TIDMFTV
FORESIGHT VCT PLC
Financial Highlights
-- Net asset value per Ordinary Share at 30 June 2016 was 82.6p after a
payment of 7.0p in dividends (31 December 2015: 87.5p).
-- Net asset value per Planned Exit Share at 30 June 2016 was 45.6p (31
December 2015: 36.8p).
-- Net asset value per Infrastructure Share at 30 June 2016 was 91.1p after
a payment of 2.5p in dividends (31 December 2015: 92.4p).
Ordinary Shares Fund
-- An interim dividend for the year ended 31 December 2015 of 7.0p per
Ordinary Share was paid on 1 April 2016.
-- GBP25.3 million was raised through the issue of shares and the Offer has
been extended to 31 December 2016.
Planned Exit Shares Fund
-- Trilogy Communications was sold after the period end for an initial cash
consideration of GBP1.4 million plus deferred consideration of GBP0.3
million.
Infrastructure Shares Fund
-- An interim dividend for the year ended 31 December 2015 of 2.5p per
Infrastructure Share was paid on 11 March 2016.
-- The Board is pleased to declare an interim dividend for the year ending
31 December 2016 of 12.0p per Infrastructure Share, to be paid on 23
September 2016, relating to the sale of FS Pentre after the period end.
Chairman's Statement
Performance - Ordinary Shares Fund
i. Movement in Net Asset Value of the Ordinary Shares Fund
During the period, the net assets of the Ordinary Shares fund increased
to GBP94.5 million at 30 June 2016 from GBP75.8 million at 31 December
2015.
Of this net increase, amounting to GBP18.7 million, the principal
contributing factors were a total of GBP25.3 million raised through the
issue of 28,496,616 new Ordinary Shares, (less issue costs of GBP1.0
million), investment income of GBP0.7 million and a net increase of
GBP2.5 million from the investment performance of the Ordinary Shares
fund portfolio. These increases were offset by payment of dividends
totalling GBP7.4 million, management fees and other expenses of GBP0.9
million and share buybacks of GBP0.5 million.
Of particular note were the performance of Datapath and Specac
International which, together, increased in value by a combined GBP3.5
million. Specac International was an investment made in April 2015 and
to date has materially outperformed its original forecasts at the time
of investment.
ii. Movement in Net Asset Value per Share of the Ordinary Shares Fund
At the end of the period, the net asset value of the Ordinary Shares
fund was 82.6p per share, which, after adding back the 7.0p per share
dividend paid on 1 April 2016, represented an increase of 2.4% over the
period.
The investments that contributed significantly (GBP250,000 or more) to
this result were as follows:
Company GBP
Specac International Limited 1,866,011
Datapath Group Limited 1,642,453
Protean Software Limited 1,234,929
Trilogy Communications Limited 558,252
ICA Group Limited (267,208)
Blackstar Amplification Holdings Limited (300,899)
Autologic Diagnostics Group Limited (434,121)
Thermotech Solutions Limited (568,047)
Aerospace Tooling Holdings Limited (691,391)
Other movements (495,677)
Total 2,544,302
iii. Cash & Deal Flow
Investment Additions
During the period the Ordinary Shares fund made no new or follow-on
private equity investments.
Investment Disposals
During the period a loan repayment of GBP45,000 was received from Specac
International and deferred consideration of GBP51,247 was received from
iCore Limited.
In March 2016 O-Gen Acme Trek was sold to Blackmead Infrastructure
Limited, a subsidiary of Foresight's Inheritance Tax Solution, at book
value for an initial cash consideration of GBP45,442 and a deferred
consideration.
Cash Availability
The Ordinary Shares fund had cash and liquid resources of GBP32.0
million at 30 June 2016, which increased to GBP32.7 million at the time
of writing. It is anticipated that these funds will be used to make
several new private equity investments arising from the Manager's deal
flow pipeline of new opportunities.
Additionally, a proportion of cash and liquidity will be retained for
dividends to shareholders, paying annual running expenses and share
buybacks.
iv. Investment Gains & Losses
During the period the Ordinary Shares fund realised losses amounting to
GBP449,000, which had already been provided for in full, following the
liquidation of i-plas Group Limited and the disposal of loans in
Abacuswood Limited.
v. Running Costs
The annual management fee of the Ordinary Shares fund is 2.0%. During
the period the management fees totalled GBP795,000, of which GBP199,000
was charged to the revenue account and GBP596,000 to the capital
account. The average ongoing charges ratio of the Ordinary Shares fund
for the period to 30 June 2016, at 2.1%, compares favourably with its
VCT peer group.
vi. Ordinary Share Dividends
It continues to be the Company's policy to provide a flow of dividends
which will be tax-free to qualifying shareholders, generated from income
and from capital profits realised on the sale of investments.
Distributions will, however, inevitably be dependent on cash being
generated from portfolio investments and successful realisations, the
timing of which is not predictable.
In accordance with this policy an interim dividend of 7.0p was paid on 1
April 2016 based on an ex-dividend date of 15 March 2016 and a record
date of 16 March 2016.
vii. Ordinary Shares Issues & Buybacks
A prospectus offer to raise GBP30 million was launched on 18 January
2016. During the period under review, GBP25.3 million was raised through
the issue of 27,548,344 Ordinary Shares, allotted at prices ranging from
80.5p to 88.0p per share.
The Company allotted 948,272 Ordinary Shares under the Company's
Dividend Reinvestment Scheme at 81.0p per share.
During the period, 695,409 Ordinary Shares were repurchased for
cancellation at a cost of GBP0.5 million at an average discount to NAV
of 10.5%. The Board and the Manager consider share buybacks at a
suitable discount to be a benefit to shareholders as a whole and an
appropriate way to manage the share price discount to NAV at which the
Ordinary Shares trade.
viii. Summary Post Period End Update
Following the period end, a further GBP1.3 million (GBP26.6 million in
total since launch) has been raised under the offer for subscription
launched on 18 January 2016.
Trilogy Communications was sold on 4 August 2016, for an initial cash
consideration of GBP574,459 plus deferred consideration of GBP146,289,
compared to a carrying value of GBP337,264 as at 31 March 2016.
As noted in the prospectus (and the merger documentation between the
Company and Foresight 2 VCT plc) the Board is considering what, if any,
performance incentive arrangements with the Manager should be
implemented relating to the Ordinary Shares fund. If, following these
deliberations, the Board believes a performance incentive arrangement
with the Manager is appropriate, it will seek Shareholder approval for
any such arrangements before they are implemented.
Outlook - Ordinary Shares Fund
The Board and the Manager are encouraged by the performance of the
portfolio over the last six months and are pleased with the progress
made by several recent investments. In addition, the pipeline of
potential investments contains a number of interesting opportunities.
Performance - Planned Exit Shares Fund
i. Movement in Net Asset Value of the Planned Exit Shares Fund
During the period, the net assets of the Planned Exit Shares fund
increased to GBP5,222,000 at 30 June 2016 from GBP4,248,000 at 31
December 2015.
Of this net increase, the principal contributing factor was the increase
of GBP1,331,000 in Trilogy Communications, which was sold following the
period end. The Board is particularly pleased with this outcome for the
Planned Exit Shareholders as it represents a remarkable turnaround in
Trilogy's fortunes and demonstrates the benefit of active asset
management for private equity style investments.
Additionally, the fund incurred management fees and expenses of
GBP22,000 and made share buybacks totalling GBP26,000 during the period
and there was a decrease of GBP340,000 from the investment performance
of the remaining Planned Exit Shares fund portfolio, principally due to
difficult market conditions for Industrial Engineering Plastics. Income
for the period totalled GBP34,000.
ii. Movement in Net Asset Value per share of the Planned Exit Shares
Fund
During the period, the net asset value of the Planned Exit Shares fund
increased to 45.6p per share at 30 June 2016 from 36.8p per Share at 31
December 2015, an increase of 23.9%.
iii. Cash & Deal Flow
Investment Additions
There were no new or follow-on investments made during the period.
Investment Disposals
Although there were no disposals during the period, Trilogy
Communications was sold on 4 August 2016, for an initial cash
consideration of GBP1,372,027 plus deferred consideration of GBP349,393,
compared to a carrying value of GBP799,029 as at 31 March 2016, an
effective increase of 9.7p per share.
Deferred consideration of GBP13,369 was received from Channel Safety
Systems during the period.
Cash Availability
The Planned Exit Shares fund had cash and liquid resources of GBP416,000
at 30 June 2016, which has decreased to GBP382,000 at the time of
writing. The Planned Exit Shares fund is considered fully invested and
its investments generate a running yield, which is principally utilised
for the payment of dividends and expenses.
iv. Investment Gains & Losses
During the period, the Planned Exit Shares fund realised losses
amounting to GBP524,000, which had already been provided for in full,
following the liquidation of i-plas Group Limited.
v. Running Costs
The annual management fee of the Planned Exit Shares fund is 1.0%.
During the period, management fees totalled GBP12,000, of which GBP3,000
was charged to the revenue account and GBP9,000 to the capital account.
The total expense ratio of the Planned Exit Shares fund for the period
ended 30 June 2016 was 0.8%.
vi. Planned Exit Share Dividends
It continues to be the Company's policy to provide a flow of dividends
which will be tax-free to qualifying shareholders, generated from income
and from capital profits realised on the sale of investments.
Distributions, however, will inevitably be dependent on cash being
generated from portfolio investments and successful realisations.
The Board intends to pay out substantially all of the proceeds of
Trilogy as a distribution once the initial proceeds have been received,
which is expected in the next few weeks. On the basis of current
unadjusted proceeds and existing cash balances held by the fund, this
would equate to approximately 14.0p per share.
vii. Planned Exit Shares Issues & Buybacks
There were no Planned Exit Shares issued during the period.
During the six months under review 72,773 Planned Exit Shares were
repurchased for cancellation at a cost of GBP26,000 at an average
discount to NAV of 9.1%. The Board and the Manager consider share
buybacks to be an effective way to manage the share price discount to
NAV at which the Planned Exit Shares trade.
viii. Summary Post Period End Update
As noted above, Trilogy Communications was sold on 4 August 2016.
Outlook - Planned Exit Shares Fund
The original objective of the Planned Exit Shares fund was to return
investors 110p per share through a combination of dividends and share
buybacks by the sixth anniversary of the closure of the original offer,
which was June 2016.
Following the sale of Trilogy in August 2016, there are still two
investments held within the Planned Exit Shares portfolio and it
continues to be the Board's policy to manage these investments until
such time as the terms of an exit would maximise potential returns for
Shareholders.
The total return for shareholders if the fund realised the remaining
investments at current valuation would be 88.6p (comprising 43.0p in
dividends paid to date and 45.6p representing the remaining NAV at 30
June 2016). To deliver the target return of 110p per share, a
significant increase on the current valuations of the two remaining
investments would need to be achieved on their disposal. Although
significant movements remain a possibility, as demonstrated by the
Trilogy realisation, it seems unlikely the target 110p will be achieved
by the fund.
Performance - Infrastructure Shares Fund
1. Movement in Net Asset Value of the Infrastructure Shares Fund
During the period, the net assets of the Infrastructure Shares fund
decreased to GBP29.6 million at 30 June 2016 from GBP30.0 million at 31
December 2015.
The Infrastructure Shares fund paid out dividends totalling GBP813,000
and management fees and other expenses of GBP265,000. Income for the
period totalled GBP1.1 million.
ii. Movement in Net Asset Value per share of the Infrastructure Shares
Fund
At the end of the period, the net asset value of the Infrastructure
Shares fund was 91.1p per share, which, after adding back the 2.5p per
share dividend paid on 11 March 2016, represented an increase of 1.3%
over the period.
iii. Cash & Deal Flow
There were no new or follow-on investments or disposals made during the
period.
The Infrastructure Shares fund had cash and liquid resources of
GBP105,000 at 30 June 2016, which had increased to GBP4,209,000 at the
time of writing, as a result of selling FS Pentre.
iv. Investment Gains & Losses
There were no realised gains or losses during the period.
v. Running Costs
The annual management fee of the Infrastructure Shares fund, which was
1.75% until 31 December 2014, was reduced to 1% from 1 January 2015. The
Board agreed with Foresight Group to make this change following the
impact of the delay in investing the original amounts raised in
qualifying infrastructure investments, which is likely to impact the
fund's future returns. During the period, management fees totalled
GBP151,000, of which GBP38,000 was charged to the revenue account and
GBP113,000 to the capital account. The ongoing charges ratio of the
Infrastructure Shares fund for the period ended 30 June 2016 was 1.5%.
vi. Infrastructure Share Dividends
During the period, an interim dividend of 2.5p was paid on 11 March 2016
based on an ex-dividend date of 25 February 2016 and a record date of 26
February 2016.
The Board is pleased to declare a further interim dividend of 12.0p per
Infrastructure Share to be paid on 23 September 2016. The shares will
have an ex-dividend date of 8 September 2016 and a record date of 9
September 2016.
The Company's original objective was to provide an annual flow of
dividends of 5.0p per share, tax-free to qualifying shareholders,
generated from income and from capital profits realised on the sale of
investments. Distributions will inevitably be dependent on cash being
generated from portfolio investments and successful realisations. The
ability to continue generating sufficient cashflows to satisfy an annual
5.0p per share dividend is uncertain in light of current yields.
vii. Infrastructure Shares Issues & Buybacks
There were no Infrastructure Shares issued during the period.
During the period under review 14,978 Infrastructure Shares were
repurchased for cancellation at a cost of GBP14,000 at an average
discount to NAV of 0.7%. The Board and the Manager consider share
buybacks to be an effective way to help manage the share price discount
to NAV at which the Infrastructure Shares trade.
viii. Summary Post Period End Update
FS Pentre, one of the fund's ground mounted solar farms, was sold on 1
July 2016, for a total consideration of GBP4.3 million, including
interest.
Outlook - Infrastructure Shares Fund
Following the merger, Foresight VCT now has a controlling holding in
four of the five currently qualifying investments, which if left
unaddressed would lead to those investments becoming non-qualifying
under VCT rules relating to control. However, a one year grace period is
allowed to remedy this situation. Partial or complete disposals of these
four investments is required to reduce ownership of each of these
holdings to below 50% and the sale of FS Pentre, noted above, is the
first of the four investments to be sold.
The Board and Manager have given consideration to other current
investment opportunities and whether any sale proceeds should be
reinvested or paid out as dividends to Shareholders, and concluded that
any sales proceeds should (subject to VCT implications for both the
Company and Shareholders and any other statutory and regulatory
constraints) be paid out as dividends to Shareholders. The rationale
behind this decision is that the asset type which can be held within the
fund is of a nature suited to longer term investment and the Board and
Manager believe that Shareholders individually are in the best position
to decide on what form of future investment is most suited to their
needs. Shareholders are, therefore, likely to receive back a substantial
proportion of their investment sooner than originally anticipated, and
the total return from an investment in the fund is expected to be lower
because of the shorter period that a part of their funds would be
earning a return from infrastructure investments.
The Board is conscious of its intention in the original prospectus to
offer shareholders the opportunity to exit their investment or remain
invested after the end of the initial five year holding period and will
be writing to Infrastructure Shareholders separately regarding these
opportunities.
Brexit
There are two principal areas where the implementation of Brexit could
impact the VCT:
1. Investee Companies - there has been much debate on the possible
impact on trade between Europe and the UK following the Brexit vote and
how this will impact UK corporates. Although too early to estimate the
impact, we do not believe that the impact will be material in the short
to medium term; and
2. Regulation - many parts of the current VCT legislation have resulted
from EU State Aid Directives, but we do not believe that post Brexit the
amending of VCT legislation will be a priority for the UK Government.
Outlook
The Board is pleased with the recent performance within both the Planned
Exit and Infrastructure Share funds and the post period end realisations
in both share classes that have enabled further dividends to be
declared.
The Ordinary Shares fund is now of a size that the Board believes will
enable it to more easily sustain the Board's dividend objective and
provides sufficient capacity for further new investments. A combination
of solid performance from the seven investments made in 2015 as well as
the existing portfolio generated a moderate increase in NAV in the
period. The Board remains optimistic for the portfolio during the
remainder of the year.
John Gregory
Chairman
Telephone: 01296 682751
Email: j.greg@btconnect.com
31 August 2016
Manager's Report
Performance during the period
Ordinary Shares Fund
The net asset value per Ordinary Share increased by 2.4% (after adding
back the interim dividend of 7.0p per Ordinary Share paid on 1 April
2016) to 82.6p per share as at 30 June 2016, from 87.5p at 31 December
2015. The Ordinary Shares fund benefitted during the period from good
performances by several portfolio companies, most notably Datapath,
Protean and Specac which performed particularly strongly, resulting in
an increase in their aggregate valuation of GBP4.7 million, or 4.1p per
share.
Having completed seven investments during the previous year, the
Ordinary Shares fund continues to focus on new opportunities. However,
uncertainty following the recent changes to VCT rules and more recently
the EU referendum have delayed completing further deals. We are
currently in exclusivity and in due diligence on two new investments for
the Ordinary Shares fund with offers on funding under negotiation on
several other investments.
Further details can be found in the Ordinary Shares Portfolio Review
later in this report.
Planned Exit Shares Fund
The net asset value per Planned Exit Share increased during the period
to 30 June 2016 by 23.9% to 45.6p per share from 36.8p at 31 December
2015. This reflected the successful sale of Trilogy Communications
Limited after the period end, providing an uplift of over GBP1.3 million
for the fund. We are working to realise the two remaining investments.
Further details can be found in the Planned Exit Shares Portfolio Review
later in this report.
Infrastructure Shares Fund
During the period, the net asset value per Infrastructure Share
increased by 1.3% (after adding back the 2.5p interim dividend paid on
11 March 2016) to 91.1p per share as at 30 June 2016, from 92.4p at 31
December 2015.
On 1 July 2016, the Infrastructure Shares fund successfully completed
the sale of FS Pentre Limited, the holding company of the Pentre solar
farm project, for GBP4.3 million which represented a premium of GBP0.4
million above book value.
The portfolio which, following the Pentre sale comprises investments in
three ground mounted solar plants and eight operating PFI projects in
the health and education sectors, performed in line with expectations
during the period.
Further details can be found in the Infrastructure Shares Portfolio
Review later in this report.
Fund raising for the Ordinary Shares Fund
We continue to see a number of high quality private equity investment
opportunities. In order to take advantage of current opportunities, on
18 January 2016, the Board launched a full prospectus to raise up to
GBP30 million through the issue of new Ordinary Shares. The issue has
been well received by both new and existing investors, with GBP25.3
million raised through the issue of 27.5 million new Ordinary Shares in
the period. The offer currently remains open.
We believe that, with the UK and US economies slowly recovering and
reducing UK uncertainty post Brexit, investing in growing, well managed
private companies in this phase of the economic cycle should, based on
past experience, generate attractive returns over the longer term.
Consequential Changes to certain Infrastructure Share Class investments
A consequence of the merger of the Company and Foresight 2 VCT in
December 2015 meant that the Infrastructure Share Class had controlling
positions in four of its five qualifying investments. Under VCT rules,
the Company benefits from a 12 month grace period within which to reduce
its holdings in each asset to below 50% which could be achieved through
partial or full disposals by December 2016.
On 1 July 2016, the Infrastructure Shares fund successfully completed
the sale of FS Pentre Limited, the holding company of the Pentre solar
farm project, for GBP4.3 million which represented a premium of GBP0.4
million above book value. Pentre was sold to another Foresight managed
investment vehicle for an attractive premium reflecting an independent
third party valuation. Pentre was one of the qualifying investments in
which the Company held a controlling position.
The whole or part disposal of three of the remaining qualifying holdings
is likely to be made to either a third party investor or to another fund
managed by Foresight Group at an independently verified valuation. In
order to continue to generate yield, any such part disposals would be
expected to take place towards the end of 2016.
To bring the VCT's holding down to 49.9% or less of each investment and
satisfy this control test, a whole or part disposal of each of the three
remaining controlled investments is required, as set out in the table
below.
Estimated value to be disposed as at 30 June 2016:
Fully Diluted Required Disposal
Investee Company Holding (GBP) Ownership (GBP)
FS Hayford Farm Ltd 2,785,424 55% 241,958
FS Tope Ltd 2,736,548 87% 1,160,341
Drumglass HoldCo Ltd 3,424,163 79% 1,244,803
Total 2,647,102
The Board and Manager have given consideration to other current
investment opportunities and whether any sale proceeds should be
reinvested or paid out as dividends to Shareholders, and concluded that
any sales proceeds should (subject to VCT implications for both the
Company and Shareholders and any other statutory and regulatory
constraints) be paid out as dividends to Shareholders. The rationale
behind this decision is that the asset type which can be held within the
fund is of a nature suited to longer term investment and the Board and
Manager believe that Shareholders individually are in the best position
to decide on what form of future investment is most suited to their
needs. Shareholders are, therefore, likely to receive back a substantial
proportion of their investment sooner than originally anticipated, and
the total return from an investment in the fund is expected to be lower
because of the shorter period that a part of their funds would be
earning a return from infrastructure investments.
Impact of recent changes to VCT legislation
The budget in July 2015 introduced a number of significant changes to
VCT legislation. Following EU State Aid approval, these regulatory
changes took effect from 18 November 2015, the date of Royal Assent to
the Finance Act 2015. Two of these changes in particular are expected to
impact the future management of all VCTs. First the restriction on the
age of a company that is eligible for investment by a VCT (generally no
more than seven years from the date of the company's first commercial
sale) and second, restrictions on VCT funds being used in acquiring an
interest in another company or existing business. By precluding
replacement capital transactions, such as shareholder recapitalisations,
management buy-outs and buy-ins and funding acquisitions by investee
companies, the restrictions are designed to encourage more development
capital transactions and investment in generally younger, less mature
companies.
The Foresight VCTs already invest in all these types of transactions so,
although the proposed changes will result in a change of investment
emphasis, they are not expected to have a material impact. Foresight
VCTs will continue to focus on investing in established, growing,
profitable companies with an attractive risk/return profile. The
emphasis will change from replacement capital transactions to
development capital investments, including investing in earlier stage
companies with a clear path to profitability. It will not be the policy,
except in exceptional circumstances, to invest in start-up companies.
Foresight Group has a strong track record in development capital
transactions, having invested in both growth capital and replacement
capital transactions since its formation over 30 years ago. For example,
40% of all investments made since 2010 were development capital
transactions. Since then, 14 of these investments have been successfully
realised, generating an average return of 2.2 times original cost.
With this long, successful, track record, Foresight's marketing efforts
have already been refocused towards finding more suitable, later stage
development capital investment opportunities, with the aim of
accelerating their growth. A number of such opportunities are currently
under active consideration. Foresight Group remains confident that
sufficient, suitable, new and attractive investment opportunities can be
sourced which will meet its return criteria and comply with the VCT
rules.
While all the implications of the new rules have yet to be clarified, it
is clear that, over the medium term, as existing investments are
realised, the change in investment emphasis and the nature of new
investments will lead to an increase in the VCTs' risk profile. Over the
medium term, however, any such increase in risk profile could be
tempered by a favourable outcome to the proposed VCT policy review, as
mentioned below. The rule changes will, however, make the VCTs'
operating environment more complicated and could limit the number of
opportunities available for investment. Similarly, the Company may not
necessarily be able to provide further investment funds for companies
already in its portfolio.
Proposed VCT Policy Review
Although the recent rule changes preclude VCTs investing in replacement
capital transactions, the Treasury and HMRC have agreed to review this
policy following representations from inter alia the British Venture
Capital Association, the Association of Investment Companies and a
number of legal firms. We hope that in due course the current rules to
enable VCTs to invest will be relaxed to allow an element of replacement
capital alongside a significant element of growth capital in any
particular transaction. At this early stage, it is not possible to
forecast the ultimate outcome of the review and Shareholders will be
kept informed of any significant developments.
If this review concludes satisfactorily, the range of potential
investment opportunities for VCTs would be widened, compared to the more
restrictive regime that currently applies.
Portfolio Review: Ordinary Shares Fund
1. New Investments
No new investments were made during the period to 30 June 2016. We are
currently working on two potential investments for the Ordinary Shares
fund and are looking to complete the first of these by the end of Q3.
2. Follow-on funding
No follow-on investments were made during the period.
3. Realisations
In March 2016 the Company's interest in O-Gen Acme Trek was sold to
Blackmead Infrastructure Limited, a subsidiary of Foresight's
Inheritance Tax Solution, at book value for an initial cash
consideration of GBP45,000 and a deferred consideration.
Following period end the Company successfully completed the sale of
Trilogy Communications Limited to California based Clear-Com LLC on 4
August 2016. The Ordinary Shares fund received GBP574,000 in cash
following completion, with further deferred consideration payable
subject to warranty claims and tax claims.
4. Material Provisions to a level below cost (including take-on cost) in
the period
Company GBP
AlwaysON Group Limited 187,525
Autologic Diagnostics Group Limited 434,121
ICA Group Limited 267,208
Ixaris Systems Limited 80,034
TFC Europe Limited 242,367
Thermotech Solutions Limited 568,047
Total 1,779,302
5. Performance Summary
The net asset value per Ordinary Share increased by 2.4% (after adding
back the interim dividend of 7.0p per Ordinary Share paid on 1 April
2016) to 82.6p per share as at 30 June 2016, from 87.5p at 31 December
2015. The Ordinary Shares fund benefitted during the period from good
performances by several portfolio companies, most notably Datapath,
Protean and Specac, which performed particularly strongly resulting in
an increase in their aggregate valuation of GBP4.7 million. Specac has
continued its strong growth and performance while Datapath and Protean
both benefited from an improved focus on sales and new product
development.
Provisions totalling GBP1.8 million were made during the period.
Following the launch of Autologic Diagnostics Group's new Assist Service,
this change in strategy towards a pure SaaS recurring revenue model
resulted in lower EBITDA during 2015 and depending on the level of new
customer sales, is also likely to impact EBITDA in 2016. Reflecting this
reduced profitability, a provision of GBP434,121 was made against the
cost of the investment during the period.
A provision of GBP187,525 was made against the investment in AlwaysOn
Group, due to continuing weak trading. Similarly, a provision against
cost of GBP242,367 was made against TFC due to the slow recovery in oil
& gas markets. A provision against cost of GBP267,208 was made against
ICA Group reflecting lower profitability. Thermotech experienced delays
in contract wins which impacted profits in the quarter to March 2016. As
such, a provision of GBP568,047 was made to the investment during the
period. The acquisition of a local competitor, Oakwood is expected to
make a significant contribution to future profits.
As a consequence of the VCT rule changes referred to above, Foresight's
marketing efforts have been refocussed towards finding more suitable,
later stage development capital investment opportunities, with the aim
of accelerating the growth of established, profitable companies. A
number of such opportunities are currently under active consideration.
The M&A market continues to be active, providing opportunities for
future realisations.
Portfolio Review: Planned Exit Shares Fund
1. New Investments
No new investments were made during the period.
2. Follow-on funding
No follow-on investments were made during the period.
3. Realisations
Following period end the Company successfully completed the sale of
Trilogy Communications Limited to California based Clear-Com LLC on 4
August 2016. The Planned Exit Shares fund received GBP1,372,000 in cash
following completion (compared with a carrying value of GBP799,029 at 31
March 2016), with further deferred consideration payable subject to
warranty claims and tax claims.
4. Material Provisions to a level below
cost (including take-on cost)
in the period
Company GBP
Industrial Engineering Plastics Limited 317,323
Total 317,323
5. Performance Summary
The net asset value per Planned Exit Share increased during the period
to 30 June 2016 by 23.9% to 45.6p per share from 36.8p as at 31 December
2015. This reflected the above mentioned successful sale of Trilogy
Communications Limited providing an uplift of over GBP1.3 million to the
fund.
With a view to improving trading, operational efficiency and systems at
Industrial Engineering Plastics, a new Chairman and experienced
turnaround CEO were appointed in late 2014. Performance improved
subsequently and good progress made in improving efficiency, cost
control and sales channels, with an increasing focus on higher margin
fabrication work. The company experienced weaker than expected trading
in late 2015 due to lower demand, however, resulting in slower than
expected progress in implementing this turnaround.
We are working to realise the two remaining investments.
Portfolio Review: Infrastructure Shares Fund
Background
The Infrastructure Shares fund was combined with the Foresight 2 VCT
Infrastructure Shares fund following the merger on 18 December 2015.
The strategy of the Infrastructure Shares fund is to invest in
infrastructure assets in the secondary PFI, solar infrastructure, energy
efficiency and on-site power generation markets.
The Infrastructure Shares fund holds shareholdings in eight operating
PFI companies, four in the education sector holding interests in 13
schools and four in the health sector, comprising three acute hospitals
and one forensic psychiatry unit. All of the projects are contracted
under UK PFI standard form and the counterparties are various Local
Authorities and NHS Trusts. These investments have strong operating
records and have remaining contract terms ranging from 11 to 26 years.
All have project finance debt in place with long term interest rate
hedging contracts and also long term facilities management subcontracts
which pass all operational risks through to major, well established
companies.
Reflecting increased competition from other PFI infrastructure funds
during the course of the offer, asset prices rose and yields fell
significantly to lower levels than originally projected, driven by
increasing investor appetite for PFI investments and a contraction in
the supply of new infrastructure assets. To help lower costs and improve
investor returns, Foresight Group agreed with the Board to reduce its
management fee from 1.75% to 1% per annum with effect from 1 January
2015. The total return will, however, depend on the prices achieved on
an ultimate sale or refinancing of the assets.
Portfolio Developments
During the period, the net asset value per Infrastructure Share
increased by 1.3% (after adding back the 2.5p interim dividend paid on
11 March 2016) to 91.1p per share as at 30 June 2016, from 92.4p at 31
December 2015.
As referred to in both the last published annual and interim accounts,
higher prices than expected were paid for the PFI and solar assets due
to increased competition, resulting in correspondingly lower yields.
Reflecting lower gas prices during 2015, UK wholesale power prices fell
significantly, reducing solar plant revenues. In August 2015, the
Government removed the Climate Change Levy, resulting in a c.3%
reduction in future cash flows at a project level, impacting both
existing and new solar investments. These reduced assumptions for solar
plants' future revenues have had a negative impact on their net asset
values. The combination of these various factors is likely to reduce
overall ultimate returns to investors.
Against this challenging market backdrop, we remain focused on capital
preservation and portfolio optimisation, using operational and
maintenance efficiencies to drive cost savings and quality benefits for
the Infrastructure Shares fund. The current low interest rate
environment presents the opportunity to refinance the projects (with
suitable debt finance) and generate a value uplift on the ultimate sale
of the solar assets in the Infrastructure Shares fund. Total return will
also depend on prices achieved on the ultimate sale of the PFI and solar
assets. We continue to work hard to position the assets for sale at the
best possible price.
New and Follow-on Investments
No new or follow-on investments were made during the period.
Outlook
As explained in further detail above, as a consequence of the merger of
the Company and Foresight 2 VCT in December 2015, the whole or part of
three of the remaining qualifying investments held within the
Infrastructure Shares fund will need to be sold by the first anniversary,
i.e. by no later than December 2016.
Portfolio Highlights
In September 2015, as part of a GBP4.2 million round alongside other
Foresight VCTs, the Ordinary Shares fund invested GBP2.75 million in ABL
Investments Limited ("ABL") to support further growth. ABL, based in
Wellingborough, Northants and with a manufacturing subsidiary in Serbia,
manufactures and distributes office power supplies and distributes
monitor arms, cable tidies and CPU holders to office equipment
manufacturers and distributors across the UK. Founded in 2003, ABL has
grown strongly over the last five years, achieving an EBITDA of GBP1.9
million on sales of GBP5.5 million in its financial year to 31 August
2015, reflecting a strong focus on customer service, speed of delivery
and value for money. Trading in the year is in line with budget. Good
progress has been made in shaping the new team and corporate structures
following the appointment of a new Chairman and Finance Director in
September 2015.
Production facilities have largely been brought in house, enabling the
Serbian operations to expand its production offering. The company has
relaunched its website to include a greater level of functionality and
product detail which will be supported by a new marketing campaign to
existing and potential customers. Held in the Ordinary Shares fund.
In June 2013, the Ordinary Shares fund invested GBP1.5 million alongside
other Foresight VCTs in a GBP3.5 million investment in Dundee based
Aerospace Tooling Corporation ("ATL"), a well-established specialist
engineering company. ATL provides repair, refurbishment and
remanufacturing services to large international companies for components
in high-specification aerospace and turbine engines. With a heavy focus
on quality assurance, the company enjoys well established relationships
with companies serving the aerospace, military, marine and industrial
markets. In the year to 30 June 2014, a number of large orders
underpinned exceptional growth, with turnover doubling and EBITDA
profits increasing significantly to a record GBP4.3 million.
Reflecting particularly strong cash generation, the company effected a
recapitalisation and dividend distribution in September 2014, returning
the entire GBP3.5 million cost of the Foresight VCTs' investments made
only 15 months previously. Having received full repayment of its loan of
GBP1.35 million and dividends of GBP150,000 equal to the cost of its
equity investment, the Ordinary Shares fund retained its original 23%
equity shareholding in the company, effectively at nil cost.
Although sales and profitability were expected to be lower in the year
to 30 June 2015, the actual trading results were weaker than budgeted,
an EBITDA of GBP2.5 million being achieved on sales of GBP8.1 million,
reflecting weak trading in the final quarter of the year due to a
premature reduction of work under a major defence contract. This
unexpected early contract termination was subsequently followed by a
significant reduction in work for an important customer in the oil and
gas industries, as a consequence of the falling energy prices. With poor
order visibility, costs were reduced, management changes made and sales
efforts increased substantially.
In the financial year ended 30 June 2016, the Company recorded
significantly lower sales and incurred EBITDA losses. Sales were in line
with the revised budget for the year and EBITDA losses were slightly
reduced reflecting an improvement in trading in the last quarter. The
new recently appointed CEO is continuing to have a positive impact on
ATL with a key focus on sales growth, via new customer acquisition
initiatives, in addition to exploring opportunities with the Company's
existing customers. The company is forecasting a return to profitability
in the current year. Held in the Ordinary Shares fund.
In April 2014, the two Foresight portfolio companies, AlwaysOn Group and
Data Continuity Group (together now known as AlwaysOn Group) merged and
implemented a major reorganisation, involving significant cost
reductions and a subsequent change in the year end to June 2015. The
merged business now provides data backup services, connectivity and, as
a Gold partner, Microsoft's Lync collaboration software (rebranded as
Skype for Business) to SMEs and larger enterprises. For the financial
year to 30 June 2016 a small EBITDA loss was incurred on reduced sales
of GBP5.5 million (compared to an EBITDA of GBP53,000 on sales of GBP8.0
million in the prior year). Whilst revenues were behind budget, improved
operational efficiency and higher margin mix resulted in a lower
budgeted EBITDA loss over the financial year. In the current year,
trading continues at a similar level, with small losses being incurred.
Held in the Ordinary Shares and Planned Exit Shares funds.
For the year to December 2015, Aquasium Technology achieved an operating
profit of GBP1.2 million on sales of GBP9.1 million, reflecting strong
spares and service revenues with good visibility on the order pipeline
for the current year (2014: GBP845,000 operating profit on sales of
GBP10.1 million). Although trading was behind budget for the first half
to June 2016, a number of significant orders have been won subsequently.
Aquasium is continuing the development of new electron beam technologies
which are expected to have considerable commercial potential. During the
year, the Ebflow (reduced pressure vacuum) machine was demonstrated to
various potential customers, successfully welding thick steel in minutes
rather than several hours. Although good progress is being made with
potential international buyers of Ebflow machines, the sales cycle for
this disruptive technology is expected to be slow and so investment in
marketing and business development has been increased to accelerate
sales of these machines.
In July 2015, the company repaid a loan of GBP166,667. At 30 June 2016
the Ordinary Shares fund held a loan of GBP166,667, due for repayment in
Q3 2016, and 33% of Aquasium's equity. The investment in Aquasium has to
date returned GBP3.8m, representing a multiple of over 2.0x cost. Held
in the Ordinary Shares fund.
Following the GBP48 million secondary buy-out by Living Bridge (formerly
ISIS Private Equity) in January 2012, the Ordinary Shares fund retained
investments in equity and loan stock valued at GBP3.46 million in
Autologic Diagnostics Group. For the year to 31 December 2014, an EBITDA
of GBP5.4 million was achieved on sales of GBP19.7 million, with
relatively stronger sales in the UK and Europe compared with the USA. In
May 2015, a new business model was launched to generate recurring
revenues and improve the quality of the company's earnings from a new
product, Assist Plus, and associated Assist Plus service. This change in
strategy towards a pure recurring revenue model has resulted in certain
exceptional costs being incurred and impacted EBITDA during 2015,
reducing this to GBP4 million on revenues of GBP18.5 million for the
year to 31 December 2015, in line with expectations.
Trading in the current year to date is at a similar level, with cash
balances currently over GBP6.5 million. The company continues to make
progress following the appointment of a new Chairman to further develop
the strategy for growth over the coming months. This has included the
newly launched Autologic Assist App in the period, which currently has
10,000 users. Held in the Ordinary Shares fund.
Biofortuna, established in 2008, is a molecular diagnostics business
based in the North West, which has developed unique expertise in the
manufacture of freeze dried, stabilised DNA tests. Biofortuna develops
and sells its own proprietary tests as well as contract developing and
manufacturing on behalf of customers. An initial GBP1.3 million round to
finance capital expenditure and working capital was completed in August
2013, in which the Ordinary Shares fund invested GBP99,066 in the first
tranche and a further GBP50,929 in the second tranche in April 2014. For
the year to March 2015, sales increased sharply to GBP1.05 million, with
a reduced operating loss of GBP528,000 (2014: sales of GBP325,000,
operating loss GBP1.05 million). For the year to 31 March 2016, trading
was well ahead of budget, with the profitable Contract Manufacturing
division helping to offset investment in the proprietary products being
developed by the Molecular Diagnostics division.
To finance the development of new products, a GBP1.6 million round was
concluded in January 2015, of which GBP890,000 was committed by the
Foresight VCTs. The Ordinary Shares fund invested GBP128,002 as the
first tranche. The final tranche of GBP94,503 was drawn down in July
2016. Held in the Ordinary Shares fund.
In July 2012, the Ordinary Shares fund invested GBP2.5 million in
Northampton based Blackstar Amplification Holdings alongside GBP1
million from Foresight 4 VCT to finance a management buy-out and provide
growth capital. In the year to 30 April 2015, the company achieved an
EBITDA of GBP537,000 on sales of GBP8.6 million (2014: GBP300,000 EBITDA
on sales of GBP8.6 million). In the financial year ended 30 April 2016,
Blackstar generated sales of GBP8.2m and EBITDA of GBP702,000,
reflecting improved gross margins and tight management of overheads. New
product development remains a key strategic priority for Blackstar and
in the current financial year alone, the Company is launching 15 new
products. Blackstar continues to be the number two guitar amplifier
brand by units sold in the UK and USA. The company currently has a
presence in over 35 countries worldwide and its products are stocked in
over 2,500 stores globally. Held in the Ordinary Shares fund.
Building on the success of its GBP48 million, 10MW Birmingham BioPower
project ("BBPL") with Carbonarius (a 50:50 joint venture with Plymouth
based Una Group), O-Gen UK has become the UK's leading independent
developer of Advanced Conversion Technology waste to energy projects. In
March 2015, O-Gen UK and Una Group combined their two teams into a new
company, CoGen Limited, to further develop their substantial, combined
pipeline of projects. In order to accelerate growth and provide
additional working capital, a new investor subscribed GBP750,000 for
equity in CoGen, alongside a loan of GBP500,000 from Una Group in April
2016. Funds managed by Foresight hold 22.13% of CoGen's equity,
including the Ordinary Shares fund (3.53%), Foresight 3 VCT (7.73%),
Foresight 4 VCT (8.55%) and the Foresight UK Sustainable EIS fund
(2.32%). O-Gen UK remains the shareholder in BBPL.
In March 2015, CoGen reached financial close on a GBP53.0 million, 10MWe
waste wood to energy plant in Welland, Northamptonshire, using the same
technology and partners as in the BBPL project. This latest project was
funded with investment from Balfour Beatty plc, Equitix and Noy (an
Israeli investment fund), with CoGen earning development fees on the
transaction whilst retaining a 12.5% shareholding in the project. Also
in March, CoGen completed the acquisition of the entire O-Gen Plymtrek
site in Plymouth, originally developed by Carbonarius and MITIE plc, on
which an GBP8 million 4.5MW waste to energy plant is planned to be built
utilising much of the footprint of the existing plant. The funding for
this transaction was provided by Aurium Capital Markets, with CoGen
owning 50% of the acquisition vehicle and Aurium 50% but with a prior
ranking return on the latter's invested capital. In October 2015, CoGen
reached financial close on a GBP98.0 million, 21.5MW project in Ince
Park, Merseyside to be fuelled with circa 160,000 tonnes per annum of
recycled wood fibre. All of the funding was provided by the Bioenergy
Infrastructure Group ("BIG", of which Foresight Group is a co-sponsor)
through a combination of shareholder loan and shares which receive a
preferential return.
Cogen is developing its pipeline of projects and funding relationships,
with active support from Foresight and BIG. The market has become more
uncertain with the Government's changes in renewables policy, in
particular relating to future CfD auctions. Cogen was unfortunately not
able to close its final, potential GBP120 million ROC project as time
expired under the ROC deadline. Cogen's primary deal pipeline comprises
four projects in Northern England and plans to bid in the CfD auction
due at the end of 2016, with the aim of closing projects successful in
that auction during 2017. BIG is expected to jointly fund this process,
requiring a total of GBP5 million of investment.
Year of financial
Project Name Project size (GBPm) close Shareholding
Birmingham Biopower
Limited 48 2013 20.0%
Plymouth 20 2015 50.0%
Welland 53 2015 12.5%
Ince Park 97 2015 20.0%
It is unlikely that full value will be secured for Foresight VCT's
stakes in Cogen and O-Gen UK until the portfolio of plants is fully
operational. However, Foresight Group will keep this situation under
review. Held in the Ordinary Shares fund.
In February 2014, the O-Gen Acme Trek facility in Stoke-on-Trent was
granted planning permission for an enlarged 8MW waste wood to energy
plant but it was not possible to finance and redevelop the site as a
project qualifying for Renewable Obligation Certificates ("ROCs") in
time for the ROC deadline. In March 2016 the Company's interest in O-Gen
Acme Trek was sold to Blackmead Infrastructure Limited, a subsidiary of
Foresight's Inheritance Tax Service, at book value for an initial cash
consideration and a deferred consideration element due when certain
conditions are met. Previously held in the Ordinary Shares fund.
Derby based Datapath Group is a world leading innovator in the field of
computer graphics and video-wall display technology utilised in a number
of international markets. The company is increasing its market share in
control rooms, betting shops and signage and entering other new areas
such as the medical market. For the year to 31 March 2015, an operating
profit of GBP6.8 million was achieved on sales of GBP19.3 million, with
the North American division trading ahead of budget (2014: record
operating profits of GBP7.4 million on sales of GBP18.7 million). In
November 2015, prior to the merger with Foresight VCT, Datapath paid
dividends of GBP6.3 million, split equally between Foresight 2 VCT,
Foresight 3 VCT and Foresight 4 VCT.
For the year to 31 March 2016, an operating profit of GBP5.9 million was
achieved on sales of GBP19.9 million. Product development continues at a
high rate, with seven new products or product variants expected to enter
production by the end of the year. The new sales manager has recently
strengthened the sales team with two new account managers in the US and
two sales executives are being recruited for the Asia Pacific region.
Held in the Ordinary Shares fund.
In September 2015, as part of a GBP3.9 million round alongside other
Foresight VCTs, the Ordinary Shares fund invested GBP2.026 million
(alongside GBP650,000 from Foresight 2 VCT) in FFX Group Limited to
support the continuing growth of this Folkestone based multi-channel
distributor of power tools, hand tools, fixings and other building
products. Since launching its e-commerce channel in 2011, FFX has grown
rapidly supplying a wide range of tools to builders and tradesmen
nationally. For the year to 31 March 2015, the company achieved an
EBITDA of GBP1.3 million on sales of GBP26.9 million. The management
team was strengthened by the appointment of two new Joint Managing
Directors and a new Chairman, each with experience of successfully
developing similar businesses.
For the year to 31 March 2016 the company achieved an EBITDA of
GBP940,000 on sales of GBP29.8 million following the successful
relocation into a nearby, much larger warehouse at Lympne in early 2016.
Held in the Ordinary Shares fund.
In May 2012, the Ordinary Shares fund invested GBP492,500 in Flowrite
Refrigeration Holdings alongside other Foresight VCTs to finance the
GBP3.2 million management buy-out of Kent based Flowrite Services
Limited. Flowrite Refrigeration Holdings provides refrigeration and air
conditioning maintenance and related services nationally, principally to
leisure and commercial businesses such as hotels, clubs, pubs and
restaurants. In the year to 31 October 2014, the company traded well,
achieving an operating profit of GBP740,000 on sales of GBP10.8 million
after substantial investment in new engineers and systems (2013:
operating profit of GBP1.06 million on sales of GBP10.0 million).
In July 2015, the company completed another recapitalisation, returning
GBP156,000 of accrued interest to the Foresight VCTs, including
GBP56,000 to the Ordinary Shares fund, taking total cash returned on
this investment to 85% of cost. For the 14 months to 31 December 2015,
the company achieved a disappointing operating profit of GBP404,000 on
sales of GBP12.8 million, reflecting difficulties arising from
installing a new workflow IT system to improve operational efficiency
and optimised profitability. To drive the business forward, steps were
taken in August 2015 to broaden the management team through the
appointment of a new Chairman and a Finance Director. In order to
improve profitability, the new management team are focused on cost
reductions and delivering operational improvements through the peak
summer trading period. Held in the Ordinary Shares fund.
In September 2015, as part of a GBP4.5 million round alongside other
Foresight VCTs, the Ordinary Shares fund invested GBP2.67 million
(alongside GBP650,000 from Foresight 2 VCT) in Hospital Services Limited
("HSL") to support its continuing growth. Based in Belfast and Dublin,
HSL distributes, installs and maintains high quality healthcare
equipment supplied by global partners such as Hologic, Fujifilm and
Shimadzu, as well as supplying related consumables. For the year to 31
March 2015, the company achieved EBITDA of GBP1.7 million on revenues of
GBP7.2 million. A new, experienced Non-Executive Chairman and a
Commercial Director were appointed to the Board. Trading in the current
year in line with budget and cash at end of June was a healthy GBP1.6
million.
Following the period end, the company acquired the trade and assets of
Eurosurgical for EUR600,000 plus stock at valuation, from the
liquidator. Eurosurgical specialises in sales and marketing of surgical
equipment, instruments and devices into the medical sector with offices
in Dublin and Belfast. Following rationalisation of the Eurosurgical
cost base, this acquisition is expected to make a significant
contribution to profit. Held in the Ordinary Shares fund.
ICA Group is a leading document management solutions provider in the
South East of England, reselling and maintaining office printing
equipment to customers in the commercial and public sectors. For the
year to 31 January 2015, trading was strong and ahead of budget, with
EBITDA of GBP645,000 being achieved on sales of GBP3,700,000 (2014:
EBITDA of GBP561,000 on sales of GBP3,000,000). With stronger demand
from SMEs and good cash generation, ICA completed a recapitalisation and
reorganisation in December 2014, enabling loans and interest totalling
GBP600,000 to be repaid. The recapitalisation was financed through a
GBP1 million bank loan facility and the company's cash resources.
Trading in the year to 31 January 2016 was in line with expectations and
reflected continuing investment in developing the sales team. As part of
the reorganisation, Steven Hallisey, a seasoned executive with relevant
sector experience, was appointed Executive Chairman in January 2015.
Trading in the relevant year to date is ahead of budget. Recruitment
continues in the sales team, with a new business development person
appointed while the sales team are generally performing well. The
company has recently won an order for 60 machines at a large secondary
school. Held in the Ordinary Shares fund.
Since July 2014, the Ordinary Shares fund invested GBP2.6 million in
tranches in Industrial Efficiency II as part of a GBP4.4 million funding
round alongside other Foresight managed funds. Industrial Efficiency II
provides energy efficiency fuel switching services, enabling customers
to make significant cost savings and reduce emissions and the company
effectively receives a percentage of these savings. Held in the Ordinary
Shares fund.
In December 2011 and March 2012, the Planned Exit Shares fund invested
GBP875,000 by way of loans and equity to help fund a management buy-in
at Industrial Engineering Plastics. The company is a long established
plastics distributor and fabricator supplying a wide range of industries
nationally, principally supplying ventilation and pipe fittings, plastic
welding rods, hygienic wall cladding, plastic tanks and sheets. For the
18 month period ended 31 May 2014, following increased competition in
its plastics distribution and industrial fabrication markets, the
company achieved a reduced EBITDA of GBP205,000 on sales of GBP6.7
million. Performance continued to deteriorate during summer 2014 and a
new Chairman and experienced turnaround CEO were appointed. For the year
to 31 May 2015, an EBITDA of GBP191,000 was achieved on sales of GBP4.5
million, after accounting for exceptional costs. Performance
subsequently improved substantially through focussing on higher margin
fabrication work. Good progress was made in improving efficiency, cost
control and sales channels. Fabrication capacity was increased and
suppliers reviewed to improve margins.
Results for the year to May 2016 were disappointing, with a lower EBITDA
on sales also lower at GBP3.6 million. This decline resulted from a fall
in distribution revenues and slower progress on growing fabrication
sales than originally budgeted, reflecting competitive pressures. Recent
structural changes to the business are, however, beginning to result in
signs of an improvement in sales. Held in the Planned Exit Shares fund.
In September 2015, as part of a GBP4.0 million round alongside other
Foresight VCTs, the Ordinary Shares fund invested GBP2.75 million in
Itad Limited, a long established consulting firm which monitors and
evaluates the impact of international development and aid programmes,
largely in developing countries. Customers include the UK Government's
Department for International Development, other European governments,
philanthropic foundations, charities and international NGOs. For the
year to 31 January 2015, Itad achieved an EBITDA of GBP1.5 million on
revenues of GBP8.8 million with significant future growth forecast. A
number of significant contracts have been won recently and, as most
contracts are long term, this provides good revenue visibility. For the
year to 30 January 2016 the company achieved an EBITDA of GBP1.9 million
on revenues of GBP12.1 million. Held in the Ordinary Shares fund.
Ixaris Systems has developed and operates Entropay, a web based global
prepaid payment service using the VISA network. Ixaris also offers its
IxSol product on a 'Platform as a Service' basis to enable enterprises
to develop their own customised global applications for payments over
various payment networks. During 2013, the company invested in
developing and marketing its Ixaris Payment System, the platform that
runs IxSol, to financial institutions. The platform enables financial
institutions to offer payment services to customers based on prepaid
cards. Ixaris was awarded an EU grant of EUR2.5 million, of which EUR1.6
million will be received over three years, to help fund the existing
platform technology roadmap, highlighting the innovative nature of the
Payment System.
During the year to 31 December 2015, reflecting strong trading and
continuing investment in software and systems, an EBITDA loss of
GBP501,000 was incurred on sales of GBP10.8 million, ahead of budget
(2014: an EBITDA loss of GBP622,000 on sales of GBP9.5 million).
EntroPay continues to perform well with a strong sales pipeline in
prospect. Held in the Ordinary Shares fund.
In December 2014, the Ordinary Shares fund invested GBP1 million
alongside other Foresight VCTs in a GBP2 million round to finance a
shareholder recapitalisation of Positive Response Communications.
Established in 1997, the company monitors the safety of people and
property through its 24 hour monitoring centre in Dumfries, Scotland.
Customers include several major restaurant and retail chains. For the
year ended 31 March 2015, an EBITDA of GBP637,000 was achieved on sales
of GBP2.04 million. In the financial year to 31 March 2016, sales grew
modestly with reduced EBITDA profits, reflecting investment in improving
efficiency and systems and recruitment of additional sales staff. The
management team has been strengthened with the appointment of three
experienced executives as Chairman, CEO and Finance Director
respectively. The company is trading in line with budget and continues
to invest significantly in sales resource in anticipation of future
growth. Held in the Ordinary Shares fund.
In April 2013, the Ordinary Shares fund invested GBP1.0 million
alongside other Foresight VCTs in a GBP1.8 million round to finance a
management buy-out of Procam Television Holdings. Procam is one of the
UK's leading broadcast hire companies, supplying equipment and crews for
UK location TV production to broadcasters, production companies and
other businesses for over 20 years. Headquartered in London, with
additional facilities in Manchester, Edinburgh and Glasgow, Procam is a
preferred supplier to BSkyB and an approved supplier to the BBC and ITV.
Revenues and profits have grown strongly, following the introduction of
new camera formats, acquisitions in both the UK and USA and increased
sales and marketing efforts.
In December 2014, Procam acquired True Lens Services, based in Leicester,
which specialises in the repair, refurbishment and supply of camera
lenses with further support from the Foresight VCTs. In March 2015, in
order to service the requirements of many of its existing UK customers
and enter the large US market, Procam acquired HotCam New York. This
acquisition was supported by a further investment of GBP750,000 from the
Foresight VCTs, of which the Ordinary Shares fund invested GBP375,006.
For the year to 31 December 2014, the company achieved an EBITDA of
GBP2.3 million on revenues of GBP8.1 million, ahead of the prior year,
reflecting organic growth and the integration of the Hammerhead
acquisition. Trading in the year to 31 December 2015 was strong, an
EBITDA of GBP3.3 million being achieved on sales of GBP11.5 million,
reflecting both organic growth, driven principally by the strong
performance of the London office, and impact of the acquisitions during
the year. In February 2016, Procam acquired the trading assets of the
film division of Take 2 Films which provides digital and film camera
equipment for Film and TV. This was funded by bank debt and asset
finance facilities. Held in the Ordinary Shares fund.
In July 2015, as part of a GBP4.0 million round alongside other
Foresight VCTs, the Ordinary Shares fund invested GBP2.5 million in
Coventry based Protean Software. Protean develops and sells business
management and field service management software, together with related
support and maintenance services, to organisations involved in the
supply, installation and maintenance of equipment, across a number of
sectors including facilities management, HVAC and elevator installation.
Protean's software suite offers both desktop and mobile variants used on
engineers' Android devices. A new CEO and an experienced Chairman were
appointed at completion and a new Financial Controller recruited
subsequently. For the year to 31 March 2015, an EBITDA of GBP900,000 was
achieved on sales of GBP3.0 million. Trading in the year to 31 March
2016 was ahead of the previous year while profits were similar,
reflecting increased investment and overheads while cash remained
strong. In the current year Protean continues to trade ahead of budget
while cash continues to strengthen and currently totals GBP1.2 million.
Held in the Ordinary Shares fund.
In April 2015, Foresight funds invested GBP2.645 million in shares and
loan notes in Specac International ("Specac") to finance a management
buy-out of Specac Limited from Smiths Group plc. The Ordinary Shares
fund invested GBP1.345 million, alongside GBP650,000 from each of
Foresight 3 VCT and Foresight 4 VCT, together acquiring a majority
equity shareholding with the management team holding the remaining
equity. Specac, based in Orpington, Kent, is a long established, leading
scientific instrumentation accessories business, manufacturing high
specification sample analysis and sample preparation equipment used
across a broad range of applications in testing, research and quality
control laboratories and other end markets Worldwide. The company's
products are primarily focused on supporting IR Spectroscopy, an
important analytical technique widely used in research and commercial/
industrial laboratories.
For the year to 31 July 2015, the company achieved an EBITDA of
GBP906,000 on sales of GBP6.9 million. Trading in the year to 31 March
2016 exceeded expectations with profit growth ahead of forecast,
reflecting greater focus on sales and costs. The company accelerated new
product development and successfully launched new products. A
non-executive Chairman was also appointed with a strong sales and
marketing background in the scientific instrumentation market who will
complement the existing management team and assist them to further
develop the business. Trading has continued to perform ahead of budget
following the strong full year performance to 31 March 2016. Held in the
Ordinary Shares fund.
TFC Europe, a leading distributor of technical fasteners in the UK and
Germany, performed satisfactorily during the year to 31 March 2015,
achieving an operating profit of GBP2.8 million on sales of GBP20.3
million (2014: operating profit of GBP2.8 million on sales of GBP19.5
million). Trading in the year to 31 March 2016 was appreciably weaker
than budgeted due to a general downturn in the UK manufacturing sector,
most particularly the oil and gas industry.
The company has made an encouraging start to the current financial year,
achieving above budget revenues and EBITDA. Key initiatives include
strengthening the sales team, development of new product ranges and
supplier price renegotiations. The Group is now showing good signs of
improvement across a variety of industry sectors and higher margin
products.
In July 2015, the company effected a successful recapitalisation and
share reorganisation, as a result of which GBP2.4 million was received
by the Foresight VCTs, repaying of all their outstanding loans, together
with accrued interest and a redemption premium. The overall Foresight
shareholding increased from 53.6% to 66.7%. A number of senior
management changes and promotions were made to facilitate the planned
retirement of the current Chairman, to enable the CEO to drive strategic
growth projects, particularly in Germany and focus on new customer
targets within Aerospace. In April 2015, two senior managers were
promoted to Sales Director and Commercial Director roles. A Group
Operations Manager has been appointed to drive cost efficiencies and
introduce best operational practice across the Group. A new, experienced
Chairman joined the Board in January 2016 with an aim to improve TFC's
sales strategy and industry focus. Held in the Ordinary Shares fund.
The Bunker Secure Hosting, which operates two ultra-secure data centres,
continues to generate substantial profits at the EBITDA level. For the
year to 31 December 2015, an EBITDA of GBP2.2 million was achieved on
sales of GBP9.6 million (2014: EBITDA of GBP2.2 million on sales of
GBP9.3 million). Recurring annual revenues presently exceed GBP9.3
million while cash balances remain healthy. On 31 March 2015, The Bunker
repaid all its shareholder loans and outstanding interest totalling
GBP6.5 million, financed through a GBP5.7 million secured medium term
bank loan plus GBP1 million from its own cash resources. In total,
GBP5.1 million was repaid to the Foresight VCTs, comprising GBP3.0
million of loan principal and GBP2.1 million of interest. Foresight 2
VCT received GBP1.41 million, comprising GBP1.065 million of loan
principal and GBP345,000 of interest and retains an 8.69% shareholding.
A new, experienced Sales Manager was recruited to lead channel sales. In
the current year to date, the company is trading in line with budget.
Focus continues on improving the sales strategy and completion of new
existing and new customer signups alongside assessing new service
offerings. Held in the Ordinary Shares fund.
In September 2015, as part of a GBP3.3 million round alongside other
Foresight VCTs, the Ordinary Shares fund invested GBP1.65 million in The
Business Advisory Limited. This company provides a range of advice and
support services to UK based small businesses seeking to gain access to
Government tax incentives, largely on a contingent success fee basis.
With a large number of small customers signed up under medium term
contracts, the company enjoys a high level of recurring income and good
visibility on future revenues. For the year to 30 September 2015, the
Company achieved a NPBT of GBP1.4 million on sales of GBP4.2 million,
well ahead of the prior year. The company continues to trade strongly
and has increased its overheads in anticipation of accelerated sales
growth. Management has been strengthened by the appointment of a new
interim COO a new experienced, non-executive Chairman. Held in the
Ordinary Shares fund.
In August 2013, the Ordinary Shares fund invested GBP1.5 million
alongside Foresight 4 VCT in a GBP2.5 million shareholder
recapitalisation of Stockport based Thermotech Solutions (formerly Fire
and Air Services). Thermotech is a hard facilities management provider
with two divisions, Mechanical Services and Fire Protection, which
designs, installs and services air conditioning and fire sprinkler
systems for retail, commercial and residential properties through a
national network of engineers. Since investment, good progress has been
made in diversifying and rebalancing the spread of revenues, with
greater emphasis on service and maintenance. For the year to 31 March
2015, an EBITDA of GBP1.1 million was achieved on sales of GBP7.8
million, some 40% ahead of the previous year (2014: EBITDA of GBP717,000
on sales of GBP4.0 million) reflecting significant contract wins and
resultant strong cash generation. Trading in the year to 31 March 2016
resulted in an EBITDA of GBP706,000 on sales of GBP6.5 million
reflecting delays in winning expected contracts. A new, non-executive
Chairman has been appointed, bringing extensive experience from the
facilities management and business services sectors.
On 1 July 2016, Thermotech acquired Oakwood, a well-respected local
competitor which provides HVAC services. The combined Group will benefit
from greater scale, a national footprint and a reduction in customer
concentration. The company also repaid the GBP2.0 million of Foresight
loan note principal, of which the Ordinary Shares fund received GBP1.2
million. Combined with interest received, the investment in Thermotech
has now returned over 1x cost with the Ordinary Shares fund still
retaining a 15.3% equity stake. Held in the Ordinary Shares fund.
Following period end, the Company successfully completed the sale of
Trilogy Communications to California based Clear-Com LLC. Trilogy
designs and sells market leading, real time video and audio solutions
for the broadcast and defence markets, globally. The Ordinary Shares
fund received GBP574,000 in cash following completion (as compared with
a carrying value of GBP337,264 at 31 March 2016) and the Planned Exit
Shares fund received GBP1,372,000 in cash following completion (compared
with a carrying value of GBP799,029 at 31 March 2016), with further
deferred consideration payable to each fund subject to warranty claims
and tax claims. This result represents a remarkable turnaround in
Trilogy's fortunes and demonstrates the benefit of active asset
management by the Foresight investment management team. Held in the
Ordinary Shares and Planned Exit Shares funds.
Russell Healey
Head of Private Equity
Foresight Group
31 August 2016
Unaudited Half-Yearly Results and Responsibility Statements
Principal Risks and Uncertainties
The principal risks faced by the Company are as follows:
-- Performance;
-- Regulatory;
-- Operational; and
-- Financial.
The Board reported on the principal risks and uncertainties faced by the
Company in the Annual Report and Accounts for the year ended 31 December
2015. A detailed explanation can be found on page 13 of the Annual
Report and Accounts which is available on www.foresightgroup.eu or by
writing to Foresight Group at The Shard, 32 London Bridge Street, London,
SE1 9SG.
In the view of the Board, there have been no changes to the fundamental
nature of these risks since the previous report and these principal
risks and uncertainties are equally applicable to the remaining six
months of the financial year as they were to the six months under
review.
Directors' Responsibility Statement:
The Disclosure and Transparency Rules ('DTR') of the UK Listing
Authority require the Directors to confirm their responsibilities in
relation to the preparation and publication of the Interim Report and
financial statements.
The Directors confirm to the best of their knowledge that:
(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 Chairman's Statement, Strategic Report and Notes to the
Accounts of the 31 December 2015 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 hedging activities; and its exposures
to credit risk and liquidity risk.
The Company has considerable financial resources together with
investments and income generated therefrom across a variety of
industries and sectors. As a consequence, the Directors believe that the
Company is well placed to manage its business risks successfully.
The Directors have reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable
future. Thus they continue to adopt the going concern basis of
accounting in preparing the annual financial statements.
The Half-Yearly Financial Report has not been audited nor reviewed by
the auditors.
On behalf of the Board
John Gregory
Chairman
31 August 2016
Unaudited Non-Statutory Analysis of the Share Classes
Income Statements
for the six months ended 30 June 2016
Ordinary Shares Fund Planned Exit Shares Fund Infrastructure Shares Fund
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Realised losses
on
investments - (697) (697) - (511) (511) - - -
Investment
holding
gains/(losses) - 3,225 3,225 - 1,515 1,515 - (332) (332)
Income 662 - 662 34 - 34 1,073 - 1,073
Investment
management
fees (199) (596) (795) (3) (9) (12) (38) (113) (151)
Other expenses (224) - (224) (10) - (10) (69) - (69)
Return/(loss)
on ordinary
activities
before
taxation 239 1,932 2,171 21 995 1,016 966 (445) 521
Taxation (48) 95 47 (4) 2 (2) (68) 23 (45)
Return/(loss)
on ordinary
activities
after
taxation 191 2,027 2,218 17 997 1,014 898 (422) 476
Return/(loss) 0.2p 2.0p 2.2p 0.1p 8.7p 8.8p 2.8p (1.3)p 1.5p
per share
Balance Sheets
at 30 June 2016
Ordinary Shares Planned Exit Infrastructure
Fund Shares Fund Shares Fund
GBP'000 GBP'000 GBP'000
Fixed assets
Investments held at
fair value through
profit or loss 60,329 4,813 29,971
Current assets
Debtors 2,509 17 277
Money market
securities and other
deposits 29,851 75 -
Cash 2,166 341 105
34,526 433 382
Creditors
Amounts falling due
within one year (341) (24) (743)
Net current
assets/(liabilities) 34,185 409 (361)
Net assets 94,514 5,222 29,610
Capital and reserves
Called-up share
capital 1,144 114 324
Share premium account 84,434 2,104 14,444
Capital redemption
reserve 425 3 1
Distributable reserve 5,486 3,307 15,276
Capital reserve (1,136) (807) (468)
Revaluation reserve 4,161 501 33
Equity shareholders'
funds 94,514 5,222 29,610
Number of shares in
issue 114,394,997 11,454,314 32,495,246
Net asset value per 82.6p 45.6p 91.1p
share
At 30 June 2016 there was an inter-share debtor/creditor of GBP98,000
which has been eliminated on aggregation.
Reconciliations of Movements in Shareholders' Funds
for the six months ended 30 June 2016
Called-up Share Capital
Ordinary Shares share premium redemption Distributable Capital Revaluation
Fund capital account reserve reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 January
2016 866 60,383 418 13,133 62 936 75,798
Shares issues
in the period 285 25,062 - - - - 25,347
Expenses in
relation to
share issues - (1,011) - - - - (1,011)
Repurchase of
shares (7) - 7 (469) - - (469)
Realised losses
on disposal of
investments - - - - (697) - (697)
Investment
holding gains - - - - - 3,225 3,225
Dividends - - - (7,369) - - (7,369)
Management fees
charged to
capital - - - - (596) - (596)
Tax credited to
capital - - - - 95 - 95
Revenue return
for the
period - - - 191 - - 191
As at 30 June
2016 1,144 84,434 425 5,486 (1,136) 4,161 94,514
Called-up Share Capital
Planned Exit share premium redemption Distributable Capital Revaluation
Shares Fund capital account reserve reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 January
2016 115 2,118 2 3,316 (289) (1,014) 4,248
Expenses in
relation to
prior year
share issues - (14) - - - - (14)
Repurchase of
shares (1) - 1 (26) - - (26)
Realised losses
on disposal of
investments - - - - (511) - (511)
Investment
holding gains - - - - - 1,515 1,515
Management fees
charged to
capital - - - - (9) - (9)
Tax credited to
capital - - - - 2 - 2
Revenue return
for the
period - - - 17 - - 17
As at 30 June
2016 114 2,104 3 3,307 (807) 501 5,222
Called-up Share Capital
Infrastructure share premium redemption Distributable Capital Revaluation
Shares Fund capital account reserve reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 January
2016 324 14,515 1 15,205 (378) 365 30,032
Expenses in
relation to
prior year
share issues - (71) - - - - (71)
Repurchase of
shares - - - (14) - - (14)
Investment
holding
losses - - - - - (332) (332)
Dividends - - - (813) - - (813)
Management fees
charged to
capital - - - - (113) - (113)
Tax credited to
capital - - - - 23 - 23
Revenue return
for the
period - - - 898 - - 898
As at 30 June
2016 324 14,444 1 15,276 (468) 33 29,610
Unaudited Income Statement
for the six months ended 30 June 2016
Six months ended Six months ended Year ended
30 June 2016 30 June 2015 31 December 2015
(Unaudited) (Unaudited) (Audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Realised losses
on
investments - (1,208) (1,208) - (887) (887) - (8,649) (8,649)
Investment
holding gains - 4,408 4,408 - 311 311 - 5,183 5,183
Income 1,769 - 1,769 759 - 759 1,561 - 1,561
Investment
management
fees (240) (718) (958) (151) (454) (605) (319) (958) (1,277)
Other expenses (303) - (303) (167) - (167) (616) - (616)
Return/(loss)
on ordinary
activities
before
taxation 1,226 2,482 3,708 441 (1,030) (589) 626 (4,424) (3,798)
Taxation (120) 120 - (46) 46 - (52) 52 -
Return/(loss)
on ordinary
activities
after
taxation 1,106 2,602 3,708 395 (984) (589) 574 (4,372) (3,798)
Return/(loss)
per share:
Ordinary Share 0.2p 2.0p 2.2p 0.2p (2.4)p (2.2)p 0.7p (7.4)p (6.7)p
Planned Exit
Share 0.1p 8.7p 8.8p 0.8p 1.7p 2.5p (3.1)p (4.4)p (7.5)p
Infrastructure 2.8p (1.3)p 1.5p 1.5p 0.8p 2.3p 2.2p 0.7p 2.9p
Share
The total column of this statement is the profit and loss account of the
Company and the revenue and capital columns represent supplementary
information.
All revenue and capital items in the above Income Statement are derived
from continuing operations. No operations were acquired or discontinued
in the period.
The Company has no recognised gains or losses other than those shown
above, therefore no separate statement of total recognised gains and
losses has been presented.
Unaudited Balance Sheet Registered Number: 03421340
at 30 June 2016
As at As at As at
30 June 2016 30 June 2015 31 December 2015
GBP'000 GBP'000 GBP'000
Fixed assets
Investments held at fair value
through profit or loss 95,113 43,768 92,237
Current assets
Debtors 2,705 1,783 1,416
Money market securities and
other deposits 29,926 21,180 14,888
Cash 2,612 6,187 2,881
35,243 29,150 19,185
Creditors
Amounts falling due within one
year (1,010) (296) (1,344)
Net current assets 34,233 28,854 17,841
Net assets 129,346 72,622 110,078
Capital and reserves
Called-up share capital 1,582 817 1,305
Share premium account 100,982 35,513 77,016
Capital redemption reserve 429 409 421
Distributable reserve 24,069 32,813 31,654
Capital reserve (2,411) 7,655 (605)
Revaluation reserve 4,695 (4,585) 287
Equity shareholders' funds 129,346 72,622 110,078
Net asset value per share:
Ordinary Share 82.6p 91.7p 87.5p
Planned Exit Share 45.6p 52.4p 36.8p
Infrastructure Share 91.1p 92.0p 92.4p
Unaudited Reconciliation of Movements in Shareholders' Funds
for the six months ended 30 June 2016
Called-up Share Capital
share premium redemption Distributable Capital Revaluation
Company capital account reserve reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1
January
2016 1,305 77,016 421 31,654 (605) 287 110,078
Share issues
in the
period 285 25,062 - - - - 25,347
Expenses in
relation to
share
issues - (1,096) - - - - (1,096)
Repurchase
of shares (8) - 8 (509) - - (509)
Realised
losses on
disposal of
investments - - - - (1,208) - (1,208)
Investment
holding
gains - - - - - 4,408 4,408
Dividends - - - (8,182) - - (8,182)
Management
fees
charged to
capital - - - - (718) - (718)
Tax credited
to capital - - - - 120 - 120
Revenue
return for
the period - - - 1,106 - - 1,106
As at 30
June 2016 1,582 100,982 429 24,069 (2,411) 4,695 129,346
Unaudited Cash Flow Statement
for the six months ended 30 June 2016
Six Six
months months Year
ended ended ended
31
30 June 30 June December
2016 2015 2015
GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Deposit and similar interest received 44 32 71
Investment management fees paid (837) (595) (1,277)
Secretarial fees paid (55) (50) (100)
Other cash payments (598) (115) (340)
Taxation - - -
Net cash outflow from operating activities (1,446) (728) (1,646)
Returns on investing activities
Purchase of unquoted investments and investments quoted
on AiM - (2,402) (16,028)
Net proceeds on sale of investments 92 1,480 4,415
Net proceeds on deferred consideration 64 - 725
Investment income received 1,819 591 1,762
Cash held on behalf of investee companies 84 - 213
Net capital inflow/(outflow) from investing activities 2,059 (331) (8,913)
Financing
Proceeds of fund raising 22,898 18,936 18,936
Expenses of fund raising (560) (408) (517)
Repurchase of own shares (737) (371) (1,068)
Equity dividends paid (7,445) (4,239) (4,690)
Cash acquired on merger with Foresight 2 VCT plc - - 1,159
Movement in money market funds (15,038) (14,024) (7,732)
(882) (106) 6,088
Net decrease in cash in the period (269) (1,165) (4,471)
Analysis of changes in net debt At 1 January 2016 Cashflow At 30 June 2016
GBP'000 GBP'000 GBP'000
Cash and cash equivalents 2,881 (269) 2,612
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 2015. Unquoted investments have
been valued in accordance with IPEVC valuation guidelines. Quoted
investments are stated at bid prices in accordance with the IPEVC
valuation guidelines and UK Generally Accepted Accounting Practice.
1. 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
2016 and 30 June 2015 has been neither audited nor formally reviewed.
Statutory accounts in respect of the period to 31 December 2015 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 2015 have been reported on by the Company's auditors or
delivered to the Registrar of Companies.
1. Copies of the Unaudited Half-Yearly Financial Report will be sent to
shareholders and will be available for inspection at the Registered
Office of the Company at The Shard, 32 London Bridge Street, London, SE1
9SG.
1. 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.
Planned Exit Shares Infrastructure Shares
Ordinary Shares Fund Fund Fund
Net Net
Net Assets Assets Assets
Number of Number of Number of
Shares in Shares in Shares in
GBP'000 Issue GBP'000 Issue GBP'000 Issue
30 June
2016 94,514 114,394,997 5,222 11,454,314 29,610 32,495,246
30 June
2015 54,241 59,140,587 3,157 6,025,610 15,224 16,547,046
31
December
2015 75,798 86,593,790 4,248 11,527,087 30,032 32,510,224
1. Return per share
The weighted average number of shares for the Ordinary Shares, Planned
Exit Shares and Infrastructure Shares funds used to calculate the
respective returns are shown in the table below.
Ordinary Shares Planned Exit Infrastructure
Fund Shares Fund Shares Fund
(Shares) (Shares) (Shares)
Six months ended
30 June 2016 101,437,735 11,526,687 32,510,141
Six months ended
30 June 2015 52,409,700 6,063,416 16,566,955
Year ended 31
December 2015 56,855,338 6,256,492 17,169,610
Earnings for the period should not be taken as a guide to the results
for the full year.
1. Income
Six months ended Six months ended Year ended
30 June 2016 30 June 2015 31 December 2015
GBP'000 GBP'000 GBP'000
Loan stock interest 1,095 720 1,435
Dividends 630 8 55
Overseas based Open
Ended Investment
Companies ("OEICs") 44 31 71
1,769 759 1,561
1. Investments held at fair value through profit or loss
Ordinary Shares Planned Exit Infrastructure
Fund Shares Fund Shares Fund Company
GBP'000 GBP'000 GBP'000 GBP'000
Book cost as at 1
January 2016 57,375 4,836 29,938 92,149
Investment
holding
gains/(losses) 737 (1,014) 365 88
Valuation at 1
January 2016 58,112 3,822 30,303 92,237
Movements in the
period:
Disposal proceeds (92) - - (92)
Realised losses (748)* (524)** - (1,272)
Investment
holding
gains/(losses) 3,057* 1,515 (332) 4,240
Valuation at 30
June 2016 60,329 4,813 29,971 95,113
Book cost at 30
June 2016 56,535 4,312 29,938 90,785
Investment
holding gains 3,794 501 33 4,328
Valuation at 30
June 2016 60,329 4,813 29,971 95,113
*Deferred consideration of GBP51,000 was received
by the Ordinary Shares fund in the period and is included
within realised losses in the income statement. This
was offset by a decrease in the deferred consideration
debtor of GBP50,000. GBP218,000 deferred consideration
was recognised on the sale of O-Gen Acme Trek Limited
in the period and is included with investment holding
gains in the income statement.
**Deferred consideration of GBP13,000 was received
by the Planned Exit Shares fund in the period and
is included within realised losses in the income statement.
1. Related party transactions
No Director has, or during the period had, a contract of service with
the Company. No Director was party to, or had an interest in, any
contract or arrangement (with the exception of Directors' fees) with the
Company at any time during the period under review or as at the date of
this report.
1. Transactions with the Manager
Foresight Group CI Limited acts as investment manager to the Company in
respect of its venture capital and other investments. During the period,
services of a total value of GBP958,000 (30 June 2015: GBP605,000; 31
December 2015: GBP1,277,000) were purchased by the Company from
Foresight Group CI Limited. At 30 June 2016, an amount due relating to a
credit note from Foresight Group CI Limited was GBP2,000 (30 June 2015:
GBPnil; 31 December 2015: GBPnil).
Foresight Fund Managers Limited, as Secretary of the Company and as a
subsidiary of Foresight Group, is also considered to effectively be a
transaction with the manager. During the period, services of a total
value of GBP55,000 excluding VAT (30 June 2015: GBP50,000; 31 December
2015:
GBP100,000) were purchased by the Company from Foresight Fund Managers
Limited. At 30 June 2016, the amount due to Foresight Fund
Managers Limited included within creditors was GBPnil (30 June 2015:
GBPnil; 31 December 2015: GBPnil).
END
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Foresight VCT PLC via Globenewswire
http://www.foresightgroup.eu/
(END) Dow Jones Newswires
August 31, 2016 11:29 ET (15:29 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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