FORESIGHT 3 VCT PLC
Summary Financial Highlights
- Net asset value per Ordinary Share for the six month period ended 30 September 2014 decreased by 0.3% represented by a net asset value of 74.0p compared to a net asset value of 74.2p at 31 March 2014.
- Funding totalling £378,000 was provided to two companies. There was also £685,000 of interest capitalised under the terms of loan agreements in three companies.
- Realisation proceeds and loan repayments totalling £1,218,000 were received from four portfolio companies.
| Six months ended | Year ended | |
| 30 September 2014 | 31 March 2014 | |
| Net asset value per Ordinary Share | 74.0p | 74.2p |
| Net asset value per Ordinary Share (including all dividends paid) | 130.8p | 131.0p |
| Share price per Ordinary Share | 60.1p | 62.5p |
| Share price total return per Ordinary Share (including all dividends paid) | 116.9p | 119.3p |
Chairman's Statement
Performance
During the period, our private equity investments, which account for the majority of the current portfolio, benefited from the recent economic upturn both in the UK and traditional export markets such that the aggregate performance of the portfolio showed a moderate uplift in the period prior to the deduction of expenses. This performance was comprised of both positive and negative movements across the entire private equity portfolio. The largest fall in valuation was Datapath which reduced by some £0.4 million as a result of a fall in comparable price/earnings ratios being the basis used for valuations despite increasing profits beyond the £7 million announced in the year to 31 March 2014. The largest gain in the portfolio was £0.8 million for Aerospace Tooling (ATL), which increased profits by 58% in its last financial year with further progress being made in its current financial year. Additionally, ATL repaid the Fund's entire £500,000 cost of investment in September 2014 as a result of this solid performance, effectively meaning that any future exit proceeds will be 100% profit. Overall net asset value of the fund at 30 September 2014 decreased by 0.3% to 74.0p per Ordinary Share at 30 September 2014 from 74.2p per Ordinary Share at 31 March 2014.
The environmental investments, which the Company's exposure is limited to just three remaining investments, namely Closed Loop Recycling, O-Gen Acme Trek and O-Gen UK produced very little movement in valuation although a great deal of effort is still being invested in these companies to secure a return for your Company.
In addition to the £500,000 received from ATL, a further £150,794 was repaid from Orthoview Holdings in April 2014 prior to a successful sale in October 2014 which realised £1.12 million. Further disposal proceeds are expected before the end of the current calendar year.
For a detailed review of the Company's investments I would refer you to the Manager's Report that starts on page 5.
Dividends
It continues to be the Company's policy to provide a flow of tax-free dividends, generated from income and from capital profits realised on the sale of investments. However distributions will inevitably be dependent on cash being generated from portfolio investments and successful realisations.
Following recent realisations, the Board expect to maintain the payment of dividends to Shareholders, which remain a priority.
Share Buy-Backs
During the period under review 446,000 Ordinary Shares were repurchased for cancellation at a cost of £271,000.
Alternative Investment Fund Management Registration
The Board has considered the impact on the Company of an EU directive regulating Alternative Investment Fund Managers (AIFM) which applies to most UK investment funds including the Company. To minimise the regulatory and financial cost of compliance as a 'full scope UK AIFM', with this legislation the Board decided that the Company would register as a 'small registered UK AIFM' directly with the Financial Conduct Authority as permitted by the rules as a 'small registered UK AIFM'. The application process was completed in June 2014 and approval was confirmed in early August 2014. This will not affect the current arrangements with the Manager which will continue to report to the Board and manage the Company's investments on a discretionary basis.
Valuation Policy
Investments held by the Company have been valued in accordance with the International Private Equity and Venture Capital Valuation ("IPEVCV") guidelines (December 2012) developed by the British Venture Capital Association and other organisations. Through these guidelines, investments are valued as defined at 'fair value'. Ordinarily, unquoted investments will be valued at cost for a limited period following the date of acquisition, being the most suitable approximation of fair value unless there is an impairment or significant accretion in value during the period. Quoted investments and investments traded on AIM and ISDX Growth Market are valued at the bid price as at 30 September 2014. The portfolio valuations are prepared by Foresight Group, reviewed and approved by the Board quarterly and subject to review by the auditors annually.
Directorate Change
I am pleased to welcome Raymond Abbott to the Board as a Director of the Company. Raymond joined the Board on 3 October 2014 and will assume the role of Chairman when I retire from the Board on 31 December 2014.
Raymond was formerly a Director of Foresight 4 VCT plc and Enterprise VCT plc (which was merged into Foresight 3 VCT plc in 2008) and was previously the Managing Director of Alliance Trust Equity Partners. Raymond is currently a non-executive director of The Scottish Building Society, Galleria Holdings Limited and Essex Services Group plc.
Outlook
It is encouraging that the UK economy is continuing to recover and we believe this should help the development of the businesses in which we have invested. A number of the investments in the fund are well placed to continue their successful expansion. However many of the familiar risks, both financial and political, remain and there can be no grounds for complacency as all operate in competitive environments.
The fund is, on the back of recent realisations, considering new investment opportunities and several potential investments are currently going through the selection process. Additionally, the Manager continues to concentrate on improving the performance of the existing portfolio and continues to look for appropriate opportunities to realise gains from the disposal of successful investments.
Following the recent successful refinancing and realisation of ATL and Orthoview Holdings, the Board expects to maintain the payment of dividends to Shareholders, which remain a priority. This in turn should help improve the liquidity of the Ordinary Shares and reduce the discount to net asset value, which continues at a higher level than the Board feels is justified by the prospects of the underlying investments.
Graham Ross Russell
Chairman
28 November 2014
Investment Manager's Report
Manager's report
For the half year to 30 September 2014, the economic climate remained relatively benign, supported by continuing low levels of interest rates although there are currently signs of volatility returning. Business confidence remains generally positive, as demonstrated by the volume of new issues during the period and signs that the major banks are beginning to lend selectively to small companies. At the same time merger and acquisition activity has been increasing. These conditions look set to continue for the time being, although significant macroeconomic risks and uncertainties remain, particularly in major overseas markets.
During the period under review, the net asset value per Ordinary Share decreased by 0.3% to 74.0p from 74.2p as at 31 March 2014.
Several investments performed well during the period, including TFC Europe, Orthoview Holdings, Procam Television Holdings, The Bunker Secure Hosting and most notably Aerospace Tooling Corporation, which repaid its entire £500,000 cost of investment within 15 months, which together generated an increase in valuation of £1.7 million in the period. As described below, in October 2014, shortly after the period end, the investment in Orthoview Holdings was sold to Materialise NV for up to £1.35 million, generating a return of three times original cost of investment. As shown below, provisions totalling £624,423 were made against three investments during the period.
Foresight Group remains positive about the overall prospects for the investment portfolio and is focused on achieving increases in net asset value and realisations from the existing investments to facilitate shareholder distributions and provide additional funding for new investments which are being actively pursued. A review of the portfolio is set out below.
1. Follow-on funding (excluding capitalised interest)
Company £
Biofortuna 50,901
Total 50,901
*Capitalised interest of £685,425 was recognised in the period for Closed Loop Recycling (£634,493), Autologic Diagnostic Group (£49,329) and Flowrite Refridgeration Holdings (£1,603).
2. New investments
Company £
Industrial Efficiency II 326,740
Total 326,740
3. Exits and realisations
Following a period of particularly strong trading and cash generation, Aerospace Tooling Corporation effected a recapitalisation and dividend distribution in September 2014, returning the entire £3.5 million cost of the Foresight VCTs' investments made only 15 months previously. Having received full repayment of its £450,000 loan and a dividend of £50,000 being equal to the cost of its equity investment, Foresight 3 VCT plc still retains its original 7.52% equity shareholding in the company.
Following a capital reorganisation in May 2013, Orthoview Holdings (formerly Meridian Technique) paid £283,304 of preference share dividends and repaid £43,900 of loan stock. A further £157,255 was similarly repaid in October 2013 and £150,794 in April 2014. After the period end, Orthoview Holdings was successfully sold to NASDAQ quoted Materialise NV for £8.47 million in cash. Foresight 3 VCT received initial consideration of £1.12 million, with a further £234,099 held in escrow to support warranties, to be released in two tranches over two years. Combined with proceeds from the capital reorganisation, the investment generated a return of three times original cost.
In May 2014, the investment in Xention Pharma, a drug development company, was sold for £10,422. A loan repayment totalling £157,193 was received from Evance Wind Turbines (in administration).
Cole Henry PE 2 Limited, an acquisition vehicle preparing to trade, repaid a loan of £450,000 in the period, which was used to fund the investment in Industrial Efficiency II.
4. Material provisions to a level below cost
Company £
AtFutsal 184,581
Evance Wind Turbines 52,731
Mplsystems (formerly The Message Pad) 387,111
Total 624,423
New and Follow on Investments
In July 2014, as a part of the initial £1.38 million tranche of a phased funding round totalling up to £4.4 million by three Foresight managed funds, a new investment of £326,740 was made by Foresight 3 VCT into Industrial Efficiency II, alongside £990,760 from Foresight VCT. The company provides energy efficiency fuel switching services, allowing customers to make significant cost savings and reduce emissions.
In April 2014, a follow on investment of £50,901 was made into Biofortuna, being the second, final tranche of the funding round completed in August 2013.
Outlook
The improvement in business confidence continues to be reflected in the trading of a number of companies across the portfolio and Management considers that the portfolio is now well positioned for further growth.
With a pipeline of high quality private equity investment opportunities and funds available from recent realisations, Foresight is now actively pursuing selected new investment opportunities while also continuing to endeavour to realise existing investments, where appropriate, to generate cash for shareholder distributions and further funds for such new investments.
Portfolio Review
In June 2013, the Company invested £500,000 alongside other Foresight VCTs in a £3.5 million investment in Dundee based Aerospace Tooling Corporation (ATL), a well established specialist engineering company. ATL provides repair, refurbishment and remanufacturing services to large international companies for components in high-specification aerospace and turbine engines. With a heavy focus on quality assurance, the company enjoys strong relationships with companies serving the aerospace, military, marine and industrial markets. In the year to 30 June 2014, a number of significant orders underpinned growth, with turnover doubling and profits increasing significantly. Further progress is being made in winning more orders and new customers in the current year, supporting an increase in valuation of £849,000 during the period. Reflecting particularly strong cash generation, the company effected a recapitalisation and dividend distribution in September 2014, returning the entire £3.5 million cost of the Foresight VCTs' investments made only 15 months previously. Having received full repayment of its £450,000 loan and a dividend of £50,000 equal to the cost of its equity investment, Foresight 3 VCT retains its original 7.52% equity shareholding in the company effectively at nil cost.
AtFutsal Group runs government approved education programmes for students aged 16-18 years old in conjunction with a consortium made up of Football League clubs, colleges and academies and training/accreditation organisations. Funding for these programmes is sourced from the Education Funding Agency. The company's three arenas in Birmingham, Leeds and Swindon are used as part of these education programmes. AtFutsal is introducing a wider range of government approved BTech courses and has developed its own online education software platform so that it can provide a broader range of educational services. The company has also developed a separate English Colleges education programme to provide additional futsal related courses for 16-18 year olds at sixth form colleges. For the current student year which commenced in September 2014, the company registered 1,400 students on its futsal related courses, compared with 1,200 in the previous academic year and 100 for its new English Colleges programme. AtFutsal Group is also improving its capacity utilisation across its three arenas with a variety of different sports being regularly played at each arena alongside futsal at both child and adult level. This improved utilisation has enabled the arenas to approach cash breakeven. For the year to 30 June 2014, a small operating profit was achieved on sales of £4.3 million, with the growing Education division generating the majority of the profit and cash flow within the Group. However, reflecting delays in achieving the forecast level of profitability, a further provision of £184,581 has been made in the period. Management is focussed on increasing the number of students and range of education programmes, increasing usage of its online education platform and achieving a consistent breakeven on the arenas each month.
Following the £48 million secondary buy-out by ISIS Private Equity in January 2012, investments in equity and loan stock of £2.23 million were retained in Autologic Diagnostics Group. Autologic Diagnostics Group continues to generate strong profits and for the year to December 2013 achieved an EBITDA of £5.4 million on sales of £18.6 million (an EBITDA of £5.9 million on revenues of £17.2 million in 2012). The company has traded satisfactorily for the year to date, with relatively stronger sales in the UK and Europe compared with the USA. As at 30 September 2014, the company had a healthy cash balance of £5.1 million. Management continues to develop a business model to generate recurring revenues and improve the quality of the company's earnings through a new service-oriented product, the launch of which has now been slightly delayed to Q1 2015. In the short term, the change in strategy towards a pure recurring revenue model may impact EBITDA in 2015 and possibly 2016 while helping to drive shareholder value. During the half year, interest of £49,329 deferred under the terms of the loan agreement with Autologic Diagnostics Group was capitalised.
Biofortuna, an early stage molecular diagnostics business based in the Wirral, has developed unique expertise in the important area of enzyme stabilisation, effectively hi-tech freeze drying. Its first range of products, SSPGo, is a series of tests for genetic diseases and organ transplant compatability. Because of the company's stabilisation and freeze drying technology, its products can be transported easily (in the post if needed) and stored at room temperature for up to two years. A £1.3 million round to finance capital expenditure and working capital was completed in August 2013, in which the Company initially invested £99,066 and then £50,901 as the second, final tranche in April 2014. For the year to 31 March 2014, an operating loss of £1.05 million was incurred on sales of £325,000. Trading in the current year is stronger, with a much reduced rate of operating loss. The company is progressing in a number of areas, including assessing new markets, broadening its product range, winning new customers and increasing its manufacturing capacity. Following successful FDA trials, Biofortuna has obtained FDA approval for its SSPGo genetic testing product range in the USA, a particularly important milestone enabling access to the American market, the largest in the World, as well as obtaining FDA registration for its manufacturing site. Five companies have selected the company's freeze-dried kit manufacturing service to produce freeze dried versions of their products, with paid for feasibility studies and contract discussions occurring with a number of parties.
In February 2013, Closed Loop Recycling concluded a major new supply contract and new customer contracts worth £17 million per annum as well as securing £12.8 million of loan finance (of which £6 million was provided by the Foresight Environmental Fund) to double capacity at the Dagenham plant. Although production of rHDPE utilising this additional capacity started in November 2013, the production ramp up took several months longer to achieve than expected. Additional loan capital of £1.0 million was agreed with the Foresight Environmental Fund in May 2014 to provide the necessary capital to achieve the forecast production run rate. Following the successful installation and commissioning of the final, third rHDPE extruder delivered in July 2014, the enlarged capacity has resulted in a substantial improvement in operational performance, with further improvements expected. Reflecting higher prices, the feedstock market continues to be tight, but the company is well positioned to secure supplies from new local sorting capacity. Management is examining a number of potential opportunities to improve profitability further. The company's banking facilities were successfully extended in September 2014.
Derby based Datapath Group is a World leading innovator in the field of computer graphics and video-wall display technology utilised in a number of international markets. The company is increasing its market share in control rooms, betting and signage and is entering other new markets. Management accounts for the year to 31 March 2014 show record operating profits of £7.36 million on sales of £18.7 million (compared with profit of £5.1 million was achieved on sales of £14.1 million in the previous year). Trading and cash generation in the current year remains strong and the company continues to enjoy good demand from its main OEM partners and distributors. The company has acquired its US distributor and has established an office in Philadelphia to develop more US sales and distributorships.
Following the appointment of administrators to Evance Wind Turbines in April 2014 as a result of reductions in the Feed-in-Tariff for small wind turbines which started in October 2012, a loan repayment of £157,193 was received during the period.
In May 2012, £200,000 was invested in Flowrite Refrigeration Holdings alongside other Foresight VCTs to finance a £3.2 million management buyout of Kent based Flowrite Services Limited. Flowrite Refrigeration Holdings provides refrigeration and air conditioning maintenance services nationally, principally to leisure and commercial businesses such as hotels, clubs, pubs and restaurants. Management has accelerated sales efforts, won significant new contracts, additional customers and reviewed several potential acquisitions with the aim of broadening its national coverage. In the year to 31 October 2013, the company traded well, achieving an operating profit of £1.06 million on sales of £10.0 million (against an operating profit of £852,000 on sales of £7.9 million in 2012) and also repaid loans of £127,709, representing some 75% of original cost of investment, after only 18 months after the MBO. The company traded well during this year's seasonally busy summer months, benefiting from increased numbers of engineers and also from the new workflow IT system installed in May 2014 which has already resulted in increased operational efficiency. Recent order wins and a growing prospects list should support future growth in sales and profits. During the period, interest of £1,603 deferred under the terms of the loan agreement was capitalised.
In July 2014, as a part of the initial £1.38 million tranche of a phased funding round totalling up to £4.4 million by three Foresight managed funds, a new investment of £326,740 was made by Foresight 3 VCT into Industrial Efficiency II, alongside £990,760 from Foresight VCT. The company provides energy efficiency fuel switching services, allowing customers to make significant cost savings and reduce emissions. A number of installations are currently in the course of construction for the first customer, a major corporation, and further tranches may be drawn down over the next year. Once the installations are completed, the company will charge the customer based on the volume of fuel and electricity consumed at each site up to a pre agreed level, which is expected to be reached after five years, at which time the contract will terminate and payments reduce to a nominal level.
Ixaris Systems has developed and operates Entropay, a web based global prepaid payment service using the VISA network, and offers its new IxSol (formerly known as Opn) product on a 'Platform as a Service' basis to enable enterprises to develop their own customised global applications for payments over various payment networks. IxSol is trading satisfactorily with a number of deployments in progress and a strong sales pipeline. IxSol is being used by companies in the affiliate marketing and travel sectors and sales efforts are being focussed on the international e-commerce and financial services sectors.
During 2013, the company invested in developing and marketing its Ixaris Payment System, the platform that runs IxSol, to financial institutions. The platform enables financial institutions to offer payment services based on prepaid cards to their customers. In the year to 31 December 2013, an EBITDA loss of £617k was incurred on sales of £9.5 million, reflecting the above mentioned investment in software and systems (against an EBITDA loss of £293,000 on sales of £8.4 million in the previous year). In January 2014, the Company invested a further £219,852 as part of a £2 million equity funding round to finance further investment in the Payment System. In the current year, revenues are currently behind the aggressive budget but the EBITDA loss is appreciably less than budgeted following cost reductions resulting in a monthly breakeven position.
To focus on its technology division, Mplsystems (formerly The Message Pad) sold its other larger division, call centre outsourcing, in June 2013. The sale proceeds were used to further develop the company's contact centre and customer service software sold on a SaaS (Software as a Service) basis to improve the efficiency of its customers' call centres and customers' experience. For the year to May 2013 and prior to the above sale, an operating profit of £299,000 was achieved on sales of £5.86 million. The transition to a SaaS business model is going well although, as expected, the company is incurring losses on annual sales of £2 million. The sales pipeline remains strong including a number significant opportunities. As a result of new contract wins, the level of contracted recurring SaaS revenues continues to grow.
In February 2014, O-Gen Acme Trek received planning permission for the proposed rebuild of the plant in Stoke as a 7MW waste wood to energy power plant. Management is currently working with the selected technology provider and a major EPC contractor to develop the project to the next stage, but this is taking longer than anticipated. The project is now expected to qualify under the Government's new CfD regime, rather than the ROC regime. The implications of the CfD regime are not yet fully established and both Foresight and O-Gen remain in close contact with the Government and Regulators to stay abreast of latest developments.
O-Gen UK is a leading developer of waste wood gasification facilities in the UK and in December 2013 reached financial close on a £48 million, 10MW, waste wood to energy power plant project in Birmingham. Construction of the plant is progressing ahead of schedule. The company has established a number of partnerships which have led to the development of a growing pipeline of similar opportunities, including one in Lincolnshire for which planning permission was obtained in July 2014 and ROC grace period secured in October, with financial close anticipated early in 2015. The company continues to develop relationships with a number of technology providers and major EPC contractors. O-Gen UK will not finance the construction of these plants but expects to benefit from project management fees, equity shareholdings and fuel and operation and maintenance contracts.
After the period end, Orthoview Holdings was successfully sold to NASDAQ quoted Materialise NV, a leading provider of additive manufacturing software and of sophisticated 3D printing solutions in the medical and industrial markets, for £8.47 million in cash. Foresight 3 VCT received initial consideration of £1.12 million, with a further £234,099 held in escrow in support of warranties, to be released in two tranches over two years. Combined with proceeds from the capital reorganisation, the investment generated a return of three times original cost.
In April 2013, the Company invested £250,000 alongside other Foresight VCTs in a £1.8 million round to finance a management buy-out of Procam Television Holdings. Procam is one of the UK's leading broadcast hire companies, supplying equipment and crews for UK location TV production to broadcasters, production companies and other businesses for over 20 years. Headquartered in Battersea, London, with additional facilities in Manchester, Edinburgh and Glasgow, Procam is a preferred supplier to BSkyB and an approved supplier to the BBC and ITV. Revenues have doubled in the last four years following the introduction of new camera formats.
In September 2013, Hammerhead, a competitor with facilities in London, Manchester and Edinburgh and Glasgow, was acquired in order to broaden the customer base, national coverage and realise various synergistic benefits. For the year to 31 December 2013, an EBITDA of £1.8 million was achieved on sales of £6.4 million, well ahead of trading in 2012. In the current year to date, significant growth in sales and profits has been achieved, well ahead of the prior year, reflecting both strong organic growth and the successful integration of the Hammerhead acquisition. Plans for opening other facilities and making other acquisitions are under consideration.
TFC Europe, a leading distributor of technical fasteners in the UK and Germany, performed well during the year to 31 March 2014, again achieving record profits of £2.75 million on sales of £19.5 million (against a record operating profit of £2.45 million on sales of £18.1 million in 2013). Trading in the current year continues to be strong, supporting an increased valuation during the period. In September 2013, a small Scottish distribution business was acquired, thereby improving national UK coverage. Management's current focus is to expand in Southern Germany. A new full service centre was opened in Bochum near Dusseldorf in October 2013 and existing customers are already expanding their business with TFC. A seventh service centre was acquired in October 2014 in Singen, near Stuttgart. This acquisition will provide increased opportunities to service existing Southern German customers and target new customers with a wider product range. This strong physical presence in Europe's largest manufacturing market is expected to assist TFC greatly in growing its sales and profits.
The Bunker Secure Hosting, which operates two ultra secure data centres, continues to generate substantial profits at the EBITDA level. For the year to 31 December 2013, record EBITDA of £2.2 million was achieved on sales of £9.25 million (against an EBITDA of £1.8 million on sales of £8.5 million in 2012). Sales growth slowed during the year, however, reflecting increased competition, but has since recovered. Recurring annual revenues presently exceed £9 million. For the year to date, trading continues in line with budget. To meet growing customer demand, a number of new Cloud based services have recently been launched while the sales and marketing strategy has been reassessed and sales efforts strengthened. A number of new customers have already been signed and a growing pipeline has been developed through channel partners for the Cloud 2.0 and Object Storage services. Investment continues in upgrading the existing infrastructure.
David Hughes
Foresight Group
Chief Investment Officer
28 November 2014
Unaudited Half-Yearly Results and Responsibility Statements
Principal Risks and uncertainties
The principal risks faced by the Company can be divided into various areas as follows:
- Performance;
- Regulatory;
- Operational; and
- Financial.
The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Accounts for the year ended 31 March 2014. A detailed explanation can be on found on page 51 of the Annual Report and Accounts which is available at www.foresightgroup.eu or by writing to Foresight Group at The Shard, 32 London Bridge Street, London SE1 9SG.
In the view of the Board, there have been no changes to the fundamental nature of these risks since the previous report and these principal risks and uncertainties are equally applicable to the remaining six months of the financial year as they were to the six months under review.
Directors' responsibility statement:
The Disclosure and Transparency Rules ('DTR') of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Unaudited Half-Yearly Financial Report for the six month period ended 30 September 2014.
The Directors confirm to the best of their knowledge that:
(a) the summarised set of financial statements has been prepared in accordance with the pronouncement on interim reporting issued by the Accounting Standards Board;
(b) the Unaudited Half-Yearly Financial Report for the six month period ended 30 September 2014 includes a fair review of the information required by DTR 4.2.7R (indication of important events during the six months of the year and a description of principal risks and uncertainties that the Company faces for the remaining six months of the year);
(c) the summarised set of financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company as required by DTR 4.2.4R; and
(d) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).
Going concern
The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report of the 31 March 2014 Annual Report and Accounts. The financial position of the Company, its cash flows, liquidity position and borrowing facilities are described in the Chairman's Statement, Strategic Report and Notes to the Accounts of the 31 March 2014 Annual Report and Accounts. In addition, the Annual Report and Accounts includes the Company's objectives, policies and processes for managing its capital; its financial risk management
objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.
The Company has considerable financial resources together with investments and income generated therefrom across a variety of industries and sectors. As a consequence, the Directors believe that the Company is well placed to manage its business risks successfully despite the current uncertain economic outlook.
The Directors have reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
The Half-Yearly Financial Report for the six month period ended 30 September 2014 has not been audited or reviewed by the auditors.
On behalf of the Board
Graham Ross Russell
Chairman
28 November 2014
Unaudited Income Statement
for the six months ended 30 September 2014
| Six months ended | Six months ended | Year ended | |||||||
| 30 September 2014 | 30 September 2013 | 31 March 2014 | |||||||
| (unaudited) | (unaudited) | (audited) | |||||||
| Revenue | Capital | Total | Revenue | Capital | Total | Revenue | Capital | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Realised (losses)/gains on investments | - | *(10.956) | (10,956) | - | (3,660) | (3,660) | - | 1,898 | 1,898 |
| Investment holding gains/(losses) | - | *10,794 | 10,794 | - | 4,847 | 4,847 | - | (816) | (816) |
| Income | 610 | - | 610 | 498 | - | 498 | 787 | - | 787 |
| Investment management fees | (110) | (331) | (441) | (123) | (368) | (491) | (237) | (710) | (947) |
| Other expenses | (215) | - | (215) | (207) | - | (207) | (390) | - | (390) |
| Return/(loss) on ordinary activities before taxation | 285 | (493) | (208) | 168 | 819 | 987 | 160 | 372 | 532 |
| Taxation | - | - | - | - | - | - | - | - | - |
| Return/(loss) on ordinary activities after taxation | 285 | (493) | (208) | 168 | 819 | 987 | 160 | 372 | 532 |
| Return/(loss) per Ordinary Share | 0.6p | (1.0)p | (0.4)p | 0.3p | 1.6p | 1.9p | 0.3p | 0.7p | 1.0p |
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 period.
The Company has no recognised gains or losses other than those shown above, therefore no separate statement of total recognised gains and losses has been presented.
*Note: Realised (losses)/gains on investments and investment holding gains/(losses) includes investments dissolved in the period and investments where loans have been disposed of for nominal consideration. These losses were previously recognised in unrealised losses and had a nominal impact on the net asset value in the period.
Unaudited Balance Sheet
at 30 September 2014
| Registered Number: 03121772 | |||
| As at | As at | As at | |
| 30 September 2014 | 30 September 2013 | 31 March 2014 | |
| (unaudited) | (unaudited) | (audited) | |
| £'000 | £'000 | £'000 | |
| Fixed assets | |||
| Investments held at fair value through profit or loss | 35,769 | 37,794 | 36,086 |
| 35,769 | 37,794 | 36,086 | |
| Current assets | |||
| Debtors | 1,478 | 1,321 | 1,762 |
| Money market securities and other deposits | - | 476 | 277 |
| Cash | 540 | 456 | 87 |
| 2,018 | 2,253 | 2,126 | |
| Creditors | |||
| Amounts falling due within one year | (211) | (66) | (181) |
| Net current assets | 1,807 | 2,187 | 1,945 |
| Net assets | 37,576 | 39,981 | 38,031 |
| Capital and reserves | |||
| Called-up share capital | 508 | 519 | 512 |
| Share premium account | 8,923 | 8,934 | 8,899 |
| Capital redemption reserve | 1,976 | 1,965 | 1,972 |
| Profit and loss account | 26,169 | 28,563 | 26,648 |
| Equity shareholders' funds | 37,576 | 39,981 | 38,031 |
| Net asset value per Ordinary Share | 74.0p | 77.0p | 74.2p |
Unaudited Reconciliation of Movements in Shareholders' Funds
for the six months ended 30 September 2014
| Called-up share capital | Share premium account | Capital redemption reserve | Profit and loss account | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | |
| As at 1 April 2014 | 512 | 8,899 | 1,972 | 26,648 | 38,031 |
| Repurchase of shares | (4) | - | 4 | (271) | (271) |
| Expenses in relation to share issues | - | 24 | - | - | 24 |
| Loss for the period | - | - | - | (208) | (208) |
| As at 30 September 2014 | 508 | 8,923 | 1,976 | 26,169 | 37,576 |
Unaudited Cash Flow Statement
for the six month period ended 30 September 2014
| Six months ended | Six months ended | Year ended | |
| 30 September 2014 | 30 September 2013 | 31 March 2014 | |
| (unaudited) | (unaudited) | (audited) | |
| £'000 | £'000 | £'000 | |
| Cash flow from operating activities | |||
| Investment income received | 164 | 94 | 357 |
| Dividends received from investment | 50 | 283 | 283 |
| Deposit and similar interest received | 1 | 1 | 2 |
| Investment management fees paid | (441) | (466) | (922) |
| Secretarial fees paid | (64) | (62) | (126) |
| Other cash payments | (152) | (112) | (250) |
| Net cash outflow from operating activities and returns on investment | (442) | (262) | (656) |
| Taxation | - | - | - |
| Returns on investment and servicing of finance | |||
| Purchase of unquoted investments and investments quoted on AIM | (381) | (1,453) | (4,673) |
| Net proceeds on sale of unquoted investments | 1,218 | 184 | 4,157 |
| Net proceeds on sale of quoted investments | - | 166 | 566 |
| Net capital inflow/(outflow) from investment | 837 | (1,103) | 50 |
| Equity dividends paid | - | - | (1,031) |
| Management of liquid resources | |||
| Movement in money market funds | 277 | (1) | 198 |
| Financing | |||
| Proceeds of fund raising | - | 1,154 | 1,196 |
| Expenses of fund raising | - | (70) | (75) |
| Net movement from share issues and share buybacks | (219) | (1) | (334) |
| (219) | 1,083 | 787 | |
| Increase/(decrease) in cash | 453 | (283) | (652) |
| Reconciliation of net cash flow to movement in net cash | |||
| Increase/(decrease) in cash for the period | 453 | (283) | (652) |
| Net cash at start of the period | 87 | 739 | 739 |
| Net cash at end of period | 540 | 456 | 87 |
Notes to the Unaudited Half-Yearly Financial Report
for the six month period ended 30 September 2014
- The Unaudited Half-Yearly results have been prepared on the basis of accounting policies set out in the statutory accounts of the Company for the year ended 31 March 2014. Unquoted investments have been valued in accordance with the International Private Equity and Venture Capital Valuation ("IPEVCV") guidelines. Quoted investments are stated at bid prices in accordance with IPEVC guidelines and UK Generally Accepted Accounting Practice.
- These are not statutory accounts in accordance with S436 of the Companies Act 2006 and the Unaudited Half-Yearly Financial Reports for the six months ended 30 September 2014 and 30 September 2013 have been neither audited nor reviewed. Statutory accounts in respect of the year ended 31 March 2014 have been audited and reported on by the Company's auditors and delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under S498(2) or S498(3) of the Companies Act 2006. No statutory accounts in respect of any period after 31 March 2014 have been reported on by the Company's auditors or delivered to the Registrar of Companies.
- Copies of the Unaudited Half-Yearly Financial Report for the six month period ended 30 September 2014 have been sent to shareholders and are available for inspection at the Registered Office of the Company at The Shard, 32 London Bridge Street, London SE1 9SG.
Copies of the Unaudited Half-Yearly Financial Report for the sixth month period ended 30 September 2014 are also available electronically at www.foresightgroup.eu.
- Net asset value per Ordinary Share
The net asset value per share is based on net assets at the end of the period and on the number of Ordinary Shares in issue at that date.
| Net Assets | Number of Ordinary Shares | |
| £'000 | in issue | |
| 30 September 2014 | 37,576 | 50,780,401 |
| 30 September 2013 | 39,981 | 51,901,401 |
| 31 March 2014 | 38,031 | 51,226,401 |
- Return/(loss) per Ordinary Share
| Six months ended | Six months ended | Year ended | |||||
| 30 September 2014 | 30 September 2013 | 31 March 2014 | |||||
| £'000 | £'000 | £'000 | |||||
| Total (loss)/return after taxation | (208) | 987 | 532 | ||||
| Basic (loss)/return per Ordinary Share (note a) | (0.4)p | 1.9p | 1.0p | ||||
| Revenue return from ordinary activities after taxation | 285 | 168 | 160 | ||||
| Revenue return per Ordinary Share (note b) | 0.6p | 0.3p | 0.3p | ||||
| Capital (loss)/return from ordinary activities after taxation | (493) | 819 | 372 | ||||
| Capital (loss)/return per Ordinary Share (note c) | (1.0)p | 1.6p | 0.7p | ||||
| Weighted average number of Ordinary Shares in issue in the period | 51,171,625 | 51,816,919 | 51,767,674 | ||||
| Notes: | |||||||
| a) Total return per Ordinary Share is total return after taxation divided by the weighted average number of Ordinary Shares in issue during the period. | |||||||
| b) Revenue return per Ordinary Share is revenue return after taxation divided by the weighted average number of Ordinary Shares in issue during the period. | |||||||
| c) Capital return per Ordinary Share is capital return after taxation divided by the weighted average number of Ordinary Shares in issue during the period. | |||||||
- Income
| Six months ended | Six months ended | Year ended | |
| 30 September 2014 | 30 September 2013 | 31 March 2014 | |
| £'000 | £'000 | £'000 | |
| Loan stock interest | 560 | 214 | 501 |
| Dividend income | 50 | 283 | 283 |
| Overseas based Open Ended Investment Companies ('OEICs') | - | 1 | 1 |
| Bank deposits | - | - | 2 |
| 610 | 498 | 787 |
- Investments held at fair value through profit or loss
| Quoted | Unquoted | Total | |
| £'000 | £'000 | £'000 | |
| Book cost as at 1 April 2014 | 2,548 | 43,089 | 45,637 |
| Investment holding losses | (2,308) | (7,243) | (9,551) |
| Valuation at 1 April 2014 | 240 | 35,846 | 36,086 |
| Movements in the period: | |||
| Purchases at cost | - | 1,063 | 1,063 |
| Disposal proceeds | - | (1,218) | (1,218) |
| Realised losses | - | (10,956) | (10,956) |
| Investment holding (losses)/gains | (4) | 10,798 | 10,794 |
| Valuation at 30 September 2014 | 236 | 35,533 | 35,769 |
| Book cost at 30 September 2014 | 2,548 | 31,978 | 34,526 |
| Investment holding (losses)/gains | (2,312) | 3,555 | 1,243 |
| Valuation at 30 September 2014 | 236 | 35,533 | 35,769 |
*Capitalised interest of £685,000 was recognized in the period and is included within purchases at cost.
- Transactions with the manager
Foresight Group, acting as investment manager to the Company in respect of its venture capital investments, earned fees of £441,000 during the period (30 September 2013: £491,000; 31 March 2014: £947,000). Fees excluding VAT of £64,000 (30 September 2013: £62,000; 31 March 2014: £126,000) were received during the period for company secretarial, administrative and custodian services to the Company.
At the balance sheet date, there was £9,000 due to or from Foresight Group (30 September 2013: £nil; 31 March 2014: £317 due from Foresight Group) and £nil due to Foresight Fund Managers Limited (30 September 2013: £nil; 31 March 2014: £nil). There were no related party transactions in the period and no amounts have been written off in the period in respect of debts due to or from related parties.
END