TIDMTV1
THAMES VENTURES VCT 1 PLC
LEI: 213800R88MRC4Y3OIW86
26 July 2023
Final Results for the year ended 31 March 2023
Audited Audited
31 Mar 31 Mar
2023 2022
Pence Pence
Net asset value per share ("NAV") 51.80 61.60
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Cumulative dividends paid since 12 November 2013 44.50 41.25
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Total Return (net asset value plus cumulative
dividends paid per share) 96.30 102.85
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Dividends in respect of financial year
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Interim dividend per share 1.50 1.25
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Proposed final dividend per share 1.00 1.75
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2.50 3.00
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Chairman's Statement
I present the Annual Report covering what has been an eventful
and unfortunately financially largely unsuccessful year for your
Company. We have seen a challenging investment environment for
small growth businesses, with increasing inflation, increasing
interest rates and the threat of recession.
Investment Advisory Arrangements
As previously reported, Foresight Group LLP ("Foresight") was
appointed as Investment Adviser to the Company following agreement
by the Company's former Investment Adviser, Downing LLP ("Downing")
to sell its non-healthcare ventures division to Foresight in a
transaction that completed on 4 July 2022.
The structure of the transaction has ensured a good level of
continuity with the core investment team members moving to
Foresight and, the former adviser, Downing LLP, continuing to
provide investment advisory services for the non-venture's
portfolio (quoted growth and yield focused investments), as well as
administration services, for a handover period.
On 2 September 2022, the Company changed its name from Downing
ONE VCT plc to Thames Ventures VCT 1 plc to recognise the change of
Investment Adviser.
Net asset value and results
As at 31 March 2023, the net asset value per share ("NAV") stood
at 51.8p, a decrease of 6.55p (10.6%) over the year after adding
back dividends of 3.25p per share which were paid during the
year.
The Income Statement shows losses attributable to equity
shareholders for the year of GBP11.7 million, comprising a revenue
gain of GBP1.2 million and a capital loss of GBP12.9 million.
Investment portfolio
During the year, the Company invested GBP10.0 million in 16
companies, three of which were new to the portfolio. Additionally,
GBP1.75 million was rolled over into a new investment as part of an
exit transaction.
GBP12.5 million of proceeds were received from full and partial
disposals of 13 investments, producing a net realised loss of
GBP633,000.
The whole portfolio showed unrealised losses of GBP11.7 million.
GBP7.8 million of this arose from the quoted growth investments,
GBP3.5 million from the unquoted growth investments and GBP0.4
million from the yield focused investments. GBP2.5 million of loan
stock interest income was recognised in respect of the yield
focussed investments.
Further details on the investment portfolio can be found within
the Investment Adviser's Reports and the Review of Investments.
Dividends
Thames Ventures VCT 1's policy is to seek to pay annual
dividends of at least 4% of net assets per annum.
The Board is proposing to pay a final dividend of 1.0p per share
on 15 September 2023, subject to Shareholder approval at the
forthcoming AGM, to Shareholders on the register at 11 August 2023.
This will bring total dividends in respect of the year ended 31
March 2023 to 2.5p per share (2022: 3.0p), equivalent to 4.1% of
the opening net assets.
Shareholders are reminded that the Company operates a Dividend
Reinvestment Scheme for those investors that wish to reinvest their
dividends and obtain further income tax relief on the reinvested
dividend. Shareholders can change their election via the Thames
Ventures Investor Hub provided by City Registrars at:
thames-ventures-vcts.cityhub.uk.com
or by contacting the registrar. The last date for elections in
respect of the above dividend under the Company's Dividend
Reinvestment Scheme is 25 August 2023.
Fundraising
The Company launched a non-Prospectus top-up offer in November
2021. The offer closed during the period at the end of April 2022,
having raised GBP1.9 million, of which GBP1.8 million was allotted
during the period.
The Company launched a full offer for subscription on 31 October
2022. The offer has raised GBP1.5 million to date, with funds
allotted following the period end and is scheduled to close on 31
July 2023, although may be extended for a short further period.
The level of funds raised is disappointing being only slightly
more than was spent on share buybacks. The Board is taking advice
on how the marketing of future offers can be improved.
Share buybacks
The Company continues to operate a policy of buying in its own
shares that become available in the market at a 5% discount to NAV
(subject to liquidity and regulatory restrictions).
During the year, the Company purchased and subsequently
cancelled 4,540,024 shares at an average price of 54.8p per share,
representing 2.6% of shares in issue at the date of the last Annual
Report.
The Company retains Panmure Gordon as its corporate broker to
assist in operating the share buyback process and ensuring that the
quoted spread on the Company's shares remains at a reasonable
level. Contact details for Panmure Gordon can be found within the
Annual Report.
Responsible investing
The Board notes the Investment Adviser, Foresight Group's,
commitment to being a "Responsible Investor". Foresight places
Environmental, Social and Governance (ESG) criteria at the
forefront of its business and investment activities in line with
best practice and in order to enhance returns for their
investors.
Further detail on the Investment Adviser's approach to
responsible investment, including the key principles and their
screening approach, can be found within the Annual Report.
VCT Qualification
At 31 March 2023, qualifying investments represented 87.4% of
total investments (including cash).
The Board expects that the minimum VCT qualification level of
80% will continue to be maintained for the foreseeable future.
Directorate
Atul Devani joined the Board in December 2022 as a non-executive
director of the Company. Atul has significant experience as a
chairman of another VCT and also with businesses similar to those
in which the Company invests and is proving to be a positive
addition to the Board.
Stuart Goldsmith was an original director of the Company, then
called The AIM Distribution Trust plc, in 1996 and has remained on
the Board, overseeing the Company through many phases of its life.
With the dust now settled on the recent changes, Stuart has decided
not to stand for re-election at the forthcoming Annual General
Meeting
I and my fellow directors would like to thank Stuart for his
significant contribution to the Company throughout its history,
working with a number of Investment Advisers/Managers and
undertaking several VCT mergers and other corporate transactions to
ensure the Company remains well suited for the current incarnation
of the VCT Regulations. We wish Stuart well in his other
ventures.
Following the AGM, the Board will comprise four non-executive
directors, which the Board considers to be an appropriate size for
a VCT. All of the Directors are independent of the Investment
Adviser, with the exception of Chris Allner who is considered
non-independent by virtue of being a partner at Downing LLP, the
previous investment adviser to the Company, which still provides
some services to the new investment adviser.
Annual General Meeting ("AGM")
This year's AGM will be held at Foresight Group LLP, The Shard,
32 London Bridge Street, London, SE1 9SG at 12:00 p.m. on 1
September 2023.
If you intend to attend the AGM, please also notify us by email
to tv1agm@downing.co.uk in case there are any changes to
arrangements that need to be communicated at short notice.
Three items of special business are proposed at the AGM:
-- one in respect of the authority to buy back shares as noted above; and
-- two in respect of the authority to allot shares.
The authority to allot shares provides the Board with the
opportunity to consider raising further funds without having to
necessarily incur the expense of seeking separate approval via a
shareholder circular. Any further fundraising decisions will take
account of the level of uninvested funds and the rate of
investment.
Outlook
The Board is naturally disappointed with the fall in net asset
value over the year but does note that nearly 70% of the fall is
down to falling share prices of its quoted investments which could
quickly reverse itself if sentiment towards small, quoted UK
companies becomes more positive. The GBP3.5 million fall in
unquoted growth investments is mainly the result of the write off
of two investments. In an early-stage portfolio, write offs tend to
come before successful gains. The Board is not complacent but does
believe that the portfolio has exhibited signs that it is
relatively resilient, and the portfolio companies can take
advantage of better conditions when they arrive.
The Board is pleased to note how the investment advisory team
has developed since moving to Foresight and hopes that, with more
resources dedicated to advising the Company and the support of the
wider Foresight Group, we will see a regular flow of high-quality
new investment opportunities, as well as strong support for the
existing portfolio, that can deliver improved results for
Shareholders in future.
Looking ahead, the Board is considering some options for the
future of the Company and will look to pursue any that it concludes
may benefit Shareholders and allow the Company to be better placed
to serve them.
Chris Kay
Chairman
Investment Adviser's Report -- Unquoted Growth
Portfolio overview
At 31 March 2023, the Company held total Unquoted investments of
GBP51.8 million (2022: GBP59.3 million), split GBP38.0 million
(2022: GBP40.7 million) Unquoted Growth and GBP13.8 million (2022:
GBP18.6 million) Unquoted Yield-focused. Details of the Unquoted
Yield-focused portfolio performance are set out below.
The Unquoted Growth portfolio comprises 36 companies, across a
range of sectors. Following a period of recovery during the year
ended 31 March 2022, investment valuations for the year ended 31
March 2023 have been unfavourably impacted by the downturn of the
UK economy and challenging market environment, resulting in an
overall unrealised loss of GBP3.5 million (2022: gain of GBP3.6
million) in the portfolio.
Portfolio composition
With a significant level of investment activity over the year to
31 March 2023, we have aimed to reduce the level of diversification
in the Unquoted Growth portfolio with a focus on deep tech and
software enterprise. As at the year end, the main sector in which
this portfolio is invested in is Software Enterprise, now
representing approximately 55% of the investment portfolio
following further investment into this sector during the period of
GBP8.0 million.
Investment activity
During the period, there was a high level of realisation and
investment activity with GBP10.0 million of proceeds generated from
exits and a total of GBP11.2 million invested into unquoted growth
companies.
Four new investments were added to the unquoted growth
portfolio:
Audioscenic Limited (GBP400,000) is a spin-out from the
University of Southampton's Institute of Sound and Vibrational
Research and has developed a software-based solution that unlocks
the full potential of 3D audio.
Kluster Enterprises Limited (GBP1,235,000) is a B2B SaaS
platform that empowers companies to plan and execute on their
revenue strategy. Kluster integrates into both CRM and accounting
tools to provide detailed and accurate forecasts which can be used
for financial planning.
Flock Limited (GBP930,000) is a fully digital insurtech Managing
General Agent (MGA) reinventing commercial fleet insurance. Flock
leverage connected vehicle data and geospatial data to accurately
quantify driving risk which provides the fleet of customers with
insights to enable safer driving.
CommerceIQ (GBP1,749,000) is a pioneer in helping brands win on
retail ecommerce channels. Their unified platform applies machine
learning and automation across marketing, supply chain, and sales
operations to help brands gain market share profitably.
Follow on investments totalling GBP5.2 million were made into
eleven companies, most notably Hackajob Limited (GBP1.5 million),
StorageOS Inc (GBP825,000), Vivacity Labs Limited (GBP789,000),
FVRVS Limited (GBP402,000) and Maestro Media Limited
(GBP320,000).
Details of the investment realisations during the year are set
out below. Total proceeds of GBP10.0 million were generated,
producing a gain over cost of GBP543,000, although representing a
loss over holding value of GBP380,000.
The largest gain in the period related to Efundamentals Group
Limited, a Software as a Service (SaaS) analytics company. The
investment was sold in July 2022, returning GBP3.7 million,
resulting in a gain over cost of GBP2.2 million, however, a loss
over opening value of GBP137,000.
StorageOS Inc (trading as OnDat), a cloud-based storage
management software solution developed to manage storage issues,
was sold in the period, generating proceeds of GBP3.0 million,
resulting in a loss over cost of GBP776,000 and a loss over the
opening holding value of GBP727,000.
Firefly Learning Limited, an edtech e-learning platform which
allows teachers, students and parents to share lesson plans and
review homework, was sold during the period, generating proceeds of
GBP1.0 million. This investment was valued at cost and the exit
produced a small realised loss against both cost and value of
GBP32,000.
Streethub Limited (trading as Trouva), an online marketplace for
a curated range of homeware and lifestyle products, was sold during
the period, generating proceeds of GBP194,000. The value of this
investment was written down in 2022 as a result of the business
trading significantly behind budget therefore a gain over value of
GBP115,000 was realised. It should be noted, however, that this was
a disappointing overall loss against the original cost of GBP1.3
million.
Further deferred consideration was received from Avid Technology
Group Limited in relation to the exit in 2022, producing further
proceeds of GBP91,000 in the year.
Portfolio valuation
Although there were some strong performers in the unquoted
growth portfolio, overall, companies have struggled in the
challenging macroeconomic environment which is reflected in the
year-on-year movement in valuations. This has resulted in a total
unrealised loss of GBP3.5 million in the period, including
unrealised foreign exchange gains of GBP585,000.
Of the GBP3.5 million total unrealised loss, the most
significant movements are noted below.
The largest gain in value was in Cornelis Networks, Inc, which
delivers purpose-built high-performance fabrics for High
Performance Computing (HPC), High Performance Data Analytics (HPDA)
and Artificial Intelligence (AI).
During the period, the company was uplifted by GBP2.3 million,
including the impact of foreign exchange. This revaluation is the
result of a calibration to the price set by a funding round during
the year.
Bulbshare Limited, a company that enables brands to build
communities from their existing customers, has performed well
during the year with revenues continuing to grow resulting in a
valuation uplift of GBP533,000 as at the year end.
Ayar Labs Inc, the developer of components for high performance
computing and data centre applications, was uplifted by GBP533,000,
including the impact of foreign exchange. This revaluation is the
result of a calibration to the price set by a funding round during
the year.
Maestro Media Limited, a talent-led, e-learning media platform
of multichannel e-commerce technology, increased in value by
GBP389,000 as a result of a calibration to the price set by a
funding round during the year.
Virtual Class Limited (trading as Third Space Learning), a
platform offering personalised online lessons from specialist
tutors, was uplifted by GBP383,000 as a result of revenues and
their customer base continuing to grow.
Disappointingly, there were a number of unrealised losses
recognised during the period. Some of these came from the more
vulnerable businesses within the portfolio, however there were some
material losses recognised to account for funding and liquidity
risks faced by some of the larger portfolio companies. The greatest
unrealised loss in the period was from Glisser Limited, a virtual
and hybrid events platform, a sector that has been unfavourably
impacted post-pandemic, which was written down to nil during the
year. This resulted in an unrealised loss of GBP1.9 million in the
year.
Carbice Corporation Inc has developed a suite of products based
on its carbon material called Carbice Carbon which is primarily
used as thermal management solutions to enable greater thermal
conductivity. The valuation was reduced by GBP1.1 million, as a
result of the challenging macroeconomic environment and access to
funding.
Trinny London Limited, a cosmetics and skincare brand, was
revalued downwards by GBP619,000 due to reduced confidence in
consumer spending.
FundingXchange Limited, a fintech platform delivering SME
lenders insights into their portfolio trends, was revalued
downwards by GBP510,000 to calibrate to the price of the last
funding round.
Hackajob Limited, a marketplace for technical hires, was
revalued downwards by GBP437,000 to calibrate to the price of the
last funding round.
It is disappointing to report that there were two other
investments that were written down to nil during the year. These
were Hummingbird Technologies Limited and Channel Mum Limited
resulting in a combined loss over original cost of GBP3.0 million
and a loss over carrying value of GBP2.1 million.
Foresight Group LLP
Investment Adviser's Report -- Yield Focused Portfolio
Downing LLP continues to advise the Company on the Unquoted
Yield Focused Portfolio under a subcontract from Foresight Group
LLP.
We present a review of the yield focused investment portfolio
for the year ended 31 March 2023. At the year end, the yield
focused portfolio consisted of 15 investments, all of which are
unquoted, with a total value of GBP13.8 million.
Divestment activity
During the year, the focus for the Adviser was towards
investment realisations from the yield focused portfolio which
resulted in four full and one partial exits, generating proceeds of
GBP4.2 million and a loss over holding value of GBP253,000. There
were no new or follow on investments.
Further details on each of the exits can be found below:
Harrogate Street LLP, a property developer, was fully exited
towards the start of the period, generating cash proceeds of GBP2.8
million, resulting in a gain over holding value of GBP27,000.
GBP128,000 of loan note interest was also received in addition to
the capital proceeds.
Proceeds of GBP591,000 were received from Downing Pub EIS ONE
Limited, a holding company that owned two London pub companies. The
company is in the process of winding up after the sale of its pubs,
with a further and final distribution expected prior to the end of
2023.
Fenkle Street LLP held an interest in a hotel in central
Newcastle. A transaction to sell the hotel completed at the end of
the accounting period, providing final proceeds of GBP772,000,
resulting in a loss over holding value of GBP139,000.
Jito Trading Limited, which has been written down to nil since
March 2020 was finally dissolved during the year following
liquidation with no proceeds being received.
Another disappointing exit during the period related to
Rockhopper Renewables Limited, an Indian solar farm company. In
August 2022, following a series of setbacks, the interest in the
company was disposed of for nil consideration, resulting in a loss
over cost of GBP738,000.
Portfolio valuation
The yield focused portfolio was reduced in value by GBP440,000
during the year, with one notable unrealised loss and a number of
unrealised gains. The most notable movements are as follows:
The most significant write down related to Baron House
Developments LLP. The company was created to fund the development
of a hotel in Newcastle. With the hotel facing challenging trading
conditions, the value of the investment was written down by GBP1.2
million, although it should be noted that the investment is still
valued at GBP323,000 above cost. A sales process was being
progressed with a potential buyer, however, after a significant
price reduction was sought, the deal has collapsed. Marketing of
the hotel for sale is now starting again to identify another
buyer.
Pearce and Saunders Limited, and the related Pearce and Saunders
DevCo Limited, are now in the process of being wound up. Further
distributions due from the company are estimated at GBP70,000,
resulting in a reduction in value across both companies of
GBP116,000.
The unrealised losses noted above have been offset in part by
the following unrealised gains on Data Centre Response Limited and
Cadbury House Holdings Limited.
Data Centre Response Limited, the maintenance provider to third
party owned data centres has increased in value by GBP578,000 in
line with anticipated exit proceeds based on corporate advisor
feedback.
Cadbury House Holdings Limited owns and operates a health club,
restaurant and conference centre at Cadbury House, near Bristol.
The valuation has been uplifted by GBP474,000 during the
period.
Outlook
The period has seen a number of investment realisations from the
yield focused portfolio. No new yield-focused investments are
expected to be made by the Company as the current VCT regulations
make this difficult and all new investment activity is focused on
growth ventures. We continue to closely monitor and support the
existing yield focused investments and work towards suitable
realisation opportunities.
Downing LLP
Investment Adviser's Report - Quoted Growth Portfolio
Downing LLP continues to advise the Company on the Quoted Growth
Portfolio under a subcontract arrangement with the Foresight Group
LLP.
Investment activity
At 31 March 2023 the quoted portfolio was valued at GBP19.5
million, comprising 35 active investments. Over the 12-month
period, the quoted portfolio produced unrealised losses of GBP7.8
million, reflecting a 29.3% decrease over the period compared to
the FTSE AIM All Share that fell 22.4%, one of the biggest falls in
the index in many years.
Markets were exceptionally volatile through much of the current
reporting period. There was no shortage of reasons for concern -
the Russian invasion of Ukraine, the continued hangover from Covid
lockdowns, particularly in China, persistent supply chain
disruptions, and growing fears over rising interest rates. The
threat of recession and the possibility of a prolonged bear market
also weighed on investor sentiment. The autumnal political
disruptions caused by the economics of Liz Truss created further
market volatility. Sentiment towards UK smaller companies has been
persistently negative for investors, with the largest outflows from
UK equities since records began.
Most global equity markets had a positive start to 2023, making
steady gains through January. While the UK economy rallied over the
month, performance was more modest than in many other developed
markets. However, this was in welcome contrast to the widespread
doom and gloom that characterised markets for much of the prior
year.
The quoted portfolio saw little activity during the period, with
two follow-on investments into existing holdings and one full exit.
In April 2022, GBP502,000 was invested into existing holding,
Downing Strategic Micro-Cap Investment Trust plc. In December 2022,
an investment of GBP100,000 was made in the Deepmatter Group plc.
Deepmatter Group subsequently delisted from the Alternative
Investment Market (AIM) and continues to trade privately, with the
support of Downing and its major shareholders.
Portfolio Movements
Given the challenging market backdrop, there are few gains of
any materiality to discuss, reflecting the exceptional period of
negative market sentiment. The two largest unrealised gains for the
quoted portfolio were Cohort plc (GBP59,000), and Feedback plc
(GBP46,000).
Cohort plc is the parent company of six businesses providing a
wide range of services and products for British, Portuguese and
other international customers in defence and security markets. The
group has a long track record of profitable growth and strong
execution by a conservative management team. The Investment Adviser
believes that the business will continue to deliver against a
strengthening outlook for defence spending across its regions. The
shares trade at a discount to peers and the Adviser thinks that
Cohort could be a valuable strategic asset for a larger player.
At the reporting period end, Cohort's latest reported results
covered the six months to 31 October 2022. The group reported a
stronger first half, with growth in both revenue and trading
profit. Management reported a record high order book of GBP304.2m,
with over GBP80m of revenue deliverable in the second half of the
year. Taking into account revenue recognised in the first half,
this covers over 95% of consensus forecast revenue for the full
financial year.
Feedback plc is a group of companies specialising in clinical
communications. The group offers safer, secure and simpler
alternatives to the traditional ways of working. It produces
innovative technology that enhances clinical communication,
accessing and storing medical information.
The group reported results for the six months to 30 November
2022 and highlighted that it had been awarded a GBP450k contract
for a 12-month pilot extension of the Sussex Integrated Care
Systems Community Diagnostic Centre development programme. It was
also named as a supplier on G-Cloud 13, the UK Government's digital
marketplace. The group also underlined the importance of the
creation of the CareLocker consumer app, giving patients direct
access to their clinical data.
The largest unrealised losses for the quoted portfolio were
Anpario plc (GBP2.1m), Inland Homes plc (GBP944k), Tracsis plc
(GBP771k) and Angle plc (GBP615k). In the view of the Investment
Adviser, Tracsis and Angle were impacted by negative market
sentiment, as opposed to any fundamentals affecting their business
operations, whilst Anpario and Inland Homes have been impacted by
specific headwinds affecting their business.
Anpario plc is an international producer and distributor of
high-performance natural feed additives for animal health, hygiene
and nutrition. Its expertise is focused on intestinal health and
nutrition, and it utilises this knowledge to improve animal
performance and producer profitability. The Investment Adviser
believes that Anpario will continue to benefit from the trends in
the growth of the world's population, the increasing taste for meat
and fish protein in developing countries, and the global tightening
in food regulation.
The group announced its full-year results to 31 December 2022.
The period was extremely challenging due to supply chain disruption
and significant and immediate raw material and logistics price
inflation. The difficult backdrop has also adversely affected many
producers who have experienced input cost pressures, notably feed
and energy, hurting their profitability and in some cases
viability. The group has been able to implement sensitive sales
price increases to partially mitigate the unprecedented raw
material price inflation, and margins improved in the second half
of the year. Trading in the first couple of months of 2023 has been
weak and market conditions are expected to continue to be
challenging through the first half of the year. However, management
expects the group's performance to improve as the year progresses,
supported by a strong balance sheet and new business development
initiatives.
Since the period end, Anpario has announced a tender offer to
buy-back shares, at a premium to the share price before the
announcement. The Investment Adviser believes that this underpins
the share price and demonstrates the management's confidence in the
recovery of their end markets.
Incorporated in the UK in 2005, Inland Homes plc is an
AIM-quoted specialist housebuilder and brownfield developer. The
group's flexible business model allows it to adapt its activity to
suit market conditions and business needs. It includes the
strategic disposal of consented land, as well as the construction
and forward sales of private homes and partnership housing. Inland
Homes issued a trading update on 25 January 2023 which reported
that the group's expected loss before tax for the year ending 30
September 2022 is GBP91.0m. In September the board stated that it
expected a pre-tax loss of GBP37.1m for the year but since then the
economic outlook for the UK housebuilding industry had
deteriorated. The losses include provisions of GBP28.8m on five
ongoing construction projects, increased from GBP15.4m following a
further review, and a GBP39.0m provision on asset management
schemes, including the planned GBP600m Cavalry Barracks development
in Hounslow.
The board said that it had already secured a waiver from one of
its lenders in respect of its revolving credit facility on the
interest cover ratio covenant for the three quarters ending 30 June
2023. Post reporting period end, the shares in the group were
temporarily suspended from trading pending publication of the
company's annual audited accounts. In April 2023, Inland Homes
announced that it raised GBP2.5 million with the issue of 25
million new Ordinary Shares, with the net proceeds used to fund
working capital requirements within the company. The net tangible
asset value of Inland Homes is 107.8p, with a Gross Development
Value of GBP3.0 billion. The Investment Adviser believes that the
value of the underlying equity is likely to be realised through
strategic initiatives put in place by the refreshed board during
the course of the coming 12 months.
Tracsis plc provides transport software solutions and condition
monitoring equipment that automates and optimises the process of
labour scheduling for rail and bus services. The company is
predominantly based in the UK but is expanding its reach to Europe
and the US. The Investment Adviser was attracted by the long-term
software licences associated with the rail refranchise process,
underpinning earnings forecasts. There is also significant
international potential for condition monitoring equipment.
The group announced its results for the six months ended 31
January 2023 post reporting period end. The group's first half
performance was in line with the board's expectations. Revenue and
adjusted EBITDA growth was underpinned by strong rail technology
recurring revenue growth in both the UK and North America, and new
large contract wins across Remote Condition Monitoring and Smart
Ticketing. There was also good growth in the Data, Analytics,
Consultancy and Events division. The future opportunity pipeline is
strong and the UK rail industry's transition to a new Great British
Railways structure will continue to drive interest in product
solutions that will deliver a data-driven, customer-focused,
safety-critical future for the industry.
Angle plc is a world-leading liquid biopsy company. The group
announced results for the year ended 31 December 2022 and
highlighted that it was a breakthrough year for Angle, with both
FDA clearance and excellent results from the ovarian cancer study.
Management stated that it was the world's first ever FDA product
clearance for a system to harvest CTCs, intact living cancer cells,
from metastatic breast cancer patient blood for subsequent
analysis. This was followed by Angle's ovarian cancer study
demonstrating the clinical validity of analysing Parsortix CTCs for
real-world clinical applications.
The increasing number of published studies for a variety of
cancer types combined with the FDA clearance have placed Angle in a
strong position to play a leading role in the emerging liquid
biopsy market for personalised cancer care. The CTCs harvested by
the Parsortix system have wide applicability for diagnosis,
treatment selection, and monitoring to improve patient outcomes and
reduce healthcare costs.
Outlook
With the continuing macro-economic uncertainty, it is difficult
to be hugely positive in the short-term. There have been limited
opportunities within the new issues and IPO market, for VCT
qualifying opportunities and we believe that this depressed market
sentiment could continue for the remainder of the calendar year.
Meanwhile, we will continue to focus on the portfolio management of
this maturing, quality collection of smaller companies, where we
believe the strong fundamentals of the underlying businesses will
take advantage of any improvement in their end markets.
Downing LLP
Review of Investments
Portfolio of investments
The following investments, all of which are incorporated in
England and Wales, were held at 31 March 2023:
Total value
Loan stock of other
Interest funds also
Valuation % of Recognised managed
movement portfolio in the by
Cost Valuation in year by value period Foresight^
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------
Quoted growth investments
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Tracsis plc* 1,443 6,782 (771) 7.8% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Downing Strategic Micro-Cap
Investment Trust plc*** 5,699 3,740 (260) 4.3% - 3,162
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Impact Healthcare REIT plc*** 1,518 1,421 (353) 1.6% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Anpario plc* 1,448 1,206 (2,134) 1.4% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Cohort plc* 394 899 59 1.0% -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Craneware plc* 353 874 (388) 1.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
GENinCode plc* 800 700 (382) 0.8% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Vianet Group plc* 756 567 (102) 0.7% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Let's Explore Group plc* (formerly
Immotion Group plc) 500 425 (121) 0.5% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Feedback plc* 400 348 46 0.4% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Brooks Macdonald Group plc* 257 333 (112) 0.4% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Libertine Holdings plc* 350 298 (147) 0.3% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Inland Homes plc* 1,311 210 (944) 0.2% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
EnerAqua Technology plc* 195 204 18 0.2% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Pittards plc* 1,350 169 (529) 0.2% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Pennant International Group
plc* 335 165 5 0.2% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
SysGroup plc* 377 157 13 0.2% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Angle plc* 570 153 (615) 0.2% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Frontier IP Group plc* 30 146 (45) 0.2% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Norman Broadbent plc* 906 135 (60) 0.2% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
One Media Group IP plc* 175 125 (31) 0.1% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Verici DX plc* 240 89 (130) 0.1% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Dillistone Group plc* 411 64 (7) 0.1% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Oncimmune Holdings plc* 278 57 (144) 0.1% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Bonhill Group plc* 1,000 56 (38) 0.1% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Fireangel Safety Technology
Group plc* 545 37 (11) 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Pressure Technologies plc* 248 29 (32) 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Pelatro plc* 290 28 (108) 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Trellus Health plc* 175 26 (57) 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Strip Tinning Holdings plc* 105 23 (63) 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Wheelsure Holdings plc** 48 2 (2) 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
AIQ Limited - 1 - 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
DeepMatter plc* 563 - (373) 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Flowgroup plc 207 - - 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
ACHP plc* 61 - - 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
23,338 19,469 (7,818) 22.3% - 3,162
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Unquoted growth investments
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Cornelis Networks Inc 2,102 4,312 2,256 5.0% - 8,210
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Ayar Labs, Inc 1,280 3,127 533 3.6% - 4,231
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Hackajob Limited 2,284 2,586 (437) 3.0% - 4,994
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Virtual Class Limited 1,164 2,295 383 2.7% - 3,063
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Trinny London Limited 443 1,889 (619) 2.2% - 10,846
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Carbice Corporation 3,020 1,883 (1,083) 2.2% - 1,041
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Maestro Media Limited 1,320 1,868 389 2.2% - 5,965
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Rated People Ltd 1,582 1,821 (273) 2.1% 3 3,287
------------------------------------- ------- --------- --------- ---------- ----------- -----------
CommerceIQ, Inc 1,749 1,731 (18) 2.0% - 2,371
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Imagen Limited 1,000 1,703 (60) 2.0% - 3,406
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Parsable Inc 1,532 1,506 84 1.7% - 2,123
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Cambridge Touch Technologies
Limited 959 1,466 97 1.7% - 1,809
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Vivacity Labs Limited 1,289 1,443 (15) 1.7% - 4,958
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Bulbshare Limited 749 1,282 533 1.5% - 2,884
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Kluster Enterprises Limited 1,236 1,236 - 1.4% - 392
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Ecstase Limited 1,000 1,000 (257) 1.1% - 2,210
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Flock Limited 930 930 - 1.1% - 2,878
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Upp Technologies Group Limited 1,136 923 (213) 1.1% 4 923
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Masters of Pie Limited 886 876 (10) 1.0% 7 3,876
------------------------------------- ------- --------- --------- ---------- ----------- -----------
DSTBTD Limited 775 775 - 0.9% - 1,725
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Limitless Technology Limited 757 703 (217) 0.8% - 1,545
------------------------------------- ------- --------- --------- ---------- ----------- -----------
FVRVS Limited 787 678 (218) 0.8% 2 3,281
------------------------------------- ------- --------- --------- ---------- ----------- -----------
FundingXchange Limited 1,335 561 (510) 0.6% - 1,359
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Tidalsense Limited (formerly
Cambridge Respiratory Innovations
Limited) 500 500 - 0.6% - 1,476
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Audioscenic Limited 400 400 - 0.5% - 4,800
------------------------------------- ------- --------- --------- ---------- ----------- -----------
DiA Imaging Analysis Limited 207 282 67 0.3% - 926
------------------------------------- ------- --------- --------- ---------- ----------- -----------
MIP Discovery Limited 225 225 75 0.3% - 1,256
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Hummingbird Technologies
Limited 2,250 - (1,750) 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Glisser Limited 1,887 - (1,887) 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Empiribox Holdings Limited 1,813 - - 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Lignia Wood Company Limited 1,778 - - 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Live Better With Limited 990 - - 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Channel Mum Limited 757 - (310) 0.0% (2) -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Lineten Limited 750 - - 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Ludorum plc 177 - - 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Resource Reserve Recovery
Limited 6 - - 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
41,055 38,001 (3,460) 44.1% 14 85,835
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Unquoted yield focused investments
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Doneloans Limited 3,631 4,156 (57) 4.8% 335 -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Baron House Developments
LLP 2,695 3,018 (1,160) 3.5% 162 -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Data Centre Response Limited 557 2,366 578 2.7% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Cadbury House Holdings Limited 3,082 2,162 474 2.5% 2,530 791
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Kimbolton Lodge Limited 664 850 (146) 1.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Pilgrim Trading Limited 2,594 778 - 0.9% (704) -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
SF Renewables (Solar) Limited 422 263 (15) 0.3% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Downing Pub EIS ONE Limited 68 94 2 0.1% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Pearce & Saunders DevCo Limited 84 70 - 0.1% - 16
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Yamuna Renewables Limited 2,500 - - 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Quadrate Catering Limited 1,500 - - 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Pearce & Saunders Limited 1,122 - (116) 0.0% 107 -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Top Ten Holdings plc 399 - - 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Quadrate Spa Limited 372 - - 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
London City Shopping Centre
Limited 110 - - 0.0% - -
------------------------------------- ------- --------- --------- ---------- ----------- -----------
19,800 13,757 (440) 15.9% 2,430 807
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Total investments 84,193 71,227 (11,718) 82.3% 2,444 89,804
------------------------------------- ------- --------- --------- ---------- ----------- -----------
Cash at bank and in hand 15,282 17.7%
------------------------------------- ------- --------- --------- ---------- ----------- -----------
86,509 100.0%
------------------------------------- ------- --------- --------- ---------- ----------- -----------
The Company also holds investments in Golden Rock Global plc and
Mining, Minerals & Metals plc (which does not show in the
previous table). These investments were acquired in prior periods
at negligible value as a result of reorganisations of other
investments and continue to be valued at the same level.
All venture capital investments are unquoted unless otherwise
stated.
* Quoted on AIM
** Quoted on the Aquis Stock Exchange Growth Market
*** Quoted on the Main Market of the London Stock Exchange
The valuation movement in the period includes unrealised foreign
exchange gains on GBP585,000.
^Includes investment made by Thames Ventures EIS, Thames
Ventures VCT 2 plc, Foresight Williams EIS and Foresight Solar and
Technology VCT plc.
Investment movements for the year ended 31 March 2023
Additions
GBP'000
Quoted growth investments
------------------------------------------------- -------
Downing Strategic Micro-Cap Investment Trust plc 502
------------------------------------------------- -------
Deepmatter plc 100
------------------------------------------------- -------
602
------------------------------------------------- -------
Unquoted growth investments
------------------------------------------------- -------
Hackajob Limited* 3,000
------------------------------------------------- -------
CommerceIQ, Inc 1,749
------------------------------------------------- -------
Kluster Enterprises Limited 1,235
------------------------------------------------- -------
Flock Limited 930
------------------------------------------------- -------
StorageOS Inc 825
------------------------------------------------- -------
Vivacity Labs Limited 789
------------------------------------------------- -------
Glisser Limited 588
------------------------------------------------- -------
FVRVS Limited* 537
------------------------------------------------- -------
Audioscenic Limited 400
------------------------------------------------- -------
Maestro Media Limited 320
------------------------------------------------- -------
FundingXchange Limited 285
------------------------------------------------- -------
Masters of Pie Limited 219
------------------------------------------------- -------
Rated People Limited 200
------------------------------------------------- -------
Upp Technologies Group Limited 59
------------------------------------------------- -------
Channel Mum Limited 20
------------------------------------------------- -------
11,156
------------------------------------------------- -------
Total additions 11,758
------------------------------------------------- -------
* The additions related to Hackajob Limited and FVRVS Limited
include loan note to equity conversions equal to GBP1.5 million and
GBP135,000 respectively.
Disposals
Loan stock
interest
Profit/ Realised recognised
(loss)
Value at vs gain/ in the
Cost 01/04/22* Proceeds cost (loss) period
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Quoted growth investments
--------------------------- -------- ----------- -------- ------- -------- ----------
MI Downing UK Micro-Cap
Growth Fund 2 2 2 - - -
--------------------------- -------- ----------- -------- ------- -------- ----------
2 2 2 - - -
--------------------------- -------- ----------- -------- ------- -------- ----------
Unquoted growth investments (including
loan note redemptions)
-------------------------------------------------- -------- ------- -------- ----------
ADC Biotechnology Limited - - 310 310 310 -
--------------------------- -------- ----------- -------- ------- -------- ----------
StreetHub Limited 1,446 79 194 (1,252) 115 (2)
--------------------------- -------- ----------- -------- ------- -------- ----------
Avid Technology Group
Limited - - 91 91 91 -
--------------------------- -------- ----------- -------- ------- -------- ----------
FVRVS Limited** 125 125 125 - - -
--------------------------- -------- ----------- -------- ------- -------- ----------
Hackajob Limited** 1,500 1,500 1,500 - - -
--------------------------- -------- ----------- -------- ------- -------- ----------
Firefly Learning Limited 1,047 1,047 1,015 (32) (32) -
--------------------------- -------- ----------- -------- ------- -------- ----------
E-fundamentals (Group)
Limited 1,508 3,847 3,710 2,202 (137) (2)
--------------------------- -------- ----------- -------- ------- -------- ----------
StorageOS Inc 3,795 3,746 3,019 (776) (727) -
--------------------------- -------- ----------- -------- ------- -------- ----------
9,421 10,344 9,964 543 (380) (4)
--------------------------- -------- ----------- -------- ------- -------- ----------
Unquoted yield focused investments (including
loan note redemptions)
-------------------------------------------------- -------- ------- -------- ----------
Harrogate Street LLP 1,400 2,778 2,805 1,405 27 14
--------------------------- -------- ----------- -------- ------- -------- ----------
Downing Pub EIS ONE Limited 422 576 591 169 15 -
--------------------------- -------- ----------- -------- ------- -------- ----------
Fenkle Street LLP 346 911 772 426 (139) 21
--------------------------- -------- ----------- -------- ------- -------- ----------
Jito Trading Limited 2,500 - - (2,500) - -
--------------------------- -------- ----------- -------- ------- -------- ----------
Rockhopper Renewables
Limited 738 156 - (738) (156) -
--------------------------- -------- ----------- -------- ------- -------- ----------
5,406 4,421 4,168 (1,238) (253) 35
--------------------------- -------- ----------- -------- ------- -------- ----------
14,829 14,767 14,134 (695) (633) 31
--------------------------- -------- ----------- -------- ------- -------- ----------
* Adjusted for purchases in the year where applicable
** Conversion of loan notes into further equity
Directors' responsibilities statement
The Directors are responsible for preparing the Strategic
Report, the Report of the Directors, the Directors' Remuneration
Report, the separate Corporate Governance Statement and the
financial statements in accordance with applicable law and
regulations. They are also responsible for ensuring that the annual
report includes information required by the Listing Rules of the
Financial Conduct Authority.
Company law requires the directors to prepare financial
statements for each financial year. Under that law, the directors
have elected to prepare the financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law), including
Financial Reporting Standard 102, the financial reporting standard
applicable in the UK and Republic of Ireland (FRS 102). Under
company law, the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or
loss of the Company for that period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgments and accounting estimates that are reasonable and prudent;
-- state whether the financial statements have been prepared in accordance
with applicable UK Accounting Standards, subject to any material
departures disclosed and explained in the financial statements;
-- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business; and
-- prepare a Directors' Report, Strategic Report and Directors' Remuneration
Report which comply with the requirements of the Companies Act 2006.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions, and to disclose with reasonable accuracy at any time
the financial position of the Company and to enable them to ensure
that the financial statements comply with the Companies Act
2006.
They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
In addition, each of the directors is responsible for ensuring
that the Annual Report, taken as a whole, is fair, balanced and
understandable and provides the information necessary to assess the
Company's position, performance, business model and strategy.
Income Statement
for the year ended 31 March 2023
Year ended 31 March Year ended 31 March
2023 2022
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 3,031 - 3,031 4,584 - 4,584
----------------------------------- ------- -------- -------- ------- ------- -------
(Losses)/gains on investments - (12,351) (12,351) - 8,619 8,619
----------------------------------- ------- -------- -------- ------- ------- -------
3,031 (12,351) (9,320) 4,584 8,619 13,203
---------------------------------- ------- -------- -------- ------- ------- -------
Investment management
fees (799) (799) (1,598) (1,051) (1,051) (2,102)
----------------------------------- ------- -------- -------- ------- ------- -------
Other expenses (812) - (812) (705) - (705)
----------------------------------- ------- -------- -------- ------- ------- -------
Return/(loss) on ordinary
activities before tax 1,420 (13,150) (11,730) 2,828 7,568 10,396
----------------------------------- ------- -------- -------- ------- ------- -------
Tax on total comprehensive
income and ordinary activities (228) 228 - (300) 300 -
----------------------------------- ------- -------- -------- ------- ------- -------
Return/(loss) attributable
to equity shareholders 1,192 (12,922) (11,730) 2,528 7,868 10,396
----------------------------------- ------- -------- -------- ------- ------- -------
Basic and diluted return/(loss)
per share 0.7 (7.2) (6.5) 1.4 4.5 5.9
----------------------------------- ------- -------- -------- ------- ------- -------
The total column within the Income Statement represents the
Statement of Total Comprehensive Income of the Company prepared in
accordance with Financial Reporting Standards ("FRS 102"). There
are no other items of comprehensive income. The supplementary
revenue and capital return columns are prepared in accordance with
the Statement of Recommended Practice issued in November 2014 and
updated in July 2022 by the Association of Investment Companies
("AIC SORP").
Statement of Changes in Equity
for the year ended 31 March 2023
Funds
held in
respect
of
Capital shares Capital
Called up Share redemption Share not yet Special reserve Revaluation Revenue
Capital reserve premium account allotted reserve realised reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the year ended 31 March 2022
------------------------------------------------------ ---------------- -------- -------- --------- ----------- -------- --------
At 1 April 2021 1,611 1,649 66,430 7,545 20,238 - 6,409 (2,529) 101,353
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Total comprehensive
income - - - - - 2,971 4,897 2,528 10,396
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Realisation of
revaluations from
previous years* - - - - - 794 (794) - -
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Realisation of impaired
valuations - - - - - (791) 791 - -
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Transfer between
reserves* - - - - (738) 738 - - -
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Transactions with owners
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Dividends paid - - - - - (3,712) - (743) (4,455)
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Utilised in share
issue - - - (7,545) - - - - (7,545)
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Unallotted shares - - - 78 - - - - 78
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Issue of new shares 213 - 12,605 - - - - - 12,818
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Share issue costs - - - - (360) - - - (360)
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Purchase of own
shares** (48) 48 - - (2,812) - - - (2,812)
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
At 31 March 2022 1,776 1,697 79,035 78 16,328 - 11,303 (744) 109,473
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
For the year ended 31 March 2023
------------------------------------------------------ ---------------- -------- -------- --------- ----------- -------- --------
At 1 April 2022 1,776 1,697 79,035 78 16,328 - 11,303 (744) 109,473
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Total comprehensive
income - - - - - (1,204) (11,718) 1,192 (11,730)
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Realisation of
revaluations from
previous years* - - - - - 2,438 (2,438) - -
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Realisation of impaired
valuations - - - - - (5,445) 5,445 - -
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Transfer between
reserves* - (1,710) (81,236) - 74,984 7,962 - - -
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Transactions with owners
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Dividends paid - - - - - (3,751) - (2,104) (5,855)
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Utilised in share
issue - - - (78) - - - - (78)
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Unallotted shares - - - - - - - - -
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Issue of new shares 43 - 2,680 - - - - - 2,723
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Share issue costs - - (51) - - - - - (51)
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
Purchase of own
shares** (45) 45 - - (2,499) - - - (2,499)
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
At 31 March 2023 1,774 32 428 - 88,813 - 2,592 (1,656) 91,983
------------------------ --------------- ----------- ---------------- -------- -------- --------- ----------- -------- --------
* A transfer of GBP2.4 million representing previously recognised unrealised gains on disposal of investments during the year ended 31 March 2023 (2022: gains of GBP794,000) have been made from the Revaluation reserve to the Capital Reserve-realised. A transfer of GBP8.0 million representing realised gains on disposal of investments, less net investment impairments and the excess of capital expenses over capital income and capital dividends in the year (2022: GBP738,000) has been made from the Special reserve to the Capital Reserve -- realised. Following the cancellation of the Capital Redemption reserve and Share Premium account subsequent to Court approval in January 2023, a transfer of GBP1.7 million and GBP81.2 million has been made from the Capital Redemption reserve and the Share Premium account, respectively, to the Special reserve.
** These shares were subsequently cancelled.
Balance Sheet
as at 31 March 2023
2023 2022
GBP'000 GBP'000
------------------------------------
Fixed assets
------------------------------------ ------- -------
Investments 71,227 85,954
-------------------------------------- ------- -------
Current assets
------------------------------------ ------- -------
Debtors 6,828 3,300
-------------------------------------- ------- -------
Cash at bank and in hand 15,282 20,856
-------------------------------------- ------- -------
22,110 24,156
------------------------------------ ------- -------
Creditors: amounts falling due
within one year (1,354) (637)
-------------------------------------- ------- -------
Net current assets 20,756 23,519
-------------------------------------- ------- -------
Net assets 91,983 109,473
-------------------------------------- ------- -------
9B9Capital and reserves
------------------------------------ ------- -------
Called up share capital 1,774 1,776
-------------------------------------- ------- -------
Capital redemption reserve 32 1,697
-------------------------------------- ------- -------
Share premium account 428 79,035
-------------------------------------- ------- -------
Funds held in respect of shares
not yet allotted - 78
-------------------------------------- ------- -------
Special reserve 88,813 16,328
-------------------------------------- ------- -------
Revaluation reserve 2,592 11,303
-------------------------------------- ------- -------
Revenue reserve (1,656) (744)
-------------------------------------- ------- -------
Total equity shareholders' funds 91,983 109,473
-------------------------------------- ------- -------
Basic and diluted net asset value 51.8p 61.6p
per share
-------------------------------------- ------- -------
Cash Flow Statement
for the year ended 31 March 2023
2023 2022
GBP'000 GBP'000
Cash flow from operating activities
--------------------------------------------- -------- -------
(Loss)/return on ordinary activities
after taxation (11,730) 10,396
---------------------------------------------- -------- -------
Loss/(gain) on investments 12,351 (8,619)
---------------------------------------------- -------- -------
(Increase) in debtors (3,529) (1,298)
---------------------------------------------- -------- -------
(Decrease)/increase in creditors (60) 72
---------------------------------------------- -------- -------
Net cash generated (used in)/from operating
activities (2,968) 551
---------------------------------------------- -------- -------
Cash flow from investing activities
--------------------------------------------- -------- -------
Purchase of investments (11,758) (4,619)
---------------------------------------------- -------- -------
Proceeds from disposal of investments 14,134 16,441
---------------------------------------------- -------- -------
Net cash inflow from investing activities 2,376 11,822
---------------------------------------------- -------- -------
Cash flows from financing activities
--------------------------------------------- -------- -------
Proceeds from share issue 1,781 12,121
---------------------------------------------- -------- -------
Funds held in respect of shares not
yet allotted (78) (7,467)
---------------------------------------------- -------- -------
Share issue costs (51) (360)
---------------------------------------------- -------- -------
Purchase of own shares (1,723) (2,791)
---------------------------------------------- -------- -------
Equity dividends paid (4,911) (3,758)
---------------------------------------------- -------- -------
Net cash (outflow) from financing activities (4,982) (2,255)
---------------------------------------------- -------- -------
(Decrease)/increase in cash (5,574) 10,118
---------------------------------------------- -------- -------
Net movement in cash
--------------------------------------------- -------- -------
Beginning of year 20,856 10,738
---------------------------------------------- -------- -------
Net cash (outflow)/inflow (5,574) 10,118
---------------------------------------------- -------- -------
End of year 15,282 20,856
---------------------------------------------- -------- -------
Notes
1. General information
Thames Ventures VCT 1 plc ("the Company") is a venture capital
trust established under the legislation introduced in the Finance
Act 1995 and is domiciled in the United Kingdom and incorporated in
England and Wales, and its registered office is St. Magnus House, 3
Lower Thames Street, London EC3R 6HD.
2. Accounting policies
Basis of accounting
The Company has prepared its financial statements in accordance
with the Financial Reporting Standard 102 ("FRS 102") and in
accordance with the Statement of Recommended Practice "Financial
Statements of Investment Trust Companies" issued November 2014 and
updated in July 2022 ("SORP").
The financial statements are presented in Sterling (GBP) and
rounded to thousands.
Going concern
After reviewing the Company's forecasts and projections, the
Directors have a reasonable expectation that the major cash
outflows of the Company (most notably investments, share buybacks
and dividends) are within the Company's control and therefore the
Company has sufficient cash to meet its expenses and liabilities
when they fall due. The impact of the conflict in Ukraine as well
as high inflation and rising interest rates has been considered.
More detail on these considerations can be found within the
Corporate Governance report. As such, the Board confirms that the
Company has adequate resources to continue in operational existence
for at least 12 months from the date of approval of the financial
statements. The Company therefore continues to adopt the going
concern basis in preparing its financial statements as noted
further within the Corporate Governance Report.
Presentation of income statement
In order to better reflect the activities of a Venture Capital
Trust and in accordance with guidance issued by the Association of
Investment Companies ("AIC"), supplementary information which
analyses the income statement between items of a revenue and
capital nature has been presented alongside the income statement.
The net revenue is the measure the Directors believe appropriate in
assessing the Company's compliance with certain requirements set
out in Part 6 of the Income Tax Act 2007.
Investments
Venture capital investments are designated as "fair value
through profit or loss" assets due to investments being managed and
their performance evaluated on a fair value basis. A financial
asset is designated within this category if it is both acquired and
managed on a fair value basis, with a view to selling after a
period of time, in accordance with the Company's documented
investment policy.
Investments quoted on recognised stock markets are measured
using bid prices.
The valuation methodologies for unquoted instruments (comprising
equity and loan notes), used by the International Private Equity
Valuation guidelines to ascertain the fair value of an investment,
are as follows:
-- Calibration to the price of recent investment;
-- Multiples;
-- Net assets;
-- Discounted cash flows or earnings (of the underlying business);
-- Discounted cash flows (from the investment); and
-- Industry valuation benchmarks.
The methodology applied takes account of the nature, facts and
circumstances of the individual investment and uses reasonable
data, market inputs, assumptions and estimates in order to
ascertain fair value, as explained in the investment accounting
policy above and addressed further in note 10 to the Annual Report.
Where an investee company has gone into receivership, liquidation
or administration and there is little likelihood of a recovery, the
loss on the investment, although not physically disposed of, is
treated as being realised.
Gains and losses arising from changes in fair value are included
in the income statement as a capital item.
It is not the Company's policy to exercise significant influence
or joint control over investee companies. Therefore, the results of
these companies are not incorporated into the Income Statement,
except to the extent of any income accrued. This is in accordance
with the SORP and FRS 102 sections 14 and 15 that do not require
portfolio investments to be accounted for using the equity method
of accounting.
Calibration to price of recent investment requires a level of
judgment to be applied in assessing and reviewing any additional
information available since the last investment date. The Board and
Adviser consider a range of factors in order to determine if there
is any indication of decline in value or evidence of increase in
value since the recent investment date. If no such indications are
noted the price of the recent investment will be used as the fair
value for the investment.
Examples of signals which could indicate a movement in value
are: -
-- Changes in results against budget or in expectations of achievement of
technical milestones patents/testing/ regulatory approvals
-- Significant changes in the market of the products or in the economic
environment in which it operates
-- Significant changes in the performance of comparable companies
-- Internal matters such as fraud, litigation or management structure.
In respect of disclosures required by the SORP for the ten
largest investments held by the Company, the most recent publicly
available accounts information, either as filed at Companies House,
or announced to the London Stock Exchange, is disclosed. In the
case of unlisted investments, this may be abbreviated information
only.
Judgements in applying accounting policies and key sources of
estimation uncertainty
The key estimate in the financial statements is the
determination of the fair value of the unquoted investments by the
Directors, as it impacts the valuation of the unquoted investments
at the balance sheet date.
Of the Company's assets measured at fair value, it is possible
to determine their fair values within a reasonable range of
estimates. The fair value of an investment upon acquisition is
deemed to be cost. Thereafter, investments are measured at fair
value in accordance with FRS 102 sections 11 and 12, together with
the International Private Equity and Venture Capital Valuation
Guidelines ("IPEV").
A price sensitivity analysis of the unquoted investments is
provided within the Annual Report, under Investment price risk.
Income
Dividend income from investments is recognised when the
shareholders' right to receive payment has been established,
normally the ex-dividend date.
Loan stock interest is accrued on a time apportioned basis, by
reference to the principal outstanding and at the effective
interest rate applicable and only where there is reasonable
certainty of collection.
Distributions from investments in limited liability partnerships
("LLPs") are recognised as they are paid to the Company. Where such
items are considered capital in nature they are recognised as
capital profits.
Expenses
All expenses are accounted for on an accrual's basis. In respect
of the analysis between revenue and capital items presented within
the income statement, all expenses have been presented as revenue
items, except as follows:
-- Expenses which are incidental to the acquisition of an investment are
deducted from the Capital Account.
-- Expenses which are incidental to the disposal of an investment are
deducted from the disposal proceeds of the investment.
-- Expenses are split and presented partly as capital items where a
connection with the maintenance or enhancement of the value of the
investments held can be demonstrated. Investment management fees are
allocated 50% to revenue and 50% to capital, in order to reflect the
Directors' expected long-term view of the nature of the investment
returns of the Company.
Taxation
The tax effects on different items in the Income Statement are
allocated between capital and revenue on the same basis as the
particular item to which they relate, using the Company's effective
rate of tax for the accounting period.
Due to the Company's status as a Venture Capital Trust and the
continued intention to meet the conditions required to comply with
Part 6 of the Income Tax Act 2007, no provision for taxation is
required in respect of any realised or unrealised appreciation of
the Company's investments.
Deferred taxation is not discounted and is provided in full on
timing differences that result in an obligation at the balance
sheet date to pay more tax, or a right to pay less tax, at a future
date, at rates expected to apply when the obligations or rights
crystallise based on tax rates and law enacted or substantively
enacted at the balance sheet date. Timing differences arise from
the inclusion of items of income and expenditure in taxation
computations in periods different from those in which they are
included in the accounts. Deferred tax assets are only recognised
if it is expected that future taxable profits will be available to
utilise such assets and are recognised on a non-discounted
basis.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held
at call with banks with an original maturity of three months or
less.
Other debtors and other creditors
Other debtors (including accrued income) and other creditors are
included within the accounts at amortised cost.
Share issue costs
Share issue costs have been deducted from the special reserve
account.
Segmental reporting
The Company only has one class of business and one market.
Dividends payable
Dividend's payable are recognised as distributions in the
financial statements when the Company's liability to make payment
has been established, normally the payment date.
Funds held in respect of shares not yet allotted
Cash received in respect of applications for new shares that
have not yet been allotted is shown as "Funds held in respect of
shares not yet allotted" and recorded on the Balance Sheet and
Statement of Changes in Equity.
3. Basic and diluted return per share
2023 2022
GBP'000 GBP'000
----------------------------------------------- ----------- -----------
Return per share based on:
----------------------------------------------- ----------- -----------
Net revenue gain/(loss) for the financial year 1,192 2,528
----------------------------------------------- ----------- -----------
Net capital (loss)/gain for the financial year (12,922) 7,868
----------------------------------------------- ----------- -----------
Total gain for the financial year (11,730) 10,396
----------------------------------------------- ----------- -----------
Weighted average number of shares in issue 179,972,333 177,473,899
----------------------------------------------- ----------- -----------
As the Company has not issued any convertible securities or
share options, there is no dilutive effect on return per share. The
return per share disclosed therefore represents both the basic and
diluted return per share.
4. Principal Risks
The Company's investment activities expose the Company to a
number of risks associated with financial instruments and the
sectors in which the Company invests. The principal financial risks
arising from the Company's operations are:
-- Investment risks;
-- Credit risk; and
-- Liquidity risk.
The Board regularly reviews these risks and the policies in
place for managing them. There have been no significant changes to
the nature of the risks that the Company is exposed to over the
year and there have also been no significant changes to the
policies for managing those risks during the year.
The risk management policies used by the Company in respect of
the principal financial risks and a review of the financial
instruments held at the year-end, are provided below.
Investment risks
As a VCT, the Company is exposed to investment risks in the form
of potential losses and gains that may arise on the investments it
holds, in accordance with its investment policy. The management of
these investment risks is a fundamental part of the investment
activities undertaken by the Investment Adviser and overseen by the
Board. The Investment Adviser monitors investments through regular
contact with management of investee companies, regular review of
management accounts and other financial information and attendance
at investee company board meetings. This enables the Investment
Adviser to manage the investment risk in respect of individual
investments. Investment risk is also mitigated by holding a
diversified portfolio spread across various business sectors and
asset classes.
The key investment risks to which the Company is exposed
are:
-- Investment price risk;
-- Interest rate risk; and
-- Foreign currency exposure risk
The Company has undertaken sensitivity analysis on its financial
instruments, split into the relevant component parts, taking into
consideration the economic climate at the time of review, in order
to ascertain the appropriate risk allocation.
Investment price risk
Investment price risk arises from uncertainty about the future
prices and valuations of financial instruments held in accordance
with the Company's investment objectives. It represents the
potential loss that the Company might suffer through investment
price movements in respect of quoted investments and also changes
in the fair value of unquoted investments that it holds.
Interest rate risk
The Company accepts exposure to interest rate risk on
floating-rate financial assets through the effect of changes in
prevailing interest rates. The Company receives interest on its
cash deposits at a rate agreed with its bankers. Investments in
loan stock and fixed interest securities attract interest
predominately at fixed rates. A summary of the interest rate
profile of the Company's investments is shown below.
Interest rate profile of financial assets and financial
liabilities
There are three levels of interest which are attributable to the
financial instruments as follows:
-- "Fixed rate" assets represent investments with predetermined yield
targets and comprise fixed interest and loan note investments.
-- "Floating rate" assets predominantly bear interest at rates linked to the
Bank of England base rate and comprise cash at bank.
-- "No interest rate" assets do not attract interest and comprise equity
investments, non-interest-bearing convertible loan notes, loans and
receivables (excluding cash at bank) and other financial liabilities.
The Company monitors the level of income received from fixed,
floating and non-interest rate assets and, if appropriate, may make
adjustments to the allocation between the categories, in
particular, should this be required to ensure compliance with the
VCT regulations.
During the period the Bank of England base rate has increased
from 0.75% per annum to 4.25% per annum at the period end.
Following the period end, in June 2023, the rate increased further,
to 5.0% per annum. Any potential change in the base rate at the
current level would not have a material impact on the net assets
and total return of the Company.
Foreign currency exposure risk
The Company has exposure to foreign currency risk through its
investments in companies whose valuation is denominated and who
report in US Dollars. This has resulted in an unrealised foreign
exchange gains of GBP585,000 (2022: GBP511,000) during the year.
Due to the relatively low exposure to companies denominated in
foreign currencies, the Board considers foreign currency risk to be
at an acceptable level and does not seek to mitigate such exposure
as this could restrict the net returns from the foreign currency
investments.
Credit risk
Credit risk is the risk that the counterparty to a financial
instrument is unable to discharge a commitment to the Company made
under that instrument. The Company is exposed to credit risk
through its holdings of loan stock in investee companies,
investments in fixed interest securities, cash deposits and
debtors.
The Investment Adviser manages credit risk in respect of loan
notes with a similar approach as described under investment risks
above. In addition, with the exception of new investments, credit
risk is mitigated by registering floating charges, covering the
full par value of the loan stock in the form of fixed and floating
charges over the assets of the investee companies. The strength of
this security in each case is dependent on the nature of the
investee company's business and its identifiable assets. The level
of security is a key means of managing credit risk. Similarly, the
management of credit risk associated with interest, dividends and
other receivables is covered within the investment management
procedures.
Cash is mainly held at Royal Bank of Scotland plc, with a
balance also maintained at Bank of Scotland plc, both of which are
A-rated financial institutions. Consequently, the Directors
consider that the credit risk associated with cash deposits is
low.
There has been limited changes in fair value during the year
that can be directly attributable to changes in credit risk.
As at 31 March 2023, of the loan stock classified as "past due",
GBP5,957,000 relates to the principal of loan notes where the
principal has passed its maturity date. As at the balance sheet
date, the extent to which the principal is past its maturity date,
GBP778,000 falls within the banding of nil to two years past due
and GBP5.2 million is two to five years past due. Notwithstanding
this information, the Directors do not consider the loan notes to
be impaired at the current time or that maturity dates of the
principal have altered.
As at 31 March 2022, of the loan stock classified as "past due",
below, GBP911,000 related to the principal of loan notes where,
although the principal remained within term, the investee company
was not fully servicing the interest obligations under the loan
note and was in arrears. Notwithstanding the arrears of interest,
the Directors did not consider that the loan note itself had been
impaired or the maturity of the principal had altered.
As at 31 March 2022, of the loan stock classified as "past due",
below, GBP6,760,000 related to the principal of loan notes where
the principal had passed its maturity date. As at 31 March 2022,
the extent to which the principal is past its maturity date,
GBP874,000 falls within the banding of nil to two years past due
and GBP5.9 million is two to five years past due. Notwithstanding
this information, the Directors did not consider the loan notes to
be impaired at 31 March 2022 or that maturity dates of the
principal had altered.
Liquidity risk
Liquidity risk is the risk that the Company encounters
difficulties in meeting obligations associated with its financial
liabilities. Liquidity risk may also arise from either the
inability to sell financial instruments when required at their fair
values or from the inability to generate cash inflows as required.
The Company normally has a relatively low level of creditors (2023:
GBP1,354,000, 2022: GBP637,000) and has no borrowings. Most of the
quoted investments held by the Company are considered to be readily
realisable. The Company always holds sufficient levels of funds as
cash and readily realisable investments in order to meet expenses
and other cash outflows as they arise. For these reasons, the Board
believes that the Company's exposure to liquidity risk is
minimal.
The Company's liquidity risk is managed by the Investment
Adviser in line with guidance agreed with the Board and is reviewed
by the Board at regular intervals.
5. Related party transactions
Fees payable during the year to the Directors and their interest
in shares of the Company are disclosed within the Directors'
Remuneration Report. There were no amounts outstanding and due to
the Directors as at 31 March 2023 (2022: nil).
Further related party transactions include Investment Adviser
and Administration fees payable to Foresight Group LLP, as
disclosed in notes 4 and 5 of the Annual Report. Of the total
Administration fees, GBP29,000 was payable to Downing LLP, who were
the Investment Adviser and Administration Manager for part of the
year.
In addition, Downing LLP were paid promoter fees in connection
with the fundraising offer that was open during the period, which
totalled GBP37,000 for the year ended 31 March 2023 (2022:
GBP206,000).
The Company also has an agreement to pay an ongoing trail fee
annually to Downing LLP and Foresight LLP, in connection with funds
raised under original offers for subscription out of which there is
an obligation to pay trail commission to intermediaries. During the
year to 31 March 2023, GBP192,000 (2022: GBP172,000) was paid to
Downing LLP.
ANNOUNCEMENT BASED ON AUDITED ACCOUNTS
The financial information set out in this announcement does not
constitute the Company's statutory financial statements in
accordance with section 434 Companies Act 2006 for the year ended
31 March 2023 but has been extracted from the statutory financial
statements for the year ended 31 March 2023 which were approved by
the Board of Directors on 26 July 2023 and will be delivered to the
Registrar of Companies. The Independent Auditor's Report on those
financial statements was unqualified and did not contain any
emphasis of matter nor statements under s 498(2) and (3) of the
Companies Act 2006.
The statutory accounts for the year ended 31 March 2022 have
been delivered to the Registrar of Companies and received an
Independent Auditors report which was unqualified and did not
contain any emphasis of matter nor statements under s 498(2) and
(3) of the Companies Act 2006.
A copy of the full annual report and financial statements for
the year ended 31 March 2023 will be printed and posted to
shareholders shortly. Copies will also be available to the public
at the registered office of the Company at St. Magnus House, 3
Lower Thames Street, London EC3R 6HD and will be available for
download from and www.foresightgroup.eu.
(END) Dow Jones Newswires
July 26, 2023 11:30 ET (15:30 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
Foresight Ventures VCT (LSE:TV1)
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