Foresight VCT plc - Half-year report
FORESIGHT VCT
PLC
FINANCIAL HIGHLIGHTS
• Total net
assets £163.4 million.
• A final
dividend of 3.7p per share was paid on 25 June 2021, costing £7.5
million.
• The value of the investment
portfolio rose by £17.6 million in the six months to 30 June 2021.
This was driven by deployment of £6.3 million, an increase in the
value of existing investments of £22.4 million offset by a
realisation of £11.1 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 £20 million with an
over-allotment facility to raise a further £10 million.
CHAIR’S STATEMENTI am pleased to present the
Company’s Unaudited Half-Yearly Financial Report for the period
ended 30 June 2021.
THE CONTINUING IMPACT OF COVID-19Since 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.
STRATEGYThe 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 £150 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 VALUEAs at 30 June 2021 the NAV of
the Company was £163.4 million (31 December 2020: £151.8 million),
which is in line with the Board’s objective of maintaining the net
assets of the Company at a level in excess of £150 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 £20 million, with an over-allotment facility to raise
up to a further £10 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%.
DIVIDENDSThe 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 £7.5 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 ACTIVITYA
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 £4.0 million and
£2.2 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.
BUYBACKSDuring 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
INCENTIVEThe annual management fee is an amount equal to
2.0% of net assets, excluding cash balances above £20 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 £0.9 million alongside the Company’s investments of £62.1
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 £3.9 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 COMPOSITIONThe 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 COMMUNICATIONWe 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.
OUTLOOKThe 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 2021MANAGER’S
REVIEWThe 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 SUMMARYAs at 30 June 2021 the
Company’s portfolio comprised 48 investments with a total cost of
£100.9 million and a valuation of £150.3 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 £17.6 million. This was driven by deployment of £6.3
million, an increase in the value of investments of £22.4 million
offset by a realisation of £11.1 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 £150 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 INVESTMENTSThe 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 EHEALTHIn June 2021, the Company
invested £1.5 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 GROUPAlso in June 2021, the Company
invested £0.8 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 TECHNOLGIESFinally, in
June 2021, the Company invested £1.7 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 ASSOCIATESPost period end, in
August 2021, £2.5 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 INVESTMENTSThe 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 £2.2 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.
CLUBSPARKIn 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
£1.5 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 RELEVANCEIn May 2021, a £0.7 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 SERVICESPost period end, in July
2021 a follow-on investment of £0.7 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 FOCUSIn August 2021, post-period end,
a £0.4 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.
PIPELINEAt 30 June 2021, the Company held cash
of £14.1 million and in July launched an offer for subscription to
raise a further £20 million (with an over-allotment facility to
raise an additional £10 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 REALISATIONSThe 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 £11.1 million at
completion and the Company will receive up to £0.3 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 £2.7 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 PERIOD ENDED 30 JUNE 2021
Company |
Detail |
Accounting Cost at Date of Disposal |
Proceeds |
Realised Gain |
Valuation at 31 December 2020 |
|
|
(£) |
(£) |
(£) |
(£) |
FFX Group Limited |
Full 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 £140,490 in deferred consideration has been
reflected in the accounts.
KEY PORTFOLIO DEVELOPMENTSIn 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 £17.6 million in the six
months to 30 June 2021. This was driven by deployment of £6.3
million, an increase in the value of existing investments of £22.4
million offset by a realisation of £11.1 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 £12.2 million, driven by deployment of £7.7 million, an increase
in the value of existing investments of £4.8 million, offset by a
realisation of £0.3 million.
Material changes in valuation, defined as increasing or
decreasing by £1.0 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 (£) |
Valuation Change (£) |
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 UNCERTAINTIESThe 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; andd)
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 STATEMENTFOR THE SIX
MONTHS ENDED 30 JUNE 2021
|
Six months ended 30 June 2021 (Unaudited) |
Six months ended 30 June 2020 (Unaudited) |
Year ended 31 December 2020 (Audited) |
|
Revenue £’000 |
Capital £’000 |
Total £’000 |
Revenue £’000 |
Capital £’000 |
Total £’000 |
Revenue £’000 |
Capital £’000 |
Total £’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 at30 June 2021 £’000 |
As at30 June 2020 £’000 |
As at 31 December 2020 £’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 MONTHS ENDED 30 JUNE
2021
|
Called-up share capital£’000 |
Share premium account£’000 |
Capital redemption reserve£’000 |
Distributable reserve^ £’000 |
Capital reserve^£’000 |
Revaluation reserve£’000 |
Total£’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 £42,183,000 (31 December 2020:
£46,033,000).
UNAUDITED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2021
|
Six months ended 30 June 2021 £’000 |
Six months ended 30 June 2020 £’000 |
Year ended 31 December 2020 £’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£’000 |
Cash Flow£’000 |
At 30 June 2021£’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 SHAREThe 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£ |
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 SHAREThe 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
|
Six months ended 30 June 2021£’000 |
Six months ended 30 June 2020£’000 |
Year ended31 December 2020£’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
|
£’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 £11,056,074 from the disposal of
investments during the period. The book cost of these investments
when they were disposed was £2,676,426. 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 £140,490, relating to
FFX Group Limited.
8) CONTINGENT
ASSETS AND LIABILITIESIn 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 £3.9 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 TRANSACTIONSNo 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 MANAGERForesight Group CI Limited, which acted as
Manager to the Company until 27 January 2020, earned fees of £nil
(30 June 2020: £192,000, 31 December 2020: £192,000) during the
period. Foresight Group LLP was appointed as Manager on 27 January
2020 and earned fees of £1,453,000 up to 30 June 2021 (30 June
2020: £1,218,000, 31 December 2020: £2,527,000).
Foresight Group LLP is the Company Secretary (appointed in
November 2017) and received, directly and indirectly, for
accounting and company secretarial services fees of £61,000 (30
June 2020: £60,000, 31 December 2020: £120,000) during the
period.
At the balance sheet date there was £nil (30 June 2020: £nil, 31
December 2020: £nil) due to Foresight Group CI Limited and £nil (30
June 2020: £7,000, 31 December 2020: £nil) due to Foresight Group
LLP.
For further information please
contactGary Fraser, Foresight
Group 0203
667 8181
END
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