TIDMFTV
FORESIGHT VCT PLC
Final Results
31 December 2020
Foresight VCT plc, managed by Foresight Group LLP, today announces the
final results for the year ended 31 December 2020.
These results were approved by the Board of Directors on 9 April 2021.
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 GBP151.8 million.
-- The portfolio has seen an uplift in valuation of GBP4.8 million during
the year.
-- Net Asset Value per share decreased by 3.7% from 76.5p at 31 December
2019 to 73.7p. Including the payment of a 3.3p dividend made on 19 June
2020, NAV total return per share at 31 December 2020 was 77.0p,
representing a positive total return of 0.7%.
-- The offer for subscription launched in January 2020 was closed on 7 April
2020 and raised a total of GBP24.2 million after expenses.
-- Three new investments totalling GBP4.6 million and three follow-on
investments totalling GBP3.1 million made during the year.
-- The Board is recommending a final dividend for the year ended 31 December
2020 of 3.7p per share, to be paid on 25 June 2021.
Chairman's Statement
I am pleased to present the Company's Audited Annual Report and Accounts
for the year ended 31 December 2020.
The Continuing Impact of Covid-19
Before providing other details, I would like to draw attention to the
continuing impact of Covid-19 on the Company and its investment
portfolio.
The Covid-19 virus has presented the Company and the management of every
one of the businesses in the Company's portfolio with unprecedented
challenges. For many of these companies, significant challenges will
continue for some time to come. The Manager has been working closely
with all the businesses, in order to minimise any adverse impact of the
virus and it is a great credit to the quality of the management of the
portfolio companies to be able to record that the fallout from the
pandemic has not been more significant. Until the virus is brought under
control, it is impossible to assess its full impact. However, it is
clear that the value of all the businesses has been affected, a minority
have benefitted but most have not.
At the end of last year, the Company held 13 investments in businesses
involved in the travel, retail, entertainment and food and drink
sectors; these investments amounted to some 22% by value of the
Company's investment portfolio. To date these sectors are amongst those
most hard hit by the various lockdowns imposed by the UK Government in
response to Covid-19. I am pleased to report that during the summer,
when initial lockdown provisions were eased, all the Company's
investments in these sectors were continuing to trade and, with one
possible exception, they were pursuing revised business strategies which
hold the potential for a return to commercial viability when the current
restrictions are eased. Inevitably the reimposition of a total lockdown
after Christmas has placed further demands on these and other businesses
within the portfolio, the full impact of which we will only be able to
assess later this year.
The immediate impact of the Covid virus at the beginning of 2020 can be
seen in the material fall in the valuation of the Company's portfolio in
March 2020. Since the end of the first lockdown the trading position of
many of the businesses has improved, some quite significantly and the
year-end valuations reflect this benefit. On behalf of the Board I would
again like to thank the members of the Manager's team for the
considerable work which they have done and continue to do alongside the
management teams at each of the companies in the portfolio.
Strategy
The Board and the Manager continue to pursue a strategy for the Company
which includes the following four key objectives:
-- further development of the net assets of the Company to maintain a
level in excess of GBP150 million;
-- payment of an annual dividend of at least 5% of the NAV per share and
at the same time endeavouring to maintain the NAV per share at no less
than 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 2020 the NAV of the Company was GBP151.8 million (2019:
GBP133.1 million), which is in line with the Board's objective of
developing the net assets of the Company to a level in excess of GBP150
million.
At the start of last year some 90% of the Company's assets were already
invested and the Board believed it would be in the Company's best
interest to raise further funds to provide liquidity for its activities
over the coming year and beyond. Despite the difficulties created by
Covid-19, the Board is pleased that the Company was successful in
raising additional funds. The Company closed its offer for subscription
on 7 April 2020 and raised GBP24.8 million before expenses. 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 compared with the NAV on 31 December 2019 of
76.5p per share.
During the year the NAV per share decreased by 3.7% from 76.5p at 31
December 2019 to 73.7p at 31 December 2020. Including the payment of a
3.3p per share dividend made on 19 June 2020, which is detailed below,
NAV total return per share for the 12 month period was 77.0p,
representing a total return of 0.7%.
After the payment of a dividend of 5.0% of NAV which is detailed below,
the Company has not met its objective of maintaining NAV per share at
around its current level. On this occasion, the Company's failure to
achieve this most important objective was due to the impact of the
Covid-19 lockdown on the Company's portfolio. The Board and the Manager
are working towards achieving this key objective in the medium term and
the portfolio had already seen a significant recovery from its March
2020 valuation by the year end.
Dividends
The final dividend for the year ended 31 December 2019 of 3.3p per share
was paid on 19 June 2020 based on an ex-dividend date of 4 June 2020,
with a record date of 5 June 2020. The total cost of this dividend was
GBP6.8 million, including shares allotted under the dividend
reinvestment scheme.
The Board is recommending a final dividend for the year ended 31
December 2020 of 3.7p per share, to be paid on 25 June 2021 based on an
ex-dividend date of 10 June 2021, with a record date of 11 June 2021.
The Company continues to achieve its target dividend yield of 5% of NAV,
which was set in the prior year in light of the change in portfolio
towards earlier stage, higher risk companies, as required by the current
VCT rules. The Board and the Manager hope that this performance may be
enhanced by additional 'special' dividends as and when particularly
successful portfolio disposals are achieved.
The total return per share from an investment made five years ago would
be 17.7%, which is below the target return set by the Board of 5% per
annum. 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.
As mentioned earlier, the Company started 2020 with around 90% 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 three new investments and three
follow-on investments costing GBP4.6 million and GBP3.1 million
respectively. This achievement was somewhat behind the Company's
objective of implementing a significant number of new and follow-on
investments every year, however, due to Covid-19, the Manager has been
focusing on supporting the existing portfolio through the various stages
of the pandemic. The Board and the Manager are confident this objective
can be achieved in the year ahead, particularly with the increased
investment activity in the three months to 31 December 2020, which
accounts for all of the new and follow on investments noted above.
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 2021 and beyond, so as to be in a position
to satisfy the investment needs of both companies.
Buybacks
During the year the Company repurchased 4.3 million shares for
cancellation at an average discount of 10.1%, achieving its objective of
maintaining regular share buybacks at a discount of 10%, as noted above.
The Board and the Manager consider that the ability to offer to buy back
shares at a target discount of approximately 10% is fair to both
continuing and selling shareholders and is an appropriate way to help
underpin the discount to NAV at which the shares trade.
Share buybacks are timed to avoid the Company's closed periods. Buybacks
will generally take place, subject to demand, during the following times
of year:
-- April, after the Annual Report has been published;
-- June, prior to the Half-Yearly reporting date of 30 June;
-- September, after the Half-Yearly Report has been published; and
-- December, prior to the end of the financial year.
Management charges, co-investment and 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 2020 of 2.1% of net assets, which is at the lower end
of the range when compared to competitor VCTs.
Since March 2017, co-investments made by the Manager and individual
members of the Manager's private equity team have totalled GBP0.8
million alongside the Company's investments of GBP55.8 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 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 a change to provide for an annual
increase to the Total Return Hurdle (originally 100p) by the greater of
RPI or 3.5% was added to the requirements.
Board Composition
The Board continues to review its own performance and undertakes
succession planning to maintain an appropriate level of independence,
experience, diversity and skills in order to be in a position to
discharge its responsibilities. The current year sees some planned
changes to the composition of the Board.
The Board was delighted to announce recently that, following an
independent professional search, Patricia (Patty) Dimond was appointed a
non-executive director with effect from 1 February 2021. Patty is an
experienced non-executive director currently on the Board of LXI REIT
plc and English National Opera, she is a qualified chartered accountant
and has a wide experience of investing in early stage technology
businesses particularly those in FinTech and Consumer & Retail. Patty
will be offering herself for election at the forthcoming AGM and if
elected, will be appointed as a member of the Audit, Nomination,
Management Engagement and Remuneration Committees.
After nearly 11 years as Chairman, I shall be retiring at the
forthcoming AGM and I am especially pleased to be able to announce that
Margaret Littlejohns has been invited by the Board to succeed me.
Margaret has made an outstanding contribution since her appointment to
the Board some 3 years ago and I wish her and her fellow Directors every
success in the future.
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. The Manager held an investor webinar in
August 2020 and it intends to hold further webinars in June and October
of this year. Details of any future events will be communicated to
investors.
Outlook
Continuing uncertainty over the full impact of Covid-19 and the impact
of Brexit create exceptional challenges for every business. The Company
invests primarily in developing businesses which by their nature need
general economic expansion and stability; 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 help them progress during these testing times.
Until the pandemic is brought under worldwide control there will
inevitably be further, mainly unhelpful, implications for many UK based
businesses. Notwithstanding this, the Board and the Manager have been
impressed by the resilience shown by the significant majority of the
Company's investments and are optimistic that the existing portfolio has
potential to add value once the virus has been successfully contained.
Annual General Meeting
The Company's Annual General Meeting will take place on 27 May 2021 at
1.00pm. Please refer to the formal notice on page 80 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
guidelines in place.
Shareholders will note that it is proposed by resolution 14 to adopt new
articles of association ("New Articles"). The key changes to the New
Articles are to provide for the ability to hold virtual and hybrid
general meetings. The Board wishes to note its preference is to hold
AGMs by way of an open meeting and AGMs will only be held virtually
where absolutely necessary.
John Gregory
Chairman
Telephone: 01296 682751
Email: j.greg@btconnect.com
9 April 2021
Manager's Review
The Board has appointed Foresight Group LLP ("the Manager") to provide
investment management and administration services.
The investment management and administration arrangements were
previously with Foresight Group CI Limited (the Manager's parent
undertaking), and Foresight Group CI Limited appointed the Manager as
its investment adviser and delegated administration services to it. The
investment management and administration arrangements were novated and
amended to be directly with the Manager on 27 January 2020. References
to the Manager's activities in this report include those activities of
Foresight Group CI Limited prior to the change in arrangements.
Portfolio Summary
As at 31 December 2020 the Company's portfolio comprised 46 investments
with a total cost of GBP97.3 million and a valuation of GBP132.7
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 14 to 18
of the Annual Report and Accounts.
During the year, the value of investments held rose by GBP12.2 million,
driven by deployment of GBP7.7 million, an increase in the value of
existing investments of GBP4.8 million offset by a realisation of
GBP0.3m. After a sharp drop in portfolio value in the quarter to March
2020 at the peak of uncertainty around Covid-19, the Company's portfolio,
in aggregate, has seen a recovery, as many of the portfolio companies
have successfully navigated the new economic landscape, with some
performing extremely strongly and some continuing to be adversely
impacted by Covid-19.
In line with the Board's strategic objectives, the Manager remains
focused on maintaining NAV at above GBP150 million whilst paying an
annual dividend to shareholders of at least 5% of the NAV per share.
Whilst the Company has made reasonable progress against these objectives
in the year, it has not maintained the value of the NAV per share after
the payment of the dividend. This objective remains the Manager's focus
in the coming year.
NEW INVESTMENTS
The Manager has taken a prudent approach to investing during 2020.
Repeated lockdowns have made it challenging for the private equity team
to meet prospective companies and their management teams face to face,
an important part of assessing investments and developing relationships.
The continued economic uncertainty has also made it difficult to assess
the underlying value and progress within a business as everyone has been
affected by the pandemic. For much of the year there were fewer
opportunities coming to market, with management teams focused on
steering their businesses through economic uncertainty. Despite these
challenges, the Manager has continued to search for high quality
businesses that have demonstrated resilience during Covid-19. As a
result, three new investments were completed in December 2020, IMMJ
Systems, a document management system serving the NHS and other
healthcare providers, iMist, a manufacturer of fire suppression systems
and Titania Group, a cybersecurity software business.
IMMJ SYSTEMS
In December 2020 the Company made a c.GBP1.7 million investment into
IMMJ Systems Limited, an innovative, electronic document management
solution for the healthcare sector, serving NHS Trusts and private
providers. Founded in 2015 by a team experienced in enterprise IT and
NHS technology distribution, IMMJ developed MediViewer, software that
addresses the challenge of digitising patient records and providing a
single, easy access interface for clinical caregivers. The investment
will enable IMMJ to scale the business through new hires in key
functions such as operations, technology and account management, to
support the expanding deployment of MediViewer..
iMIST
In December 2020 the Company invested c.GBP1.6 million into iMist
Holdings Limted, a manufacturer and installer of water mist fire
protection systems for residential buildings. iMist was founded in 2015
by Tony Sims who has over 20 years' engineering experience. iMist has
developed its own range of high-pressure water mist fire suppression
systems. The proprietary solution offers a number of benefits over
traditional fire sprinkler and lower pressure water mist products
including more efficient use of water, ease of installation and cost
effectiveness. The investment will drive further growth and development
activities across the UK, on the back of the current regulatory
opportunity.
TITANIA
In December 2020, the Company invested c.GBP1.2 million into Titania
Group Limited, a cybersecurity software business. Founded in 2009,
Titania has grown substantially due to the success of its first product,
Nipper, which automates the assessment of network devices to accurately
identify vulnerabilities. The winner of multiple cybersecurity industry
awards, Titania has over 1,000 customers globally. The investment will
be used to enhance sales and marketing efforts for Titania's current
suite of products.
FOLLOW ON INVESTMENTS
The Manager had expected that more portfolio companies would need
additional capital to support them through difficult trading conditions
resulting from the various lockdowns, driving an increase in follow-on
investment. However, the portfolio has remained relatively resilient,
supported by the Manager, who has increased oversight of the portfolio
and provided guidance to portfolio management teams throughout the
pandemic. The Manager has made follow-on investments into three
companies during 2020, totalling GBP3.1 million. Further details of each
of these are provided below.
Many companies took advantage of Government support, such as the
furlough scheme and the Coronavirus Business Interruption Loan Scheme,
which reduced the need for additional equity injections in the period.
However, as these schemes unwind and while the economic climate remains
difficult, the Manager anticipates numerous requirements for follow-on
investment in the coming months.
ROXY LEISURE
During December 2020 the Company made a c.GBP1.0 million follow-on
investment into Roxy Leisure, an entertainment bar group offering
customers a variety of games such as pool and bowling. Roxy Leisure was
performing extremely strongly prior to Covid-19 but has been affected by
the repeated lockdowns. The business will use funds to open new sites
once restrictions ease, aiming to capitalise on increased consumer
demand..
SPEKTRIX
In December 2020, Spektrix, a leading enterprise software solution for
the UK and US arts sector encompassing ticketing, marketing, fundraising,
analytics and customer relationship management, received a follow-on
investment of c.GBP1.4 million from the Company. The investment will
enable Spektrix to capitalise on new opportunities following the
reopening of the arts sector.
ACCROSOFT
Also in December 2020, the Company made a GBP0.7 million follow-on
investment into Accrosoft, a software as a service company with two core
products focusing on recruitment and parent-teacher-student
communication. The investment will support the commercialisation of the
school communications platform, with strong demand seen in the market
due to the increased role of such technology while schools were closed
because of Covid-19 restrictions.
PIPELINE
At 31 December 2020, the Company had cash balances of GBP18.9 million,
which will be used to fund new and follow-on investments, buybacks and
running expenses. The Manager is seeing a recovery in the pipeline of
potential investments and has a number of opportunities under
exclusivity or in due diligence. The Company remains well positioned to
continue pursuing these potential investment opportunities.
The onset of Covid-19 and the resulting economic downturn resulted in
lower new investment activity in 2020. Depending on the length and
severity of the Covid-19 outbreak and associated restrictions, the
Manager expects to see a higher proportion of the Company's deployment
focused on follow-on investments in the short to medium term.
As the economy recovers from the worst effects of the virus, the Manager
expects demand for funding to increase, driving some particularly
interesting opportunities for investment.
REALISATIONS
Whilst the M&A climate has been challenging in the period, with most
trade acquirers focused on their core business and private equity
investors focused on their existing portfolios or on distressed
acquisitions, the Manager is now seeing acquisition interest returning,
particularly in the healthcare, technology and ecommerce sectors.
Fast casual and grab and go eateries have been particularly hard hit
during the pandemic and to that end with the difficult market outlook as
well as the remaining uncertainty around the business model, the Company
realised its position in The Naked Deli, a healthy eating food chain,
via an initial loan repayment of GBP0.2 million and the subsequent sale
of share capital and loan note positions for GBP0.1 million to the
Company. The Naked Deli closed all its stores in line with government
guidance in March 2020 and the outlook for this sector remains extremely
challenged. There is uncertainty about town centre footfall,
particularly for lunchtime trade, while employees are still working from
home. In aggregate, The Naked Deli returned to the Company 0.2x money
invested.
In contrast, post-period end, the Company successfully realised its
investment in FFX Group, one of the UK's largest multi-channel
independent suppliers of high-quality power tools, fixings and building
supplies. The transaction generated proceeds of GBP11.1 million at
completion and the Company will receive up to GBP0.3 million of deferred
consideration after 18 months subject to certain conditions, implying a
cash on cash return of 4.3x the initial investment of GBP2.7m made in
October 2015, equivalent to an IRR of c.32%. During the investment
period, FFX opened a new 60,000 sq ft distribution centre and a new head
office in Kent, updated its brand and launched an extensive range of its
own products. Since the Company's investment, FFX more than tripled
revenues and increased headcount by over 125.
DISPOSALS IN THE YEARED 31 DECEMBER 2020
Accounting Valuation Valuation
Cost at Date Realised at 31 December at 30 September
of Disposal Proceeds Gain/(Loss) 2019 2020
Company Detail (GBP) (GBP) (GBP) (GBP) (GBP)
The Naked Full
Deli disposal 1,724,139 295,487 (1,428,652) 695,435 Nil
Total disposals 1,724,139 295,487 (1,428,652) 695,435 Nil
Deferred consideration of GBP13,000 was also received by the company
from the sale of Idio Limited.
KEY PORTFOLIO DEVELOPMENTS
Overall, the value of unquoted investments held rose by GBP12.2 million
in the year, driven by deployment of GBP7.7 million, an increase in
value of existing investments by GBP4.8 million and offset by the sale
of The Naked Deli of GBP0.3 million.
A disciplined approach to investment valuations has been maintained in
light of Covid-19. In the quarter to March 2020, the onset of the
Covid-19 pandemic drove significant economic uncertainty and the
portfolio initially saw a substantial decrease in value of GBP18.9
million. In the following quarters, as the businesses adapted to the new
economic climate, fair values saw a recovery in aggregate. Material
changes in valuation, defined as increasing or decreasing by GBP2.0
million or more since 31 December 2019, are detailed below. Updates on
these companies are included below, or in the Top Ten Investments
section on pages 14 to 18 of the Annual Report and Accounts.
Valuation Change
Company Valuation Methodology (GBP)
------------------------------ ---------------------------- ----------------
Hospital Services Group Discounted earnings
Limited multiple 5,329,619
FFX Group Limited Offer proceeds 3,439,036
Innovation Consulting Group Discounted earnings
Limited multiple 2,634,323
Mologic Ltd Discounted revenue multiple 2,105,454
Biofortuna Limited Discounted revenue multiple 2,089,201
Ixaris Group Holdings Limited Discounted revenue multiple (4,954,587)
----------------
BIOFORTUNA
Biofortuna, established in 2008, is a molecular diagnostics business
based in the North West that manufactures freeze dried, stabilised DNA
tests.
31 December 2020 Update
Biofortuna's technical ability and freeze-drying capability allowed it
to support several clients, manufacturing their Covid-19 testing kits,
with over 30 million manufactured since April 2020. This has transformed
the company's financial performance, with material revenue growth and
maiden profits generated. Biofortuna continues to explore new commercial
opportunities unrelated to Covid-19.
IXARIS SYSTEMS LIMITED
Ixaris is a payments platform enabling efficient global payments,
targeted in particular at the travel sector.
31 December 2020 Update
Ixaris has seen a severe downturn in trading due to the collapse of the
travel sector in the wake of the pandemic. There remains significant
uncertainty about when worldwide travel will resume.
OUTLOOK
On 22 February 2021, Prime Minister Boris Johnson outlined the planned
route out of lockdown for businesses in England, culminating in the
lifting of all social restrictions on 21 June 2021. Businesses of all
sizes have faced a very testing 12 months, not least with the stop-start
dynamic of multiple lockdowns. Therefore the Prime Minister's political
commitment to an 'irreversible' ending of lockdown is welcomed, along
with the extended support of the Coronavirus Job Retention Scheme. It is
vital that SMEs are supported through the full reopening of the UK's
economy in order to rebuild consumer and business confidence and to
enable our retail, hospitality, cultural, leisure and tourism sectors to
get back to business.
Most businesses in the portfolio had fully reopened by September, with
the Manager supporting the portfolio through a transition to the 'new
normal'. During the November and current year lockdowns, the Manager
acted quickly to administer the same 'toolbox' of support for the
portfolio companies as in the first lockdown, to guide and prepare them
for a prolonged period of uncertainty. The Manager has also been working
with companies to revise business plans and budgets to manage creditor
stretch and debt build-up, and to prepare them for a reduction of
Government support. The Manager is ensuring that finance directors at
the portfolio companies continue to manage overheads tightly, reduce
capital expenditure and work through longer-term cost reduction plans
given the uncertain macro environment. It is important that management
teams and investors are well prepared for a sustained period of weaker
consumer and business demand as consumers and businesses adapt to the
'new normal'.
While Covid-19 has brought unprecedented disruption, it has also
prompted many organisations to reassess their business models and take
action to adapt to a new economic landscape. A number of the portfolio
companies have used this as an opportunity to review their overall
strategy, venture into a new market or launch a new product or service.
For example, to supplement lost revenues from their core business some
companies have procured and provided PPE or other protective equipment,
such as hand sanitising stations or screens. Healthcare and life science
investments have also contributed to national efforts to defeat the
virus by manufacturing Covid-19 testing kits. An example of this is
portfolio company Mologic, which received a grant of c.GBP1m to fund
Covid related lateral flow diagnostics development. Fellow portfolio
company Biofortuna, another diagnostics company, has successfully won
contracts to manufacture millions of Covid-19 PCR testing kits for
others.
Some of the portfolio companies used this time as an opportunity to
improve online activity and have seen an uptick in revenues as a
consequence. With the trend towardsecommerce accelerating during
Covid-19, retail businesses will need to continue embracing this channel
fully and make it a core part of the overall growth strategy. The
Manager is working closely with portfolio companies to ensure they are
well-positioned to capitalise on this opportunity.
A proportion of the portfolio companies are particularly at risk due to
the sectors they operate in, such as travel, hospitality and leisure.
Many of these businesses are now stuck in a prolonged period of closure
with anticipated re-opening in the next few months. The Manager is
working closely with these businesses, paying particular attention to
managing creditors and cash preservation. It is important to highlight
that some of the Company's leisure investments demonstrated market
leading site metrics pre-Covid and will have the ability to weather this
temporary period of reduced trading. Once reopened, even with capacity
limitations, the Manager expects several of these leisure businesses to
return to profit and cash generation over time, thanks to a loyal
customer base and favourable customer demographic.
Beyond Covid-19, another factor providing economic uncertainty was
Brexit, with the Brexit transition period ending on 31 December 2020.
The Manager has worked closely with portfolio companies to prepare them
for this. Thanks to the diverse nature of businesses in the portfolio,
most of which primarily focus on the domestic UK market and some that
export and source worldwide, the Manager remains confident that the
portfolio businesses are well-positioned to deal with any Brexit related
difficulties.
Notwithstanding the uncertain economic backdrop, the Manager continues
to see encouraging levels of activity from smaller UK companies seeking
growth capital. The Manager expects this to increase as companies begin
to recover from the impact of Covid-19, with requirements for permanent
funding to working capital. VCTs are still viewed by many entrepreneurs
as an attractive source of capital that provide scale-up funding to
businesses at an early stage of their growth, when other sources of
funding may not be readily available or alongside other sources of
capital, including the government measures for supporting businesses
during Covid-19. Despite the current challenges of Covid-19 in the
medium and long term, the UK remains an excellent place to start, scale
and sell a business, with broad pools of talent and an entrepreneurial
culture.
Russell Healey
Head of Private Equity
Foresight Group LLP
9 April 2021
Audited Income Statement
for the year ended 31 December 2020
Year ended Year ended
31 December 2020 31 December 2019
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Realised losses on investments -- (1,415) (1,415) -- (2,551) (2,551)
Investment holding gains -- 6,250 6,250 -- 10,258 10,258
Income 1,844 -- 1,844 1,284 -- 1,284
Investment management
fees (680) (2,039) (2,719) (643) (1,930) (2,573)
Other expenses (580) -- (580) (565) -- (565)
Return on ordinary activities
before taxation 584 2,796 3,380 76 5,777 5,853
Taxation -- -- -- -- -- --
Return on ordinary activities
after taxation 584 2,796 3,380 76 5,777 5,853
Return per share: 0.3p 1.4p 1.7p 0.0p 3.3p 3.3p
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
2020 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------------- -------------------- --------------- ----------- ----------
As at 1 January 2020 1,740 78,841 951 23,799 (1,059) 28,847 133,119
Share issues in the
year* 363 25,655 -- -- -- -- 26,018
Expenses in relation
to share issues** -- (1,221) -- -- -- -- (1,221)
Repurchase of shares (43) -- 43 (2,674) -- -- (2,674)
Cancellation of share
premium -- (35,641) -- 35,641 -- -- --
Realised losses on disposal
of investments -- -- -- -- (1,415) -- (1,415)
Investment holding gains -- -- -- -- -- 6,250 6,250
Dividends paid -- -- -- (6,804) -- -- (6,804)
Management fees charged
to capital -- -- -- -- (2,039) -- (2,039)
Revenue return for the
year -- -- -- 584 --- -- 584
As at 31 December 2020 2,060 67,634 994 50,546 (4,513) 35,097 151,818
^Reserve is available for distribution, total distributable reserves at 31 December
2020 total GBP46,033,000 (2019: GBP22,740,000).
*Includes the dividend reinvestment scheme.
**Expenses in relation to share issues includes trail commission for prior years'
fund raising.
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.
Audited Balance Sheet
at 31 December 2020
Registered Number: 03421340
As at As at
31 December 31 December
2020 2019
GBP'000 GBP'000
Fixed assets
Investments held at fair value through profit
or loss 132,739 120,521
Current assets
Debtors 239 362
Cash and cash equivalents 18,939 12,324
19,178 12,686
Creditors
Amounts falling due within one year (99) (88)
Net current assets 19,079 12,598
Net assets 151,818 133,119
Capital and reserves
Called-up share capital 2,060 1,740
Share premium account 67,634 78,841
Capital redemption reserve 994 951
Distributable reserve 50,546 23,799
Capital reserve (4,513) (1,059)
Revaluation reserve 35,097 28,847
Equity Shareholders' funds 151,818 133,119
Net asset value per share: 73.7p 76.5p
The financial statements were approved by the Board of Directors and
authorised for issue on 9 April 2021 and were signed on its behalf by:
John Gregory
Chairman
Audited Cash Flow Statement
for the year ended 31 December 2020
Year ended Year ended
31 December 31 December
2020 2019
GBP'000 GBP'000
Cash flow from operating activities
Loan interest received from investments 478 733
Dividends received from investments 1,437 178
Deposit and similar interest received 34 186
Investment management fees paid (2,719) (2,573)
Secretarial fees paid (120) (122)
Other cash payments (449) (465)
Net cash outflow from operating activities (1,339) (2,063)
Cash flow from investing activities
Purchase of investments (7,680) (15,791)
Net proceeds on sale of investments 296 1,966
Net proceeds on deferred consideration 13 441
Net cash outflow from investing activities (7,371) (13,384)
Cash flow from financing activities
Proceeds of fund raising 24,203 -
Expenses of fund raising (637) (92)
Repurchase of own shares (2,668) (2,248)
Equity dividends paid (5,573) (7,308)
Net cash inflow/ (outflow) from financing
activities 15,325 (9,648)
Net inflow/ (outflow) of cash in the year 6,615 (25,095)
Reconciliation of net cash flow to movement in net
funds
Increase/ (decrease) in cash and cash equivalents
for the year 6,615 (25,095)
Net cash and cash equivalents at start of year 12,324 37,419
Net cash and cash equivalents at end of year 18,939 12,324
At 1 January At 31 December
Analysis of changes in net debt 2020 Cashflow 2020
GBP'000 GBP'000 GBP'000
Cash and cash equivalents 12,324 6,615 18,939
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 2020, 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 2020 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 2020. All investments held by the
Company are classified as 'fair value through the profit and loss'.
Unquoted investments have been valued in accordance with IPEV
guidelines. Quoted investments are stated at bid prices in accordance
with the IPEV 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: www.foresightvct.com.
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
2020 31 December 2019
Net assets GBP151,818,000 GBP133,119,000
No. of shares at
year end 205,954,017 173,959,405
Net asset value per 73.7p 76.5p
share
5. Return per share
Year ended
31 December Year ended 31
2020 December 2019
GBP'000 GBP'000
Total return after taxation 3,380 5,853
Total return per share (note
a) 1.7p 3.3p
Revenue return from ordinary
activities after taxation 584 76
Revenue return per share
(note b) 0.3p 0.0p
Capital return from ordinary
shares after taxation 2,796 5,777
Capital return per share
(note c) 1.4p 3.3p
Weighted average number of
shares in issue in the year 199,164,754 175,090,865
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 The Shard, 32
London Bridge Street, SE14 5QA on 27 May 2021 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. Shareholders will, however, be able
to attend virtually, but will not be able to vote on the resolutions at
the Annual General Meeting. Details on how to sign up and join the
Annual General Meeting virtually will be published on both the Company's
and the Manager's website at www.foresightvct.com.
7. Income
Year ended Year ended
31 December 31 December
2020 GBP'000 2019 GBP'000
----------------------------------------
Loan stock interest 370 920
Dividends receivable 1,437 178
Deposit and similar interest received 34 186
Other Income 3 -
----------------------------------------
1,844 1,284
8. Investments held at fair value through profit or loss
2020 2019
GBP'000 GBP'000
Unquoted investments 132,739 120,521
Total
GBP'000
Book cost as at 1 January 2020 91,360
Investment holding gains 29,161
Valuation at 1 January 2020 120,521
Movements in the year:
Purchases at cost 7,680
Disposal proceeds^ (296)
Realised losses* (1,428)
Investment holding gains** 6,262
Valuation at 31 December 2020 132,739
Book cost at 31 December 2020 97,316
Investment holding gains 35,423
Valuation at 31 December 2020 132,739
^The Company received GBP296,000 (2019: GBP1,966,000) from the disposal
of investments during the year. The book cost of these investments when
they were purchased was GBP1,724,000 (2019: GBP4,957,000). 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 GBP13,000 received from Idio Limited in
the year.
**Investment holding gains in the income statement have been reduced by
the offset in the deferred consideration
debtor of GBP12,000 (Idio Limited).
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
Foresight Group CI Limited, which acted as Manager to the Company until
27 January 2020, earned fees of GBP192,000 (2019: GBP2,573,000).
Foresight Group LLP was appointed as Manager on 27 January 2020 and
earned fees of GBP2,527,000 up to 31 December 2020 (2019: GBPnil).
During the year, services of a total cost of GBP120,000 (2019:
GBP120,000) were delivered to the Company by Foresight Group LLP. At 31
December 2020, the amount due to Foresight Group LLP was GBPnil (2019:
GBPnil).
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 09, 2021 13:03 ET (17:03 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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