Foresight VCT PLC Foresight Vct Plc - Annual Financial Report

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Foresight VCT PLC Foresight Vct Plc - Annual Financial Report

 
TIDMFTV 
 
   FORESIGHT VCT PLC 
 
   Final Results 
 
   31 December 2019 
 
   Foresight VCT plc, managed by Foresight Group LLP, today announces the 
final results for the year ended 31 December 2019. 
 
   These results were approved by the Board of Directors on 27 April 2020. 
 
   The Annual Report will shortly be available in full at 
www.foresightgroup.eu. All other statutory information can also be found 
there. 
 
   Highlights 
 
   -- Total net assets GBP133.1 million. 
 
   -- The portfolio has seen an uplift in valuation of GBP7.6 million 
during the year. 
 
   -- Net Asset Value per share decreased by 2.0% from 78.1p at 31 December 
2018 to 76.5p. Including the payment of a 5.0p dividend made on 3 May 
2019, NAV per share at 31 December 2019 was 81.5p, representing a 
positive total return of 4.4%. 
 
   -- Seven new investments totalling GBP12.8 million and four follow-on 
investments totalling GBP2.9 million made during the year. 
 
   -- The Company successfully exited its investments in Idio Limited and 
Flowrite Refrigeration Limited realising a total of GBP1.9 million. 
 
   -- The Board is recommending a final dividend for the year ended 31 
December 2019 of 3.3p per share, to be paid on 19 June 2020. 
 
 
 
 
 
   Chairman's Statement 
 
   I am pleased to present the Company's Audited Annual Report and Accounts 
for the year ended 31 December 2019. 
 
   I would draw your attention to the separate section in my statement 
which includes information on Material Post Year End Events. 
 
   STRATEGY 
 
   The Board, together with the Manager, continue to pursue a strategy for 
the Company which includes the following four key objectives: 
 
   -- further development of the net assets of the Company to a level in 
excess of GBP150 million; 
 
   -- payment of an annual dividend to shareholders of at least 5% of the 
NAV per share and at the same time endeavouring to maintain the NAV per 
share at around its current level; 
 
   -- the implementation of a significant number of new and follow on 
qualifying investments every year; and 
 
   -- maintaining a programme of regular share buy backs at a discount in 
the region of 10% to the prevailing NAV per share. 
 
   The Board and the Manager believe that these key objectives remain 
appropriate and the Company's performance in relation to each of them 
over the past year is reviewed more fully below. 
 
   NET ASSET VALUE 
 
   At 31 December 2019 the NAV of the Company stood at GBP133.1 million 
(2018: GBP136.7 million). During the year ended 31 December 2019 the NAV 
per share rose by 3.4p, an increase of 4.4%. However, following the 
payment of a 5.0p per share dividend on 3 May 2019, which is detailed 
below, the NAV per share reduced from 78.1p at 31 December 2018 to 76.5p 
at 31 December 2019. 
 
   DIVIDS 
 
   The interim dividend of 5.0p per share was paid on 3 May 2019 based on 
an ex-dividend date of 11 April 2019, with a record date of 12 April 
2019. The cost of this dividend was a total of GBP8.8 million, including 
shares allotted under the dividend reinvestment scheme. 
 
   The Board is recommending a final dividend for the year ended 31 
December 2019 of 3.3p per share, to be paid on 19 June 2020 based on an 
ex-dividend date of 4 June 2020, with a record date of 5 June 2020. 
 
   The Company has achieved or exceeded annual dividend payments of at 
least 5.0p per share for each of the past nine years. As discussed in 
the Half-Yearly Report, in light of the change in portfolio towards 
earlier stage, higher risk companies, as required by the new VCT rules, 
the Board felt it prudent to adjust the dividend policy towards a 
targeted annual dividend yield of 5% of NAV per annum. The Board and the 
Manager hope that this may be enhanced by additional 'special' dividends 
as and when particularly successful portfolio exits are made. 
 
   The total return per share from an investment made five years ago would 
be 9.2%, which is materially below the target return set by the Board. 
It is the future achievement of this target that is at the centre of the 
Company's current and future portfolio management strategy. 
 
   INVESTMENT PERFORMANCE AND PORTFOLIO ACTIVITY 
 
   A detailed analysis of the investment portfolio performance over the 
period is given in the Manager's Review. 
 
   Before the payment of dividends, the Company's NAV increased last year 
by GBP5.2 million. The Board believes this reflects the benefit of the 
enlarged and diversified portfolio of qualifying investments which the 
Manager has built up over the past few years. The Company started the 
current year with nearly 85% of its assets invested in a range of 
unquoted growth capital investments; the Board and the Manager believe 
that these investments will continue to mature and help improve the 
future rate of growth in NAV. During the year under review the Manager 
completed seven new investments costing GBP12.8 million. Details of each 
of these new portfolio companies can be found in the Manager's Review. 
 
   The Company and Foresight 4 VCT plc have the same Manager and share 
similar investment policies. The Board closely monitors the extent and 
nature of the pipeline of investment opportunities and is reassured by 
the Manager's confidence in being able to deploy funds without 
compromising quality during 2020 and beyond, so as to be in a position 
to satisfy the investment needs of both companies. We do however 
anticipate that the ongoing impact of the Covid-19 Coronavirus will slow 
down the new investment process. 
 
   BUYBACKS 
 
   During the year the Company repurchased 3.1 million shares for 
cancellation at an average discount of 10.1%. The Board and the Manager 
consider that the ability to offer to buy back shares at a target 
discount of approximately 10% is fair to both continuing and selling 
shareholders and is an appropriate way to help underpin the discount to 
NAV at which the shares trade. 
 
   Share buybacks are timed to avoid the Company's closed periods. Buybacks 
will generally take place, subject to demand, during the following times 
of year: 
 
   -- April, after the Annual Report has been published; 
 
   -- June, prior to the Half-Yearly reporting date of 30 June; 
 
   -- September, after the Half-Yearly Report has been published; and 
 
   -- December, prior to the end of the financial year. 
 
   MANAGEMENT CHARGES, CO-INVESTMENT AND INCENTIVE ARRANGEMENTS 
 
   The annual management fee is an amount equal to 2.0% of net assets, 
excluding cash balances above GBP20 million, which are charged at a 
reduced rate of 1.0%. This has resulted in ongoing charges for the year 
ended 31 December 2019 of 2.3% of net assets, which is at the lower end 
of the range when compared to competitor VCTs. 
 
   Since March 2017, co-investments made by the Manager and individual 
members of the Manager's private equity team have totalled GBP0.7 
million alongside the Company's investments of GBP47.1 million. Under 
the terms of the Incentive Arrangements, as detailed in note 14 to the 
accounts, the 'Total NAV Return Hurdle', has not yet been achieved and 
no performance incentive payment is due. The Board however believes it 
is prudent to record a contingent liability in relation to the 
performance incentive fee due to there being a possible future 
obligation. More detail on this is given in note 16 to the accounts. 
 
   Recognising the importance of protecting shareholder interests the Board 
and the Manager agreed that it was appropriate to update the Incentive 
Arrangements and from 27 January 2020 an additional provision to provide 
an annual increase to the Total Return Hurdle (originally 100p) by the 
greater of RPI and 3.5% was added to the requirements. 
 
   BOARD COMPOSITION 
 
   The Board continues regularly 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. It is the present 
intention not to alter the composition of the Board during the current 
year and the next planned change is scheduled to take effect during 
2021. 
 
   MATERIAL POST YEAR EVENTS 
 
   Since the end of last year two material events have occurred to which I 
would like to draw specific attention. The first is the continuing 
impact of Covid-19 on the Company and its portfolio and the second is to 
report on the Company's fundraising which closed on 7 April this year. 
 
   The Covid-19 virus has presented the Company and the management of its 
portfolio companies with an unprecedented threat which it is anticipated 
will persist for a considerable time to come. On behalf of the Board I 
would pay tribute to the work which has been undertaken by the Manager, 
both in administering the Company and more particularly in working 
closely with the management of the Company's portfolio companies, in 
order to try to minimise the ongoing impact of this threat. Until this 
virus is brought under worldwide control, it is impossible to assess its 
full impact. However, it is already clear that in the immediate future 
every business in the UK will be materially affected; considerable work 
has and is continuing to be undertaken by the Manager alongside the 
management teams at each and every one of the companies within the 
portfolio to contain the impact so far as possible. 
 
   Despite the ongoing difficulties created by Covid-19, the Board is 
pleased that the Company has been successful in raising additional funds 
to support both its current and future portfolio of investments. The 
Company closed its offer for subscription on 7 April and raised GBP24.8 
million. The majority of the funds received were subscribed in the final 
allotments totalling GBP18.6 million, which took place on 3 April and 14 
April based on a NAV of 66.5p per share, which compares with the NAV at 
the end of last year of 76.5p per share. 
 
   OUTLOOK 
 
   The persisting uncertainty over the full impact of Covid-19 and the 
ongoing negotiations in relation to Brexit create truly exceptional 
challenges for every business. The Company invests primarily in 
developing companies which by their nature benefit from general economic 
growth and the current environment places considerable demands upon them 
and their management teams. The Manager's private equity team is well 
aware of the management and business needs of each of the companies 
within the investment portfolio and is working closely with them to 
ensure that they are able to make progress during these testing times. 
Nevertheless, the Board and the Manager are optimistic that the existing 
portfolio has potential to grow further once the spread of the virus has 
been successfully contained. 
 
   SHAREHOLDER COMMUNICATION 
 
   As a result of the travel restrictions imposed due to Covid-19, the 
Manager's popular investor forums have been temporarily put on hold. 
Once it is possible to do so, details of both a London event and 
regional events will be sent to shareholders resident in the locality as 
and when they are organised. 
 
   As communicated in the Half-Yearly Report, the Board offered 
shareholders the opportunity to choose the method by which they receive 
shareholder communications. I am pleased to announce that 92% of 
communications to investors will now be provided electronically. The 
Board believes that, in addition to promoting sustainability, a shift 
towards electronic communications will result in cost savings for the 
Company. 
 
   AUDITOR 
 
   The Board launched a tender for its audit contract following the signing 
of the 2018 Annual Report and Accounts. The previous auditor, KPMG LLP, 
was invited to tender alongside several other firms. As announced in the 
Half-Yearly Report, following this tender process, Deloitte LLP was 
appointed as company auditor for the year ending 31 December 2019. The 
Board is pleased with the appointment but would like to record its 
thanks to KPMG LLP for its services and advice over the past eight 
years. 
 
   ANNUAL GENERAL MEETING 
 
   The Company's Annual General Meeting will take place on 28 May 2020 at 
1.00pm. Please refer to the formal notice on page 74 of the Annual 
Report and Accounts for further details in relation to the format of 
this year's meeting and the request to observe social distancing and 
travel restrictions in place. 
 
   John Gregory 
 
   Chairman 
 
   Telephone: 01296 682751 
 
   Email: j.greg@btconnect.com 
 
   27 April 2020 
 
 
 
 
 
   Manager's Review 
 
   The Company has appointed Foresight Group LLP ("the Manager") to provide 
investment management and administration services. 
 
   The investment management and administration arrangements were 
previously with Foresight Group CI Limited (the Manager's parent 
undertaking), with Foresight Group CI Limited appointing the Manager as 
its investment adviser and delegating administration services to the 
Manager. The investment management and administration arrangements were 
novated and amended to be directly with the Manager on 27 January 2020. 
References to the Manager's activities in this report include those 
activities of Foresight Group CI Limited prior to the change in 
arrangements. 
 
   Overview 
 
   We are pleased to report an uplift in the existing portfolio's value of 
GBP7.6 million in the year, although NAV per share was reduced by 
payment of an GBP8.8 million dividend and performance was therefore 
behind target. Good progress was made in regards new investments with 
seven completed in the year, deploying GBP12.8 million. We continue to 
support the Board in management of the Company's resources to ensure 
sufficient liquidity for new and follow-on investments, dividends and 
regular buybacks, with the Company repurchasing 3.1 million shares at an 
average discount of 10.1% in the year. As the portfolio mix evolves in 
line with the new VCT rules we believe the Board's new target dividend 
of 5% of NAV per annum, enhanced by the opportunity for 'special' 
dividends following successful portfolio exits, is appropriate in light 
of the new VCT rules. 
 
   Portfolio Summary 
 
   As at 31 December 2019 the Company's portfolio comprised 43 investments 
with a total cost of GBP91.4million and a valuation of GBP120.5 million. 
The portfolio is diversified by sector, transaction type, and maturity 
profile. Details of the ten largest investments by valuation, including 
an update on their performance, are provided on pages 12 to 16 of the 
accounts. 
 
   NEW INVESTMENTS 
 
   The Company maintained investment momentum in 2019, investing a total of 
GBP12.8 million in seven new investments: ClubSpark, a specialist 
software company providing sports management software to sports clubs, 
venues, coaches and participants; Steamforged Games, a developer and 
retailer of tabletop games with a portfolio of miniature role playing, 
board and card games; Fourth Wall Creative, a technology-led sports 
merchandising business; Ten Health, a group of boutique fitness studios 
offering a range of services including physiotherapy, massage therapy 
and fitness classes; Biotherapy Services, a pharmaceutical biotech 
company specialising in wound treatment medicine; Rovco, a disruptive 
technology subsea surveying company and Roxy Leisure, a group of games 
orientated bars. 
 
   CLUBSPARK 
 
   In January 2019 the Company made a c.GBP1.3 million investment in 
Sportlabs Technology Limited, trading as ClubSpark, a specialist 
software company providing sports management software to sports clubs, 
venues, coaches and participants. ClubSpark was founded in 2012 by two 
ex-Lawn Tennis Association employees who spotted an opportunity to 
develop a platform to manage operations for the LTA member clubs. The 
investment will be used to establish an international presence, enhance 
the platform and expand into new sports markets. 
 
   STEAMFORGED GAMES 
 
   In March 2019 the Company invested c.GBP2.4 million in Steamforged Games, 
a developer and retailer of tabletop games with a portfolio of tabletop 
role playing, board and card games. Founded in 2014, Steamforged Games 
has successfully carved out a niche in the market developing tabletop 
games based on popular video game titles, incorporating their own 
original content. The investment will be used to fund growth through 
product development and international expansion. 
 
   FOURTH WALL CREATIVE 
 
   In April 2019 the Company invested c.GBP3.0 million in Fourth Wall 
Creative, a technology-led sports merchandising business. Its core 
business is the design and distribution of membership welcome packs on 
behalf of football clubs. The investment will fund growth through the 
development of new services, expanding the customer base and exploring 
other sports opportunities. 
 
   TEN HEALTH & FITNESS 
 
   In June 2019 the Company invested c.GBP2.4 million in Ten Health, a 
group of boutique fitness studios offering a range of services including 
physiotherapy, massage therapy and fitness classes. Ten Health was 
developed to bridge the gap in the market between traditional healthcare 
and mainstream fitness. The investment will be used to further develop 
Ten Health's non-fitness services and to support a roll-out of new 
studios. 
 
   BIOTHERAPY SERVICES 
 
   In November 2019, the Company invested c.GBP1.5 million in Biotherapy 
Services, a pharmaceutical biotech company specialising in wound 
treatment regenerative medicine, with a focus on chronic diabetic foot 
ulcers and complex wounds. The investment will support the completion of 
medical trials and facilitate product development. 
 
   ROVCO 
 
   In December 2019, the Company invested GBP0.9 million in Rovco, a 
company which provides subsea surveying services. Established in 2015, 
the business seeks to disrupt the industry with new technology which 
will lead to a fully automated process. The investment will support the 
growth of the business' commercial and operational capabilities to help 
with its goal of global expansion. 
 
   ROXY LEISURE 
 
   In December 2019, the Company invested GBP1.5 million in Roxy Leisure, a 
games focused bar group operating eight sites across the Midlands and 
Northern England. Founded in 2013, the sites provide a range of 
entertainment facilities including pool tables, ping-pong, bowling, 
shuffleboard, mini-golf, arcade gaming and karaoke. The investment will 
be used to support the business' expansion into additional locations 
across the UK with multiple openings planned in 2020. 
 
   FOLLOW ON INVESTMENTS 
 
   Follow-on investments totalling GBP2.9 million were also made in four 
existing portfolio companies throughout the year. Further details of 
each of these are provided below. 
 
   FERTILITY FOCUS 
 
   During the year the Company made a GBP0.4 million follow-on investment 
in Fertility Focus, a fertility monitoring device business. This was in 
order to support new product launches planned for 2020. 
 
   NANO 
 
   During the year the Company made a GBP1.0 million follow-on investment 
in Nano, a data analysis software platform, as part of a larger funding 
round. This additional investment enabled Nano to invest in new 
technologies and provided support for further growth, product 
development and US expansion. 
 
   LUMINET 
 
   In December 2019, the Company made a GBP1.4 million follow-on investment 
in Luminet, providers of fixed wireless internet access to businesses 
across London. The investment was required to help the business fulfil 
its pipeline of new contracts. 
 
   BIOFORTUNA 
 
   Also in December 2019, the Company made a GBP0.1 million follow-on 
investment in Biofortuna, a molecular diagnostics business which 
manufactures DNA tests. The investment was required to provide 
additional working capital and support an asset purchase. 
 
   PIPELINE 
 
   At 31 December 2019, the Company had cash balances of GBP12.3 million 
available to fund new and follow-on investments, buybacks and running 
expenses. The Board therefore decided to launch an offer for 
subscription on 28 January 2020 and raised GBP24.8 million. 
 
   Depending on the length and severity of the Covid-19 Coronavirus 
outbreak, we will likely see a higher proportion of our deployment 
focused on follow-on investments in the existing portfolio in the medium 
term, potentially alongside co-investors. We anticipate that the onset 
of a downturn may result in lower new deal activity in the coming months 
and we continue to remain disciplined on valuations paid for new 
investments. 
 
   As the economy recovers from the worst effects of the virus, we expect 
valuations to become more attractive, and expect there to be a number of 
particularly interesting opportunities for investment. 
 
   EXITS AND REALISATIONS 
 
   During the period, proceeds of GBP1.9 million were generated from the 
successful exit of two investments. 
 
   IDIO 
 
   In November 2019, Idio, an enterprise software company that analyses 
data obtained from consumers' online activity, was sold to Episerver, a 
private equity backed global software company. During the investment 
period, Idio refocused its corporate strategy and was able to broaden 
its customer base beyond financial services. The investment supported 
the management team's growth strategy by building out the sales team, 
improving account management to enhance retention rates and further 
developing the broader business. Overall, the investment generated a 
1.9x return for the Company. 
 
   FLOWRITE 
 
   In December 2019, the Company completed the successful sale of Flowrite 
Refrigeration Holdings Limited, a company focused on the design, 
installation and servicing of air conditioning equipment throughout the 
UK, to Airedale Catering Equipment Group Limited. With our support, 
Flowrite has become a market leader in the refrigeration and air 
conditioning service market. The company has an enviable customer base 
which includes some of the UK's largest restaurant chains, pub groups 
and retailers. Overall, the investment generated a 1.4x return on cash 
and a double digit IRR, when taking into account previous realisations. 
 
   DISPOSALS IN THE YEARED 31 DECEMBER 2019 
 
 
 
 
                                           Accounting 
                                           Cost at Date                     Realised       Valuation at 31 
                                           of Disposal   Proceeds          Gain/(Loss)      December 2018 
Company                  Detail               (GBP)        (GBP)              (GBP)             (GBP) 
                                      -----------------             ------------------  ------------------ 
                         Full 
Idio Limited              disposal              920,313  1,725,808             805,495             695,435 
Flowrite Refrigeration   Full 
 Limited                  disposal              209,801    194,849            (14,952)             194,783 
The Business Advisory    Loan 
 Limited                  Repayment              45,000     45,000                   -              45,000 
Autologic Diagnostics 
 Group Limited           Dissolved            3,782,272          -        (3,782,272)^                   - 
Mitgjorn Limited         Dissolved                  100          -               (100)                   - 
Total disposals                               4,957,486  1,965,657         (2,991,829)             935,218 
 
   Deferred consideration of GBP441,016 was also received by the Company 
from the sale of Trilogy Communications Limited. 
 
   ^This loss refers to the transfer on disposal between unrealised and 
realised reserves and has no impact on NAV in the current year. 
 
   KEY PORTFOLIO DEVELOPMENTS 
 
   Overall, the value of investments held rose to GBP120.5 million, driven 
by investment of GBP15.8 million of cash and an increase in value of 
existing investments by GBP7.6 million. Material changes in valuation 
are defined as increasing or decreasing by over GBP1.0 million since 31 
December 2018. Updates on these companies are included below, or in the 
Top Ten Investments section on page 12 of the accounts. 
 
 
 
 
                                                              Valuation Change 
Company                                Valuation Methodology        (GBP) 
------------------------------  ----------------------------  ---------------- 
                                Discounted earnings 
FFX Group Limited                multiple                            2,669,931 
                                Discounted earnings 
Mowgli Street Food Limited       multiple                            1,402,555 
Nano Interactive Group 
 Limited                        Discounted revenue multiple          1,307,462 
Aerospace Tooling Holdings      Discounted earnings 
 Limited                         multiple                            1,050,553 
Ixaris Group Holdings Limited   Discounted revenue multiple          1,023,418 
Fresh Relevance Limited         Discounted revenue multiple          1,021,321 
                                Discounted earnings 
Specac International Limited     multiple                            1,011,706 
Powerlinks Media Limited        Discounted revenue multiple        (1,299,720) 
                                Discounted earnings 
Aquasium Technology Limited      multiple                          (1,411,773) 
Online Poundshop Limited         Discounted revenue multiple       (1,497,384) 
                                                              ---------------- 
 
   MOWGLI STREET FOOD 
 
   Mowgli Street Food is a fast casual Indian street food chain of 
restaurants founded in 2014 with a focus on healthier, homestyle Indian 
cuisine. The business has performed exceptionally well to date with its 
six mature sites achieving strong revenue growth and its four younger 
sites performing ahead of budget. 
 
   AEROSPACE TOOLING ("ATL") 
 
   ATL is a niche engineering company based in Dundee which specialises in 
the inspection, maintenance and repair of components for aircraft 
engines. ATL has achieved strong sales in the past year, consistently 
trading ahead of budget. The business has won a number of new key 
accounts and broadened its customer base by targeting new product areas. 
 
   POWERLINKS MEDIA 
 
   Powerlinks Media is an advertising technology company that has developed 
a real-time trading platform for online adverts globally. Sales are 
materially behind forecast for the year, but the company remains in 
discussion with its largest clients to improve volumes. The business is 
continuing to reduce its cost base while improving the performance of 
the technology platform in order to help with its recovery. 
 
   AQUASIUM 
 
   Aquasium manufactures, services and refurbishes electron beam welding 
equipment and vacuum furnaces. Revenues for the year have been behind 
budget, mainly due to a delay in a large anticipated order. 
Encouragingly, the order book has picked up to its highest levels in 10 
years and the pipeline remains healthy. The company's new product 
development is progressing well. 
 
   ONLINE POUNDSHOP 
 
   Online Poundshop is an online only discount retailer. The business has 
had a difficult year of trading with sales behind management forecasts. 
On a positive note, customer satisfaction rates are steadily improving 
and the team remains focused on improving sales as well as reducing 
overheads. 
 
   OUTLOOK 
 
   The United Kingdom has officially left the European Union after a 
three-year period of political uncertainty. Despite some relief, the 
economic outlook remains mixed however, as businesses await further news 
on future trade deals. Equally, a new threat has emerged in the form of 
the Coronavirus. We have been working closely with the Company's 
portfolio companies to identify potential risk areas and are encouraging 
businesses to take the necessary precautions. The outbreak of Covid-19 
will lead to weaker consumer and business spend as well as missed 
forecasts. Given the above, we are asking our portfolio businesses to 
stress test their cash position to ensure that they can withstand a 
significant downturn in trading. We are ensuring the finance directors 
at all of our portfolio companies are tightly managing central overheads, 
reducing capital expenditure and preparing both short and long-term cost 
reduction plans. 
 
   A proportion of our portfolio companies are particularly at risk due to 
the sectors they operate in, such as Ixaris in the travel sector or 
Ollie Quinn in retail. We are paying particular attention to these 
assets by leveraging the experience and skillset of the wider investment 
team to assist the management teams in preserving and maximising cash. 
We are working closely with management teams to take firm and decisive 
steps to significantly reduce cash burn in the short and medium term. 
 
   Notwithstanding these events, we are continuing to see encouraging 
levels of activity from smaller UK companies seeking growth capital, and 
expect this to increase as companies seek to recover from the impact of 
Covid-19 with requirement for permanent funding to working capital. VCTs 
are still viewed by many entrepreneurs as an attractive source of 
capital that provides scale up funding to businesses at an early stage 
of their growth, when other sources of funding may not be readily 
available. The Company's portfolio is sector and market diverse and the 
SME market tends to be resilient and nimble enough to weather periods of 
volatility. The UK remains an excellent place to start, scale and sell a 
business, with broad pools of talent and an entrepreneurial culture. 
 
   Russell Healey 
 
   Head of Private Equity 
 
   Foresight Group LLP 
 
   27 April 2020 
 
   Audited Income Statement 
 
   for the year ended 31 December 2019 
 
 
 
 
                                    Year ended                    Year ended 
                                  31 December 2019              31 December 2018 
                                Revenue    Capital    Total   Revenue    Capital    Total 
                                GBP'000    GBP'000   GBP'000  GBP'000    GBP'000   GBP'000 
Realised (losses)/gains 
 on investments                       --    (2,551)  (2,551)        --        921      921 
Investment holding gains              --     10,258   10,258        --      5,916    5,916 
Income                             1,284         --    1,284     1,398         --    1,398 
Investment management 
 fees                              (643)    (1,930)  (2,573)     (595)    (1,784)  (2,379) 
Other expenses                     (565)         --    (565)     (472)         --    (472) 
Return on ordinary activities 
 before taxation                      76      5,777    5,853       331      5,053    5,384 
Taxation                              --         --       --      (34)         34       -- 
Return on ordinary activities 
 after taxation                       76      5,777    5,853       297      5,087    5,384 
 
Return per share:                   0.0p       3.3p     3.3p      0.2p       2.9p     3.1p 
 
 
   The total column of this statement is the profit and loss account of the 
Company and the revenue and capital columns represent supplementary 
information. 
 
   All revenue and capital items in the above Income Statement are derived 
from continuing operations. No operations were acquired or discontinued 
in the year. 
 
   The Company has no recognised gains or losses other than those shown 
above, therefore no separate statement of total comprehensive income 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. 
 
 
 
   Audited Reconciliation of Movements in Shareholders' Funds 
 
 
 
 
                                                      Share 
                                  Called-up           premium    Capital redemption    Distributable     Capital    Revaluation 
Year ended 31 December           share capital        account          reserve            Reserve^       reserve^     reserve        Total 
 2019                               GBP'000           GBP'000          GBP'000            GBP'000        GBP'000      GBP'000        GBP'000 
                              ----------------  -------------  --------------------  ---------------  -----------                 ---------- 
As at 1 January 2019                     1,751         99,115                   920           12,929        3,422         18,589     136,726 
Share issues in the 
 year*                                      20          1,425                    --               --           --             --       1,445 
Expenses in relation 
 to share issues**                          --           (92)                    --               --           --             --        (92) 
Repurchase of shares                      (31)             --                    31          (2,060)           --             --     (2,060) 
Cancellation of share 
 premium                                    --       (21,607)                    --           21,607           --             --          -- 
Realised losses on disposal 
 of investments                             --             --                    --               --      (2,551)             --     (2,551) 
Investment holding gains                    --             --                    --               --           --         10,258      10,258 
Dividends paid                              --             --                    --          (8,753)           --             --     (8,753) 
Management fees charged 
 to capital                                 --             --                    --               --      (1,930)             --     (1,930) 
Revenue return for the 
 year                                       --             --                    --               76          ---             --          76 
As at 31 December 2019                   1,740         78,841                   951           23,799      (1,059)         28,847     133,119 
*Relating to the dividend reinvestment scheme. 
 **Expenses in relation to share issues relate to trail commission for 
 prior years' fund raising. 
 ^Reserve is available for distribution, total distributable reserves 
 at 31 December 2019 total GBP22,740,000 (2018: GBP16,351,000). 
                                                        Share 
                                     Called-up        premium    Capital redemption    Distributable      Capital    Revaluation 
Year ended 31 December           share capital        account               reserve          reserve      reserve        reserve       Total 
 2018                                  GBP'000        GBP'000               GBP'000          GBP'000      GBP'000        GBP'000     GBP'000 
                              ----------------  -------------  --------------------  ---------------  -----------  -------------  ---------- 
As at 1 January 2018                     2,194         97,687                   455           23,169        4,251         12,673     140,429 
Share issues in the 
 year*                                      22          1,523                    --               --           --             --       1,545 
Removal of shares                        (439)             --                   439               --           --             --          -- 
Expenses in relation 
 to share issues**                          --           (95)                    --               --           --             --        (95) 
Repurchase of shares                      (26)             --                    26          (1,817)           --             --     (1,817) 
Realised gains on disposal 
 of investments                             --             --                    --               --          921             --         921 
Investment holding gains                    --             --                    --               --           --          5,916       5,916 
Dividends paid                              --             --                    --          (8,720)           --             --     (8,720) 
Management fees charged 
 to capital                                 --             --                    --               --      (1,784)             --     (1,784) 
Tax credited to capital                     --             --                    --               --           34             --          34 
Revenue return for the 
 year                                       --             --                    --              297          ---             --         297 
As at 31 December 2018                   1,751         99,115                   920           12,929        3,422         18,589     136,726 
 
  *Relating to the dividend reinvestment scheme. 
  **Expenses in relation to share issues relate to trail commission for 
  prior years' fund raising. 
 
   Audited Balance Sheet 
 
   at 31 December 2019 
 
   Registered Number: 03421340 
 
 
 
 
                                                     As at 
                                                   31 December        As at 
                                                      2019       31 December 2018 
                                                     GBP'000         GBP'000 
Fixed assets 
Investments held at fair value through profit 
or loss                                                120,521             99,065 
Current assets 
Debtors                                                    362                542 
Cash and cash equivalents                               12,324             37,419 
                                                        12,686             37,961 
Creditors 
Amounts falling due within one year                       (88)              (300) 
Net current assets                                      12,598             37,661 
Net assets                                             133,119            136,726 
Capital and reserves 
Called-up share capital                                  1,740              1,751 
Share premium account                                   78,841             99,115 
Capital redemption reserve                                 951                920 
Distributable reserve                                   23,799             12,929 
Capital reserve                                        (1,059)              3,422 
Revaluation reserve                                     28,847             18,589 
Equity Shareholders' funds                             133,119            136,726 
 
Net asset value per share:                               76.5p              78.1p 
 
 
   The financial statements were approved by the Board of Directors and 
authorised for issue on 27 April 2020 and were signed on its behalf by: 
 
   John Gregory 
 
   Chairman 
 
 
 
 
 
   Audited Cash Flow Statement 
 
   for the year ended 31 December 2019 
 
 
 
 
                                                      Year ended    Year ended 
                                                      31 December   31 December 
                                                         2019          2018 
                                                        GBP'000       GBP'000 
Cash flow from operating activities 
Loan interest received from investments                       733         1,025 
Dividends received from investments                           178           155 
Deposit and similar interest received                         186           258 
Investment management fees paid                           (2,573)       (2,379) 
Secretarial fees paid                                       (122)         (115) 
Other cash payments                                         (465)         (495) 
Net cash outflow from operating activities                (2,063)       (1,551) 
Cash flow from investing activities 
Purchase of investments                                  (15,791)      (17,705) 
Net proceeds on sale of investments                         1,966         3,380 
Net proceeds on deferred consideration                        441           310 
Net proceeds on liquidation of investments                     --            20 
Net cash outflow from investing activities               (13,384)      (13,995) 
Cash flow from financing activities 
Expenses of fund raising                                     (92)          (95) 
Repurchase of own shares                                  (2,248)       (1,763) 
Equity dividends paid                                     (7,308)       (7,176) 
Net cash outflow from financing activities                (9,648)       (9,034) 
Net outflow of cash in the year                          (25,095)      (24,580) 
Reconciliation of net cash flow to movement in net 
 funds 
Decrease in cash and cash equivalents for the year       (25,095)      (24,580) 
Net cash and cash equivalents at start of year             37,419        61,999 
Net cash and cash equivalents at end of year               12,324        37,419 
 
 
 
 
 
 
                                  At 1 January            At 31 December 
Analysis of changes in net debt       2019      Cashflow       2019 
                                    GBP'000     GBP'000      GBP'000 
Cash and cash equivalents               37,419  (25,095)          12,324 
 
 
 
 
 
   Notes 
 
   1.     These are not statutory accounts in accordance with S436 of the 
Companies Act 2006. The full audited accounts for the year ended 31 
December 2019, which were unqualified and did not contain statements 
under S498(2) of the Companies Act 2006 or S498(3) of the Companies Act 
2006, will be lodged with the Registrar of Companies. Statutory accounts 
for the year ended 31 December 2019 including an unqualified audit 
report and containing no statements under the Companies Act 2006 will be 
delivered to the Registrar of Companies in due course. 
 
   2.    The audited Annual Financial Report has been prepared on the basis 
of accounting policies set out in the statutory accounts of the Company 
for the year ended 31 December 2019.  All investments held by the 
Company are classified as 'fair value through the profit and loss'. 
Unquoted investments have been valued in accordance with IPEVC 
guidelines. Quoted investments are stated at bid prices in accordance 
with the IPEVC guidelines and Generally Accepted Accounting Practice. 
 
   3.   Copies of the Annual Report will be sent to shareholders and can be 
accessed on the following website: 
https://www.globenewswire.com/Tracker?data=18quyPFtWR8-EXXM_mqAdK0L3mNbVgJfG3nBYSdfBYIHVe82OlMmAGxLiT-_vOTsHej-WJqdYR80HArXX6mpEJlx8pKTR9X-7tyPkhYmeOo= 
www.foresightgroup.eu. 
 
   4.    Net asset value per share 
 
   The net asset value per share is based on net assets at the end of the 
year and on the number of shares in issue at that date. 
 
 
 
 
                       31 December 
                           2019       31 December 2018 
Net assets            GBP133,119,000   GBP136,726,000 
No. of shares at 
 year end                173,959,405       175,051,026 
Net asset value per            76.5p             78.1p 
 share 
 
 
   5.    Return per share 
 
 
 
 
                                 Year ended 
                                 31 December   Year ended 31 
                                    2019        December 2018 
                                  GBP'000         GBP'000 
Total return after taxation            5,853            5,384 
Total return per share (note 
 a)                                     3.3p             3.1p 
Revenue return from ordinary 
 activities after taxation                76              297 
Revenue return per share 
 (note b)                               0.0p             0.2p 
Capital return from ordinary 
 shares after taxation                 5,777            5,087 
Capital return per share 
 (note c)                               3.3p             2.9p 
Weighted average number of 
 shares in issue in the year     175,090,865      175,834,593 
 
 
   Notes: 
 
   a) Total return per share is total return after taxation divided by the 
weighted average number of shares in issue during the year. 
 
   b) Revenue return per share is revenue return after taxation divided by 
the weighted average number of shares in issue during the year. 
 
   c) Capital return per share is capital return after taxation divided by 
the weighted average number of shares in issue during the year. 
 
   6.    Annual General Meeting 
 
   The Annual General Meeting of the Company will be held at 5 Wildernesse 
Mount, Sevenoaks, Kent, TN13 3QS on 28 May 2020 at 1.00 pm. Shareholders 
are encouraged to observe the social distancing and travel restrictions 
and are asked not to attend the Annual General Meeting which will be 
held by way of a 'closed' meeting. Further information can be found 
within the notification letter and at www.foresightgroup.eu. 
 
 
 
 
 
   7.    Income 
 
 
 
 
                                           Year ended     Year ended 
                                           31 December    31 December 
                                           2019 GBP'000   2018 GBP'000 
---------------------------------------- 
  Loan stock interest                               920            985 
  Dividends receivable                              178            155 
  Deposit and similar interest received             186            258 
---------------------------------------- 
                                                  1,284          1,398 
 
 
   8.    Investments held at fair value through profit or loss 
 
 
 
 
                          2019      2018 
                         GBP'000   GBP'000 
Unquoted investments     120,521    99,065 
 
 
 
 
 
 
 
 
                                 Total 
                                       GBP'000 
Book cost as at 1 January 2019          80,527 
Investment holding gains                18,538 
Valuation at 1 January 2019             99,065 
Movements in the year: 
Purchases at cost                       15,791 
Disposal proceeds^                     (1,966) 
Realised losses*                       (2,992) 
Investment holding gains**              10,623 
Valuation at 31 December 2019          120,521 
Book cost at 31 December 2019           91,360 
Investment holding gains                29,161 
Valuation at 31 December 2019          120,521 
 
 
 
   ^The Company received GBP1,966,000 (2018: GBP3,380,000) from the 
disposal of investments during the year. The book cost of these 
investments when they were purchased was GBP4,957,000 (2018: 
GBP2,789,000). 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. 
 
   *Realised losses in the income statement includes deferred consideration 
of GBP441,000 received from Trilogy Communications Limited in the year. 
 
   **Investment holding gains in the income statement have been reduced by 
the offset in the deferred consideration debtor of GBP377,000 (Trilogy 
Communications Limited) and have been increased by the deferred 
consideration debtor for Idio Limited, totalling GBP12,000. 
 
   9.    Related party transactions 
 
   No Director has an interest in any contract to which the Company is a 
party other than their appointment as directors. 
 
   10.  Transactions with the manager 
 
   During the year the manager of the Company was Foresight Group CI 
Limited. During the year, investment management and administration 
services of a total cost of GBP2,573,000 (2018: GBP2,379,000) were 
delivered by Foresight Group CI Limited. At 31 December 2019, the amount 
due to Foresight Group CI Limited was GBPnil (2018: GBPnil). 
 
   During the year, services of a total cost of GBP120,000 (2018: 
GBP117,000) were indirectly delivered to the Company by Foresight Group 
LLP. At 31 December 2019, the amount due to Foresight Group LLP was 
GBPnil (2018: GBP2,000). 
 
   No amounts have been written off in the year in respect of debts due to 
or from the Manager. 
 
   END 
 
 
 
 

(END) Dow Jones Newswires

April 27, 2020 10:30 ET (14:30 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.

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