TIDMFTV
FORESIGHT VCT PLC
FINANCIAL HIGHLIGHTS
-- Total net assets GBP163.4 million.
-- A final dividend of 3.7p per share was paid on 25 June 2021, costing GBP7.5 million.
-- The value of the investment portfolio rose by GBP17.6 million in the six months to 30 June 2021. This was driven by deployment of GBP6.3 million, an increase in the value of existing investments of GBP22.4 million offset by a realisation of GBP11.1 million.
-- Net Asset Value per share increased by 9.2% from 73.7p at 31 December 2020 to 80.5p at 30 June 2021. Including the payment of a 3.7p dividend made on 25 June 2021, NAV total return per share was 84.2p, which increased the total return in the period to 14.2%.
-- An offer for subscription was launched in July 2021 to raise up to GBP20 million with an over-allotment facility to raise a further GBP10 million.
CHAIR'S STATEMENT
I am pleased to present the Company's Unaudited Half-Yearly
Financial Report for the period ended 30 June 2021.
THE CONTINUING IMPACT OF COVID-19
Since the end of last year, the successful roll-out of the
vaccination programme in the UK has begun to generate more positive
news, as hospitalisations and deaths from COVID-19 have fallen
significantly, albeit that the emergence of new variants,
particularly the Delta variant, has raised new concerns.
Whilst the pandemic and the ensuing market conditions made 2020
a challenging and unpredictable year, overall the companies within
the portfolio have coped relatively well in these testing times.
After a sharp drop in portfolio value in the quarter to March 2020
at the peak of uncertainty around COVID-19, the Company's
portfolio, in aggregate, experienced a recovery which has continued
into the first half of 2021. Many of the portfolio companies have
successfully adapted to the new economic landscape, with some
performing extremely strongly. A minority continue to be adversely
impacted by COVID-19 and the resulting lockdowns, particularly
those companies in the travel, retail and hospitality sectors.
At the start of the crisis, the Manager reacted swiftly,
providing the portfolio companies with a useful toolkit in response
to their immediate difficulties. From then on, the Manager has
continued to work very closely with all the businesses within the
portfolio to help them minimise the damage to their operations from
the COVID-19 pandemic. I would like to express the Board's thanks
to the Manager's private equity team for their dedication and
diligence during this difficult period. It is also a credit to the
high quality of the management teams within the portfolio companies
that their businesses were protected from the worst of the
fallout.
STRATEGY
The Board and the Manager continue to pursue a strategy for the
Company which includes the following four key objectives:
-- further development of the net assets of the Company to maintain a level in excess of GBP150 million;
-- payment of an annual dividend of at least 5% of the NAV per share and at the same time endeavouring to maintain the NAV per share on a year on year basis;
-- the implementation of a significant number of new and follow-on qualifying investments every year; and
-- maintaining a programme of regular share buy backs at a discount in the region of 10% to the prevailing NAV per share.
The Board and the Manager believe that these key objectives
remain appropriate and the Company's performance in relation to
each of them over the past six months is reviewed more fully
below.
NET ASSET VALUE
As at 30 June 2021 the NAV of the Company was GBP163.4 million
(31 December 2020: GBP151.8 million), which is in line with the
Board's objective of maintaining the net assets of the Company at a
level in excess of GBP150 million.
At the start of the year 87% of the Company's assets were
already invested and the Board believed it would be in the
Company's best interest to raise further funds to provide liquidity
for its activities over the remainder of this year and beyond. On
26 July 2021 the Company launched an offer for subscription to
raise up to GBP20 million, with an over-allotment facility to raise
up to a further GBP10 million, through the issue of new shares.
During the period the NAV per share increased by 9.2% from 73.7p
at 31 December 2020 to 80.5p at 30 June 2021. Including the payment
of a 3.7p per share dividend made on 25 June 2021, which is
detailed below, NAV total return per share for the six-month period
was 84.2p, representing a total return of 14.2%.
After the payment of a dividend of 5.0% of NAV which is detailed
below, the Company has exceeded its objective of maintaining NAV
per share on a year on year basis.
The total return per share from an investment made five years
ago would be 28.9%.
DIVIDS
The final dividend for the year ended 31 December 2020 of 3.7p
per share was paid on 25 June 2021 based on an ex-dividend date of
10 June 2021, with a record date of 11 June 2021. The total cost of
this dividend was GBP7.5 million, including shares allotted under
the dividend reinvestment scheme.
The Company continues to achieve its target dividend yield of 5%
of NAV, which was set in 2019 in light of the change in portfolio
towards earlier stage, higher risk companies, as required by the
current VCT rules. The Board and the Manager hope that this
performance may be enhanced by additional 'special' dividends as
and when particularly successful portfolio disposals are
achieved.
INVESTMENT PERFORMANCE AND PORTFOLIO ACTIVITY
A detailed analysis of the investment portfolio performance over
the period is given in the Manager's Review.
During the period under review the Manager completed three new
investments and two follow-on investments costing GBP4.0 million
and GBP2.2 million respectively. Details of each of these new
portfolio companies can be found in the Manager's Review.
This level of new investment was somewhat behind the Company's
original forecast, as the Manager focussed more on supporting the
existing portfolio through the various stages of the pandemic. The
Board and the Manager are confident that a more significant number
of new and follow-on investments can be achieved during the rest of
the year as the economy opens up again and more opportunities
emerge.
After the period end a new investment was made into Callen-Lenz
Associates Limited and further follow-on investments were made into
Biotherapy Services Limited and Fertility Focus Limited. We are
pleased to announce that in July 2021, the Company sold its
investment in Mologic Ltd, generating a return of 3.1x on the
original investment. Also in August 2021 the Company sold its
investment in Ixaris Group Holdings Limited.
The Company and Foresight Enterprise VCT plc (formerly Foresight
4 VCT plc) have the same Manager and share similar investment
policies. The Board closely monitors the extent and nature of the
pipeline of investment opportunities and is reassured by the
Manager's confidence in being able to deploy funds without
compromising quality, so as to be in a position to satisfy the
investment needs of both companies.
BUYBACKS
During the period the Company repurchased 4.6 million shares for
cancellation at an average discount of 10.0%, achieving its
objective of maintaining regular share buybacks at a discount of
10.0%, as noted above. The Board and the Manager consider that the
ability to offer to buy back shares at a target discount of
approximately 10% is fair to both continuing and selling
shareholders and is an appropriate way to help underpin the
discount to NAV at which the shares trade.
Share buybacks are timed to avoid the Company's closed periods.
Buybacks will generally take place, subject to demand, during the
following times of year:
-- April, after the Annual Report has been published;
-- June, prior to the Half-Yearly reporting date of 30 June;
-- September, after the Half-Yearly Report has been published; and
-- December, prior to the end of the financial year.
MANAGEMENT CHARGES, CO-INVESTMENT AND INCENTIVE
The annual management fee is an amount equal to 2.0% of net
assets, excluding cash balances above GBP20 million, which are
charged at a reduced rate of 1.0%. This has resulted in ongoing
charges for the period ended 30 June 2021 of 2.1% of net assets,
which is at the lower end of the range when compared to competitor
VCTs.
Since March 2017, co-investments made by the Manager and
individual members of the Manager's private equity team have
totalled GBP0.9 million alongside the Company's investments of
GBP62.1 million. With regard to the performance incentive fee
arrangement, the continued improvement in the Company's net asset
performance has resulted in its NAV Total Return per share meeting
the NAV Total Return Hurdle under the arrangement for the first
time. I would like to remind shareholders that an actual payment
for the performance of each realised investment will only be made
when three different hurdles have been achieved: the Investment
Growth Hurdle for the individual investment at exit and also two
NAV Total Return Hurdles, the first upon the exit of the investment
and the second three years later. The NAV Total Return Hurdle
increases each year so the second NAV Total Return Hurdle will be
higher than the first.
As at 30 June 2021 the Investment Growth Hurdle had been met for
14 unrealised investments out of the 27 new early stage investments
made since the introduction of the performance incentive
arrangements and for the sake of prudence there is a contingent
liability of GBP3.9 million disclosed in note 8. An investment
under the arrangement will only qualify for the payment of a
performance fee if all three hurdles described above have been met.
This has not yet occurred and therefore no such payments have yet
been made or accrued as due.
More information on the performance incentive arrangements
(including an explanation of terms used above) can be found in note
8 of these accounts and in note 14 of our Annual Report for the
year ended 31 December 2020.
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 its responsibilities. The current year saw
some planned changes to the composition of the Board.
The Board was delighted to appoint Patricia (Patty) Dimond as a
non-executive director with effect from 1 February 2021. Patty is
an experienced non-executive director currently on the Board of LXI
REIT plc and English National Opera. She is a qualified chartered
accountant and has a wide experience of investing in early stage
technology businesses particularly those in FinTech and Consumer
& Retail.
After nearly 11 years as Chairman, John Gregory retired at the
AGM on 27 May 2021, as planned. On behalf of the Company, I would
like to thank John for his significant contribution and commitment
to the Company, which has benefited enormously from his wisdom and
guidance during his service as Chairman. I and my fellow directors
wish John a happy retirement.
SHAREHOLDER COMMUNICATION
We were disappointed that so far this year we still have not
been able to meet with shareholders in person as a result of the
travel restrictions imposed due to COVID-19. As an alternative, we
invited shareholders to a virtual AGM in May, followed at the
beginning of June by an online investor forum facilitated by the
Manager. We appreciate how popular such events are with our
investors and will continue to hold similar events remotely until
it is considered safe to meet in person. Details of any such future
events will be communicated to investors.
OUTLOOK
The unknown legacy of COVID-19 and the impact of Brexit continue
to challenge both our economy and society and create uncertainty
for every business. In particular, the risk of inflationary
pressures, supply chain issues and staff shortages are beginning to
emerge and impact some of the portfolio companies. The Manager's
private equity team understands well the management and business
requirements of each of the companies within the investment
portfolio and is working closely with them to help them to adapt to
the changing environment. The UK is not safe until the world is
safe, so until COVID-19 has been contained globally, some negative
effects of the pandemic on many UK based businesses are likely to
linger. Nonetheless, the current portfolio of investments is well
diversified by business sector and by age and overall has
demonstrated its relative resilience in the face of COVID- 19's
challenges. Hoping that the worst of the pandemic is now behind us,
the Board and the Manager are optimistic that the existing
portfolio will resume its growth and that the pipeline of
investments will yield further attractive and profitable
opportunities for the Company.
Margaret Littlejohns
Chair
14 September 2021
MANAGER'S REVIEW
The Board has appointed Foresight Group LLP ("the Manager") to
provide investment management and administration services.
The investment management and administration arrangements were
previously with Foresight Group CI Limited (the Manager's parent
undertaking), and Foresight Group CI Limited appointed the Manager
as its investment adviser and delegated administration services to
it.
The investment management and administration arrangements were
novated and amended to be directly with the Manager on 27 January
2020. References to the Manager's activities in this report include
those activities of Foresight Group CI Limited prior to the change
in arrangements.
PORTFOLIO SUMMARY
As at 30 June 2021 the Company's portfolio comprised 48
investments with a total cost of GBP100.9 million and a valuation
of GBP150.3 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 to 16.
During the six months to June, the value of investments held
rose by GBP17.6 million. This was driven by deployment of GBP6.3
million, an increase in the value of investments of GBP22.4 million
offset by a realisation of GBP11.1 million. The Company's portfolio
continues to recover following the impact of COVID-19 over the past
18 months. Many of the portfolio companies have successfully
navigated the new economic landscape, with some performing
extremely strongly while others continue to adjust.
In line with the Board's strategic objectives, the investment
team remains focused on maintaining NAV above GBP150 million whilst
paying an annual dividend to shareholders of at least 5% of the NAV
per share at the year end. The Company has so far achieved this
target for the current year and this objective remains the
Manager's focus.
NEW INVESTMENTS
The Manager has taken a prudent approach to investing since the
onset of COVID-19. Repeated lockdowns have made it challenging for
the private equity team to meet prospective companies and their
teams face to face, an important part of assessing investments and
developing relationships with management teams. However, the
Manager and SMEs have adjusted to this new landscape given
companies still wish to grow their businesses despite the economic
uncertainty. The Manager continued to meet new companies and
advisors throughout this period. Relationships are now forged
virtually with deals being introduced and completed entirely
online.
As a result, three new investments were completed in the six
months to 30 June 2021. Further details of each of these are
provided below. Behind these, there is a strong pipeline of
opportunities that the Manager expects to convert during the second
half of 2021.
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.
HEXARAD GROUP
Also in June 2021, the Company invested GBP0.8 million into
Hexarad Group, an early stage, high growth healthcare services
company, providing teleradiology services to NHS Trusts and UK
private healthcare customers. Headquartered in London, the company
was founded in 2016 by a group 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.
ADDITIVE MANUFACTURING TECHNOLGIES
Finally, in June 2021, the Company invested GBP1.7 million into
Additive Manufacturing Technologies, which manufactures systems
that automate the post-processing of 3D printed parts. Additive
Manufacturing Technologies originally received seed funding from
Foresight Williams EIS in September 2019. The additional
investment, made alongside further investment from Foresight
Williams, will be used to further commercialise its products now
they have achieved commercial traction.
CALLEN-LENZ ASSOCIATES
Post period end, in August 2021, GBP2.5 million growth capital
was invested into Callen-Lenz Associates, a provider of innovative
technology solutions and engineering design services for high
performance Uncrewed Air Systems ("UAS") and the Urban Air Mobility
("UAM") market. Based near Salisbury, Wiltshire, the company
develops, designs and produces air vehicles, vehicle components,
and navigation and communication software for high performance UASs
globally.
FOLLOW ON INVESTMENTS
The Manager had expected that more portfolio companies would
need additional capital to support them through difficult trading
conditions resulting from the various lockdowns, driving an
increase in follow-on investment. However, the portfolio has
remained relatively resilient, supported by the Manager, which has
increased oversight of the portfolio and provided guidance to
portfolio management teams throughout the pandemic. The Company
made two follow-on investments in the period, totalling GBP2.2
million, both to support further growth opportunities post-COVID
restrictions lifting. Further details of each of these are provided
below.
Many companies used forms of Government support, such as the
furlough scheme and the Coronavirus Business Interruption Loan
Scheme, which reduced the need for additional equity injections in
the period. However, as these schemes unwind, the Manager
anticipates some requirements for follow-on investment in the next
six 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 GBP1.5 million follow-on
investment from the Company. The investment will be used to expand
into other sports and push further into international markets, such
as the US.
FRESH RELEVANCE
In May 2021, a GBP0.7 million follow-on investment was made into
Fresh Relevance, a SaaS email marketing and web personalisation
platform providing online retailers with personalised customer
experiences and real-time marketing tools. The investment will be
used to further support growth and accelerate the product
rollout.
BIOTHERAPY SERVICES
Post period end, in July 2021 a follow-on investment of GBP0.7
million was also made into Biotherapy Services Limited ("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.
FERTILITY FOCUS
In August 2021, post-period end, a GBP0.4 million follow-on
investment was made into Fertility Focus, 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.
PIPELINE
At 30 June 2021, the Company held cash of GBP14.1 million and in
July launched an offer for subscription to raise a further GBP20
million (with an over-allotment facility to raise an additional
GBP10 million). This will be used to fund new and follow-on
investments, buybacks and running expenses and support the
Company's dividend objectives. The Manager is seeing a recovery in
the pipeline of potential investments and has a number of
opportunities under exclusivity or in due diligence. The Company
remains well-positioned to continue pursuing these potential
investment opportunities. As the economy recovers from the worst
effects of COVID-19, the Manager expects demand for funding to
increase, driving some particularly interesting opportunities for
investment.
EXITS AND REALISATIONS
The M&A climate has remained surprisingly buoyant during the
last 18 months. At first, most trade acquirers focused on their
core business and private equity investors focused on their
existing portfolios or on distressed acquisitions. However, since
the second half of last year, the Manager has seen acquisition
interest returning, particularly in the healthcare, technology and
e-commerce sectors, with numerous investment opportunities being
presented for consideration.
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 GBP11.1 million at
completion and the Company will receive up to GBP0.3 million of
deferred consideration after 18 months, subject to certain
conditions. This implies a cash on cash return of 4.3x the initial
investment of GBP2.7 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. Since the Company's investment, FFX more
than tripled revenues and increased headcount by over 125.
Post-period end, 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 return multiple of 3.1x includes
deferred consideration, which is equivalent to an IRR of c.38%.
During the investment period, the Mologic team had worked with the
Manager to strengthen the business, advancing the product
portfolio, increasing turnover by over 165% and increasing employee
numbers by over 40%. The business has also developed a presence in
the US, opening an office on the East Coast, and developed a
manufacturing partnership in West Africa.
The Company's investment in Ixaris Group Holdings was sold in
August 2021 to Nium, a global B2B payments platform headquartered
in Singapore.
DISPOSALS IN THE PERIODED 30 JUNE 2021
Accounting Valuation
Cost at at 31
Date of Realised December
Company Detail Disposal Proceeds Gain 2020
(GBP) (GBP) (GBP) (GBP)
------------ ------------ ----------- ----------- ----------- -----------
FFX Group Full
Limited disposal 2,676,426 11,056,074* 8,379,648 11,196,564
------------ ------------ ----------- ----------- ----------- -----------
Total disposals 2,676,426 11,056,074 8,379,648 11,196,564
-------------------------- ----------- ----------- ----------- -----------
* A further GBP140,490 in deferred consideration has been
reflected in the accounts.
KEY PORTFOLIO DEVELOPMENTS
In the first six months of the year, the portfolio has shown
further recovery, which started in the second half of 2020, as
businesses adapt to the new economic climate combined with the
gradual easing of restrictions.
The value of investments held rose by GBP17.6 million in the six
months to 30 June 2021. This was driven by deployment of GBP6.3
million, an increase in the value of existing investments of
GBP22.4 million offset by a realisation of GBP11.1 million. A
disciplined approach to investment valuations has been maintained
in light of COVID-19. During the prior year, the value of
investments held rose by GBP12.2 million, driven by deployment of
GBP7.7 million, an increase in the value of existing investments of
GBP4.8 million, offset by a realisation of GBP0.3 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 below, or
in the Top Ten Investments section on pages 12 to 16.
KEY VALUATION CHANGES IN THE PERIOD
Company Valuation (GBP) Valuation Change (GBP)
-------------------------------- --------------- ----------------------
Hospital Services Group Limited 11,966,837 3,004,099
-------------------------------- --------------- ----------------------
Nano Interactive Group Limited 7,696,845 2,638,706
-------------------------------- --------------- ----------------------
Mologic Ltd 7,472,577 2,418,317
-------------------------------- --------------- ----------------------
Dhalia Limited 3,471,609 2,057,442
-------------------------------- --------------- ----------------------
Spektrix Limited 7,137,764 1,440,721
-------------------------------- --------------- ----------------------
Fresh Relevance Ltd 6,996,636 1,173,409
-------------------------------- --------------- ----------------------
Ollie Quinn Limited 6,544,780 1,133,927
-------------------------------- --------------- ----------------------
Dhalia holds investments in smaller companies, most notably True
Lens Services Limited ("TLS"), a specialist provider of lens
manufacturing, refurbishment and servicing to the film and
television markets. TLS continues to trade positively, returning to
pre-COVID-19 levels.
OUTLOOK
The United Kingdom has now lifted most of its COVID-19
restrictions, marking a milestone as the country moves into a new
phase. However, this newfound freedom has brought with it a raft of
challenges, including a sharp rise in new COVID-19 cases and the
consequential increase in the percentage of the population
isolating. This has led to staff shortages across the country,
leading to either reductions in capacity or the temporary closure
of businesses. The rules are changing constantly, and it is clear
that COVID-19 will still continue to impact trading in the medium
term and businesses must remain cautious through this transition to
the 'new normal'. The Manager will continue to provide added
support to its portfolio companies and, if the situation worsens,
will be on standby to administer the same 'toolbox' of support as
in prior lockdowns.
On a positive note, the International Monetary Fund believes
that the UK economy will grow faster than previously expected this
year, upgrading the UK's forecast to 7% growth. Despite this, the
Manager has taken a prudent view, encouraging companies to revise
budgets to manage creditor stretch and debt build-up, particularly
due to the reduction of Government support. The Manager is ensuring
that finance directors at the portfolio companies continue to
tightly manage overheads and critically assess capital expenditure
given the uncertain macro environment.
While COVID-19 has brought unprecedented disruption, it has also
prompted many organisations to reassess their business models and
take action to adapt to a new economic landscape. A number of the
Manager's portfolio companies have used this as an opportunity to
review their overall strategy, venture into a new market or launch
a new product or service. For example, to supplement lost revenues
from their core business some portfolio companies have procured and
provided PPE or other protective equipment, such as hand sanitising
stations or screens. Healthcare and life science investments have
also contributed to national efforts to defeat the virus by
manufacturing COVID-19 testing kits.
Some of the portfolio companies used this time as an opportunity
to improve online activity and have seen an uptick in revenues as a
consequence. With the trend towards e-commerce accelerating during
COVID-19, retail businesses will need to continue embracing this
channel fully and make it a core part of the overall growth
strategy. The Manager is working closely with portfolio companies
to ensure they are well-positioned to capitalise on this
opportunity.
Beyond COVID-19, the end of the Brexit transition period on 31
December 2020 has also created some economic uncertainty. The
Manager has worked closely with portfolio companies to prepare them
to the best extent possible as some of them encounter supply chain
challenges and experience staffing issues. Thanks to the diverse
nature of the portfolio, with a combination of businesses focused
on the domestic UK market and some that export and source
worldwide, the Manager remains confident that the Company is
well-positioned to endure potential volatility.
Notwithstanding this uncertain economic backdrop, the Manager
continues to see encouraging levels of activity from smaller UK
companies seeking growth capital. The Manager expects this to
increase as companies begin to recover from the impact of COVID-19,
with requirements for permanent funding to working capital. VCTs
are still viewed by many entrepreneurs as an attractive source of
capital that provide scale-up funding to businesses at an early
stage of their growth, when other sources of funding may not be
readily available or alongside other sources of capital, including
government measures for supporting businesses during COVID-19.
Despite the challenges of COVID-19 in the medium and long term, the
UK remains an excellent place to start, scale and sell a business,
with broad pools of talent and an entrepreneurial culture.
Russell Healey, on behalf of Foresight Group LLP
Head of Private Equity
Foresight Group LLP
14 September 2021
UNAUDITED HALF-YEARLY RESULTS AND RESPONSIBILITIES
STATEMENTS
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks faced by the Company are as follows:
-- Strategic and Performance;
-- Legislative and Regulatory;
-- Operational, including Internal Controls;
-- Valuation of Unquoted Investments; 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 2020. A detailed explanation can be found on page
31 of the Annual Report and Accounts which is available on the
Company's website www.foresightvct.com 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:
a) the summarised set of financial statements has been prepared in accordance with FRS 104;
b) 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);
c) 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
d) 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 Chair's
Statement, Strategic Report and Notes to the Accounts of the 31
December 2020 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
Margaret Littlejohns
Chair
14 September 2021
UNAUDITED INCOME STATEMENT
FOR THE SIX MONTHSED 30 JUNE 2021
Six months ended 30 June 2021 Six months ended 30 June 2020 Year ended 31 December 2020
(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
gains/(losses)
on
investments - 8,380 8,380 - 13 13 - (1,415) (1,415)
Investment
holding
gains/(losses) - 14,123 14,123 - (13,227) (13,227) - 6,250 6,250
Income 135 - 135 2,014 - 2,014 1,844 - 1,844
Investment
management
fees (363) (1,090) (1,453) (353) (1,057) (1,410) (680) (2,039) (2,719)
Other expenses (289) - (289) (283) - (283) (580) - (580)
--------------- ------- ------- ----------- ------- -------- ----------- ------- ------- ---------
(Loss)/return
on ordinary
activities
before
taxation (517) 21,413 20,896 1,378 (14,271) (12,893) 584 2,796 3,380
Taxation - - - - - - - - -
--------------- ------- ------- ----------- ------- -------- ----------- ------- ------- ---------
(Loss)/return
on ordinary
activities
after
taxation (517) 21,413 20,896 1,378 (14,271) (12,893) 584 2,796 3,380
--------------- ------- ------- ----------- ------- -------- ----------- ------- ------- ---------
(Loss)/return
per share: (0.2)p 10.4p 10.2p 0.7p (7.5)p (6.8)p 0.3p 1.4p 1.7p
--------------- ------- ------- ----------- ------- -------- ----------- ------- ------- ---------
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 recognised
gains and losses 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.
UNAUDITED BALANCE SHEET
AT 30 JUNE 2021
Registered Number: 03421340
As at
As at As at 31 December 2020
30 June 2021 GBP'000 30 June 2020 GBP'000 GBP'000
------------------------- --------------------- --------------------- -----------------
Fixed assets
Investments held at fair
value through profit or
loss 150,320 107,118 132,739
------------------------- --------------------- --------------------- -----------------
Current assets
Debtors 192 797 239
Cash and cash equivalents 14,070 29,079 18,939
14,262 29,876 19,178
Creditors
Amounts falling due
within one year (1,172) (290) (99)
------------------------- --------------------- --------------------- -----------------
Net current assets 13,090 29,586 19,079
------------------------- --------------------- --------------------- -----------------
Net assets 163,410 136,704 151,818
------------------------- --------------------- --------------------- -----------------
Capital and reserves
Called-up share capital 2,031 2,078 2,060
Share premium account 68,935 103,319 67,634
Capital redemption
reserve 1,041 975 994
Distributable reserve 39,406 16,815 50,546
Capital reserve 2,777 (2,103) (4,513)
Revaluation reserve 49,220 15,620 35,097
------------------------- --------------------- --------------------- -----------------
Equity shareholders'
funds 163,410 136,704 151,818
------------------------- --------------------- --------------------- -----------------
Net asset value per share 80.5p 65.8p 73.7p
------------------------- --------------------- --------------------- -----------------
UNAUDITED RECONCILITION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
FOR THE SIX MONTHSED 30 JUNE 2021
Called-up share capital Share premium account Capital redemption reserve Distributable reserve^ Capital reserve^ Revaluation reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ ----------------------- --------------------- -------------------------- ---------------------- ---------------- ------------------- --------
As at 1
January
2021 2,060 67,634 994 50,546 (4,513) 35,097 151,818
Share issues
in the
period 18 1,338 - - - - 1,356
Expenses in
relation to
share
issues - (37) - - - - (37)
Repurchase
of shares (47) - 47 (3,115) - - (3,115)
Realised
gains on
disposal of
investments - - - - 8,380 - 8,380
Investment
holding
gains - - - - - 14,123 14,123
Dividends
paid - - - (7,508) - - (7,508)
Management
fees
charged to
capital - - - - (1,090) - (1,090)
Revenue loss
for the
period - - - (517) - - (517)
------------ ----------------------- --------------------- -------------------------- ---------------------- ---------------- ------------------- --------
As at 30
June 2021 2,031 68,935 1,041 39,406 2,777 49,220 163,410
------------ ----------------------- --------------------- -------------------------- ---------------------- ---------------- ------------------- --------
^Reserve is available for distribution, total distributable
reserves at 30 June 2021 total GBP42,183,000 (31 December 2020:
GBP46,033,000).
UNAUDITED CASH FLOW STATEMENT
FOR THE SIX MONTHSED 30 JUNE 2021
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
----------------------------------------------------- ---------- ---------- ------------
Cash flow from operating activities
Loan interest received on investments 284 230 478
Dividends received from investments 42 1,437 1,437
Deposit and similar interest received 1 29 34
Investment management fees paid (1,453) (1,364) (2,719)
Secretarial fees paid (61) (60) (120)
Other cash payments (252) (312) (449)
----------------------------------------------------- ---------- ---------- ------------
Net cash outflow from operating activities (1,439) (40) (1,339)
Cash flow from investing activities
Purchase of investments (6,274) - (7,680)
Net proceeds on sale of investments 11,056 188 296
Net proceeds on deferred consideration - 13 13
Net cash inflow/(outflow) from investing activities 4,782 201 (7,371)
Cash flow from financing activities
Proceeds of fund raising - 24,203 24,203
Expenses of fund raising (37) (594) (637)
Repurchase of own shares (2,023) (1,442) (2,668)
Equity dividends paid (6,152) (5,573) (5,573)
Net cash (outflow)/inflow from financing activities (8,212) 16,594 15,325
Net (outflow)/inflow in cash in the period (4,869) 16,755 6,615
----------------------------------------------------- ---------- ---------- ------------
Reconciliation of net cash flow to movement in net
funds
(Decrease)/increase in cash and cash equivalents for
the period (4,869) 16,755 6,615
Net cash and cash equivalents at start of period 18,939 12,324 12,324
----------------------------------------------------- ---------- ---------- ------------
Net cash and cash equivalents at end of period 14,070 29,079 18,939
----------------------------------------------------- ---------- ---------- ------------
Analysis of changes in net debt
At 1 January 2021 Cash Flow At 30 June 2021
GBP'000 GBP'000 GBP'000
-------------------------- ----------------- --------- ---------------
Cash and cash equivalents 18,939 (4,869) 14,070
-------------------------- ----------------- --------- ---------------
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 2020. Unquoted investments have been valued in accordance with IPEV Valuation Guidelines.
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 2021 and 30 June 2020 has been neither audited nor formally reviewed. Statutory accounts in respect of the year ended 31 December 2020 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 2020 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 via their chosen method 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.
Net assets
GBP Number of Shares in Issue
----------------- ----------- -------------------------
30 June 2021 163,410,000 203,113,554
30 June 2020 136,704,000 207,824,856
31 December 2020 151,818,000 205,954,017
----------------- ----------- -------------------------
5) RETURN PER SHARE
The weighted average number of shares used to calculate the
respective returns are shown in the table below.
Shares
Six months ended 30 June 2021 205,199,150
Six months ended 30 June 2020 191,020,332
Year ended 31 December 2020 199,164,754
------------------------------ -----------
Earnings for the period should not be taken as a guide to the
results for the full year.
6) INCOME
Year ended
Six months ended 30 June 2021 Six months ended 30 June 2020 31 December 2020
GBP'000 GBP'000 GBP'000
----------- ----------------------------- ----------------------------- -----------------
Loan stock
interest 92 548 370
Dividends
receivable 42 1,437 1,437
Deposit and
similar
interest
received 1 29 34
Other
income -- -- 3
----------- ----------------------------- ----------------------------- -----------------
135 2,014 1,844
----------- ----------------------------- ----------------------------- -----------------
7) INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
GBP'000
------------------------------- --------
Book cost as at 1 January 2021 97,316
Investment holding gains 35,423
------------------------------- --------
Valuation at 1 January 2021 132,739
Movements in the period:
Purchases 6,274
Disposal proceeds^ (11,056)
Realised gains 8,380
Investment holding gains* 13,983
------------------------------- --------
Valuation at 30 June 2021 150,320
------------------------------- --------
Book cost at 30 June 2021 100,914
Investment holding gains 49,406
------------------------------- --------
Valuation at 30 June 2021 150,320
------------------------------- --------
^The Company received GBP11,056,074 from the disposal of
investments during the period. The book cost of these investments
when they were disposed was GBP2,676,426. 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.
*Investment holding gains in the income statement include the
deferred consideration debtor of GBP140,490, relating to FFX Group
Limited.
8) CONTINGENT ASSETS AND LIABILITIES
In order to incentivise the Manager to generate enhanced returns
for shareholders, the Manager will potentially be entitled to
performance incentive payments in respect of investments made in
new investee companies on or after 31 March 2017 (including
follow-ons in such investee companies), as described in note 14 of
the Company's Annual Report and Accounts (including an explanation
of terms used below).
As at 30 June 2021, the NAV Total Return was 107.4p (being the
aggregate of the NAV per share as at 30 June 2021 of 80.5p and
dividends paid per share (rebased) since 18 December 2015 totalling
26.9p). This compares to the NAV Total Return Hurdle as at 30 June
2021 of 105.3p and is the first time this hurdle has been met.
As at 30 June 2021 the Investment Growth Hurdle had been met for
14 unrealised investments out of the 27 new early stage investments
made since the introduction of the performance incentive
arrangements.
ESTIMATION OF THE FINANCIAL EFFECT
Should all the hurdles detailed in note 14 of the Annual Report
and Accounts be met in the future, the Manager will receive a fee
equal to 20% of the amount by which the cash proceeds received by
the Company exceed the Investment Growth Hurdle. Based on the
current investments made on or after 31 March 2017 the contingent
liability, if investments were sold at their current carrying
value, would be GBP3.9 million.
The fee will only be paid after three years following the exit
of a relevant investment, once the End Total NAV Return can be
measured. As the payment is conditional on meeting the hurdles and
payment would only occur three years after the relevant exit, this
contingent liability is not provided for in the financial
statements.
No performance fees have been paid or were accrued as due during
the period (2020: nil).
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 CI Limited, which acted as Manager to the
Company until 27 January 2020, earned fees of GBPnil (30 June 2020:
GBP192,000, 31 December 2020: GBP192,000) during the period.
Foresight Group LLP was appointed as Manager on 27 January 2020 and
earned fees of GBP1,453,000 up to 30 June 2021 (30 June 2020:
GBP1,218,000, 31 December 2020: GBP2,527,000).
Foresight Group LLP is the Company Secretary (appointed in
November 2017) and received, directly and indirectly, for
accounting and company secretarial services fees of GBP61,000 (30
June 2020: GBP60,000, 31 December 2020: GBP120,000) during the
period.
At the balance sheet date there was GBPnil (30 June 2020:
GBPnil, 31 December 2020: GBPnil) due to Foresight Group CI Limited
and GBPnil (30 June 2020: GBP7,000, 31 December 2020: GBPnil) due
to Foresight Group LLP.
For further information please contact
Gary Fraser, Foresight Group 0203 667 8181
END
(END) Dow Jones Newswires
September 14, 2021 06:03 ET (10:03 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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