TIDMFTF
FORESIGHT ENTERPRISE VCT PLC
LEI: 213800MWJNR3WZZ3ZP42
UNAUDITED HALF-YEARLY FINANCIAL REPORT
FOR THE PERIODED 30 JUNE 2023
Financial Highlights
-- Total net assets GBP148.2 million
-- An interim dividend of 3.3p per share was paid on 30 June 2023, returning
GBP7.7 million to Shareholders
-- The portfolio value has increased by GBP3.2 million in the last six
months
-- Net Asset Value per share decreased by 2.3% in the period from 64.9p at
31 December 2022 to 63.4p at 30 June 2023
-- Including the payment of a 3.3p dividend made on 30 June 2023, NAV Total
Return per share at 30 June 2023 was 66.7p (being NAV at the end of the
period plus dividends paid in the period), representing a positive NAV
Total Return of 2.8% in the period
Chair's Statement
I am pleased to present the unaudited Half-Yearly Report for
Foresight Enterprise VCT plc for the period ended 30 June 2023 and
to report a Net Asset Value Total Return of 2.8% for the period,
including a dividend yield of 5.6%.
The business environment remains challenging despite the
substantial impact of the COVID-19 pandemic receding. The war in
Ukraine continues and supply chains remain strained while energy
prices and persistent inflation have led to a series of interest
rate increases. The threat of recession is the new economic
reality, with consumer demand severely depleted. In addition, the
financial markets were rocked by the collapse of both Silicon
Valley Bank and Credit Suisse in March 2023 but fortunately the
turmoil was short-lived and further contagion limited. However,
heightened nervousness in the financial markets and recent changes
to banks' capital adequacy rules are beginning to reduce the level
of funding available for smaller businesses. Understandably,
consumer and business confidence in the UK remains fragile.
However, the Board believes that the careful planning, help and
advice the Manager provides to all the portfolio companies will
continue to be relevant to the current and future economic
situations. While there will be bumps in the road, we believe that
the portfolio is in good shape to withstand what we currently see
ahead. The Company's portfolio in aggregate has remained resilient
amid economic and political turmoil that has plagued 2023.
Many of the portfolio companies have successfully adapted to the
new economic landscape, with some performing extremely well and
demonstrating the strength of their management teams. A minority of
the portfolio companies struggled as a result of a fall in consumer
demand and inflationary pressures. However, these businesses are
now beginning to show signs of recovery.
In the six months ended 30 June 2023, 21 companies in the
portfolio recorded a combined increase in valuation of GBP9.3
million, offset by 14 companies recording an aggregate fall in
valuation of GBP6.1 million.
Strategy
The Board believes that it is in the best interests of
Shareholders to continue to pursue a strategy of:
-- Growth in Net Asset Value Total Return above a 5% target while continuing
to grow the Company's assets
-- Payment of annual dividends of at least 5% of the NAV per share per annum
based on the opening NAV per share of that financial year
-- Implementation of a significant number of new and follow-on qualifying
investments every year, exceeding deployment requirements to maintain VCT
status
-- Maintaining a programme of regular share buybacks (the Board continues to
have an objective of achieving and maintaining buybacks at a discount of
5% over the medium term, subject to market conditions)
Central to the Company being able to achieve these objectives is
the ability of the Manager to source and complete attractive new
qualifying investment opportunities.
Whilst this task has not been made easier by the changes to VCT
legislation since 2015, which (amongst other requirements) place
greater emphasis on growth or development capital investment into
younger companies, the Company is fortunate in that it has pursued
a policy of seeking growth capital investments for several years
prior to the rule changes and the Manager has an established track
record in this area.
Performance and portfolio activity
During the period Net Asset Value per share decreased by 2.3%
from 64.9p as at 31 December 2022 to 63.4p as at 30 June 2023.
After adding back the payment of a 3.3p dividend paid on 30 June
2023, NAV Total Return per share at 30 June 2023 was 66.7p,
representing a positive NAV Total Return of 2.8% in the period.
This positive movement is a result of the strategy and business
changes throughout the portfolio alluded to above.
On 14 October 2022, the Company launched an offer for
subscription to raise up to GBP20 million, with an over--allotment
facility to raise up to a further GBP10 million, through the issue
of new shares. The offer was closed on 26 April 2023 having raised
gross proceeds of GBP22.6 million, GBP21.7 million after expenses.
We would like to thank those existing Shareholders who have
supported the offer and welcome all new Shareholders to the
Company.
During the period the Manager completed five new investments and
four follow-on investments costing GBP6.0 million and GBP2.6
million respectively. The Manager also fully disposed of two
investments, generating proceeds of GBP16.4 million with a further
GBP2.3 million of deferred consideration included within debtors at
the period end, representing a combined cash-on-cash return
multiple of 8.4 times the original investment.
After the period end, in September 2023, GBP1.8 million was
invested in Loopr Ltd, trading as Looper Insights, a data analytics
platform to film and TV content distributors and video--on--demand
streaming services. Furthermore, the Company sold its holding in
Protean Software Limited, which generated proceeds of GBP3.5
million at completion. Including cash returned to the date of this
report, the exit delivered a return multiple of 2.4 times the
original investment. Further details of these investments and
realisations can be found in the Manager's Report.
The Board and the Manager are confident that a number of new and
follow-on investments can be achieved this year, particularly with
the increased investment activity noted above. Details of each of
these new, existing and former portfolio companies can be found in
the Manager's Review.
The Manager continues to see a strong pipeline of potential
investments sourced through its regional networks and
well-developed relationships with advisers and the SME community;
however, it is also focused on supporting the existing portfolio
through the current economic climate.
Responsible investing
The analysis of environmental, social and governance ("ESG")
issues is embedded in the Manager's investment process and these
factors are considered key in determining the quality of a business
and its long-term success. Central to the Manager's responsible
investment approach are five ESG principles that are applied to
evaluate investee companies, acquired since May 2018, throughout
the lifecycle of their investment, from their initial review and
acquisition to their final sale. Every year, the portfolio
companies are assessed and progress measured against these
principles. More detailed information about the process can be
found on pages 26 and 27 of the Manager's Review in the Unaudited
Half-Yearly Financial Report.
Dividends
An interim dividend of 3.3p per share was declared on 8 June
2023 based on an ex-dividend date of 15 June 2023 and a record date
of 16 June 2023. The dividend was paid on 30 June 2023, returning
GBP7.7 million to Shareholders. The Board and the Manager continue
to hope that additional "special" dividends can be paid as and when
particularly successful portfolio exits are made.
Buybacks
The Board is pleased to have achieved an average discount across
all buybacks of 7.5% to the Net Asset Value per share in the
period, but continues to have an objective of achieving and
maintaining buybacks at a discount of 5.0% over the medium term,
subject to market conditions.
Shareholder communication
We were delighted to meet with some Shareholders in person at
the AGM on 8 June 2023. We hope many of you will be available to
attend our next in-person investor forum event on 19 October 2023
at The Shard. These events have proven very popular with our
Shareholders in the past and provide the opportunity to learn
first-hand about some of our investee companies from their founders
and management.
Board composition
The Board continues to review its own performance and undertakes
succession planning to maintain an appropriate level of
independence, experience, diversity and skills in order to be in a
position to discharge all its responsibilities.
The Board was delighted to appoint Kavita Patel as a
Non-Executive Director in September 2023 and, after nine years of
service, Simon Jamieson did not stand for re--election at the AGM
on 8 June 2023. I would once again like to thank Simon for his
dedication to the Company and the Board over his tenure.
The Board is also engaged in a recruitment process to appoint an
additional independent Non-Executive Director to its Board as
further succession planning. An additional appointment is expected
to be made towards the end of the year.
Sunset clause
As explained in last year's Annual Report, a "sunset clause"
applies to the current approved scheme for EIS and VCT tax reliefs.
This clause provides that income tax relief will expire on
subscriptions made for VCT shares on or after 6 April 2025, unless
the legislation is amended to make the scheme permanent, or the
"sunset clause" is extended.
The UK Chancellor has reconfirmed in his Spring Budget the
government's commitment to extend the income tax relief available
on new VCT shares beyond the tax year ending in April 2025. The
Treasury Select Committee's report on early stage investment
published in July supported the important role played by VCTs and
called for early action on the "sunset clause". It also noted that
the UK should be able to extend the scheme without European
Commission approval, as clarified by the new Northern Ireland
Protocol, the Windsor Framework.
Trade bodies of which the Manager is a member will continue to
lobby the government to provide greater clarity on the timing and
nature of its plans for removing this obstacle.
Outlook
As mentioned in my introduction, while the impact of the
pandemic has lessened, other economic impacts continue to dampen
consumer and business confidence. Ongoing inflationary pressures,
tight monetary policies, supply chain issues and a lack of bank
lending appetite may continue to hinder economic recovery. The
Board is conscious that such conditions could prove particularly
challenging for our investee companies which are unquoted, small,
early-growth businesses and by their nature entail higher levels of
risk and lower liquidity than larger listed companies.
On the other hand, these younger companies may prove more agile
and creative in their approach and better able to adapt their
operations swiftly and identify new products and services in
response to changing circumstances.
The portfolio is showing signs of resilience and the Manager has
been working with management teams to assess business plans,
consider funding requirements and help navigate through these
difficult times. The Company's current portfolio of investments is
highly diversified by number, business sector, size and stage of
development and overall has already demonstrated its relative
resilience in the face of economic and geopolitical difficulties.
We are confident that this approach will continue to provide
protection in volatile market conditions.
The Manager is continuing to see a promising pipeline of
potential investments, both new and follow-on. In addition to the
funds raised earlier in the year, we have already announced our
intention to raise further funds in the coming months. These
combined funds will provide the necessary resources to make
selective acquisitions from the increasing numbers of investment
opportunities that are now emerging out of the recent disruption.
Although in the short term there may be considerable economic
headwinds, we believe the Company's diversified portfolio is well
positioned to generate long-term value for Shareholders.
Raymond Abbott
Chair
28 September 2023
Manager's Review
The Board has appointed Foresight Group LLP ("the Manager") to
provide investment management and administration services.
Portfolio summary
As at 30 June 2023, the Company's portfolio comprised 44
investments with a total cost of GBP65.5 million and a valuation of
GBP107.3 million. The Company also held GBP39.0 million of cash and
GBP1.9 million of net current assets taking total net assets to
GBP148.2 million. The portfolio is diversified by sector,
transaction type and maturity profile. Details of the ten largest
investments by valuation, including an update on their performance,
are provided on pages 19 to 22 in the Unaudited Half-Yearly
Financial Report.
During the six months to 30 June 2023, the value of the
portfolio increased by GBP3.2 million and GBP8.6 million of new and
follow-on investment was concluded. There was a strong series of
successful exits, realising GBP16.4 million, as well as GBP7.7
million returned to Shareholders through the interim dividend.
Overall therefore, the value of the unquoted portfolio decreased by
GBP4.6 million in the period.
The Company's portfolio continues to navigate the various
economic challenges, including inflation, tight labour markets and
soft financial and M&A markets. Many of the portfolio companies
are performing extremely well, while others continue to adjust.
In line with the Board's strategic objectives, the investment
team remains focused on continuing to grow the Company's assets
whilst paying an annual dividend to Shareholders of at least 5% of
the opening NAV per share of the relevant financial year. The
Company has so far achieved this target for the current year and
this objective remains the Manager's focus.
New investments
Fostering strong relationships with local deal introducers
across the UK and Ireland remains central to the private equity
team's approach. The team remains focused on attending in-person
meetings and events with both deal introducers and prospective
investee companies to generate a flow of pipeline opportunities.
The regional presence is central to this approach and the Manager
opened three offices over the last year, in Leeds, Dublin and
Newcastle. These new regional offices are expected to support
stronger relationships with local advisers and increase deal flow
from these geographies.
Five new investments were completed in the six months to 30 June
2023, totalling GBP6.0 million. Post-period end, in September 2023,
the Manager invested a further GBP1.8 million in Loopr Ltd. 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 2023.
Sprintroom Limited
In January 2023, GBP1.0 million of growth capital was invested
in Sprintroom, which trades as Sprint Electric. The business
designs and manufactures drives for controlling electric motors in
light and heavy industrial applications, as well as recovering and
reusing otherwise lost energy. The investment will be used to
further develop and commercialise novel alternating current
variable speed drive technology.
Firefish Software Ltd.
In March 2023, the Company invested GBP1.5 million in Firefish
Software, a Glasgow-based customer relationship management and
marketing software platform targeting the recruitment sector. The
funding will be used to further develop the platform in order to
attract a larger enterprise-level customer base and expand its
outbound sales team.
Red Flag Alert Technology Group Limited
In March 2023, the Company invested GBP1.8 million in Reg Flag
Alert Technology Group, a Manchester-based proprietary SaaS
intelligence platform with modular capabilities spanning
compliance, prospecting, risk management and financial health
assessments. The growth capital will be used to support continued
product development alongside an increased marketing budget which
is expected to accelerate new client acquisition with particular
focus on larger enterprise-level customers.
Five Wealth Limited
In March 2023, the Company invested GBP0.7 million in Five
Wealth, an established boutique financial planning business
operating across the North West of England, headquartered in
Manchester. Five Wealth's service offering is focused on the
provision of independent private client financial advice and wealth
planning. This growth capital investment will be used to support
increased marketing and advertising to drive top-line growth and
greater regulatory and compliance costs which are forecast to
increase commensurately with AUM.
The KSL Clinic Limited
In April 2023, the Company invested GBP1.0 million in The KSL
Clinic, a leading provider of hair replacement treatments, with
clinics in Manchester and Kent. The investment will be used to
invest in facilities, create high-quality, sustainable jobs and to
expand its geographic reach, resulting in significant improvements
in the wellbeing of patients.
Loopr Ltd
Post-period end, in September 2023, the Company invested GBP1.8
million in Loopr Ltd, trading as Looper Insights, a data analytics
platform to film and TV content distributors and video-on-demand
streaming services. The investment will be used build a sales and
marketing team, expand the customer success team and continue the
development of the company's software.
Follow--on investments
The Manager expects to continue to deploy additional capital
into both growing portfolio companies and those that require
support to trade through more uncertain periods. Macro factors such
as wage, commodity price and energy price inflation may impact some
elements of the portfolio, but in general the Manager ensures at
the time of initial investment that investee companies are
well--capitalised to trade through periods of lower market demand
or supply challenges. This is evidenced by the portfolio remaining
relatively resilient over the COVID-19 period, supported by the
Manager's active style, to ensure risks are identified and
mitigated early.
The Company made four follow-on investments in the period,
totalling GBP2.6 million, to support further growth opportunities.
Further details are provided below.
Mizaic Ltd (formerly IMMJ Systems Limited)
In February 2023, GBP0.6 million was invested in Mizaic, a
clinical electronic document management solution supplier to the
NHS. The investment will be used to grow the leadership team and
bolster the business's abilities to support the digitisation of
records, providing easy and efficient access to patient records for
clinical care across the NHS.
NorthWest EHealth Limited ("NWEH")
In March 2023, the Company invested a further GBP1.5 million in
NWEH, 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 support the delivery of
a number of new real world trials in FY23, while completing
building the company's Connexon platform to be compatible with up
to 18 million UK healthcare data sources. Since investment, NWEH
has won a number of new customers and is considering changing its
business model to focus more on referral revenues, which will mean
a lower cost overhead in the business.
Ten Health & Fitness Limited
In March 2023, Ten Health & Fitness, a multi-site operator
in the boutique health, wellbeing and fitness market, received an
additional investment of GBP0.4 million. The funding enabled the
company to complete its new Kings Cross site and support the
company's transition to profitability from Q1 2023. The flagship
Kings Cross site opened in March and is already trading well.
Additive Manufacturing Technologies Ltd ("AMT")
In April 2023, the Company invested GBP0.1 million in AMT, which
manufactures systems that automate the post-processing of 3D
printed parts. See the key valuation changes in the period section
on page 14 in the Unaudited Half-Yearly Financial Report for
further details.
Pipeline
As at 30 June 2023, the Company held cash of GBP39.0 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 has a number of opportunities under
exclusivity or in due diligence. The Company remains well
positioned to continue pursuing these potential investment
opportunities.
Exits and realisations
Whilst global M&A markets are relatively soft, the Manager
has delivered some strong realisations in the period. The Manager
has witnessed particularly strong interest from overseas buyers,
particularly those that are US funded. Certain acquirers also
strategically need to acquire a UK presence following the UK's exit
from the EU. However, M&A activity in the broader market has
been lower so far in 2023 than recent years, suggesting the market
might be cooling slightly in the face of economic uncertainty and
rising interest rates.
Datapath Group Limited
In March 2023, the Company was pleased to announce the exit of
Datapath, a global leader in the provision of hardware and software
solutions for multiscreen displays. The transaction generated
proceeds of GBP10.1 million at completion with an additional GBP2.3
million payable over the next 24 months. When added to GBP10.8
million of cash returned to date, this implies a total cash-on-cash
return of 11.6 times the original investment of GBP2.0 million made
in September 2007, equivalent to an IRR of 38%.
Since the original investment, the Manager had supported
Datapath through a period of material growth, with revenues growing
from approximately GBP7 million to GBP25 million. Datapath has
developed a market-leading hardware and software product suite for
the delivery of multiscreen displays and video walls which are sold
globally to a diverse customer base across a range of sectors.
Innovation Consulting Group Limited ("GovGrant")
In March 2023, the Company announced the exit of GovGrant to
Source Advisors, a US corporate buyer backed by BV Investment
Partners. GovGrant is one of the UK's leading providers of R&D
tax relief, patent box relief and other innovation services. The
transaction generated proceeds of GBP6.8 million at completion.
When added to GBP0.7 million of cash returned to date, this implies
a total cash-on-cash return of 4.5 times the capital of GBP1.65
million invested in October 2015, equivalent to an IRR of 25%.
Since the original investment in 2015, the Manager had helped
GovGrant through a period of material growth during which it
supported the R&D activities of a growing number of customers.
GovGrant's high levels of service and innovative products, such as
the growing patent box offering, have contributed to driving
innovation in the UK economy. The Manager had taken a proactive
approach to supporting the exceptional senior management team, all
of whom were introduced to the business during the investment
period.
Protean Software Limited
In July 2023, the Company achieved a successful exit of its
holding in Protean Software to Joblogic, a UK-based direct provider
of Field Service Management software to SMEs, and Protean's direct
competitor. The Manager invested in Protean in July 2015 as one of
the last buyouts prior to the changes in VCT legislation. Over the
holding period the Manager helped Protean transition its highly
featured legacy product into a modern software product sold on a
SaaS basis. The transaction generated proceeds of GBP3.5 million on
completion. When added to GBP0.1 million of cash returned to date,
this implies a total cash-on-cash return of 2.4 times the original
investment of GBP1.5 million made in July 2015, equivalent to an
IRR of 12%.
Disposals in the period ended 30 June 2023
Accounting
cost Exit proceeds
At date of and deferred
Total Total
invested1 disposal(2) consideration return(3)
Company Detail (GBP) (GBP) (GBP) (GBP)
-----------
Innovation
Consulting
Group Full
Limited disposal 1,650,000 1,938,046 6,788,558 7,444,806
Datapath
Group Full
Limited disposal 2,000,000 11,081,243 12,432,757 23,203,221
-----------
3,650,000 13,019,289 19,221,315 30,648,027
1. Total invested reflects the total cash investment made by the Company and
Foresight 3 VCT plc.
2. The accounting cost includes the valuation of Foresight 3 VCT plc's
investment in Datapath at the point it was transferred to the Company as
part of the merger in June 2017. The investment cost at the date of
transfer was GBP73,250.
3. Total return includes yield returned to the Company and Foresight 3 VCT
plc up to the date of the exit.
Key portfolio developments
In the first six months of the year, the portfolio has
demonstrated continued resilience in the face of the economic
headwinds that started mid-way through 2022.
Material changes in valuation, defined as increasing or
decreasing by GBP1.0 million or more since 31 December 2022, are
detailed below. Updates on these companies are included below, or
in the Top Ten Investments section on pages 19 to 22 in the
Unaudited Half-Yearly Financial Report.
Key valuation changes in the period
Valuation
Valuation change
Company (GBP) (GBP)
----------------------------------------
Callen-Lenz Associates Limited 9,283,367 3,880,264
Aerospace Tooling Corporation Limited 3,190,346 (1,111,974)
Additive Manufacturing Technologies Ltd -- (1,833,018)
----------------------------------------
Aerospace Tooling Corporation Limited
Founded in 2007, Aerospace Tooling Corporation ("ATL") is a
niche engineering company based in Dundee. ATL provides specialist
inspection, maintenance, repair and overhaul services for
components in high-specification aerospace and turbine engines.
30 June 2023 update
Trading continues to be behind expectations, due to a
combination of external factors, such as delays from customers
providing parts for repair, and internal factors such as equipment
failures. The senior management team has been significantly
strengthened with a new chair and operations director hired, and a
new finance director to start in the coming quarter.
Additive Manufacturing Technologies Ltd ("AMT")
AMT is developing machines for post-production of 3D printed
parts: removal of excess polymer ("depowdering"), surface
smoothing/polishing, colouring and inspection. AMT's goal is to
provide a fully automated end-to-end post-production system, the
"DMS", with robots linking each stage.
30 June 2023 update
The business is navigating the challenging economic environment
with support from the Manager, providing expertise and guidance in
line with its active management approach.
Outlook
The global and UK markets have experienced a volatile past six
months following a strong recovery in consumer and business demand
after the COVID-19 pandemic. The recovery has been somewhat stalled
due to various economic factors following the pandemic. Rising
input prices, driven by supply chain constraints during COVID-19
and rapidly increasing energy prices following Russia's invasion of
Ukraine in Q1 2022, drove inflation to a high of 11.1% in October
2022. This was initially slow to decrease, with inflation remaining
at 10.1% in March 2023 and 7.9% in June 2023, partly driven by wage
inflation resulting from a tight labour market in the UK.
The Bank of England responded by steadily raising the base
interest rate from 0.1% in December 2021 to 5.25% in August 2023.
While this is now taking effect with inflation reducing, many
analysts predict further increases to interest rates in the short
term. The Bank of England is expected to maintain interest rates at
their current level in the medium term, with most analysts
predicting no meaningful reduction during 2024. Rising wage
inflation is limiting the impact of interest rate rises, suggesting
a further tightening of monetary policy, which would potentially
drive the UK into recession in late 2023 or 2024.
Despite this backdrop, the Company's portfolio is reasonably
well positioned to withstand the market volatility and economic
headwinds. We have worked to balance risk, with the portfolio
exposed to a broad base of both well--established and earlier-stage
growth companies across a range of sectors. In the period to 30
June 2023, the portfolio continued to perform well, with the
Company realising two investments in this time.
Notable examples that demonstrate our ability to capitalise on
high-quality regional opportunities in a variety of sectors are the
sale of Innovation Consulting Group, a St Albans provider of
R&D tax relief, patent box relief and other innovation
services, to a US corporate buyer backed by BV Investment Partners
that generated a 4.5 times return on investment, and Datapath
Group, a Derbyshire-based global leader in the provision of visual
solutions, achieving an impressive cash-on-cash return of 11.6
times the original investment. The current portfolio is well
diversified with a good mix of earlier-stage and more mature
investments that will yield attractive opportunities for the
Company over time.
The Manager continues to leverage its regional offices to source
the highest quality growth companies where we can employ our
extensive advisory network and proactive portfolio management style
to drive growth and add value to each investee company. There
remains a strong appetite for funding from the smaller UK
businesses with growth potential, which manifested itself in a
number of exciting deals completed in the past year. Despite shifts
in the investment landscape, we continue to see excellent
opportunities to support small companies in many sub--sectors, such
as health, technology and compliance systems, amongst others.
While the macro environment is precarious, we believe that the
Company's portfolio is well placed to cope with a period of
uncertainty. The UK undoubtedly remains an exceptional place to
start, fund and grow a small business, and the Manager remains
committed to supporting the best UK entrepreneurs on their
journey.
James Livingston
Foresight Group LLP
28 September 2023
Unaudited Half-Yearly Results and Responsibilities
Statements
Principal risks and uncertainties
The principal risks faced by the Company are as follows:
-- Market risk
-- Strategic and performance risk
-- Internal and financial control risk
-- Legislative and regulatory risk
-- VCT qualifying status risk
-- Investment valuation and liquidity risk
The Board reported on the principal risks and uncertainties
faced by the Company in the Annual Report and Accounts for the
period ended 31 December 2022. A detailed explanation can be found
on pages 45 to 47 of the Annual Report and Accounts, which is
available on Foresight Enterprise VCT's website
www.foresightenterprisevct.com or by writing to Foresight Group LLP
at The Shard, 32 London Bridge Street, London SE1 9SG. The Board
considers that 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.
In the view of the Board, there have been no changes to the
fundamental nature of these risks since the previous report. The
emerging risks identified in the previous report included those of
climate change, inflationary pressures, interest rates, supply
chain issues, energy prices, the Russian invasion of Ukraine and
increased tension between the United States and China over the
future of Taiwan. These emerging risks continue to apply and be
monitored. The Board and the Manager continue to follow all
emerging risks closely with a view to identifying where changes
affect the areas of the market in which portfolio companies
operate. This enables the Manager to work closely with portfolio
companies, preparing them so far as possible to ensure they are
well positioned to endure potential volatility.
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 Half-Yearly
Financial Report and financial statements.
The Directors confirm to the best of their knowledge that:
1. The summarised set of financial statements has been prepared in
accordance with FRS 104
2. The interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first
six months and description of principal risks and uncertainties for the
remaining six months of the year)
3. The summarised set of financial statements gives a true and fair view of
the assets, liabilities, financial position and profit or loss of the
Company as required by DTR 4.2.4R
4. The interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transactions and
changes therein)
Going concern
The Company's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Strategic Report of the Annual Report. The
financial position of the Company, its cash flows, liquidity
position and borrowing facilities are described in the Chair's
Statement, Strategic Report and Notes to the Accounts of the 31
December 2022 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 a 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
Raymond Abbott
Chair
28 September 2023
Unaudited Income Statement
For the six months ended 30 June 2023
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Realised gains on
investments -- 3,411 3,411 -- 17,283 17,283 -- 17,493 17,493
Investment holding
gains/(losses) -- 1,950 1,950 -- (12,158) (12,158) -- (8,465) (8,465)
Income 1,048 -- 1,048 264 -- 264 871 -- 871
Investment management
fees (373) (1,573) (1,946) (332) (995) (1,327) (681) (2,323) (3,004)
Other expenses (417) -- (417) (309) -- (309) (673) -- (673)
Return/(loss) on
ordinary activities
before taxation 258 3,788 4,046 (377) 4,130 3,753 (483) 6,705 6,222
Taxation -- -- -- -- -- -- -- -- --
Return/(loss) on
ordinary activities
after taxation 258 3,788 4,046 (377) 4,130 3,753 (483) 6,705 6,222
Return/(loss) per
share 0.1p 1.7p 1.8p (0.2)p 2.1p 1.9p (0.2p) 3.3p 3.1p
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 Reconciliation of Movements in Shareholders' Funds
For the six months ended 30 June 2023
Called-up Share Capital
share premium redemption Distributable Capital Revaluation
capital account reserve reserve(1) reserve(1) reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------
As at 1
January
2023 2,133 68,203 573 57,309 (32,793) 43,025 138,450
Share issues
in the
period 237 15,756 -- -- -- -- 15,993
Expenses in
relation to
share
issues -- (632) -- -- -- -- (632)
Repurchase
of shares (33) -- 33 (2,011) -- -- (2,011)
Realised
gains on
disposal of
investments -- -- -- -- 3,411 -- 3,411
Investment
holding
gains -- -- -- -- -- 1,950 1,950
Dividends
paid -- -- -- (7,692) -- -- (7,692)
Management
fees
charged to
capital -- -- -- -- (1,573) -- (1,573)
Revenue
return for
the period -- -- -- 258 -- -- 258
------------
As at 30
June 2023 2,337 83,327 606 47,864 (30,955) 44,975 148,154
------------
1. Reserve is available for distribution, total distributable reserves at 30
June 2023 are GBP16,909,000 (31 December 2022: GBP24,516,000).
Unaudited Balance Sheet
At 30 June 2023
Registered number: 03506579
As at As at As at
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
---------------------------------------
Fixed assets
Investments held at fair value through
profit or loss 107,332 103,365 111,966
---------------------------------------
Current assets
Debtors 3,341 5,836 2,152
Cash and cash equivalents 39,012 25,730 24,814
---------------------------------------
Total current assets 42,353 31,566 26,966
Creditors
Amounts falling due within one year (1,531) (174) (482)
---------------------------------------
Net current assets 40,822 31,392 26,484
---------------------------------------
Net assets 148,154 134,757 138,450
---------------------------------------
Capital and reserves
Called-up share capital 2,337 1,996 2,133
Share premium account 83,327 58,068 68,203
Capital redemption reserve 606 557 573
Distributable reserve 47,864 66,479 57,309
Capital reserve (30,955) (31,675) (32,793)
Revaluation reserve 44,975 39,332 43,025
---------------------------------------
Equity Shareholders' funds 148,154 134,757 138,450
---------------------------------------
Net Asset Value per share 63.4p 67.5p 64.9p
---------------------------------------
Unaudited Cash Flow Statement
For the six months ended 30 June 2023
Year
Six months Six months ended
31
ended ended December
30 June 30 June
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
---------------------------------------------------
Cash flow from operating activities
Loan interest received from investments 636 193 653
Dividends received from investments -- 26 38
Deposit and similar interest received 412 19 202
Investment management fees paid (1,485) (1,330) (2,766)
Secretarial fees paid (91) (83) (178)
Other cash payments (288) (191) (433)
---------------------------------------------------
Net cash outflow from operating activities (816) (1,366) (2,484)
---------------------------------------------------
Cash flow from investing activities
Purchase of investments (7,608) (3,202) (9,987)
Net proceeds on sale of investments 16,430 15,408 20,951
Net proceeds on deferred consideration -- 24 234
---------------------------------------------------
Net cash inflow from investing activities 8,822 12,230 11,198
---------------------------------------------------
Cash flow from financing activities
Proceeds of fundraising 14,685 4,469 13,987
Expenses of fundraising (360) (98) (361)
Repurchase of own shares (1,448) (525) (1,467)
Equity dividends paid (6,685) (6,093) (13,172)
---------------------------------------------------
Net cash inflow/(outflow) from financing activities 6,192 (2,247) (1,013)
---------------------------------------------------
Net inflow of cash in the period 14,198 8,617 7,701
---------------------------------------------------
Reconciliation of net cash flow to movement in net
funds
Increase in cash and cash equivalents for the
period 14,198 8,617 7,701
Net cash and cash equivalents at start of period 24,814 17,113 17,113
---------------------------------------------------
Net cash and cash equivalents at end of period 39,012 25,730 24,814
---------------------------------------------------
Analysis of changes in net debt
At 1 January At 30 June
2023 Cash flow 2023
GBP'000 GBP'000 GBP'000
--------------------------
Cash and cash equivalents 24,814 14,198 39,012
--------------------------
Notes to the Unaudited Half-Yearly Results
For the six months ended 30 June 2023
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 2022.
Unquoted investments have been valued in accordance with IPEV
Valuation Guidelines (as updated in December 2022 including further
COVID-19 guidance in March 2020).
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 2023 and 30 June 2022 has been neither audited nor
formally reviewed. Statutory accounts in respect of the year ended
31 December 2022 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 2022 have been reported on by the Company's auditors or
delivered to the Registrar of Companies.
3
Copies of the Unaudited Half-Yearly Financial Report will be
sent to Shareholders via their chosen method and will be available
for inspection at the Registered Office of the Company at The
Shard, 32 London Bridge Street, London SE1 9SG.
4 Net Asset Value per share
The Net Asset Value per share is based on net assets at the end
of the period and on the number of shares in issue at the date.
Number of
shares in
Net assets issue
-----------------
30 June 2023 GBP148,154,000 233,691,676
30 June 2022 GBP134,757,000 199,590,704
31 December 2022 GBP138,450,000 213,316,422
-----------------
5 Return per share
The weighted average number of shares used to calculate the
respective returns are shown in the table below.
Shares
------------------------------
Six months ended 30 June 2023 225,472,482
Six months ended 30 June 2022 195,162,969
Year ended 31 December 2022 198,639,819
------------------------------
Earnings for the period should not be taken as a guide to the
results for the full year.
6 Income
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
--------------------------------------
Loan stock interest 636 207 631
Deposit and similar interest received 412 19 202
Dividends receivable -- 38 38
--------------------------------------
Total income 1,048 264 871
--------------------------------------
7 Investments at fair value through profit or loss
GBP'000
-------------------------------
Book cost as at 1 January 2023 69,921
Investment holding gains 42,045
-------------------------------
Valuation at 1 January 2023 111,966
Movements in the period:
Purchases 8,608
Disposal proceeds(1) (16,430)
Realised gains 3,411
Investment holding losses(2) (223)
-------------------------------
Valuation at 30 June 2023 107,332
-------------------------------
Book cost at 30 June 2023 65,510
Investment holding gains 41,822
-------------------------------
Valuation at 30 June 2023 107,332
-------------------------------
1. The Company received GBP16,430,000 from the disposal of investments
during the period. The book cost of these investments when they were
purchased was GBP13,019,000. These investments have been revalued over
time and until they were sold any unrealised gains or losses were
included in the fair value of the investments.
2. Investment holding gains in the Income Statement include the deferred
consideration debtor increase of GBP2,173,000. The debtor movement
reflects the recognition of amounts receivable in respect of Datapath
Group Limited (GBP2,333,000), offset by an FX movement in respect of
Codeplay Software Limited (GBP19,000) and provisions made against
balances in respect of Mologic Ltd. (GBP105,000) and FFX Group Limited
(GBP36,000).
8 Related party transactions
No Director has an interest in any contract to which the Company
is a party other than their appointment and payment as
Directors.
9 Transactions with the Manager
Foresight Group LLP acts as Manager to the Company and was
appointed on 27 January 2020. During the period, services of a
total cost of GBP1,492,000 (30 June 2022: GBP1,327,000; 31 December
2022: GBP2,724,000) were purchased by the Company from Foresight
Group LLP. Although no performance fee was paid in the period (30
June 2022: GBPnil; 31 December 2022: GBPnil), a liability of
GBP734,000 has been recognised as at the period end (30 June 2022:
GBPnil; 31 December 2022: GBP280,000).
During the period, administration services of a total cost of
GBP91,000 (30 June 2022: GBP83,000; 31 December 2022: GBP178,000)
were delivered to the Company by Foresight Group LLP, Company
Secretary.
At 30 June 2023, the amount due to Foresight Group LLP was
GBPnil (30 June 2022: GBP43,000; 31 December 2022: GBPnil).
END
(END) Dow Jones Newswires
September 28, 2023 09:50 ET (13:50 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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