Unaudited Half-Yearly Financial Report
FORESIGHT ENTERPRISE VCT
PLCLEI: 213800MWJNR3WZZ3ZP42
UNAUDITED HALF-YEARLY FINANCIAL
REPORTFOR THE PERIOD ENDED 30 JUNE
2023
Financial Highlights
- Total net assets £148.2 million
- An interim dividend of 3.3p per share was paid
on 30 June 2023, returning £7.7 million to
Shareholders
- The portfolio value has increased by
£3.2 million in the last six months
- Net Asset Value per share decreased by 2.3% in
the period from 64.9p at
31 December 2022 to 63.4p at 30 June
2023
- Including the payment of a 3.3p dividend made on 30 June 2023,
NAV Total Return per share at 30 June 2023 was
66.7p (being NAV at the end of the period plus
dividends paid in the period), representing a positive NAV Total
Return of 2.8% in the period
Chair’s Statement
I am pleased to present the unaudited
Half-Yearly Report for Foresight Enterprise VCT plc for the period
ended 30 June 2023 and to report a Net Asset Value Total
Return of 2.8% for the period, including a dividend yield of
5.6%.
The business environment remains challenging
despite the substantial impact of the COVID-19 pandemic receding.
The war in Ukraine continues and supply chains remain strained
while energy prices and persistent inflation have led to a series
of interest rate increases. The threat of recession is the new
economic reality, with consumer demand severely depleted. In
addition, the financial markets were rocked by the collapse of both
Silicon Valley Bank and Credit Suisse in March 2023 but fortunately
the turmoil was short-lived and further contagion limited. However,
heightened nervousness in the financial markets and recent changes
to banks’ capital adequacy rules are beginning to reduce the level
of funding available for smaller businesses. Understandably,
consumer and business confidence in the UK remains fragile.
However, the Board believes that the careful
planning, help and advice the Manager provides to all the portfolio
companies will continue to be relevant to the current and future
economic situations. While there will be bumps in the road, we
believe that the portfolio is in good shape to withstand what we
currently see ahead. The Company’s portfolio in aggregate has
remained resilient amid economic and political turmoil that has
plagued 2023.
Many of the portfolio companies have
successfully adapted to the new economic landscape, with some
performing extremely well and demonstrating the strength of their
management teams. A minority of the portfolio companies struggled
as a result of a fall in consumer demand and inflationary
pressures. However, these businesses are now beginning to show
signs of recovery.
In the six months ended 30 June 2023, 21
companies in the portfolio recorded a combined increase in
valuation of £9.3 million, offset by 14 companies recording an
aggregate fall in valuation of £6.1 million.
StrategyThe Board believes that
it is in the best interests of Shareholders to continue to pursue a
strategy of:
- Growth in Net Asset Value Total Return above a 5% target while
continuing to grow the Company’s assets
- Payment of annual dividends of at least 5% of the NAV per share
per annum based on the opening NAV per share of that financial
year
- Implementation of a significant number of new and follow-on
qualifying investments every year, exceeding deployment
requirements to maintain VCT status
- Maintaining a programme of regular share buybacks (the Board
continues to have an objective of achieving and maintaining
buybacks at a discount of 5% over the medium term, subject to
market conditions)
Central to the Company being able to achieve
these objectives is the ability of the Manager to source and
complete attractive new qualifying investment opportunities.
Whilst this task has not been made easier by the
changes to VCT legislation since 2015, which (amongst other
requirements) place greater emphasis on growth or development
capital investment into younger companies, the Company is fortunate
in that it has pursued a policy of seeking growth capital
investments for several years prior to the rule changes and the
Manager has an established track record in this area.
Performance and portfolio
activityDuring the period Net Asset Value per share
decreased by 2.3% from 64.9p as at 31 December 2022 to 63.4p as at
30 June 2023. After adding back the payment of a 3.3p
dividend paid on 30 June 2023, NAV Total Return per share at
30 June 2023 was 66.7p, representing a positive NAV Total
Return of 2.8% in the period. This positive movement is a result of
the strategy and business changes throughout the portfolio alluded
to above.
On 14 October 2022, the Company launched an
offer for subscription to raise up to £20 million, with an
over‑allotment facility to raise up to a further £10 million,
through the issue of new shares. The offer was closed on 26 April
2023 having raised gross proceeds of £22.6 million, £21.7 million
after expenses. We would like to thank those existing Shareholders
who have supported the offer and welcome all new Shareholders to
the Company.
During the period the Manager completed five new
investments and four follow-on investments costing
£6.0 million and £2.6 million respectively. The Manager
also fully disposed of two investments, generating proceeds of
£16.4 million with a further £2.3 million of deferred
consideration included within debtors at the period end,
representing a combined cash-on-cash return multiple of
8.4 times the original investment.
After the period end, in September 2023, £1.8
million was invested in Loopr Ltd, trading as Looper Insights,
a data analytics platform to film and TV content distributors and
video‑on‑demand streaming services. Furthermore, the Company sold
its holding in Protean Software Limited, which generated proceeds
of £3.5 million at completion. Including cash returned to the date
of this report, the exit delivered a return multiple of 2.4 times
the original investment. Further details of these investments and
realisations can be found in the Manager’s Report.
The Board and the Manager are confident that a
number of new and follow-on investments can be achieved this year,
particularly with the increased investment activity noted above.
Details of each of these new, existing and former portfolio
companies can be found in the Manager’s Review.
The Manager continues to see a strong pipeline
of potential investments sourced through its regional networks and
well-developed relationships with advisers and the SME community;
however, it is also focused on supporting the existing portfolio
through the current economic climate.
Responsible investingThe
analysis of environmental, social and governance (“ESG”) issues is
embedded in the Manager’s investment process and these factors are
considered key in determining the quality of a business and its
long-term success. Central to the Manager’s responsible investment
approach are five ESG principles that are applied to evaluate
investee companies, acquired since May 2018, throughout the
lifecycle of their investment, from their initial review and
acquisition to their final sale. Every year, the portfolio
companies are assessed and progress measured against these
principles. More detailed information about the process can be
found on pages 26 and 27 of the Manager’s Review in the
Unaudited Half-Yearly Financial Report.
DividendsAn interim dividend of
3.3p per share was declared on 8 June 2023 based on an
ex-dividend date of 15 June 2023 and a record date of 16 June 2023.
The dividend was paid on 30 June 2023, returning £7.7 million
to Shareholders. The Board and the Manager continue to hope
that additional “special” dividends can be paid as and when
particularly successful portfolio exits are made.
BuybacksThe Board is pleased to
have achieved an average discount across all buybacks of 7.5% to
the Net Asset Value per share in the period, but continues to have
an objective of achieving and maintaining buybacks at a discount of
5.0% over the medium term, subject to market conditions.
Shareholder communicationWe
were delighted to meet with some Shareholders in person at the AGM
on 8 June 2023. We hope many of you will be available to attend our
next in-person investor forum event on 19 October 2023 at The
Shard. These events have proven very popular with our Shareholders
in the past and provide the opportunity to learn first-hand about
some of our investee companies from their founders and
management.
Board compositionThe 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 all its responsibilities.
The Board was delighted to appoint Kavita Patel
as a Non-Executive Director in September 2023 and, after nine
years of service, Simon Jamieson did not stand for
re‑election at the AGM on 8 June 2023. I would once again like
to thank Simon for his dedication to the Company and the Board
over his tenure.
The Board is also engaged in a recruitment
process to appoint an additional independent Non-Executive Director
to its Board as further succession planning. An additional
appointment is expected to be made towards the end of the year.
Sunset clauseAs explained in
last year’s Annual Report, a “sunset clause” applies to the current
approved scheme for EIS and VCT tax reliefs. This clause provides
that income tax relief will expire on subscriptions made for VCT
shares on or after 6 April 2025, unless the legislation
is amended to make the scheme permanent, or the “sunset clause” is
extended.
The UK Chancellor has reconfirmed in his Spring
Budget the government’s commitment to extend the income tax relief
available on new VCT shares beyond the tax year ending in April
2025. The Treasury Select Committee’s report on early stage
investment published in July supported the important role played by
VCTs and called for early action on the “sunset clause”. It also
noted that the UK should be able to extend the scheme without
European Commission approval, as clarified by the new Northern
Ireland Protocol, the Windsor Framework.
Trade bodies of which the Manager is a member
will continue to lobby the government to provide greater clarity on
the timing and nature of its plans for removing this obstacle.
OutlookAs mentioned in my
introduction, while the impact of the pandemic has lessened, other
economic impacts continue to dampen consumer and business
confidence. Ongoing inflationary pressures, tight monetary
policies, supply chain issues and a lack of bank lending appetite
may continue to hinder economic recovery. The Board is conscious
that such conditions could prove particularly challenging for our
investee companies which are unquoted, small, early-growth
businesses and by their nature entail higher levels of risk and
lower liquidity than larger listed companies.
On the other hand, these younger companies may
prove more agile and creative in their approach and better able to
adapt their operations swiftly and identify new products and
services in response to changing circumstances.
The portfolio is showing signs of resilience and
the Manager has been working with management teams to assess
business plans, consider funding requirements and help navigate
through these difficult times. The Company’s current portfolio of
investments is highly diversified by number, business sector, size
and stage of development and overall has already demonstrated its
relative resilience in the face of economic and geopolitical
difficulties. We are confident that this approach will continue to
provide protection in volatile market conditions.
The Manager is continuing to see a promising
pipeline of potential investments, both new and follow-on. In
addition to the funds raised earlier in the year, we have already
announced our intention to raise further funds in the coming
months. These combined funds will provide the necessary resources
to make selective acquisitions from the increasing numbers of
investment opportunities that are now emerging out of the recent
disruption. Although in the short term there may be considerable
economic headwinds, we believe the Company’s diversified portfolio
is well positioned to generate long-term value for
Shareholders.
Raymond AbbottChair28 September
2023
Manager’s Review
The Board has appointed Foresight Group LLP
(“the Manager”) to provide investment management and
administration services.
Portfolio summaryAs at 30 June
2023, the Company’s portfolio comprised 44 investments with a
total cost of £65.5 million and a valuation of £107.3 million. The
Company also held £39.0 million of cash and £1.9 million of
net current assets taking total net assets to £148.2 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 19 to 22 in the Unaudited Half-Yearly
Financial Report.
During the six months to 30 June 2023, the value
of the portfolio increased by £3.2 million and £8.6 million of new
and follow-on investment was concluded. There was a strong series
of successful exits, realising £16.4 million, as well as £7.7
million returned to Shareholders through the interim dividend.
Overall therefore, the value of the unquoted portfolio decreased by
£4.6 million in the period.
The Company’s portfolio continues to navigate
the various economic challenges, including inflation, tight labour
markets and soft financial and M&A markets. Many of the
portfolio companies are performing extremely well, while others
continue to adjust.
In line with the Board’s strategic objectives,
the investment team remains focused on continuing to grow the
Company’s assets whilst paying an annual dividend to Shareholders
of at least 5% of the opening NAV per share of the relevant
financial year. The Company has so far achieved this target for the
current year and this objective remains the Manager’s focus.
New investmentsFostering strong
relationships with local deal introducers across the UK and Ireland
remains central to the private equity team’s approach. The team
remains focused on attending in-person meetings and events with
both deal introducers and prospective investee companies to
generate a flow of pipeline opportunities. The regional presence is
central to this approach and the Manager opened three offices over
the last year, in Leeds, Dublin and Newcastle. These new regional
offices are expected to support stronger relationships with local
advisers and increase deal flow from these geographies.
Five new investments were completed in the six
months to 30 June 2023, totalling £6.0 million. Post-period end, in
September 2023, the Manager invested a further £1.8 million in
Loopr Ltd. Further details of each of these are provided
below. Behind these, there is a strong pipeline of opportunities
that the Manager expects to convert during the second
half of 2023.
Sprintroom Limited In January
2023, £1.0 million of growth capital was invested in Sprintroom,
which trades as Sprint Electric. The business designs and
manufactures drives for controlling electric motors in light and
heavy industrial applications, as well as recovering and reusing
otherwise lost energy. The investment will be used to further
develop and commercialise novel alternating current variable speed
drive technology.
Firefish Software Ltd. In March
2023, the Company invested £1.5 million in Firefish Software, a
Glasgow-based customer relationship management and marketing
software platform targeting the recruitment sector. The funding
will be used to further develop the platform in order to attract a
larger enterprise-level customer base and expand its outbound sales
team.
Red Flag Alert Technology
Group Limited In March 2023, the Company invested
£1.8 million in Reg Flag Alert Technology Group, a Manchester-based
proprietary SaaS intelligence platform with modular capabilities
spanning compliance, prospecting, risk management and financial
health assessments. The growth capital will be used to
support continued product development alongside an increased
marketing budget which is expected to accelerate new client
acquisition with particular focus on larger
enterprise-level customers.
Five Wealth Limited In March
2023, the Company invested £0.7 million in Five Wealth, an
established boutique financial planning business operating across
the North West of England, headquartered in Manchester. Five
Wealth’s service offering is focused on the provision of
independent private client financial advice and wealth planning.
This growth capital investment will be used to support increased
marketing and advertising to drive top-line growth and greater
regulatory and compliance costs which are forecast to increase
commensurately with AUM.
The KSL Clinic Limited In April
2023, the Company invested £1.0 million in The KSL Clinic, a
leading provider of hair replacement treatments, with clinics in
Manchester and Kent. The investment will be used to invest in
facilities, create high-quality, sustainable jobs and to expand its
geographic reach, resulting in significant improvements in the
wellbeing of patients.
Loopr Ltd Post-period end, in
September 2023, the Company invested £1.8 million in Loopr Ltd,
trading as Looper Insights, a data analytics platform to film and
TV content distributors and video-on-demand streaming services. The
investment will be used build a sales and marketing team, expand
the customer success team and continue the development of the
company’s software.
Follow‑on
investmentsThe Manager expects to continue to deploy
additional capital into both growing portfolio companies and those
that require support to trade through more uncertain periods. Macro
factors such as wage, commodity price and energy price inflation
may impact some elements of the portfolio, but in general the
Manager ensures at the time of initial investment that investee
companies are well‑capitalised to trade through periods of lower
market demand or supply challenges. This is evidenced by the
portfolio remaining relatively resilient over the COVID-19 period,
supported by the Manager’s active style, to ensure risks are
identified and mitigated early.
The Company made four follow-on investments in
the period, totalling £2.6 million, to support further growth
opportunities. Further details are provided below.
Mizaic Ltd (formerly IMMJ Systems
Limited)In February 2023, £0.6 million was invested in
Mizaic, a clinical electronic document management solution supplier
to the NHS. The investment will be used to grow the leadership team
and bolster the business’s abilities to support the digitisation of
records, providing easy and efficient access to patient records for
clinical care across the NHS.
NorthWest EHealth Limited
(“NWEH”)In March 2023, the Company invested a further £1.5
million in NWEH, which provides software and services to the
clinical trials market, allowing pharmaceutical companies and
contract research organisations to conduct feasibility studies,
recruit patients and run trials. The investment will be used to
support the delivery of a number of new real world trials in FY23,
while completing building the company’s Connexon platform to be
compatible with up to 18 million UK healthcare data sources. Since
investment, NWEH has won a number of new customers and is
considering changing its business model to focus more on referral
revenues, which will mean a lower cost overhead in the
business.
Ten Health & Fitness
Limited In March 2023, Ten Health & Fitness, a
multi-site operator in the boutique health, wellbeing and fitness
market, received an additional investment of £0.4 million. The
funding enabled the company to complete its new Kings Cross site
and support the company’s transition to profitability from Q1 2023.
The flagship Kings Cross site opened in March and is already
trading well.
Additive Manufacturing Technologies Ltd
(“AMT”)In April 2023, the Company invested £0.1 million in
AMT, which manufactures systems that automate the post-processing
of 3D printed parts. See the key valuation changes in the period
section on page 14 in the Unaudited Half-Yearly Financial Report
for further details.
PipelineAs at 30 June 2023, the
Company held cash of £39.0 million. This will be used to fund
new and follow‑on investments, buybacks and running expenses, and
support the Company’s dividend objectives. The Manager has a
number of opportunities under exclusivity or in due
diligence. The Company remains well positioned to
continue pursuing these potential investment
opportunities.
Exits and realisationsWhilst
global M&A markets are relatively soft, the Manager has
delivered some strong realisations in the period. The Manager
has witnessed particularly strong interest from overseas buyers,
particularly those that are US funded. Certain acquirers also
strategically need to acquire a UK presence following the UK’s exit
from the EU. However, M&A activity in the broader market has
been lower so far in 2023 than recent years, suggesting the market
might be cooling slightly in the face of economic uncertainty and
rising interest rates.
Datapath Group Limited In March
2023, the Company was pleased to announce the exit of Datapath, a
global leader in the provision of hardware and software solutions
for multiscreen displays. The transaction generated proceeds of
£10.1 million at completion with an additional £2.3 million payable
over the next 24 months. When added to £10.8 million of cash
returned to date, this implies a total cash-on-cash return of 11.6
times the original investment of £2.0 million made in September
2007, equivalent to an IRR of 38%.
Since the original investment, the Manager had
supported Datapath through a period of material growth, with
revenues growing from approximately £7 million to £25 million.
Datapath has developed a market-leading hardware and software
product suite for the delivery of multiscreen displays and video
walls which are sold globally to a diverse customer
base across a range of sectors.
Innovation Consulting Group Limited
(“GovGrant”) In March 2023, the Company announced the exit
of GovGrant to Source Advisors, a US corporate buyer backed by BV
Investment Partners. GovGrant is one of the UK’s leading providers
of R&D tax relief, patent box relief and other innovation
services. The transaction generated proceeds of £6.8 million at
completion. When added to £0.7 million of cash returned to date,
this implies a total cash-on-cash return of 4.5 times the
capital of £1.65 million invested in October 2015, equivalent to an
IRR of 25%.
Since the original investment in 2015, the
Manager had helped GovGrant through a period of material growth
during which it supported the R&D activities of a growing
number of customers. GovGrant’s high levels of service and
innovative products, such as the growing patent box offering, have
contributed to driving innovation in the UK economy. The Manager
had taken a proactive approach to supporting the exceptional senior
management team, all of whom were introduced to the business during
the investment period.
Protean Software LimitedIn July
2023, the Company achieved a successful exit of its holding in
Protean Software to Joblogic, a UK-based direct provider of Field
Service Management software to SMEs, and Protean’s direct
competitor. The Manager invested in Protean in July 2015 as one of
the last buyouts prior to the changes in VCT legislation. Over the
holding period the Manager helped Protean transition its highly
featured legacy product into a modern software product sold on a
SaaS basis. The transaction generated proceeds of £3.5 million
on completion. When added to £0.1 million of cash returned to date,
this implies a total cash-on-cash return of 2.4 times the original
investment of £1.5 million made in July 2015, equivalent to an IRR
of 12%.
Disposals in the period ended 30 June
2023
|
|
|
Accounting cost |
Exit proceeds |
|
|
|
|
At date of |
and deferred |
|
|
|
Total invested1 |
disposal2 |
consideration |
Total return3 |
Company |
Detail |
(£) |
(£) |
(£) |
(£) |
Innovation Consulting Group Limited |
Full disposal |
1,650,000 |
1,938,046 |
6,788,558 |
7,444,806 |
Datapath Group Limited |
Full disposal |
2,000,000 |
11,081,243 |
12,432,757 |
23,203,221 |
|
|
3,650,000 |
13,019,289 |
19,221,315 |
30,648,027 |
- Total invested reflects the total cash investment made by the
Company and Foresight 3 VCT plc.
- The accounting cost includes the valuation of Foresight 3 VCT
plc’s investment in Datapath at the point it was transferred to the
Company as part of the merger in June 2017. The investment
cost at the date of transfer was £73,250.
- Total return includes yield returned to the Company and
Foresight 3 VCT plc up to the date of the exit.
Key portfolio developmentsIn
the first six months of the year, the portfolio has demonstrated
continued resilience in the face of the economic headwinds that
started mid-way through 2022.
Material changes in valuation, defined as
increasing or decreasing by £1.0 million or more since 31
December 2022, are detailed below. Updates on these
companies are included below, or in the Top Ten Investments section
on pages 19 to 22 in the Unaudited Half-Yearly Financial
Report.
Key valuation changes in the
period
Company |
Valuation(£) |
Valuationchange(£) |
Callen-Lenz Associates Limited |
9,283,367 |
3,880,264 |
Aerospace Tooling Corporation Limited |
3,190,346 |
(1,111,974) |
Additive Manufacturing Technologies Ltd |
— |
(1,833,018) |
Aerospace Tooling Corporation
Limited Founded in 2007, Aerospace Tooling
Corporation (“ATL”) is a niche engineering company based in Dundee.
ATL provides specialist inspection, maintenance, repair and
overhaul services for components in high-specification aerospace
and turbine engines.
30 June 2023 updateTrading continues to be
behind expectations, due to a combination of external factors, such
as delays from customers providing parts for repair, and internal
factors such as equipment failures. The senior management team has
been significantly strengthened with a new chair and operations
director hired, and a new finance director to start in the
coming quarter.
Additive Manufacturing Technologies Ltd
(“AMT”)AMT is developing machines for post-production of
3D printed parts: removal of excess polymer (“depowdering”),
surface smoothing/polishing, colouring and inspection. AMT’s goal
is to provide a fully automated end-to-end post-production system,
the “DMS”, with robots linking each stage.
30 June 2023 updateThe business is navigating
the challenging economic environment with support from the Manager,
providing expertise and guidance in line with its active management
approach.
OutlookThe global and UK
markets have experienced a volatile past six months following a
strong recovery in consumer and business demand after the COVID-19
pandemic. The recovery has been somewhat stalled due to various
economic factors following the pandemic. Rising input prices,
driven by supply chain constraints during COVID-19 and rapidly
increasing energy prices following Russia’s invasion of Ukraine in
Q1 2022, drove inflation to a high of 11.1% in October 2022. This
was initially slow to decrease, with inflation remaining at 10.1%
in March 2023 and 7.9% in June 2023, partly driven by wage
inflation resulting from a tight labour market in the UK.
The Bank of England responded by steadily
raising the base interest rate from 0.1% in December 2021 to 5.25%
in August 2023. While this is now taking effect with inflation
reducing, many analysts predict further increases to interest rates
in the short term. The Bank of England is expected to maintain
interest rates at their current level in the medium term, with most
analysts predicting no meaningful reduction during 2024. Rising
wage inflation is limiting the impact of interest rate rises,
suggesting a further tightening of monetary policy, which would
potentially drive the UK into recession in late 2023 or 2024.
Despite this backdrop, the Company’s portfolio
is reasonably well positioned to withstand the market
volatility and economic headwinds. We have worked to balance
risk, with the portfolio exposed to a broad base of both
well‑established and earlier-stage growth companies across a range
of sectors. In the period to 30 June 2023, the portfolio continued
to perform well, with the Company realising two investments in this
time.
Notable examples that demonstrate our ability to
capitalise on high-quality regional opportunities in a variety of
sectors are the sale of Innovation Consulting Group, a
St Albans provider of R&D tax relief, patent box relief
and other innovation services, to a US corporate buyer backed by BV
Investment Partners that generated a 4.5 times return on
investment, and Datapath Group, a Derbyshire-based global leader in
the provision of visual solutions, achieving an impressive
cash-on-cash return of 11.6 times the original investment. The
current portfolio is well diversified with a good mix of
earlier-stage and more mature investments that will yield
attractive opportunities for the Company over time.
The Manager continues to leverage its regional
offices to source the highest quality growth companies where we can
employ our extensive advisory network and proactive portfolio
management style to drive growth and add value to each investee
company. There remains a strong appetite for funding from the
smaller UK businesses with growth potential, which manifested
itself in a number of exciting deals completed in the past year.
Despite shifts in the investment landscape, we continue to see
excellent opportunities to support small companies in many
sub‑sectors, such as health, technology and compliance systems,
amongst others.
While the macro environment is precarious, we
believe that the Company’s portfolio is well placed to cope with a
period of uncertainty. The UK undoubtedly remains an exceptional
place to start, fund and grow a small business, and the Manager
remains committed to supporting the best UK entrepreneurs on their
journey.
James
LivingstonForesight Group LLP 28
September 2023
Unaudited Half-Yearly Results
and Responsibilities Statements
Principal risks and
uncertaintiesThe principal risks faced by the Company are
as follows:
- Market risk
- Strategic and performance risk
- Internal and financial control risk
- Legislative and regulatory risk
- VCT qualifying status risk
- Investment valuation and liquidity risk
The Board reported on the principal risks and
uncertainties faced by the Company in the Annual Report and
Accounts for the period ended 31 December 2022. A detailed
explanation can be found on pages 45 to 47 of the Annual Report and
Accounts, which is available on Foresight Enterprise VCT’s website
www.foresightenterprisevct.com or by writing to Foresight Group LLP
at The Shard, 32 London Bridge Street, London SE1 9SG. The Board
considers that 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.
In the view of the Board, there have been no
changes to the fundamental nature of these risks since the previous
report. The emerging risks identified in the previous report
included those of climate change, inflationary pressures, interest
rates, supply chain issues, energy prices, the Russian invasion of
Ukraine and increased tension between the United States and China
over the future of Taiwan. These emerging risks continue to apply
and be monitored. The Board and the Manager continue to follow all
emerging risks closely with a view to identifying where changes
affect the areas of the market in which portfolio companies
operate. This enables the Manager to work closely with portfolio
companies, preparing them so far as possible to ensure they are
well positioned to endure potential volatility.
Directors’ responsibility
statementThe 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 Half-Yearly Financial Report and financial statements.
The Directors confirm to the best of their
knowledge that:
- The summarised set of financial statements has been prepared in
accordance with FRS 104
- The interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year)
- The summarised set of financial statements gives 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
- 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 concernThe 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 Annual Report. The financial position of
the Company, its cash flows, liquidity position and borrowing
facilities are described in the Chair’s Statement, Strategic Report
and Notes to the Accounts of the 31 December 2022 Annual
Report.
In addition, the Annual Report includes the
Company’s objectives, policies and processes for managing its
capital; its financial risk management objectives; details of
its financial instruments; 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.
The Directors have a 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 has not been
audited nor reviewed by the auditors.
On behalf of the Board
Raymond AbbottChair28 September
2023
Unaudited Income StatementFor the six
months ended 30 June 2023
|
Six months ended |
Six months ended |
Year ended |
|
30 June 2023 |
30 June 2022 |
31 December 2022 |
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Realised gains on investments |
— |
3,411 |
3,411 |
— |
17,283 |
17,283 |
— |
17,493 |
17,493 |
Investment holding gains/(losses) |
— |
1,950 |
1,950 |
— |
(12,158) |
(12,158) |
— |
(8,465) |
(8,465) |
Income |
1,048 |
— |
1,048 |
264 |
— |
264 |
871 |
— |
871 |
Investment management fees |
(373) |
(1,573) |
(1,946) |
(332) |
(995) |
(1,327) |
(681) |
(2,323) |
(3,004) |
Other expenses |
(417) |
— |
(417) |
(309) |
— |
(309) |
(673) |
— |
(673) |
Return/(loss) on ordinary activities before
taxation |
258 |
3,788 |
4,046 |
(377) |
4,130 |
3,753 |
(483) |
6,705 |
6,222 |
Taxation |
— |
— |
— |
— |
— |
— |
— |
— |
— |
Return/(loss) on ordinary activities after
taxation |
258 |
3,788 |
4,046 |
(377) |
4,130 |
3,753 |
(483) |
6,705 |
6,222 |
Return/(loss) per share |
0.1p |
1.7p |
1.8p |
(0.2)p |
2.1p |
1.9p |
(0.2p) |
3.3p |
3.1p |
The total columns of this statement are 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.
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.
Unaudited Reconciliation of Movements in
Shareholders’ FundsFor the six months ended 30 June 2023
|
Called-up |
Share |
Capital |
|
|
|
|
|
share |
premium |
redemption |
Distributable |
Capital |
Revaluation |
|
|
capital |
account |
reserve |
reserve1 |
reserve1 |
reserve |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
As at 1 January 2023 |
2,133 |
68,203 |
573 |
57,309 |
(32,793) |
43,025 |
138,450 |
Share issues in the period |
237 |
15,756 |
— |
— |
— |
— |
15,993 |
Expenses in relation to share issues |
— |
(632) |
— |
— |
— |
— |
(632) |
Repurchase of shares |
(33) |
— |
33 |
(2,011) |
— |
— |
(2,011) |
Realised gains on disposal of investments |
— |
— |
— |
— |
3,411 |
— |
3,411 |
Investment holding gains |
— |
— |
— |
— |
— |
1,950 |
1,950 |
Dividends paid |
— |
— |
— |
(7,692) |
— |
— |
(7,692) |
Management fees charged to capital |
— |
— |
— |
— |
(1,573) |
— |
(1,573) |
Revenue return for the period |
— |
— |
— |
258 |
— |
— |
258 |
As at 30 June 2023 |
2,337 |
83,327 |
606 |
47,864 |
(30,955) |
44,975 |
148,154 |
- Reserve is available for distribution, total distributable
reserves at 30 June 2023 are £16,909,000 (31 December 2022:
£24,516,000).
Unaudited Balance SheetAt 30 June
2023
Registered number: 03506579
|
As at |
As at |
As at |
|
30 June |
30 June |
31 December |
|
2023 |
2022 |
2022 |
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
£’000 |
£’000 |
£’000 |
Fixed assets |
|
|
|
Investments held at fair value through profit or loss |
107,332 |
103,365 |
111,966 |
Current assets |
|
|
|
Debtors |
3,341 |
5,836 |
2,152 |
Cash and cash equivalents |
39,012 |
25,730 |
24,814 |
Total current assets |
42,353 |
31,566 |
26,966 |
Creditors |
|
|
|
Amounts falling due within one year |
(1,531) |
(174) |
(482) |
Net current assets |
40,822 |
31,392 |
26,484 |
Net assets |
148,154 |
134,757 |
138,450 |
Capital and reserves |
|
|
|
Called-up share capital |
2,337 |
1,996 |
2,133 |
Share premium account |
83,327 |
58,068 |
68,203 |
Capital redemption reserve |
606 |
557 |
573 |
Distributable reserve |
47,864 |
66,479 |
57,309 |
Capital reserve |
(30,955) |
(31,675) |
(32,793) |
Revaluation reserve |
44,975 |
39,332 |
43,025 |
Equity Shareholders’ funds |
148,154 |
134,757 |
138,450 |
Net Asset Value per share |
63.4p |
67.5p |
64.9p |
Unaudited Cash Flow StatementFor the six
months ended 30 June 2023
|
Six months |
Six months |
Year ended |
|
ended |
ended |
31 December |
|
30 June 2023 |
30 June 2022 |
2022 |
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
£’000 |
£’000 |
£’000 |
Cash flow from operating activities |
|
|
|
Loan interest received from investments |
636 |
193 |
653 |
Dividends received from investments |
— |
26 |
38 |
Deposit and similar interest received |
412 |
19 |
202 |
Investment management fees paid |
(1,485) |
(1,330) |
(2,766) |
Secretarial fees paid |
(91) |
(83) |
(178) |
Other cash payments |
(288) |
(191) |
(433) |
Net cash outflow from operating activities |
(816) |
(1,366) |
(2,484) |
Cash flow from investing activities |
|
|
|
Purchase of investments |
(7,608) |
(3,202) |
(9,987) |
Net proceeds on sale of investments |
16,430 |
15,408 |
20,951 |
Net proceeds on deferred consideration |
— |
24 |
234 |
Net cash inflow from investing activities |
8,822 |
12,230 |
11,198 |
Cash flow from financing activities |
|
|
|
Proceeds of fundraising |
14,685 |
4,469 |
13,987 |
Expenses of fundraising |
(360) |
(98) |
(361) |
Repurchase of own shares |
(1,448) |
(525) |
(1,467) |
Equity dividends paid |
(6,685) |
(6,093) |
(13,172) |
Net cash inflow/(outflow) from financing
activities |
6,192 |
(2,247) |
(1,013) |
Net inflow of cash in the period |
14,198 |
8,617 |
7,701 |
Reconciliation of net cash flow to movement in net
funds |
|
|
|
Increase in cash and cash equivalents for the period |
14,198 |
8,617 |
7,701 |
Net cash and cash equivalents at start of period |
24,814 |
17,113 |
17,113 |
Net cash and cash equivalents at end of
period |
39,012 |
25,730 |
24,814 |
Analysis of changes in net
debt
|
At 1 January 2023 |
Cash flow |
At 30 June 2023 |
|
£’000 |
£’000 |
£’000 |
Cash and cash equivalents |
24,814 |
14,198 |
39,012 |
Notes to the Unaudited Half-Yearly
ResultsFor the six months ended 30 June 2023
1 The Unaudited Half-Yearly
Financial Report has been prepared on the basis of the accounting
policies set out in the statutory accounts of the Company for the
year ended 31 December 2022. Unquoted investments have been
valued in accordance with IPEV Valuation Guidelines (as updated in
December 2022 including further COVID-19 guidance in March
2020).
2These are not statutory
accounts in accordance with S436 of the Companies Act 2006 and the
financial information for the six months ended 30 June 2023 and 30
June 2022 has been neither audited nor formally reviewed. Statutory
accounts in respect of the year ended 31 December 2022 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 December 2022 have been reported on
by the Company’s auditors or delivered to the
Registrar of Companies.
3 Copies of the Unaudited
Half-Yearly Financial Report will be sent to Shareholders via their
chosen method and will be available for inspection at the
Registered Office of the Company at The Shard, 32 London
Bridge Street, London SE1 9SG.
4 Net Asset Value per shareThe
Net Asset Value per share is based on net assets at the end of the
period and on the number of shares in issue at the date.
|
|
Number of |
|
Net assets |
shares in issue |
30 June 2023 |
£148,154,000 |
233,691,676 |
30 June 2022 |
£134,757,000 |
199,590,704 |
31 December 2022 |
£138,450,000 |
213,316,422 |
5 Return per shareThe weighted
average number of shares used to calculate the respective returns
are shown in the table below.
|
Shares |
Six months ended 30 June 2023 |
225,472,482 |
Six months ended 30 June 2022 |
195,162,969 |
Year ended 31 December 2022 |
198,639,819 |
Earnings for the period should not be taken as a
guide to the results for the full year.
6 Income
|
Six months |
Six months |
|
|
ended |
ended |
Year ended |
|
30 June |
30 June |
31 December |
|
2023 |
2022 |
2022 |
|
£’000 |
£’000 |
£’000 |
Loan stock interest |
636 |
207 |
631 |
Deposit and similar interest received |
412 |
19 |
202 |
Dividends receivable |
— |
38 |
38 |
Total income |
1,048 |
264 |
871 |
7 Investments at fair value through
profit or loss
|
£’000 |
Book cost as at 1 January 2023 |
69,921 |
Investment holding gains |
42,045 |
Valuation at 1 January 2023 |
111,966 |
Movements in the period: |
|
Purchases |
8,608 |
Disposal proceeds1 |
(16,430) |
Realised gains |
3,411 |
Investment holding losses2 |
(223) |
Valuation at 30 June 2023 |
107,332 |
Book cost at 30 June 2023 |
65,510 |
Investment holding gains |
41,822 |
Valuation at 30 June 2023 |
107,332 |
- The Company received £16,430,000 from the disposal of
investments during the period. The book cost of these investments
when they were purchased was £13,019,000. 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.
- Investment holding gains in the Income Statement include the
deferred consideration debtor increase of £2,173,000. The debtor
movement reflects the recognition of amounts receivable in respect
of Datapath Group Limited (£2,333,000), offset by an FX movement in
respect of Codeplay Software Limited (£19,000) and provisions made
against balances in respect of Mologic Ltd. (£105,000) and FFX
Group Limited (£36,000).
8 Related party transactionsNo
Director has an interest in any contract to which the Company is a
party other than their appointment and payment as Directors.
9 Transactions with the
ManagerForesight Group LLP acts as Manager to the Company
and was appointed on 27 January 2020. During the period, services
of a total cost of £1,492,000 (30 June 2022: £1,327,000; 31
December 2022: £2,724,000) were purchased by the Company from
Foresight Group LLP. Although no performance fee was paid in the
period (30 June 2022: £nil; 31 December 2022: £nil), a liability of
£734,000 has been recognised as at the period end (30 June 2022:
£nil; 31 December 2022: £280,000).
During the period, administration services of a
total cost of £91,000 (30 June 2022: £83,000; 31
December 2022: £178,000) were delivered to the Company by
Foresight Group LLP, Company Secretary.
At 30 June 2023, the amount due to Foresight
Group LLP was £nil (30 June 2022: £43,000; 31 December 2022:
£nil).
END
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