
In March 2021, Clubspark, a software platform that provides
sports clubs and centres with the ability to manage operations such
as court and equipment booking, received a GBP1.0 million follow-on
investment from the Company. The investment will be used to push
further into international markets, including the US.
Biotherapy Services
In July 2021, a follow-on investment of GBP0.75 million was made
into Biotherapy Services ("BTS"), a leading pharmaceutical biotech
company. BTS has developed a wound care treatment for diabetic foot
ulcers and the additional funds will be used to support its
clinical development through trials.
Vio Healthtech (formerly Fertility Focus)
In August 2021, a GBP0.15 million follow-on investment was made
into Vio Healthtech, a leading fertility monitoring technology
company that has developed registered medical devices that enable
women to predict ovulation. The funding will be used to support a
new product launch over the next 12 months.
Fourth Wall Creative
In November 2021, an additional GBP0.9 million was invested into
Fourth Wall Creative ("FWC"). FWC designs, procures and fulfils
branded merchandise for use in membership welcome packs,
season-ticket presentation boxes and hospitality gifts for sports
clubs and organisations, predominantly football clubs in the UK,
but increasingly cricket and rugby clubs. The investment will be
used to invest further in its technology to enable the company to
add more customers, allowing it to secure long-term licence
agreements with sports teams to directly engage with the fans on
their behalf. This will allow FWC to drive fan engagement on behalf
of the clubs.
Ten Health & Fitness
In December 2021, Ten Health, a multi-site operator in the
boutique health, wellbeing and fitness market, received an
additional investment of GBP0.4 million. The funding will be used
for the rollout strategy of more sites as consumers return to
in-person studio offerings, with an increased focus on health and
wellbeing.
Rovco Limited
Post year end, in March 2022, Rovco received a GBP0.5 million
follow-on growth capital investment, part of a funding round
totalling GBP15.2 million. Rovco is a leading provider of autonomy
and cloud managed robotics for subsea surveys in offshore wind and
oil field decommissioning. The investment will allow Rovco, and its
technology division Vaarst, to further tech development and
continue global expansion to Austin, Texas and Tokyo, Japan, as
well as increasing its presence across Europe.
Realisations
The M&A climate has been robust in certain sectors,
particularly in healthcare, technology and ecommerce. Foresight
continues to engage with a range of potential acquirers of several
portfolio companies, with demand for these high-growth businesses
demonstrated by both private equity and trade buyers.
FFX Group
In January 2021, the Company successfully sold its investment in
FFX Group, one of the UK's largest multi--channel, independent
suppliers of high-quality power tools, fixings and building
supplies. The transaction generated proceeds of GBP5.7 million at
completion and the Company will receive up to GBP0.2 million of
deferred consideration after 18 months, subject to certain
conditions. This generated a cash-on--cash return of 4.3x the
initial investment of GBP1.4 million, made in October 2015, which
is equivalent to an IRR of c.32%. During the investment period, FFX
opened a new 60,000 sq ft distribution centre and a new head office
in Kent. The business updated its brand and launched an extensive
range of its own products. During the Company's investment, FFX
more than tripled revenues and increased headcount by over 125.
Ixaris Systems
In August 2021, the Company sold its holding in Ixaris, an
award-winning leader in B2B travel payment technology, to Nium, a
global B2B payments platform based in Singapore, resulting in
proceeds of c.GBP2.4 million with an additional deferred amount of
GBP0.3 million representing a return of 1.3x initial cost. Ixaris'
main product is a pre--paid debit card providing flexible funding
and payment methods. Ixaris has clients in over 50 countries,
ranging from the world's largest travel brands to independent
travel agencies.
The decision was made to exit this investment as it would likely
have needed considerable further investment to continue trading
given the depressed travel industry. Without a clear timeline on
market recovery, a process was undertaken to find the best acquirer
for Ixaris led by a new Executive Chair brought in with Foresight's
support.
Since investment, the Manager helped recruit key senior team
members as well as helping the business establish partnerships with
Visa and Mastercard and increase headcount by over 75.
Mologic
In July 2021, the Company successfully sold its investment in
Mologic, a health diagnostics company providing both contract
research services for clients and developing its own range of
proprietary point-of-care diagnostics products. It was sold to
Global Access Health, a not-for-profit company financed by the
Soros Economic Development Fund, the impact investing arm of the
Open Society Foundations, and a group of other philanthropic
organisations and investors. The proceeds of GBP3.2 million
including deferred consideration equals a return multiple of 3.1x,
reflecting an IRR of c.38%. During the investment period, the
Mologic team had worked with the Manager to strengthen the business
and develop the product portfolio, increasing turnover by over 165%
and employee numbers by over 40%. The business has also developed a
presence in the US, opening an office on the East Coast, and also a
manufacturing partnership in West Africa.
Accrosoft
In October 2021, the Company completed the sale of Accrosoft, a
recruitment and employee onboarding software company, to Acendre
Technologies Inc., an HR software business headquartered in the US.
One of its main products is Vacancy Filler ("VF"), software which
streamlines talent acquisition and recruitment management for
organisations. It helps millions of candidates to apply for jobs
easily and empowers recruiters and hiring managers to recruit
better and faster. Acendre and Accrosoft's VF product are
complementary businesses and by joining forces they will be able to
offer a recruitment and HR management software platform across a
much wider customer base as well as establishing a presence in
Europe.
Prior to the sale of Accrosoft, its subsidiary, Weduc, was spun
out, with the Company retaining its 8.6% shareholding. Weduc is a
leading communication platform sold into the education sector and
was initially launched in 2017. The company has grown significantly
since Foresight's original investment, doubling its customer
numbers over the past year.
This transaction generated proceeds of GBP1.9 million, which
represents a return of 1.8x and IRR of 25.9% over a period of three
years, with further upside possible given the ongoing investment in
Weduc.
Realisations in the year ended 31 December 2021
Valuation
Accounting at
cost at 31
date Realised December
of
disposal Proceeds gain/(loss) 2020
Company Detail (GBP) (GBP) (GBP) (GBP)
----------------- ---------- ---------- ---------- ----------- ----------
Full
FFX Group Limited disposal 1,372,002 5,651,756 4,279,754 5,723,459
Full
Mologic Ltd. disposal 1,059,000 2,732,940 1,673,940 2,202,147
Entropay Limited
(formerly Ixaris Full
Systems Ltd) disposal 3,479,188 2,441,478 (1,037,710) 1,388,932
Partial
Accrosoft Limited disposal 1,026,250 1,873,640 847,390 1,469,901
----------------- ---------- ---------- ---------- ----------- ----------
Total disposals 6,936,440 12,699,814 5,763,374 10,784,439
Pipeline
At 31 December 2021, the Company had cash reserves of GBP17.1
million, which will be used to fund new and follow-on investments,
buybacks and running expenses. Foresight is seeing its pipeline of
potential investments grow and has a number of opportunities under
exclusivity or in due diligence, which it continues to
progress.
The onset of COVID-19 and the resulting economic downturn
resulted in lower new investment activity in 2020 while 2021 saw an
increased flow of opportunities as restrictions changed throughout
the year. Depending on the length and severity of any potential
COVID-19 variants and associated restrictions, Foresight expects to
see a higher proportion of the Company's deployment focused on new
investments in the short to medium term.
As the economy recovers from the worst effects of the virus,
Foresight expects the demand for funding to increase. However,
given reasonably high levels of liquidity in the market, investment
opportunities are likely to be reasonably competitive. Therefore,
Foresight remains focused on using its direct origination strategy
to identify off-market companies and supplement traditional sources
of deal flow.
Key portfolio developments
Overall, the value of unquoted investments held rose by GBP22.8
million in the year, driven by deployment of GBP13.2 million and an
increase of GBP22.3 million in the value of existing investments,
offset by realisations of GBP12.7 million.
Material changes in valuation, defined as increasing or
decreasing by GBP1.0 million or more since 31 December 2020, are
detailed below. Updates on these companies are included above, or
in the Top Ten Investments section on pages 20 to 24 of the Annual
Report and Accounts.
Key valuation changes in the year
Valuation
change
Company Valuation methodology (GBP)
---------------------------------- ----------------------------- -----------
Specac International Limited Discounted earnings multiple 4,076,456
TFC Europe Limited Discounted earnings multiple 3,790,499
TLS Holdco Limited (formerly
Galinette Limited) Net assets 2,620,430
Hospital Services Group Limited Discounted earnings multiple 2,452,563
Roxy Leisure Ltd Discounted earnings multiple 2,450,148
Aerospace Tooling Corporation
Limited Discounted earnings multiple 1,300,990
NorthWest EHealth Limited Discounted revenue multiple 1,177,901
Innovation Consulting Group
Limited Discounted earnings multiple 1,127,075
Datapath Group Limited Discounted earnings multiple (1,506,801)
Biofortuna Ltd Discounted revenue multiple (1,589,453)
Outlook
The direct impact of COVID-19 is gradually receding but the
combination of loose fiscal policy and relaxation of restrictions
globally is resulting in other challenges for businesses. In the
UK, the success of the vaccination rollout has enabled the
Government to remove restrictions and now "live with the virus".
There is an expectation that the UK's return to normal should
continue at least until next winter. This, combined with the
gradual easing of COVID-19 related border security measures, will
provide a welcome boost to hospitality, travel and leisure. The
Manager remains cautiously optimistic but will keep the situation
under review and will support the portfolio as required at the
first sign of any relapse caused by new emerging COVID-19
variants.
The gradual opening up of the global economy and the
consequential increase in demand for resources and staff are
putting pressure on supply chains and resulting in staffing
concerns across some industries. Several of Foresight Group's
portfolio companies have been impacted by the global computer chip
shortage amongst other raw material price rises and delays in
delivery. Businesses are also struggling with both staff retention
and hiring new staff as the number of vacancies in the market is
driving both churn and wage inflation. However, such is the demand
in several markets, many companies are successfully passing cost
increases on to the end customer, protecting margins but adding to
the global consumer squeeze.
Hospitality, which had a particularly torrid 2020, enjoyed a
strong summer 2021 and festive period, as consumers relieved
pent-up demand and returned to a pre-pandemic trend of increased
levels of experiential spend. This has resulted in positive results
at portfolio companies including Roxy Leisure. Similarly,
technology businesses with clear revenue visibility and a
differentiated product, and healthcare services businesses,
continue to trade strongly and are the current focus of the
Manager's origination efforts.
Inflation across the western world is at levels that have not
been seen for many years. The majority of Foresight Group's
portfolio CEOs and finance directors have worked in a high
inflation environment and the Manager is encouraging a prudent
approach to cost inflation and supply chain management and
requesting scenario analyses to model the impact of medium-term
inflation on margins.
The Russian invasion of Ukraine, in recent weeks, has brought
further pressure on inflation and energy prices, as well as the
potential for further market turmoil and increased cyber risks. The
Company's portfolio has some direct exposure to Russia and Ukraine,
but this remains manageable. We are working closely with management
teams to ensure scenario planning for a wider economic impact has
been undertaken.
The Manager is pleased with the overall performance of the
portfolio over the past 12 months, especially in these challenging
times, and looks forward to a further improvement as conditions
return to normal.
During the pandemic, in addition to taking advantage of the
Coronavirus Job Retention (or "furlough") Scheme, many small
businesses turned to Government-supported debt facilities including
"Bounce Back Loans", the Future Fund and the Coronavirus Business
Interruption Loan Scheme. As companies come to the end of their
repayment holidays, the drain on operating cash flow of interest
and capital repayments is making companies look to alternative
sources of funding for support or growth which should support VCT
deal flow.
Global equity markets are currently highly volatile with a
number of lockdown "winners" such as Amazon, Peloton and Netflix
beginning to lose their shine, whilst mining stocks and traditional
sectors including banking and utilities are showing record profits.
The threat of war in Europe is looming over capital markets;
however, M&A activity remains relatively buoyant and both
international buyers and domestic investors have high levels of
deployable capital which should provide support for a continued
steady flow of realisations.
Notwithstanding the continued uncertainty, the Manager expects
to see a sustained high level of activity from UK companies seeking
growth capital, given VCTs remain an attractive source of capital
for entrepreneurs.
Russell Healey
Partner and Head of Private Equity
Foresight Group LLP
28 April 2022
Income statement
for the year ended 31 December 2021
Nine months ended 31
Year ended 31 December 2021 December 2020(1)
------------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------- --------- --------- -------- -------- --------
Realised
gains/(losses)
on
investments -- 5,763 5,763 -- (623) (623)
Investment
holding gains -- 17,449 17,449 -- 20,372 20,372
Income 1,408 -- 1,408 67 -- 67
Investment
management
fees (604) (1,812) (2,416) (434) (1,301) (1,735)
Other expenses (627) -- (627) (490) -- (490)
--------------- --------- --------- --------- -------- -------- --------
Return/(loss)
on ordinary
activities
before
taxation 177 21,400 21,577 (857) 18,448 17,591
Taxation -- -- -- -- -- --
--------------- --------- --------- --------- -------- -------- --------
Return/(loss)
on ordinary
activities
after
taxation 177 21,400 21,577 (857) 18,448 17,591
--------------- --------- --------- --------- -------- -------- --------
Return/(loss) 0.1p 11.1p 11.2p (0.4)p 9.5p 9.1p
per share
1. The Company changed its accounting reference date from 31 March to 31
December. Given this change, the comparative results shown in this report
are for the nine months ended 31 December 2020.
The total columns of this statement are 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 period.
The Company has no recognised gains or losses other than those
shown above, therefore no separate statement of total comprehensive
income has been presented.
The Company has only one class of business and one reportable
segment, the results of which are set out in the Income Statement
and Balance Sheet.
There are no potentially dilutive capital instruments in issue
and, therefore, no diluted earnings per share figures are relevant.
The basic and diluted earnings per share are, therefore,
identical.
The notes on pages 70 to 84 of the Annual Report and Accounts
form part of these financial statements.
Reconciliation of movements in Shareholders' funds
Share Capital
Year ended Called-up premium redemption Distributable Capital Revaluation
share
31 December capital account reserve reserve(1) reserve(1) reserve Total
2021 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- --------- -------- ---------- ------------- ---------- ----------- -------
As at 1
January
2021 1,939 67,458 523 68,307 (51,914) 34,041 120,354
Share issues
in the
year(2) 15 918 -- -- -- -- 933
Expenses in
relation to
share
issues(3) -- (51) -- -- -- -- (51)
Repurchase of
shares (26) -- 26 (1,481) -- -- (1,481)
Cancellation
of share
premium -- (15,329) -- 15,329 -- -- --
Realised
gains on
disposal of
investments -- -- -- -- 5,763 -- 5,763
Investment
holding
gains -- -- -- -- -- 17,449 17,449
Dividends
paid -- -- -- (8,086) -- -- (8,086)
Management
fees charged
to capital -- -- -- -- (1,812) -- (1,812)
Revenue
return for
the year -- -- -- 177 -- -- 177
------------- --------- -------- ---------- ------------- ---------- ----------- -------
As at 31
December
2021 1,928 52,996 549 74,246 (47,963) 51,490 133,246
Share Capital
Nine months
ended Called-up premium redemption Distributable Capital Revaluation
share
31 December capital account reserve reserve(1) reserve(1) reserve Total
2020 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- --------- -------- ---------- ------------- ---------- ----------- -------
As at 1 April
2020 1,948 79,443 503 63,127 (49,990) 13,669 108,700
Share issues
in the
period(2) 11 578 -- -- -- -- 589
Expenses in
relation to
share
issues(3) -- (28) -- -- -- -- (28)
Repurchase of
shares (20) -- 20 (1,085) -- -- (1,085)
Cancellation
of share
premium -- (12,535) -- 12,535 -- -- --
Realised
losses on
disposal of
investments -- -- -- -- (623) -- (623)
Investment
holding
gains -- -- -- -- -- 20,372 20,372
Dividends
paid -- -- -- (5,413) -- -- (5,413)
Management
fees charged
to capital -- -- -- -- (1,301) -- (1,301)
Revenue loss
for the
period -- -- -- (857) -- -- (857)
------------- --------- -------- ---------- ------------- ---------- ----------- -------
As at 31
December
2020 1,939 67,458 523 68,307 (51,914) 34,041 120,354
1. Reserve is available for distribution; total distributable reserves at 31
December 2021 total GBP26,283,000 (2020: GBP16,393,000).
2. Relating to the dividend reinvestment scheme.
3. Expenses in relation to share issues relate to trail commission for prior
years' fundraising.
The notes on pages 70 to 84 of the Annual Report and Accounts
form part of these financial statements.
Balance sheet
at 31 December 2021
Registered number: 03506579
As at As at
31 December 31 December
2021 2020
GBP'000 GBP'000
---------------------------------------------------- ----------- -----------
Fixed assets
Investments held at fair value through profit or
loss 115,238 92,441
---------------------------------------------------- ----------- -----------
Current assets
Debtors 1,028 162
Cash and cash equivalents 17,113 27,862
---------------------------------------------------- ----------- -----------
18,141 28,024
Creditors
Amounts falling due within one year (133) (111)
---------------------------------------------------- ----------- -----------
Net current assets 18,008 27,913
---------------------------------------------------- ----------- -----------
Net assets 133,246 120,354
---------------------------------------------------- ----------- -----------
Capital and reserves
Called-up share capital 1,928 1,939
Share premium account 52,996 67,458
Capital redemption reserve 549 523
Distributable reserve 74,246 68,307
Capital reserve (47,963) (51,914)
Revaluation reserve 51,490 34,041
---------------------------------------------------- ----------- -----------
Equity Shareholders' funds 133,246 120,354
---------------------------------------------------- ----------- -----------
Net Asset Value per share 69.1p 62.1p
The financial statements were approved by the Board of Directors
and authorised for issue on 28 April 2022 and were signed on its
behalf by:
Raymond Abbott
Chair
28 April 2022
The notes on pages 70 to 84 of the Annual Report and Accounts
form part of these financial statements.
Cash flow statement
for the year ended 31 December 2021
Year Nine months
ended ended
31 December 31 December
2021 2020
GBP'000 GBP'000
---------------------------------------------------- ----------- -----------
Cash flow from operating activities
Loan interest received from investments 346 136
Dividends received from investments 1,022 --
Deposit and similar interest received 2 28
Investment management fees paid (2,416) (1,283)
Secretarial fees paid (161) (119)
Other cash payments (447) (349)
---------------------------------------------------- ----------- -----------
Net cash outflow from operating activities (1,654) (1,587)
---------------------------------------------------- ----------- -----------
Cash flow from investing activities
Purchase of investments (13,163) (6,532)
Net proceeds on sale of investments 12,700 46
---------------------------------------------------- ----------- -----------
Net cash outflow from investing activities (463) (6,486)
---------------------------------------------------- ----------- -----------
Cash flow from financing activities
Expenses of fundraising (36) (28)
Repurchase of own shares (1,444) (1,085)
Equity dividends paid (7,152) (4,824)
---------------------------------------------------- ----------- -----------
Net cash outflow from financing activities (8,632) (5,937)
---------------------------------------------------- ----------- -----------
Net outflow of cash for the period (10,749) (14,010)
---------------------------------------------------- ----------- -----------
Reconciliation of net cash flow to movement in net
funds
Decrease in cash and cash equivalents for the period (10,749) (14,010)
Net cash and cash equivalents at start of period 27,862 41,872
---------------------------------------------------- ----------- -----------
Net cash and cash equivalents at end of period 17,113 27,862
Analysis of changes in net debt
At At
1 January 31 December
2021 Cash flow 2021
GBP'000 GBP'000 GBP'000
-------------------------- --------- --------- -----------
Cash and cash equivalents 27,862 (10,749) 17,113
The notes on pages 70 to 84 of the Annual Report and Accounts
form part of these financial statements.
Notes
1. These are not statutory accounts in accordance with S436 of the Companies Act 2006. The full audited accounts for the year ended 31 December 2021, which were unqualified and did not contain statements under S498(2) of the Companies Act 2006 or S498(3) of the Companies Act 2006, will be lodged with the Registrar of Companies. Statutory accounts for the year ended 31 December 2021 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.
2. 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 31 December 2021. All investments held by the Company are classified as 'fair value through the profit and loss'. Unquoted investments have been valued in accordance with IPEV guidelines. Quoted investments are stated at bid prices in accordance with the IPEV guidelines and Generally Accepted Accounting Practice.
3. Copies of the Annual Report will be sent to shareholders and can be accessed on the following website: www.foresightenterprise https://www.globenewswire.com/Tracker?data=n9RwI4eBx4HAqMU5JLo_jIvx_vl4_2vC_9jkIm7q3_yqqGYWze5fdan3cXxLImjXobTHmfBpxjdn6nV1DCWR3w== vct. https://www.globenewswire.com/Tracker?data=_HZYzxfkaFNCjV37HpLm0btXUafzTxmr8VRp6dRAkG276jCs5lZjUKxvHTyghmU7lZbvDQLuxxsdNTlcv46VZJm6x19daB1l_8hjqCs1YQk= c https://www.globenewswire.com/Tracker?data=5uNlFsLmfNtAmvXnMrm7IWDcwHwQ1S2ALpFKkl_G95o5GWvnCE4_MCMlQimQrDE1Ja1CqwDPtEH9qTuPxIn3ww== om https://www.globenewswire.com/Tracker?data=e7K6SKNVTt9Wh1D_Id2yMOvT6fJ2CAkOV3SZwoO02cooW-ai8cV7SgG2AjWWz2nToiPiSB8w9yprvE3HABTS6WGXrEHlUmKmmv7-IR_3Ywk=
4. Net Asset Value per share
Net Asset Value per share is based on net assets at the end of
the year of GBP133,246,000 (2020: GBP120,354,000) and on
192,806,963 (2020: 193,859,213) shares, being the number of shares
in issue at that date.
5. Return per share
Nine months
Year ended ended
31 December 31 December
2021 2020
GBP'000 GBP'000
----------------------------------------------------- ----------- -----------
Total profit after taxation 21,577 17,591
Total profit per share (note a) 11.2p 9.1p
----------------------------------------------------- ----------- -----------
Revenue profit/(loss) from ordinary activities after
taxation 177 (857)
Revenue profit/(loss) per share (note b) 0.1p (0.4)p
----------------------------------------------------- ----------- -----------
Capital profit from ordinary activities after
taxation 21,400 18,448
Capital profit per share (note c) 11.1p 9.5p
----------------------------------------------------- ----------- -----------
Weighted average number of shares in issue in the
period 193,445,500 194,099,123
Notes:
a) Total profit per share is total profit after taxation divided by the weighted average number of shares in issue during the period.
b) Revenue profit/(loss) per share is revenue profit/(loss) after taxation divided by the weighted average number of shares in issue during the period.
c) Capital profit per share is capital profit after taxation divided by the weighted average number of shares in issue during the period.
6. Annual General Meeting
The Annual General Meeting of the Company will be held at the
offices of Foresight Group LLP, The Shard, 32 London Bridge Street,
SE1 9SG on 9 June 2022 at 1.00pm. Details will be published on both
the Company's and the Manager's website at www.foresightenterprise
https://www.globenewswire.com/Tracker?data=enxQf2HOHk--cCGwViq6dz5188FqXpBXNtmljdawm7YkTms6uZtUy0jhYGrSjneIL9dn7Fbx2uEtdnH-gluRHC9K1GjvZsOfHvjt87p8acw=
v
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ct.com
https://www.globenewswire.com/Tracker?data=Un2qrc7MKHRD8q7Wo0HLi_hpIhPGDQ1Xj9hfq9Ud5tgOLyqFo90klRxGdGdZCXS2ewMctFq5krIDU4h94OolOhS7Fpb6fGYvglC-wltq1j0=
.
7. Income
Year Nine
ended months ended
31 December 31 December
2021 2020
GBP'000 GBP'000
-------------------------------------- ----------- ------------
Dividends receivable 1,025 --
Loan stock interest 381 19
Deposit and similar interest received 2 28
Other income -- 20
-------------------------------------- ----------- ------------
1,408 67
8. Investments held at fair value through profit or loss
31 December 31 December
2021 2020
GBP'000 GBP'000
-------------------------------- ----------- -----------
Unquoted investments 115,238 92,441
-------------------------------- ----------- -----------
GBP'000
-------------------------------- ----------- -----------
Book cost at 1 January 2021 58,400
Investment holding gains 34,041
-------------------------------- ----------- -----------
Valuation at 1 January 2021 92,441
Movements in the year:
Purchases at cost 13,163
Disposal proceeds(1) (12,700)
Realised gains 5,763
Investment holding gains(2) 16,571
-------------------------------- ----------- -----------
Valuation at 31 December 2021 115,238
-------------------------------- ----------- -----------
Book cost at 31 December 2021 64,626
Investment holding gains 50,612
-------------------------------- ----------- -----------
Valuation at 31 December 2021 115,238
1. The Company received GBP12,700,000 (2020: GBP46,000) from the disposal of
investments during the year. The book cost of these investments when they
were purchased was GBP6,937,000 (2020: GBP669,000). These investments
have been revalued over time and until they were sold any unrealised
gains or losses were included in the fair value of the investments.
2. Investment holding gains in the Income Statement include the deferred
consideration debtor of GBP878,000 with GBP72,000 relating to FFX Group
Limited, GBP525,000 relating to Mologic Ltd., GBP249,000 relating to
Ixaris Systems Limited and GBP32,000 relating to Accrosoft Limited.
9. Related party transactions
No Director has an interest in any contract to which the Company
is a party other than their appointment and payment as
Directors.
10. Transactions with the Manager
Foresight Group LLP was appointed as Manager in January 2020 and
earned fees of GBP2,416,000 in the year ended 31 December 2021
(nine months ended 31 December 2020: GBP1,735,000). No performance
fee was paid or accrued for the year (nine months ended 31 December
2020: GBPnil).
Foresight Group LLP is the Company Secretary (appointed in
November 2017) and received accounting and company secretarial
services fees of GBP161,000 during the year (nine months ended 31
December 2020: GBP119,000).
At 31 December 2021, the amount due to Foresight Group LLP was
GBPnil (2020: GBPnil).
No amounts have been written off in the year in respect of debts
due to or from the Manager.
END
For further information please contact:
Gary Fraser, Foresight Group: 020 3667 8181
(END) Dow Jones Newswires
April 28, 2022 11:52 ET (15:52 GMT)
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