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 £133.1 million.
• The portfolio has seen an uplift in valuation of £7.6 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 £12.8 million and four follow-on investments totalling £2.9 million made during the year.
• The Company successfully exited its investments in Idio Limited and Flowrite Refrigeration Limited realising a total of £1.9 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 £150 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 £133.1 million (2018: £136.7 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.
DIVIDENDS
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 £8.8 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 £5.2 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 £12.8 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 £20 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 £0.7 million alongside the Company’s investments of £47.1 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 END 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 £24.8 million. The majority of the funds received were subscribed in the final allotments totalling £18.6 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 £7.6 million in the year, although NAV per share was reduced by payment of an £8.8 million dividend and performance was therefore behind target. Good progress was made in regards new investments with seven completed in the year, deploying £12.8 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 £91.4million and a valuation of £120.5 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 £12.8 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.£1.3 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.£2.4 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.£3.0 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.£2.4 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.£1.5 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 £0.9 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 £1.5 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 £2.9 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 £0.4 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 £1.0 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 £1.4 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 £0.1 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 £12.3 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 £24.8 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 £1.9 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 YEAR ENDED 31 DECEMBER 2019
| Company | Detail | Accounting Cost at Date of Disposal (£) | Proceeds (£) | Realised Gain/(Loss) (£) | Valuation at 31 December 2018 (£) | |
| Idio Limited | Full disposal | 920,313 | 1,725,808 | 805,495 | 695,435 | |
| Flowrite Refrigeration Limited | Full disposal | 209,801 | 194,849 | (14,952) | 194,783 | |
| The Business Advisory Limited | Loan 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 £441,016 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 £120.5 million, driven by investment of £15.8 million of cash and an increase in value of existing investments by £7.6 million. Material changes in valuation are defined as increasing or decreasing by over £1.0 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.
| Company | Valuation Methodology | Valuation Change (£) |
| FFX Group Limited | Discounted earnings multiple | 2,669,931 |
| Mowgli Street Food Limited | Discounted earnings multiple | 1,402,555 |
| Nano Interactive Group Limited | Discounted revenue multiple | 1,307,462 |
| Aerospace Tooling Holdings Limited | Discounted earnings multiple | 1,050,553 |
| Ixaris Group Holdings Limited | Discounted revenue multiple | 1,023,418 |
| Fresh Relevance Limited | Discounted revenue multiple | 1,021,321 |
| Specac International Limited | Discounted earnings multiple | 1,011,706 |
| Powerlinks Media Limited | Discounted revenue multiple | (1,299,720) |
| Aquasium Technology Limited | Discounted earnings 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 31 December 2019 | | Year ended 31 December 2018 | ||||
| Revenue | Capital | Total | Revenue | Capital | Total | |
| £’000 | £’000 | £’000 | £’000 | £’000 | £’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
| Year ended 31 December 2019 | Called-up share capital £’000 | Share premium account £’000 | Capital redemption reserve £’000 | Distributable Reserve^ £’000 | Capital reserve^ £’000 | Revaluation reserve £’000 | Total £’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 £22,740,000 (2018: £16,351,000). | |||||||
| Year ended 31 December 2018 | Called-up share capital £’000 | Share premium account £’000 | Capital redemption reserve £’000 | Distributable reserve £’000 | Capital reserve £’000 | Revaluation reserve £’000 | Total £’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 2019 £’000 | As at 31 December 2018 £’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 31 December 2019 £’000 | Year ended 31 December 2018 £’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 |
| Analysis of changes in net debt | At 1 January 2019 | Cashflow | At 31 December 2019 |
| £'000 | £'000 | £'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: 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 | £133,119,000 | £136,726,000 |
| No. of shares at year end | 173,959,405 | 175,051,026 |
| Net asset value per share | 76.5p | 78.1p |
5. Return per share
| Year ended 31 December 2019 | Year ended 31 December 2018 | |
| £'000 | £'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 31 December 2019 £’000 | Year ended 31 December 2018 £’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 £’000 | 2018 £’000 | ||
| Unquoted investments | 120,521 | 99,065 |
| Total | ||||
| £’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 £1,966,000 (2018: £3,380,000) from the disposal of investments during the year. The book cost of these investments when they were purchased was £4,957,000 (2018: £2,789,000). 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 £441,000 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 £377,000 (Trilogy Communications Limited) and have been increased by the deferred consideration debtor for Idio Limited, totalling £12,000.
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 £2,573,000 (2018: £2,379,000) were delivered by Foresight Group CI Limited. At 31 December 2019, the amount due to Foresight Group CI Limited was £nil (2018: £nil).
During the year, services of a total cost of £120,000 (2018: £117,000) were indirectly delivered to the Company by Foresight Group LLP. At 31 December 2019, the amount due to Foresight Group LLP was £nil (2018: £2,000).
No amounts have been written off in the year in respect of debts due to or from the Manager.
END