TIDMFTV
FORESIGHT VCT PLC
Financial Highlights
Ordinary Shares Fund
-- Diversified portfolio of 30 actively managed companies.
-- Total net assets GBP147.5 million.
-- Net Asset Value per Ordinary Share increased by 6.2% to 83.8p as at 30
June 2017 (31 December 2016: 83.6p), after payment of a 5.0p dividend
made on 3 April 2017.
-- The portfolio has seen an uplift in valuation of GBP10.5 million in the
last six months.
-- Three new investments, totalling GBP6.8 million made during the period.
-- A total of GBP39.9 million raised through the issue of shares and the
offer was closed in March 2017, six weeks after launch.
-- In July 2017 the Company successfully exited Blackstar Amplification,
Simulity Labs and The Bunker Secure Hosting, realising a total of GBP17.2
million compared to an investment cost of GBP8.0 million.
-- The board is pleased to declare an interim dividend for the year ending
31 December 2017 of 4.0p per Ordinary Share, to be paid on 29 September
2017.
-- Two further new investments made post period end, totalling GBP3.8
million.
Planned Exit Shares Fund
-- Following the sale of AlwaysON in January 2017 and Industrial Engineering
Plastics in July 2017, the Fund has now realised all its investments.
-- An interim dividend for the year ended 31 December 2017 of 18.0p per
Planned Exit Share was paid on 13 April 2017.
-- The total return for Shareholders is 82.7p (comprising 75.0p in dividends
paid to date and 7.7p representing the remaining NAV at 30 June 2017).
-- The Board is in the process of "winding-down" the Fund and a final
distribution will be made to shareholders prior to year end.
Infrastructure Shares Fund
-- Diversified portfolio of 11 infrastructure assets.
-- Total net assets GBP24.8 million.
-- Net Asset Value per Infrastructure Share increased by 3.9p to 85.6p as at
30 June 2017 (31 December 2016: 81.7p). The portfolio has seen an uplift
in valuation of GBP1.2 million in the last six months.
-- Good progress has been made towards a full realisation of the portfolio
and a final distribution will be made to shareholders prior to year end.
Chairman's Statement
I am pleased to present the Unaudited Half-Yearly Financial Report for
Foresight VCT plc for the period ended 30 June 2017. The following
statement is divided into three sections, dealing with the specific
share class funds within the Company.
ORDINARY SHARES FUND
NET ASSET VALUE
During the period under review, the net assets of the Ordinary Shares
Fund increased to GBP147.5 million as at 30 June 2017 from GBP107.0
million as at 31 December 2016. The net asset value ("NAV") per Ordinary
Share as at 30 June 2017 was 83.8p, which, after taking account of the
5.0p per Ordinary Share dividend paid in April 2017, represents an
increase of 6.2% on the NAV per Ordinary Share as at 31 December 2016 of
83.6p.
The Board is pleased with the increase in both the net assets and NAV
per Ordinary Share achieved during the period under review and believes
it demonstrates the positive impact of the strategy pursued over recent
years to expand the size of the Fund and refocus its investment policy
on growth-orientated businesses.
DIVIDS
The ability to maintain the payment of regular dividends is at the core
of the strategy for the Fund. In line with this ambition, an interim
dividend of 5.0p per Ordinary Share was paid on 3 April 2017 based on an
ex-dividend date of 16 March 2017 and a record date of 17 March 2017.
Furthermore, the Board is pleased to announce that an interim dividend
of 4.0p per Ordinary Share will be paid on 29 September 2017 with an
ex-dividend date of 14 September 2017 and a record date of 15 September
2017. This additional interim dividend largely reflects the distribution
of the profit on the sale of Simulity Labs, which took place in July
this year and is described in more detail below. The Board is pleased
that the Fund has been able to maintain its annual dividend payments at
or above its target of 5.0p per Ordinary Share for the past six years
and will endeavour to maintain this in the future, subject to achieving
future profitable realisations.
INVESTMENT PERFORMANCE AND PORTFOLIO ACTIVITY
At the period end, the Fund held a diversified portfolio of 30
investments in UK businesses, across a range of different sectors. The
Fund completed three new investments in the period under review and a
further two new investments since the end of the period. The level of
investment activity is encouraging and reflects the Manager's ongoing
ability to source and transact growth capital investment into qualifying
companies. The Board closely monitors the extent and nature of the
pipeline of investment opportunities and expects that the Manager will
be able to maintain the increase in the level of new investments over
the coming year.
Details of these new portfolio companies can be found in the Manager's
Report.
Since the end of June this year, the Fund has successfully exited three
investments generating total disposal proceeds of GBP17.3 million
compared to an original investment cost of GBP8.0 million and a combined
book value at date of disposal of GBP11.6 million. Further details of
each of these exits can be found in the Manager's Report. The sale of
Simulity Labs is particularly pleasing as within a period from
investment of just eight months, it resulted in a return of almost three
times when generating disposal proceeds of GBP11.7 million on an
original investment of GBP4 million.
KEY OBJECTIVES
The Board believes that it is in the best interests of Ordinary
Shareholders for the Fund to continue to pursue its existing strategy,
which includes the following four key objectives:
-- Increasing the net assets of the Ordinary Shares Fund to above
GBP150 million
-- Paying an annual dividend to shareholders of at least 5.0p per
Ordinary Share, while endeavouring to maintain, or increase, NAV per
Ordinary Share
-- Completing a significant number of new and follow on qualifying
investments every year
-- Offering a programme of regular share buy backs at a discount in the
region of 10% to the prevailing NAV.
FUNDRAISING
In continuing pursuit of its aim to increase the net assets of the Fund
to a level appropriate to sustain its other key objectives, the Board
took the opportunity during the period to raise a total of GBP40 million
in new capital. That this was achieved in just six weeks is a
demonstration of the improving investor support for the Ordinary Shares
Fund. On behalf of the Board, I would like to welcome all new
shareholders and thank them together with existing shareholders for
their support.
The Board appreciates that in order for the Fund to be able to achieve
its objectives on an ongoing basis, the Manager will need to source and
complete attractive new qualifying investment opportunities and this is
currently being undertaken at a rate of in excess of GBP20 million per
annum. As at 30 June 2017, the Ordinary Shares Fund held GBP63 million
of cash available for investment. After allowing for a suitable cash
margin to meet annual operating requirements, the Board and the Manager
believe that the Fund is well positioned to take advantage of attractive
investments being sourced across the UK by the Manager for at least the
coming 24 months.
CHARGES AND PERFORMANCE INCENTIVE
The annual management fee on the Ordinary Shares Fund is an amount equal
to 2.0% of net assets, excluding cash balances above GBP20 million which
are charged at a reduced rate of 1%. This has produced an average annual
charges ratio for the period ended 30 June 2017 of 2.1% of net assets,
which is among the lower of its competitor VCTs.
As stated at the time of the merger with Foresight 2 VCT plc, the Board
believes that a performance incentive scheme can help to incentivise the
Manager to deliver above average value for shareholders. In addition,
the Board believes it to be advantageous to align, as far as may be
practical, the interests of the Manager with those of shareholders. New
incentive and co-investment arrangements were approved by shareholders
on 8 March 2017. These oblige the Manager and individual members of
Foresight Group's private equity team to co-invest alongside the
Ordinary Shares Fund, in order that they may become entitled to
performance incentive payments, subject to the achievement of 'per
investment' and 'fund as a whole' performance hurdles. Details of these
arrangements can be found in the Annual Report to 31 December 2016.
BUYBACKS
Following the end of the period, in July 2017, the Company repurchased
1.4 million Ordinary Shares for cancellation at a discount of 10.1%. The
Board and the Manager consider that the ability to offer to buy back
Ordinary Shares at a target discount in the region of 10% is beneficial
to shareholders in general, and is appropriate way to underpin the share
price discount to NAV at which the Ordinary Shares trade.
OUTLOOK
This year has already proved to be a busy one for the Ordinary Shares
Fund. The Board and the Manager are intent on continuing to build on the
progress achieved to date. The Board is optimistic that the investments
currently held within the Fund have the potential to grow further in the
months ahead, and is encouraged by the new investment opportunities
being sourced by the Manager. Provided the current level and quality of
new investment is maintained, the Board believes that the Fund will be
well positioned to meet its key objectives and to provide shareholders
with regular dividends and maintained capital value in the future.
PLANNED EXIT SHARES FUND
NET ASSET VALUE AND PORTFOLIO PERFORMANCE
During the period under review, the net assets of the Planned Exit
Shares Fund decreased to GBP882,000 as at 30 June 2017 from GBP2,949,000
as at 31 December 2016. The NAV per share as at 30 June 2017 was 7.7p
which, after taking into account the interim dividend of 18.0p paid on
13 April 2017 (based on an ex-dividend date of 30 March 2017 and a
record date of 31 March 2017), represents a decrease of 0.2p (0.8%) from
the 25.9p NAV per share as at 31 December 2016.
At the period end, the Fund had cash and liquid resources of GBP114,000.
The annual management fee is an amount equal to 1.0% of net assets and
the average ongoing charges ratio for the period ended 30 June 2017 was
5.8% of net assets, representing the decrease in net assets as the fund
is in realisation mode.
Following the sale of AlwaysON in January 2017 and Industrial
Engineering Plastics in July 2017, the Fund has now sold all of its
investments. Details of these sales can be found in the Manager's
Report. The Fund now consists wholly of cash and rights to deferred
consideration in relation to prior realisations.
The Board is in the process of making the final arrangements to turn the
Fund fully into cash assets. Once this is completed, a final
distribution will be paid and shareholders will be requested to approve
arrangements to 'wind-down' the Fund. The final distribution is expected
to be paid, and the wind-down of the Fund completed, before the year end
alongside the wind-down arrangements for the Infrastructure Shares Fund
referred to below. Further information will be provided to shareholders
as the 'wind-down' arrangements progress.
ANTICIPATED OUTCOME OF THE FUND
The original objective of the Planned Exit Shares Fund was to provide
investors with a return of 110p per share through a combination of
dividends and share buybacks by the sixth anniversary of the closure of
the original offer, which was June 2016. Currently, the total return
(prior to ongoing costs and costs relating to the final distribution and
the subsequent 'wind-down' of the Fund referred to above) for
Shareholders is 82.7p (comprising 75.0p in dividends paid to date and
7.7p representing the remaining NAV as at 30 June 2017). The actual
amount of the final distribution will be dependent on the ultimate
proceeds received and the various costs referred to above.
The final outcome for investors in the Fund is very far from that
anticipated at its inception. The reasons have been summarised in
previous reports during the life of the Fund. Both the Board and the
Manager recognise that the return will represent poor overall
performance and regret that this is significantly behind the original
target.
INFRASTRUCTURE SHARES FUND
NET ASSET VALUE AND PORTFOLIO PERFORMANCE
During the period under review, the net assets of the Infrastructure
Shares Fund increased to GBP27.8 million as at 30 June 2017 from GBP26.6
million at 31 December 2016. The NAV per share was 85.6p as at 30 June
2017 compared to 81.7p per share at 31 December 2016, which represents
an increase of 4.8% over the period. The majority of this increase in
value relates to the asset life extensions of the Fund's three remaining
solar assets, which were completed in March 2017.
At the period end, the Fund held cash and liquid resources of GBP3.2
million. The annual management fee is an amount equal to 1% of net
assets and the ongoing charges ratio for the period was 1.3% of net
assets.
FUTURE OF THE FUND
The Board wrote to Infrastructure Shareholders in April 2017 with a
request for their expression of wishes as to whether they would like to
realise their investment after the end of the initial five year holding
period or continue with an investment by converting their holdings into
Ordinary Shares. A total of 88.3% expressed their wish to realise their
holdings and the Manager is making good progress in realising the
portfolio, with exits expected later this year.
The total return as at 30 June 2017, before ongoing costs and the costs
relating to realising investments, making the final distribution to
shareholders and the subsequent 'wind-down' of the Fund referred to
above, is 107.6p (comprising 22.0p in dividends paid to date and the
current remaining NAV per Share of 85.6p as at 30 June 2017). A
performance incentive fee payable to the Manager, totalling GBP422,000,
has been recognised as at the period end, in accordance with the
arrangements set out in the prospectus. The actual amount of the final
performance incentive fee and total return to shareholders will very
much depend on the sale negotiations, proceeds received and the various
costs referred to above.
ANTICIPATED OUTCOME OF THE FUND
Once all investments have been realised and the Fund consists solely of
cash assets, a final distribution will be paid and shareholders will be
requested to approve arrangements to 'wind-down' the Fund. The final
distribution is expected to be paid before the year end, following which
the 'wind-down' of the Fund will be completed alongside the wind-down
arrangements for the Planned Exit Shares Fund referred to above. Further
information will be provided to shareholders as the 'wind-down'
arrangements progress.
SHAREHOLDER INFORMATION AND COMMUNICATION
It is the intention of the Board that, as soon as practical, the Company
should have a single class of share and become an Ordinary Shares Fund
only with all investments in the Ordinary Shares Fund of a similar
nature. The Board is anxious to provide good quality shareholder
information and communication and would like to encourage shareholders
to attend one or more of the regular Investor Forums hosted by the
Manager. These events are held quarterly and the Manager will be in
touch later this year with the date of the next forum.
John Gregory
Chairman
Telephone: 01296 682751
Email: j.greg@btconnect.com
31 August 2017
Manager's Report
ORDINARY SHARES FUND
Foresight Group has pursued a strategy of seeking growth and development
capital investments for many years now, ahead of the changes to VCT
regulation in 2015, having established a successful track record in this
area. We were recently awarded 'VCT House of the Year 2016' at the
Unquote awards, in recognition of investments made and the achievements
of team members, and the Group as a whole, throughout 2016.
In addition to its established reputation as a VCT manager, we continue
to develop a number of UK regional private equity funds supporting early
stage businesses. The first two funds, which are based in Nottingham and
Manchester, are already proving a useful source of attractive new
investment leads for the Company.
Portfolio Summary
As at 30 June 2017 the portfolio of the Ordinary Shares Fund comprised
30 investments with a total cost of GBP63.1 million and a valuation of
GBP83.2 million. 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 12-16 of the Report.
NEW INVESTMENTS
During the period, the Ordinary Shares Fund completed new investments in
Poundshop.com, the UK's largest online pound shop, Ollie Quinn, a
designer and retailer of glasses and sunglasses and Fresh Relevance, an
ecommerce marketing platform for online retailers, totalling GBP6.8
million. No follow-on investments were completed during the period.
In February 2017 the Ordinary Shares Fund completed a GBP1.7 million
growth capital investment in Poundshop.com. Launched in February 2014,
Poundshop.com is an online-only single price retailer, founded and
chaired by Steve Smith, the founder of Poundland. The investment will
fund the strategic growth of the company, including widening the product
range and updating the website, IT systems and warehousing capacity.
In March 2017, a GBP3.0 million investment was completed in glasses
designer and retailer Ollie Quinn, to fund the rollout of additional
stores throughout the UK and Canada. Ollie Quinn is a branded retailer
of prescription glasses, sunglasses and non-prescription polarised
sunglasses, which has achieved rapid growth since inception in the UK in
2013. After a rebranding exercise earlier this year, eight new stores
have opened since investment (four in the UK and four in Canada),
bringing the total number to 19.
The third investment during the period, of GBP2.1 million, was completed
in email marketing and web personalisation platform Fresh Relevance, in
March 2017. Based in Southampton, Fresh Relevance is a high growth,
marketing technology business with recurring revenue derived from its
Software as a Service model. The company provides online retailers such
as Mothercare, Toys"R"Us, Moss Bros and Space NK with bespoke customer
experiences and marketing tools including triggered emails and web
personalisation. The capital will be used to fund increased sales
resource, launch a US office and introduce increased consultancy
services, in order to drive average order values.
Following the end of the period, two further new investments were
completed in Mowgli Street Food, a chain of authentic Indian restaurants,
and Cinelabs International, a leading provider of film laboratory
services.
The Ordinary Shares Fund has invested GBP1.6 million in Mowgli, a fast
casual chain of restaurants serving Indian street food. Founded in 2014,
this popular chain currently operates two sites in Liverpool and one in
Manchester. Mowgli will use the investment to roll out a number of sites
over the next three years with the first of these planned for Birmingham
and Leeds later this year. The modern focus on healthy, light,
flavoursome dishes differentiates Mowgli from traditional Indian
restaurants, as does its provision of an extensive gluten-free,
vegetarian and vegan offering using authentic recipes. This is the first
investment alongside the Foresight Regional Investment LP, "FRIF", a
GBP40 million institutional private equity fund. FRIF provided the
replacement capital required in the transaction which, following the
changes to VCT rules in 2015, VCTs are now unable to provide.
The Fund has invested GBP2.2 million in Cinelabs, which is the UK's only
full service film laboratory, offering film processing, scanning,
distribution, digitisation, restoration and archive management to
clients in the media and entertainment industries such as the BFI, ITV
and FIFA. The business will use the funds to invest in specialist
equipment and to increase staff numbers, allowing it to expand its
service offering and increase customer engagement.
PIPELINE
Foresight Group has a focused strategy for generating deal flow across
the UK, combining meetings with advisors and professional service firms,
attending and organising networking events and approaching businesses
directly. We are deeply connected within the investment community and
our efforts are producing positive results. The team typically analyses
around 100 new investment opportunities each month, of which only a
handful will be deemed of sufficient quality to require full evaluation
for a potential investment. We are firmly established as a key player in
the investment range of GBP1 million to GBP5 million and are
acknowledged for our appetite to transact and support ambitious SME
management teams. As at 30 June 2017, the Ordinary Shares Fund had
current cash in hand of GBP63 million. This will be utilised for new and
follow-on investments, as well as buybacks and ongoing running expenses.
EXITS AND REALISATIONS
Total proceeds of GBP424,011 were generated during the period. This was
principally from the first tranche of deferred consideration received
from the sale of O-Gen Acme Trek in 2016. A final loan repayment of
GBP166,667 was made by Aquasium Technology, in which the Fund continues
to hold an equity position. Aquasium manufactures, services and
refurbishes electron beam welding equipment and vacuum furnaces.
Proceeds also came from the sale of the Fund's remaining shares in
AIM-listed ZOO Digital, which supplies software and services for
authored content (such as DVD, Blu-ray discs and iTunes media) to media
businesses and post-production firms.
During the period the Fund realised losses amounting to GBP2.3 million,
which had already been provided for in full, following the liquidation
of Abacuswood and The Skills Group and the disposal of AlwaysON Group.
Following the end of the reporting period, the Fund's positions in
Simulity Labs, Blackstar Amplification and The Bunker Secure Hosting
were successfully realised, generating total proceeds of GBP17.2 million
compared to a cost of GBP8.0 million.
In July 2017 the Fund successfully completed the sale of Simulity Labs
to ARM, the world's leading semiconductor IP company. The transaction
generated proceeds of GBP11.7 million from an initial GBP4.0 million
investment just eight months previously. Established in 2009, Simulity
provides embedded communications software and related server systems for
both SIM cards and embedded SIMs ('eSIMs'). The software allows IoT
devices to connect securely to networks in order to collect and exchange
data.
The Fund originally invested in Blackstar Amplification, an
award-winning Northampton-based designer and manufacturer of innovative
guitar amplifiers, in 2012. The funding provided growth capital and
helped restructure the company's shareholder base. In addition,
Foresight Group introduced Keith Pacey, former Executive Chairman and
CEO of Maplin Electronics, as Chairman. Blackstar has expanded
internationally and more than doubled turnover over the last four years,
established itself as the number two amplifier brand in the UK and USA
and broadened its product catalogue. The exit was facilitated by a
management buyout, supported by the company's manufacturing and
distribution partners and bank support, and generated return of
approximately 2x the Fund's investment.
The Fund acquired its investment in The Bunker from Foresight 2 VCT plc
as part of the merger in December 2015. Having first invested in May
2006, the Foresight VCTs have been longstanding shareholders in The
Bunker, which builds, hosts and manages high security, high availability
IT data centres, providing competitive data storage solutions. The
growth capital provided by the Foresight VCTs was used to scale The
Bunker's data storage facilities materially. The business has
experienced a compound annual growth rate of over 14% of recurring
revenues for the past three years with annual revenues growing to in
excess of GBP9 million compared to GBP1.8 million at the time of
investment, having built a strong reputation in the specialist FinTech
space. The Bunker was acquired by Palatine Private Equity, generating an
overall return of 2.44x over the life of the investment.
The current environment remains supportive of further exits across the
portfolio. While exchange rates currently favour international buyers,
we continue to witness strong appetite to acquire high quality UK
companies from both domestic and international parties.
DISPOSALS IN THE PERIODED 30 JUNE 2017
Original Valuation
Cost/ at 31
Take-On Realised December
Value Proceeds Gain/(loss) 2016
Company Detail (GBP) (GBP) (GBP) (GBP)
Company
Abacuswood Limited dissolved 478,684 - (478,684)^ -
AlwaysON Group Full
Limited disposal 1,473,271 - (1,473,271)^ -
Loan
Aquasium Technology repayment 166,667 166,667 - 166,667
Limited
The Skills Group
Limited (formerly Company
AtFutsal) dissolved 391,301 563 (390,738)^ -
ZOO Digital Group Full
plc disposal 40,307 57,675 17,368 53,742
Total disposals 2,550,230 224,905 (2,325,325) 220,409
In addition to the above, deferred consideration of GBP199,106 was
received by the Fund from the sale of O-Gen
Acme Trek Limited.
^This loss refers to the transfer on disposal between unrealised and
realised reserves and has no impact on NAV.
POST PERIOD DISPOSALS
Original Valuation
Cost/ at 31
Take-On Realised December
Value Proceeds Gain/(loss) 2016
Company Detail (GBP) (GBP) (GBP) (GBP)
Blackstar Full
Amplification disposal 2,500,000 3,857,000 1,357,000 3,822,050
Holdings
Limited
Simulity Labs Full
Limited disposal 4,000,000 11,668,659 7,668,659 4,000,000
The Bunker
Secure Full
Hosting disposal 1,537,348 1,680,684 143,336 1,656,835
Limited
Total disposals 8,037,348 17,206,343 9,168,995 9,478,885
In addition to the above, deferred consideration of GBP24,003 was
received by the Fund from the sale of Trilogy.
KEY PORTFOLIO DEVELOPMENTS
The Ordinary Shares Fund has benefitted from solid performance of the
underlying portfolio with a total net valuation uplift of GBP10.5
million, driven primarily by the agreed sale of Simulity Labs at a value
GBP7.7 million above cost. Material changes in valuation, defined as an
increase or decrease of GBP500,000 or more since 31 December 2016, are
detailed below. Where these companies do not feature in the Top Ten
Investments section of the report, an update on underlying developments
that have driven changes in value is provided below.
Company Valuation Methodology Valuation Change (GBP)
Simulity Labs Limited Disposal proceeds 7,668,659
Thermotech Solutions Discounted earnings
Limited multiple 876,767
Discounted revenue
Ixaris Systems Limited multiple 690,943
Aerospace Tooling Holdings Discounted earnings
Limited multiple 532,735
Discounted earnings
Datapath Group Limited multiple (555,910)
THERMOTECH SOLUTIONS
Thermotech, which designs, installs and maintains customised air
conditioning and fire sprinkler systems, has performed well in 2017 to
date, demonstrating positive EBITDA momentum. Following the acquisition
of air conditioning supplier Oakwood a year ago, a number of sizeable
new contracts have been won. The pipeline continues to grow and is the
largest seen to date, comprising a mixture of retailers, restaurants,
office developments and public sector clients.
IXARIS SYSTEMS
Ixaris operates EntroPay, a prepaid electronic payment service
integrated with the Visa network. Foresight 2 VCT initially invested in
2006 and the investment was transferred to the Fund during the merger.
Ixaris has traded ahead of budget in 2017 to date as EntroPay continues
to perform well and has a strong sales pipeline in prospect. Investment
continues in developing the solutions and platform business. The
business is now trading profitably.
AEROSPACE TOOLING
Aerospace Tooling is a niche engineering company specialising in the
refurbishment of high-value aerospace and industrial gas turbine
components. Following weaker trading in 2016, the business has made
solid progress this year, maintaining a stabilised cost structure and
further diversifying its customer base to reduce reliance on its largest
customer.
OUTLOOK
Although the recent UK election and commencement of the formal Brexit
negotiations for the UK to leave the EU have resulted in a period of
uncertainty, Foresight Group continues to see a strong dealflow and high
level of activity, with a growing pipeline of interesting investment
opportunities. We also continue to see solid interest from numerous
potential acquirers for businesses in the portfolio and are optimistic
these will crystallise into further realisations in the year ahead.
PLANNED EXIT SHARES FUND
Portfolio Summary
Following the sale of the final two companies, alwaysON in January 2017
and Industrial Engineering Plastics in July 2017, the Fund has now
realised all of its portfolio investments. The Board is in the process
of "winding-down" the Fund and a final distribution will be paid to
Shareholders later this year. The total return for Shareholders is 82.7p
(comprising 75.0p in dividends paid to date and 7.7p representing the
remaining NAV at 30 June 2017).
DISPOSALS IN THE PERIODED 30 JUNE 2017
Valuation at 31
Original Cost/ Take-On Value Proceeds Realised Gain/(loss) December 2016
Company Detail (GBP) (GBP) (GBP) (GBP)
AlwaysON
Group Full
Limited disposal 1,839,970 2,032,608 192,638 2,032,608
Total disposals 1,839,970 2,032,608 192,638 2,032,608
POST PERIOD DISPOSALS
Valuation at 31
Original Cost/ Take-On Value Proceeds Realised Gain/(loss) December 2016
Company Detail (GBP) (GBP) (GBP) (GBP)
Industrial
Engineering
Plastics Full
Limited disposal 1,556,416 492,550 (1,063,866) 508,150
Total disposals 1,556,416 492,550 (1,063,866) 508,150
In addition to the above, deferred consideration of GBP57,328 was
received by the Fund from the sale of Trilogy.
ALWAYSON
alwaysON provides data backup services, connectivity and Microsoft's
Skype for Business collaboration software to SMEs and larger
enterprises. Given the company's cash constraints, a decision was made
to seek an exit rather than fund further losses. Despite challenging
trading conditions the sale was completed in January 2017, generating
proceeds of GBP2.0 million against an investment cost of GBP1.8 million.
INDUSTRIAL ENGINEERING PLASTICS
Industrial Engineering Plastics ("IEP") is a plastics distributor and
fabricator, supplying a wide range of industries with ventilation and
pipe fittings, plastic welding rods, hygienic wall cladding, plastic
tanks and sheets. Considering some of the structural challenges within
IEP's markets, we pursued multiple conversations with potential trade
acquirers. As a result, we received two acquisition offers early in 2017
before agreeing an offer with one of IEP's competitors at a price
marginally below the most recent valuation, albeit at a loss against the
original investment of GBP1.6 million.
INFRASTRUCTURE SHARES FUND
Portfolio Summary
As at 30 June 2017 the Fund's portfolio comprised 11 infrastructure
investments with a total cost of GBP22.1 million and a valuation of
GBP24.8 million. The strategy of the Infrastructure Shares Fund is to
invest in infrastructure assets including secondary Private Finance
Initiatives ("PFI") assets and solar infrastructure. Details of the
investments are provided on pages 18-19 of the Report.
KEY PORTFOLIO DEVELOPMENTS
During the period, the value of the portfolio increased by GBP1.2
million, driven primarily by asset life extensions of the Fund's three
remaining solar portfolio companies, which were completed in March 2017.
The discounted cash flow methodology used to value the Fund's solar
portfolio assumes a 25-year asset life. This is based on the market
standard lease length for the properties and the initial planning
consents. However, according to independent technical advisers, the
effective commercial operating life of the solar panels could be as long
as 40 years. The grid connection agreements do not have a specified
expiry date.
The assets have favourable options to extend the leases for between 10
and 25 additional years and we have has therefore extended the planning
permissions for the solar assets to enable the options to be exercised.
This increases the likely operating periods for the assets from 25 years
to 35 years. The valuation of the three solar assets has therefore
increased by a total GBP1.1 million.
REALISATION
We are currently conducting a marketing and third party valuation
process for the 11 assets held in the Fund with the aim of securing a
sale before the end of September 2017. It is currently expected that the
likely sale price will result in a NAV per share of 85.6p. However, the
ability to sell all or part of the portfolio is not guaranteed and the
timing and price is not certain. The final distribution to shareholders
will be dependent on the proceeds received less any costs related to the
sales process and the process of "winding-down" the Fund.
COMPANY
Following the "wind-down" of the Planned Exit Shares Fund and the
Infrastructure Shares Fund referred to above, expected to be completed
before the end of the year, the Company will only have one class of
share, the Ordinary Shares. The Company will, therefore, solely
constitute the Ordinary Shares Fund going forward.
Russell Healey
Head of Private Equity
Foresight Group
31 August 2017
Unaudited Half-Yearly Results and Responsibility Statements
Principal Risks and Uncertainties
The principal risks faced by the Company are as follows:
-- Performance;
-- Regulatory;
-- Operational; and
-- Financial.
The Board reported on the principal risks and uncertainties faced by the
Company in the Annual Report and Accounts for the year ended 31 December
2016. A detailed explanation can be found on page 25 of the Annual
Report and Accounts which is available on Foresight's website
www.foresightgroup.eu or by writing to Foresight Group at The Shard, 32
London Bridge Street, London, SE1 9SG.
In the view of the Board, there have been no changes to the fundamental
nature of these risks since the previous report and these principal
risks and uncertainties are equally applicable to the remaining six
months of the financial year as they were to the six months under
review.
Directors' Responsibility Statement:
The Disclosure and Transparency Rules ('DTR') of the UK Listing
Authority require the Directors to confirm their responsibilities in
relation to the preparation and publication of the Interim Report and
financial statements.
The Directors confirm to the best of their knowledge that:
1. the summarised set of financial statements has been prepared in
accordance with FRS 104;
2. the interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first
six months and description of principal risks and uncertainties for the
remaining six months of the year);
3. the summarised set of financial statements gives a true and fair view of
the assets, liabilities, financial position and profit or loss of the
Company as required by DTR 4.2.4R; and
4. the interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transactions and
changes therein).
GOING CONCERN
The Company's business activities, together with the factors likely to
affect its future development, performance and position, are set out in
the Strategic Report of the Annual Report. The financial position of the
Company, its cash flows, liquidity position and borrowing facilities are
described in the Chairman's Statement, Strategic Report and Notes to the
Accounts of the 31 December 2016 Annual Report. In addition, the Annual
Report includes the Company's objectives, policies and processes for
managing its capital; its financial risk management objectives; details
of its financial instruments; and its exposures to credit risk and
liquidity risk.
The Company has considerable financial resources together with
investments and income generated therefrom across a variety of
industries and sectors. As a consequence, the Directors believe that the
Company is well placed to manage its business risks successfully.
The Directors have reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable
future. Thus they continue to adopt the going concern basis of
accounting in preparing the annual financial statements.
The Half-Yearly Financial Report has not been audited nor reviewed by
the auditors.
On behalf of the Board
John Gregory
Chairman
31 August 2017
Unaudited Non-Statutory Analysis of the Share Classes
Income Statements
for the six months ended 30 June 2017
Ordinary Shares Fund
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Realised losses/(gains) on investments - (2,126) (2,126)
Investment holding gains/(losses) - 12,606 12,606
Income 328 - 328
Investment management fees (322) (966) (1,288)
Other expenses (281) - (281)
(Loss)/return on ordinary
activities before taxation (275) 9,514 9,239
Taxation - - -
(Loss)/return on ordinary activities after
taxation (275) 9,514 9,239
(Loss)/return per share (0.2)p 6.1p 5.9p
Planned Exit Shares Fund Infrastructure Shares Fund
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
- 193 193 - - -
- (168) (168) - 1,246 1,246
4 - 4 688 - 688
(5) (14) (19) (33) (521)* (554)*
(16) - (16) (71) - (71)
(17) 11 (6) 584 725 1,309
- - - (37) 37 -
(17) 11 (6) 547 762 1,309
(0.2)p 0.1p (0.1)p 1.7p 2.3p 4.0p
*Includes GBP422,000 accrued performance incentive fee.
Balance Sheets
at 30 June 2017
Ordinary Shares Planned Exit Shares Infrastructure
Fund Fund Shares Fund
GBP'000 GBP'000 GBP'000
Fixed assets
Investments held at fair
value through profit or
loss 83,155 493 24,771
Current assets
Debtors 984 290 284
Money market securities and
other deposits 59,431 - -
Cash 3,981 113 3,210
64,396 403 3,494
Creditors
Amounts falling due within
one year (104) (14) (462)
Net current assets 64,292 389 3,032
Net assets 147,447 882 27,803
Capital and reserves
Called-up share capital 1,761 114 324
Share premium account 96,504 - -
Capital redemption reserve 431 3 1
Distributable reserve 35,220 1,722 26,447
Capital reserve (6,862) (183) (1,600)
Revaluation reserve 20,393 (774) 2,631
Equity shareholders' funds 147,447 882 27,803
Number of shares in issue 176,051,960 11,404,314 32,495,246
Net asset value per share 83.8p 7.7p 85.6p
At 30 June 2017 there was an inter-share debtor/creditor of GBP2,000
which has been eliminated on aggregation.
Reconciliations of Movements in Shareholders' Funds
for the six months ended 30 June 2017
Called-up Share Capital
share premium redemption Distributable Capital Revaluation
capital account reserve reserve reserve reserve Total
Ordinary Shares Fund GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 January 2017 1,280 96,071 431 5,247 (3,770) 7,787 107,046
Share issues in the period 481 40,892 - - - - 41,373
Expenses in relation to
share issues - (1,683) - - - - (1,683)
Cancellation of share
premium - (38,776) - 38,776 - - -
Realised losses on disposal
of investments - - - - (2,126) - (2,126)
Investment holding gains - - - - - 12,606 12,606
Dividends paid - - - (8,528) - - (8,528)
Management fees charged to
capital - - - - (966) - (966)
Revenue loss for the period - - - (275) - - (275)
As at 30 June 2017 1,761 96,504 431 35,220 (6,862) 20,393 147,447
Called-up Share Capital
share premium redemption Distributable Capital Revaluation
capital account reserve reserve reserve reserve Total
Planned Exit Shares Fund GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 January 2017 114 2,095 3 1,705 (362) (606) 2,949
Trail commission in
relation to prior year
share issues - (8) - - - - (8)
Cancellation of share
premium - (2,087) - 2,087 - - -
Realised gains on disposal
of investments - - - - 193 - 193
Investment holding losses - - - - - (168) (168)
Dividends paid - - - (2,053) - - (2,053)
Management fees charged to
capital - - - - (14) - (14)
Revenue loss for the period - - - (17) - - (17)
As at 30 June 2017 114 - 3 1,722 (183) (774) 882
Called-up Share Capital
share premium redemption Distributable Capital Revaluation
capital account reserve reserve reserve reserve Total
Infrastructure Shares Fund GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 January 2017 324 14,375 1 11,591 (1,116) 1,385 26,560
Trail commission in
relation to prior year
share issues - (33) - (33) - - (66)
Cancellation of share
premium - (14,342) - 14,342 - - -
Investment holding gains - - - - - 1,246 1,246
Management fees charged to
capital - - - - (521) - (521)
Tax credited to capital - - - - 37 - 37
Revenue return for the
period - - - 547 - - 547
As at 30 June 2017 324 - 1 26,447 (1,600) 2,631 27,803
Unaudited Income Statement
for the six months ended 30 June 2017
Six months ended Six months ended Year ended
30 June 2017 30 June 2016 31 December 2016
(Unaudited) (Unaudited) (Audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Realised losses on
investments - (1,933) (1,933) - (1,208) (1,208) - (3,262) (3,262)
Investment holding
gains - 13,684 13,684 - 4,408 4,408 - 8,279 8,279
Income 1,020 - 1,020 1,769 - 1,769 2,916 - 2,916
Investment
management fees (360) (1,501)* (1,861)* (240) (718) (958) (534) (1,601) (2,135)
Other expenses (368) - (368) (303) - (303) (596) - (596)
Return on ordinary
activities before
taxation 292 10,250 10,542 1,226 2,482 3,708 1,786 3,416 5,202
Taxation (37) 37 - (120) 120 - (220) 220 -
Return on ordinary
activities after
taxation 255 10,287 10,542 1,106 2,602 3,708 1,566 3,636 5,202
(Loss)/return per
share:
Ordinary Share (0.2)p 6.1p 5.9p 0.2p 2.0p 2.2p 0.4p 2.8p 3.2p
Planned Exit Share (0.2)p 0.1p (0.1)p 0.1p 8.7p 8.8p 0.3p 2.9p 3.2p
Infrastructure 1.7p 2.3p 4.0p 2.8p (1.3)p 1.5p 3.4p 0.9p 4.3p
Share
*Includes GBP422,000 accrued performance incentive fee for the
Infrastructure Shares Fund.
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 period.
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 Balance Sheet
at 30 June 2017
Registered Number: 03421340
As at As at As at
30 June 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Fixed assets
Investments held at fair
value through profit or
loss 108,419 95,113 92,217
Current assets
Debtors 1,556 2,705 2,193
Money market securities and
other deposits 59,431 29,926 30,976
Cash 7,304 2,612 11,361
68,291 35,243 44,530
Creditors
Amounts falling due within
one year (578) (1,010) (192)
Net current assets 67,713 34,233 44,338
Net assets 176,132 129,346 136,555
Capital and reserves
Called-up share capital 2,199 1,582 1,718
Share premium account 96,504 100,982 112,541
Capital redemption reserve 435 429 435
Distributable reserve 63,389 24,069 18,543
Capital reserve (8,645) (2,411) (5,248)
Revaluation reserve 22,250 4,695 8,566
Equity shareholders' funds 176,132 129,346 136,555
Net asset value per share:
Ordinary Share 83.8p 82.6p 83.6p
Planned Exit Share 7.7p 45.6p 25.9p
Infrastructure Share 85.6p 91.1p 81.7p
Unaudited Reconciliation of Movements in Shareholders' Funds
for the six months ended 30 June 2017
Share Capital
Called-up premium redemption Distributable Capital Revaluation
share capital account reserve reserve reserve reserve Total
Company GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1
January
2017 1,718 112,541 435 18,543 (5,248) 8,566 136,555
Share issues
in the
period 481 40,892 - - - - 41,373
Expenses in
relation to
share
issues - (1,724) - (33) - - (1,757)
Cancellation
of share
premium - (55,205) - 55,205 - - -
Realised
losses on
disposal of
investments - - - - (1,933) - (1,933)
Investment
holding
gains - - - - - 13,684 13,684
Dividends
paid - - - (10,581) - - (10,581)
Management
fees charged
to capital - - - - (1,501) - (1,501)
Tax credited
to capital - - - - 37 - 37
Revenue
return for
the period - - - 255 - - 255
As at 30 June
2017 2,199 96,504 435 63,389 (8,645) 22,250 176,132
Unaudited Cash Flow Statement
for the six months ended 30 June 2017
Six Six
months months
ended 30 ended 30
June June Year
2017 2016 ended 31 December 2016
GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Investment income received 1,337 1,819 2,768
Deposit and similar interest received 45 44 98
Investment management fees paid (1,464) (837) (2,118)
Secretarial fees paid (56) (55) (110)
Other cash payments (246) (598) (848)
Net cash (outflow)/inflow from operating activities (384) 373 (210)
Returns on investing activities
Purchase of unquoted investments (6,773) - (4,877)
Net proceeds on sale of investments 2,258 92 9,287
Net proceeds on deferred consideration 199 64 64
Receipt/(return) of cash held on behalf of investee
companies - 84 (548)
Net cash (outflow)/inflow from investing activities (4,316) 240 3,926
Financing
Proceeds of fund raising 39,384 22,898 36,028
Expenses of fund raising (1,150) (560) (886)
Repurchase of own shares - (737) (1,329)
Equity dividends paid (9,136) (7,445) (12,961)
Movement in money market funds (28,455) (15,038) (16,088)
Net cash inflow from financing activities 643 (882) 4,764
Net (decrease)/increase in cash in the period (4,057) (269) 8,480
Analysis of changes in net debt
At 1 At 30
January June
Cash
2017 Flow 2017
GBP'000 GBP'000 GBP'000
Cash and cash equivalents 11,361 (4,057) 7,304
Notes to the Unaudited Half-Yearly Results
1) The Unaudited Half-Yearly Financial Report has been prepared on
the basis of the accounting policies set out in the statutory accounts
of the Company for the year ended 31 December 2016. Unquoted investments
have been valued in accordance with IPEV Valuation Guidelines. Quoted
investments are stated at bid prices in accordance with the IPEV
Valuation Guidelines and UK Generally Accepted Accounting Practice.
2) These are not statutory accounts in accordance with S436 of the
Companies Act 2006 and the financial information for the six months
ended 30 June 2017 and 30 June 2016 has been neither audited nor
formally reviewed. Statutory accounts in respect of the period to 31
December 2016 have been audited and reported on by the Company's
auditors and delivered to the Registrar of Companies and included the
report of the auditors which was unqualified and did not contain a
statement under S498(2) or S498(3) of the Companies Act 2006. No
statutory accounts in respect of any period after 31 December 2016 have
been reported on by the Company's auditors or delivered to the Registrar
of Companies.
3) Copies of the Unaudited Half-Yearly Financial 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.
4) Net asset value per share
The net asset value per share is based on net assets at the end of the
period and on the number of shares in issue at the date.
Ordinary Shares Fund Planned Exit Shares Fund Infrastructure Shares Fund
Number of Number of Number of
Net assets Shares Net assets Shares Net assets Shares
GBP'000 in Issue GBP'000 in Issue GBP'000 in Issue
30 June
2017 147,447 176,051,960 882 11,404,314 27,803 32,495,246
30 June
2016 94,514 114,394,997 5,222 11,454,314 29,610 32,495,246
31
December
2016 107,046 127,985,288 2,949 11,404,314 26,560 32,495,246
1. Return per share
The weighted average number of shares for the Ordinary Shares, Planned
Exit Shares and Infrastructure Shares funds used to calculate the
respective returns are shown in the table below.
Planned Exit Infrastructure
Ordinary Shares Shares Fund Shares Fund
Fund (Shares) (Shares) (Shares)
Six months ended 30
June 2017 156,000,564 11,404,314 32,495,246
Six months ended 30
June 2016 101,437,735 11,526,687 32,510,141
Year ended 31
December 2016 109,561,757 11,488,663 32,502,653
Earnings for the period should not be taken as a guide to the results
for the full year.
1. Income
Year ended
Six months ended Six months ended 31 December
30 June 2017 30 June 2016 2016
GBP'000 GBP'000 GBP'000
Loan stock interest 578 1,095 2,133
Dividends 397 630 685
Overseas based Open Ended
Investment Companies
("OEICs") 45 44 98
1,020 1,769 2,916
1. Investments held at fair value through profit or loss
Ordinary Infrastructure
Shares Fund Planned Exit Shares Fund Shares Fund Company
GBP'000 GBP'000 GBP'000 GBP'000
Book cost as at 1
January 2017 58,877 3,396 22,140 84,413
Investment
holding
gains/(losses) 7,274 (855) 1,385 7,804
Valuation at 1
January 2017 66,151 2,541 23,525 92,217
Movements in the
period:
Purchases 6,773 - - 6,773
Disposal proceeds (225) (2,033) - (2,258)
Realised
(losses)/gains* (2,325) 193 - (2,132)
Investment
holding
gains/(losses)** 12,781 (208) 1,246 13,819
Valuation at 30
June 2017 83,155 493 24,771 108,419
Book cost at 30
June 2017 63,100 1,556 22,140 86,796
Investment
holding
gains/(losses) 20,055 (1,063) 2,631 21,623
Valuation at 30
June 2017 83,155 493 24,771 108,419
*Deferred consideration of GBP199,000 was received by the Ordinary
Shares fund in the period and is included within realised losses in the
income statement. This was offset by a decrease in the deferred
consideration debtor of GBP199,000.
**Deferred consideration debtors relating to the sale of Trilogy were
adjusted during the period, generating increases of GBP24,000 for the
Ordinary Shares fund and GBP40,000 for the Planned Exit Shares fund.
1. Related party transactions
No Director has, or during the period had, a contract of service with
the Company. No Director was party to, or had an interest in, any
contract or arrangement (with the exception of Directors' fees) with the
Company at any time during the period under review or as at the date of
this report.
1. Transactions with the Manager
Foresight Group CI Limited acts as manager to the Company in respect of
its investments. During the period, services of a total value of
GBP1,439,000 (30 June 2016: GBP958,000; 31 December 2016: GBP2,135,000)
were purchased by the Company from Foresight Group CI Limited. At 30
June 2017, the amount due to Foresight Group CI Limited was GBPnil (30
June 2016: GBP2,000 credit; 31 December 2016: GBP17,000).
Foresight Fund Managers Limited, as Secretary of the Company and as a
subsidiary of Foresight Group, is also considered to effectively be a
transaction with the manager. During the period, services of a total
value of GBP56,000 excluding VAT (30 June 2016: GBP55,000; 31 December
2016: GBP110,000) were purchased by the Company from Foresight Fund
Managers Limited. At 30 June 2017, the amount due to Foresight Fund
Managers Limited included within creditors was GBPnil (30 June 2016:
GBPnil; 31 December 2016: GBPnil).
END
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Foresight VCT PLC via Globenewswire
http://www.foresightgroup.eu/
(END) Dow Jones Newswires
August 31, 2017 12:06 ET (16:06 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Foresight Vct (LSE:FTV)
Historical Stock Chart
From Apr 2024 to May 2024
Foresight Vct (LSE:FTV)
Historical Stock Chart
From May 2023 to May 2024