Half-year report
26/09/2024 14:19
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FORESIGHT ENTERPRISE VCT PLC
LEI: 213800MWJNR3WZZ3ZP42
UNAUDITED HALF-YEARLY FINANCIAL REPORT
FOR THE PERIOD ENDED 30 JUNE 2024
Financial Highlights
* Total net assets £171.1 million
* A special dividend of 5.0p per share was paid on 19 January 2024, returning
£13.2 million to Shareholders
* Post period end, an interim dividend of 3.3p per share was paid on 12 July
2024, returning £8.7 million to Shareholders
* The value of the investment portfolio has increased by £8.7 million in the
last six months
* Net Asset Value per share decreased by 1.7% in the period from 65.6p at 31
December 2023 to 64.5p at 30 June 2024
* Including the payment of a 5.0p dividend on 19 January 2024, NAV Total
Return per share at 30 June 2024 was 69.5p (being NAV at the end of the period
plus dividends paid in the period), representing a positive NAV Total Return
of 5.9% in the period
Chair’s Statement
I am pleased to present the unaudited Half-Yearly Financial Report
for Foresight Enterprise VCT plc for the period ended 30 June 2024 and to
report a Net Asset Value Total Return of 5.9% for the period, including a
dividend yield of 8.6%.
The business environment is slowly improving with interest rates looking like
they have peaked and inflationary pressures more stable, as are energy costs.
All of these factors are key to a more stable business environment which is a
prerequisite to building business confidence and, from this, hopefully growth.
However, the spectre of a worsening geopolitical landscape continues to cause
concern for citizens and investors alike. The threat of recession is receding,
but markets remain uncertain with forthcoming US elections and a new UK
Government and what that might mean for us all. The continuing issues in
Ukraine and the Middle East only goes to add to the uncertainty and these
matters influence the Manager’s investment thinking too. Against that
backdrop, I am delighted to say our portfolio is performing well with some
good exits and a positive pipeline of new investment opportunities being
considered. The Board is soon to embark upon our annual strategy review with
the Manager. I believe the strong and growing team of investment professionals
serves us well. The Manager’s regional presence across core commercial
centres in the UK further adds to the diversity of opportunities they can
review and invest in. We will continue to have great focus to ensure the
Company and sector selections are considered, well researched and suggest
good value prior to investment.
In the six months ended 30 June 2024, 22 companies in the portfolio recorded a
combined increase in valuation of £13.7 million, offset by 19 companies
recording an aggregate fall in valuation of £5.0 million.
Strategy
The 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% annual target while
continuing to grow the Company’s assets
* Payment of annual dividends of at least 5% of the NAV per share based on
the opening NAV per share of that financial year
* Implementation of a number of new and follow-on qualifying investments every
year, exceeding deployment requirements to maintain VCT status
* Maintaining a programme of regular share buybacks at a discount of 5%,
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 activity
During the period Net Asset Value per share decreased by 1.7% from 65.6p as at
31 December 2023 to 64.5p as at 30 June 2024. After adding back the payment
of a 5.0p dividend paid on 19 January 2024, NAV Total Return per share at
30 June 2024 was 69.5p, representing a positive NAV Total Return of 5.9% in
the period. This positive movement is a result of the strategy and business
changes throughout the portfolio alluded to above.
On 13 October 2023, 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 15
April 2024 having raised gross proceeds of £30.0 million, £28.8 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 three new investments and three
follow-on investments costing £6.5 million and £2.5 million respectively.
The Manager successfully disposed of Callen-Lenz Associates Limited and Specac
International Limited, generating proceeds of £34.3 million, with a further
£3.6 million of deferred consideration included within debtors at the period
end. Adding in the £1.5 million of cash returned in the investment period,
this represents a combined return multiple of 6.4 times the original
investment. The Manager also disposed of two challenged businesses, Crosstown
Dough Limited and So-Sure Limited, during the period. Further details of these
investments and realisations can be found in the Manager’s Review.
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 investing
The analysis of environmental, social and governance (“ESG”) issues is
embedded in the Manager’s investment process and, whilst the Company has no
specific objective to invest in companies which have an ESG focus, these
factors are more generally 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 24 and 25 in the Unaudited Half-Yearly Financial Report.
Dividends
A special interim dividend of 5.0p per share was declared on 14 December 2023
based on an ex-dividend date of 4 January 2024 and a record date of 5 January
2024. The dividend was paid on 19 January 2024, returning £13.2 million to
Shareholders. Additionally, an interim dividend of 3.3p per share was declared
on 11 June 2024 based on an ex-dividend date of 27 June 2024 and a
record date of 28 June 2024. The dividend was paid on 12 July 2024,
returning £8.7 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.
Buybacks
The Board is pleased to have achieved an average discount across all buybacks
of 5.0% to the Net Asset Value per share in the period and continues to have
an objective of maintaining buybacks at a discount of 5%, subject to
market conditions.
Shareholder communication
We were delighted to hold the AGM on 11 June 2024. We hope many of you will be
available to attend our next in‑person investor forum event which will be
announced in due course. 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 composition
The Board continues to review its own performance and undertakes succession
planning to maintain an appropriate level of independence, experience,
diversity and skills in order to be in a position to discharge all its
responsibilities.
VCT Sunset clause
I am pleased to report that the European Commission has decided not to raise
objections in respect of the prolongation of the UK’s VCT scheme by ten
years to April 2035. This now removes any recent uncertainty and will help
support further investment by the VCT sector in early stage companies.
Outlook
As I mentioned in my introduction, the business environment is improving with
interest rates and inflationary pressures beginning to ease. However, the
geopolitical landscape of the world is as hostile and uncertain as I have seen
it. We are therefore carefully considering how all of these factors, in an
ever-changing world, challenge the investment thesis.
We do, however, have the benefit of these developing companies in which we
invest, on the whole being able to more swiftly adapt to the fast-moving
environment in which we operate with the benefit of our Manager and a strong
funding base.
We have a diverse portfolio of investments and we are confident that our
continued focus on the wider business landscape, alongside the Manager’s
deep understanding of the individual investee companies in which we invest,
will protect us from the most extreme market conditions.
We have a strong balance sheet with a diversified portfolio that we believe
will provide sustainable long-term value for Shareholders.
Michael Gray
Chair
26 September 2024
Manager’s Review
The Board has appointed Foresight Group LLP (the “Manager”) to provide
investment management and administration services.
Portfolio summary
As at 30 June 2024, the Company’s portfolio comprised 45 investments with a
total cost of £71.4 million and a valuation of £102.7 million. The portfolio
is diversified by sector, transaction type and maturity profile. Details of
the ten largest investments by valuation, including an update on their
performance, are provided on pages 17 to 20 in the Unaudited Half-Yearly
Financial Report.
During the six months to 30 June 2024, the value of the investment portfolio
decreased by £16.9 million as a result of successful realisations of several
investments generating £34.5 million. This was partially offset by an
increase of £8.7 million in the valuation of the remaining investments,
plus £9.0 million of new and follow‑on investments.
Overall, the portfolio has performed well despite uncertainty in the market
with ongoing conflicts in Ukraine and Gaza, numerous elections taking place
worldwide, fears of a potential recession in the US and continued domestic
price inflation, coupled with high interest rates.
In line with the Board’s strategic objectives, we remain focused on growing
the Company through further development of Net Asset Value Total Return. For
the six months to 30 June 2024, Net Asset Value Total Return was 5.9% and net
assets increased by 1.5% to £171.1 million following the payment of a 5.0p
per share dividend costing the Company £13.2 million, meaning that the
Company has successfully met this objective in the period under review.
New investments
Three new investments were completed in the six months to 30 June 2024,
totalling £6.5 million. New investments were across children’s play
centres, engineering solutions and cybersecurity. Follow-on investments
totalling £2.5 million were also made in three existing investee companies.
There is a strong pipeline of opportunities that we expect to convert during
the second half of 2024.
Family Adventures Group Limited
In January 2024, the Company invested £2.5 million of growth capital into
Family Adventures Group, a provider of daycare nurseries and children’s
leisure sites that combines soft play areas with theatrical role play
facilities. All inspected sites have been rated “Good” by Ofsted and have
an average score of 9.9/10 on daynurseries.co.uk; whilst the leisure sites
have market-leading Net Promoter Scores and high repeat visits.
The investment will be used to aid the business with a continued rollout of
nursery and leisure sites across the South West and the Midlands.
Evolve Dynamics Limited
In March 2024, the Company completed a £2.0 million investment into Evolve
Dynamics. Founded in 2016, the company designs and manufactures smaller
Unmanned Aerial Systems (“UAS”) with capabilities for intelligence,
surveillance and reconnaissance. The company’s UAS products are also widely
deployed within UK and international police forces, fire services, energy
inspection and search & rescue organisations. The investment will help scale
the business and aid in new product launches.
Lepide Group Holding Company Limited
In March 2024, the Company invested £2.0 million into Lepide, a cyber
security software solution that helps organisations to protect their
unstructured data. Lepide actively monitors event logs within Windows Active
Directory in order to detect suspicious activity and help organisations to
manage over‑exposure of data. The investment will help scale the business
and accelerate growth initiatives.
Follow-on investments
The Company made follow-on investments in three companies during the six
months to 30 June 2024, totalling £2.5 million. Further details of each of
these are provided below.
The additional equity injections in the period were used to support further
growth plans, such as launching new products, and expansion of commercial
capabilities. We continue to successfully navigate the volatility that has
been felt across the markets over the course of the year and remain vigilant
about the health of the portfolio and the need for follow-on funding during
the second half of 2024. Given the size of the portfolio, further
opportunities to deploy capital into growing existing investments are
expected.
HomeLink Healthcare Limited
In March 2024, the Company completed a £1.0 million follow‑on investment
into HomeLink Healthcare. The Company first invested into HomeLink in March
2022. Contracting with the NHS, the business provides patients with wound
care, physiotherapy and intravenous therapies in their own home. HomeLink is
also a leader in remote patient monitoring practices, offers a virtual ward
solution and has now saved the NHS over 150,000 hospital bed days. The
investment will support the organic expansion of the company.
Hexarad Group Limited
In June 2024, the Company completed a £0.7 million follow‑on investment
into Hexarad Group. The Company initially invested £0.9 million into Hexarad
in June 2021, which preceded a £0.7 million follow-on in August 2022.
Hexarad is a teleradiology company, supporting NHS and private healthcare
providers with access to a diversified pool of radiologists in order to
provide fast, accurate diagnosis and enable more timely and higher quality
patient care. The latest investment forms part of a larger funding round,
including a new third‑party investor, to support the ongoing development of
the technology, as well as the expansion of the commercial and operational
teams.
Sprintroom Limited
In March 2024, the Company completed a £0.8 million follow‑on investment
into 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 drive continued revenue growth and
develop further iterations of the new product range.
Post period end activity
After the period end, the Company completed three follow‑on investments
totalling £2.2 million into NorthWest EHealth Limited, which provides
software and services to the clinical trials market; Strategic Software
Applications Ltd, a London-based SaaS technology provider supporting financial
institutions in meeting their regulatory compliance obligations; and Red Flag
Alert Technology Group Limited, a Manchester-based proprietary SaaS
intelligence platform with modular capabilities spanning compliance,
prospecting, risk management and financial health assessments.
Realisations
The M&A climate has proven more challenging in recent years in light of
macroeconomic conditions, including higher interest rates and geopolitical
uncertainty alluded to above. Despite this, we are pleased to report the
particularly strong realisations of Callen-Lenz Associates Limited and Specac
International Limited, as well as the disposal of two challenged businesses
within the portfolio: Crosstown Dough Ltd and So-Sure Limited. Two loans
totalling £0.6 million were also fully repaid in the period. We continue to
engage with a range of potential acquirers of several portfolio companies and
to carefully consider the timing of exit for each. Demand from both private
equity and trade buyers remains for high-quality, high-growth businesses.
Callen-Lenz Associates Limited
In May 2024, the Company achieved the successful exit of Callen-Lenz
Associates, returning £23.4 million to the Company. Including a further £2.9
million of earnout recognised at the period end, the sale implies a 5.4x
cash‑on‑cash return on the total investment made of £4.9 million,
equivalent to an IRR of 124%.
Since investment, we have worked with the board to expand both non-executive
and executive leadership, which led to successful product launches and a
significant increase in headcount and revenue. With the business focus
successfully transitioned from R&D to commercial sales, the exit will
facilitate continued growth.
Crosstown Dough Limited
In June 2024, the Company realised its investment in Crosstown Dough, a
doughnut vendor operating from 31 sites including a mix of bricks and mortar,
food trucks and market stalls. Crosstown’s core products are made at
its central production unit in Battersea. The sale of Crosstown to Karali
Group, a large franchise operator of Burger King in the UK and US, allowed
distributions to be made to creditors whilst facilitating the continuation of
the business. The business had been impacted by wage and supply chain
inflation.
Specac International Limited
In March 2024, the Company announced the sale of Specac International, a
leading manufacturer of high-specification sample analysis and preparation
equipment used in testing and research laboratories worldwide, primarily
supporting infrared spectroscopy. The transaction generated proceeds of £11.2
million at completion. When added to £1.5 million of cash returned pre-exit,
this implies a total cash-on-cash return of 10.3x, equivalent to an IRR of
33%, with a further £704,000 of deferred consideration recognised at the
period end. Since investment, the business has grown to sell globally through
both original equipment manufacturers (“OEMs”) and distributors. We also
engaged with the team to support management team changes, improvements in
governance, headcount and numerous product launches, as well as a major site
move. The exit will facilitate the continued growth of the business.
So-Sure Limited
In March 2024, the investment in So-Sure was fully written off as it failed
to perform in line with the management plan proposed at the Manager’s
Investment Committee. So-Sure Limited is a technology company acting as
“Managing General Agent” for insurers. The company’s mission is to offer
a more trusted proposition, greater pricing transparency and improved customer
experience through its customer-centric digital platform.
Realisations in the period ended 30 June 2024
Company Detail Total invested (£) Accounting cost at date of disposal (£) Exit proceeds and deferred consideration (£) Total return (£)
Callen-Lenz Associates Limited (1) Full disposal 4,875,000 4,875,000 26,266,395 26,266,395
Specac International Limited (2) Full disposal 1,300,000 2,054,761 11,876,787 13,326,804
Crosstown Dough Ltd Full disposal 1,500,000 1,500,000 — —
So-Sure Limited (3) Full disposal 1,600,000 1,600,000 11,429 11,429
Spektrix Limited Loan repayment 112,873 112,873 112,873 112,873
Positive Response Corporation Ltd Loan repayment 100,000 100,000 100,000 100,000
9,487,873 10,242,634 38,367,484 39,817,501
1. Includes £2,894,000 of deferred consideration which has been recognised
within debtors.
2. Includes £704,000 of deferred consideration which has been recognised
within debtors. Accounting cost includes an uplift of £1,254,761 on transfer
into the Company on merger with Foresight 3 VCT plc.
3. Includes £11,000 of deferred consideration which has been recognised
within debtors.
Pipeline
As at 30 June 2024, the Company had cash reserves of £64.5 million, which
will be used to fund new and follow‑on investments, buybacks, dividends and
corporate expenditure. We are seeing a strong pipeline of new opportunities,
with several opportunities in due diligence or in exclusivity, with further
deal completions expected to be announced in the months to follow.
The outlook for the UK economy is more favourable during the year to date,
with inflation returning to historic norms over the last 12 months. Consumer
spending remains squeezed however, resulting from stubbornly higher interest
rates and the effects of recent high inflation still being felt.
Conflicts in Ukraine and Gaza continue to impact supply chains and erode
confidence.
Global markets have proven to be exceptionally volatile so far in 2024, which
recently gave rise to some concern within the market about a US recession
which would have far-reaching consequences globally. Against this unsettled
backdrop, the UK economy is performing reasonably well and UK companies
continue to seek both the capital and experience to help deliver growth in
uncertain times.
With a broad network of deal introducers across the UK and internationally,
and through its growing network of regional offices, we continue to see a
large volume of attractive investment opportunities. This is not expected to
change in the medium term. We continue to pursue a balanced strategy,
targeting companies from a range of sectors and at different stages of
maturity to combat market volatility.
Key portfolio developments
Material changes in valuation, defined as increasing or decreasing by £1.0
million or more since 31 December 2023, are detailed below. Updates on these
companies are included on page 12 and in the Top Ten Investments section on
pages 17 to 20 in the Unaudited Half-Yearly Financial Report.
Key valuation changes in the period
Valuation Valuation change
methodology (£)
TLS Holdco Limited (1) Discounted earnings multiple 2,135,763
Hexarad Group Limited (1) Price of last funding round 1,685,755
Aerospace Tooling Corporation Limited Discounted earnings multiple (1,417,100)
1. Updates included in Top Ten Investments section on pages 17 to 18 in the
Unaudited Half-Yearly Financial Report.
Outlook
2024 has so far been a year of market volatility. Global markets performed
strongly in the first six months of the year, with US indexes such as the S&P
500 and NASDAQ delivering consistent gains, albeit largely driven by a handful
of high‑performing technology companies. Increasing unemployment rates
created a sense of anxiety in the US, whilst volatility across the market is
expected to continue in the medium term as a result of the ongoing wars in
Ukraine and Gaza, which threaten to morph into global conflicts. In addition,
nations representing approximately half of the global population are holding
or have held elections in 2024, with the polarising US election taking place
later in the year. This political uncertainty deepens the sense of instability
in the markets.
Despite this challenging backdrop, the UK economy continues to perform
relatively well. The FTSE 100 has shown steady gains throughout the year,
rather than the significant gains and losses driven by highly valued
technology companies seen in the US. GDP growth forecasts for the year are
modest but exceed the expectations set earlier in 2024. Inflation has returned
to historic levels, despite evidence which suggests that increased costs
continue to be passed on to consumers, eroding spending power. As a result,
the base interest rate has been held at 5% or over until September, with
further reductions likely to be measured. The first Labour government in over
a decade appears relatively moderate and business-friendly, but is yet to
announce its first budget, which could have wide‑ranging consequences for
small businesses in the UK.
In light of the volatile global economy and geopolitical environment, and a UK
economy that is showing moderate signs of growth, the Company has performed
well in the year to date. NAV Total Return in the year to date is 5.9%. Strong
exits from Specac and Callen-Lenz have significantly contributed to the 3.3p
dividend paid in July and a very attractive dividend yield of 14.3% (based on
the mid-market share price as at 30 June 2024 of 58.0p). The disappointing
exits of So-Sure and Crosstown, however, exemplify the current challenges
faced by businesses linked to consumer spending. The Company maintains a
balanced portfolio across different sectors and stages of the business
lifecycle, which should stand it in good stead to face the volatility ahead.
Our hands-on approach to challenges and exit planning continues to add value
to the portfolio companies.
Looking to the remainder of 2024 and beyond, it would be reasonable to expect
further volatility given the geopolitical and economic environment. The US
election could have far-reaching consequences, while few concrete details have
yet emerged on the new UK government's first budget. Interest rates are
likely to remain relatively high in the medium term, although this may create
opportunities for equity investors to support SMEs put off by the cost of
debt.
On the optimistic side, the UK’s relatively low market volatility and
moderate government should mean it remains an attractive place to do business.
We expect to see continuing interest in UK companies as acquisition targets
for overseas corporations. The UK continues to invest heavily in innovation
through world-class universities and support networks, generating a good flow
of attractive investment opportunities for us.
We are pleased with the performance in the year to date, with a successful
fundraising, high-potential new investments and attractive exits. With
inflation returning to historic norms and consumer confidence hopefully
improving, there is cause for some optimism looking to the future. Crucially,
the portfolio remains diversified across sectors and with a mix of
higher-growth and cash-generative businesses, the Company is resilient to
headwinds and challenges. The Company has further strengthened its position in
the rankings against its peers in the VCT market, which remains an important
source of capital for UK entrepreneurs.
James Livingston
Foresight Group LLP
26 September 2024
Unaudited Half-Yearly Results And Responsibilities Statements
Principal risks and uncertainties
The principal risks faced by the Company are as follows:
* Market risk
* Strategic and performance risk
* Internal 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 year ended 31 December 2023.
A detailed explanation can be found on pages 47 to 49 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.
In the view of the Board, there have been no changes to the fundamental nature
of these risks since the previous Annual Report and Accounts. The emerging
risks identified in the previous report included those of climate change,
inflationary pressures, interest rates, supply chain issues, energy prices and
geopolitical tensions. 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 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 Half-Yearly Financial Report.
The Directors confirm to the best of their knowledge that:
a) The summarised set of financial statements has been
prepared in accordance with FRS 104
b) The Half-Yearly Financial 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)
c) 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
d) The Half-Yearly Financial 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 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 2023 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 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
Michael Gray
Chair
26 September 2024
Unaudited Income Statement
For the six months ended 30 June 2024
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
(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 — 25,300 25,300 — 3,411 3,411 — 5,366 5,366
Investment holding (losses)/gains — (13,044) (13,044) — 1,950 1,950 — 6,405 6,405
Income 1,750 — 1,750 1,048 — 1,048 2,683 — 2,683
Investment management fees (434) (2,614) (3,048) (373) (1,573) (1,946) (759) (3,845) (4,604)
Other expenses (420) — (420) (417) — (417) (790) — (790)
Return on ordinary activities before taxation 896 9,642 10,538 258 3,788 4,046 1,134 7,926 9,060
Taxation (183) 183 — — — — (225) 225 —
Return on ordinary activities after taxation 713 9,825 10,538 258 3,788 4,046 909 8,151 9,060
Return per share 0.3p 3.6p 3.9p 0.1p 1.7p 1.8p 0.4p 3.5p 3.9p
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’ Funds
For the six months ended 30 June 2024
Called-up Share Capital
share premium redemption Distributable Capital Revaluation
capital account reserve reserve (1) reserve (1) reserve Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
As at 1 January 2024 2,567 102,801 679 44,046 (31,047) 49,430 168,476
Share issues in the period 171 10,894 — — — — 11,065
Expenses in relation to share issues — (348) — — — — (348)
Repurchase of shares (88) — 88 (5,460) — — (5,460)
Realised gains on disposal of investments — — — — 25,300 — 25,300
Investment holding losses — — — — — (13,044) (13,044)
Dividends paid — — — (13,200) — — (13,200)
Management fees charged to capital — — — — (2,614) — (2,614)
Revenue return for the period before taxation — — — 896 — — 896
Taxation for the period — — — (183) 183 — —
As at 30 June 2024 2,650 113,347 767 26,099 (8,178) 36,386 171,071
1. Reserve is available for distribution, total distributable reserves at 30
June 2024 are £17,921,000 (31 December 2023: £12,999,000)
Unaudited Balance Sheet
At 30 June 2024
Registered number: 03506579
As at 30 June As at 30 June As at 31 December
2024 2023 2023
(Unaudited) (Unaudited) (Audited)
£’000 £’000 £’000
Fixed assets
Investments held at fair value through profit or loss 102,729 107,332 119,587
Current assets
Debtors 5,418 3,341 2,726
Cash and cash equivalents 64,515 39,012 47,843
Total current assets 69,933 42,353 50,569
Creditors
Amounts falling due within one year (1,591) (1,531) (1,680)
Net current assets 68,342 40,822 48,889
Net assets 171,071 148,154 168,476
Capital and reserves
Called-up share capital 2,650 2,337 2,567
Share premium account 113,347 83,327 102,801
Capital redemption reserve 767 606 679
Distributable reserve 26,099 47,864 44,046
Capital reserve (8,178) (30,955) (31,047)
Revaluation reserve 36,386 44,975 49,430
Equity Shareholders’ funds 171,071 148,154 168,476
Net Asset Value per share 64.5p 63.4p 65.6p
Unaudited Cash Flow Statement
For the six months ended 30 June 2024
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
(Unaudited) (Unaudited) (Audited)
£’000 £’000 £’000
Cash flow from operating activities
Loan interest received from investments 401 636 1,238
Dividends received from investments 165 — 175
Other income received from investments — — 71
Deposit and similar interest received 979 412 1,190
Investment management fees paid (1,747) (1,485) (3,029)
Performance incentive fee paid (1,115) — (734)
Secretarial fees paid (101) (91) (197)
Other cash payments (240) (288) (549)
Net cash outflow from operating activities (1,658) (816) (1,835)
Cash flow from investing activities
Purchase of investments (8,969) (7,608) (17,652)
Net proceeds on sale of investments 34,486 16,430 20,572
Net proceeds on deferred consideration 1,057 — 669
Net cash inflow from investing activities 26,574 8,822 3,589
Cash flow from financing activities
Proceeds of fundraising 9,182 14,685 34,910
Expenses of fundraising (535) (360) (474)
Repurchase of own shares (5,432) (1,448) (6,504)
Equity dividends paid (11,459) (6,685) (6,657)
Net cash (outflow)/inflow from financing activities (8,244) 6,192 21,275
Net inflow of cash in the period 16,672 14,198 23,029
Reconciliation of net cash flow to movement in net funds
Increase in cash and cash equivalents for the period 16,672 14,198 23,029
Net cash and cash equivalents at start of period 47,843 24,814 24,814
Net cash and cash equivalents at end of period 64,515 39,012 47,843
Analysis of changes in net debt
At 1 January At 30 June
2024 Cash flow 2024
£’000 £’000 £’000
Cash and cash equivalents 47,843 16,672 64,515
Notes To The Unaudited Half-Yearly Results
For the six months ended 30 June 2024
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 2023. Unquoted investments have been valued in
accordance with IPEV Valuation Guidelines (as updated in December 2022
including further COVID-19 guidance in March 2020).
2
These are not statutory accounts in accordance with S436 of the Companies Act
2006 and the financial information for the six months ended 30 June 2024 and
30 June 2023 has been neither audited nor formally reviewed. Statutory
accounts in respect of the year ended 31 December 2023 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 2023
have been reported on by the Company’s auditors.
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 share
The 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 2024 £171,071,000 265,024,186
30 June 2023 £148,154,000 233,691,676
31 December 2023 £168,476,000 256,728,468
5 Return per share
The weighted average number of shares used to calculate the respective returns
are shown in the table below.
Shares
Six months ended 30 June 2024 271,618,784
Six months ended 30 June 2023 225,472,482
Year ended 31 December 2023 230,692,970
Earnings for the period should not be taken as a guide to the results for the
full year.
6 Income
Six months ended 30 June 2024 £’000 Six months ended 30 June 2023 £’000 Year ended 31 December 2023 £’000
Deposit and similar interest received 979 412 1,190
Loan stock interest 606 636 1,247
Dividends receivable 165 — 175
Other income — — 71
Total income 1,750 1,048 2,683
7 Investments at fair value through profit or loss
£’000
Book cost as at 1 January 2024 72,698
Investment holding gains 46,889
Valuation at 1 January 2024 119,587
Movements in the period:
Purchases 8,969
Disposal proceeds (1) (34,486)
Realised gains (2) 24,243
Investment holding losses (3) (15,584)
Valuation at 30 June 2024 102,729
Book cost at 30 June 2024 71,424
Investment holding gains 31,305
Valuation at 30 June 2024 102,729
1. The Company received £34,486,000 from the disposal of investments during
the period. The book cost of these investments when they were purchased was
£10,243,000. 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.
2. Realised gains in the Income Statement include deferred consideration
receipts from Datapath Group Limited (£583,000), Codeplay Software Limited
(£463,000) and Mologic Ltd (£11,000).
3. Investment holding losses in the Income Statement include the deferred
consideration debtor increase of £2,540,000. The debtor movement reflects the
recognition of amounts receivable from Callen-Lenz Associates Limited
(£2,894,000), Specac International Limited (£704,000) and So-Sure Limited
(£11,000) offset by receipts from Datapath Group Limited (£583,000),
Codeplay Software Limited (£463,000) and Mologic Ltd (£11,000) and a
provision made against the balance potentially due from Ixaris Systems Ltd
(£12,000).
8 Related party transactions
No Director has an interest in any contract to which the Company is a party
other than their appointment and payment as Directors.
9 Performance incentive fee
In order to incentivise the Manager to generate enhanced returns for
Shareholders, the Manager is entitled to a performance incentive fee,
designated a share-based payment due to its nature. This fee is equal to 15%
of dividends paid to Shareholders, subject to the total return (Net Asset
Value plus cumulative dividends paid per share on or after 11 January 2011)
exceeding 100p (“High Watermark”), both immediately before and after the
performance incentive fee is paid. After each distribution is made to
Shareholders where a performance incentive is paid, the High Watermark
required to be achieved by the Company to trigger a further performance
incentive fee will be amended to take account of the dividend paid.
A £1,115,000 performance incentive fee was paid during the period (31
December 2023: £734,000) following the January 2024 dividend. The High
Watermark as at 19 January 2024 was at 110.3p. The total return as at 19
January 2024 was 113.1p. As a result of performance incentive fee payments
made in the current and previous years, the High Watermark as at 30 June 2024
was 112.7p (31 December 2023: 110.3p). The total return as at 30 June 2024 was
117.2p (31 December 2023: 113.1p). At 30 June 2024, the Company has accrued an
amount of £1,312,000 in relation to future performance incentive fees as it
is considered likely such payment will become due over the medium term (31
December 2023: £1,115,000).
10 Transactions with the Manager
Foresight Group LLP advises the Company on investments under an agreement
dated 30 July 2004. During the period, Foresight Group LLP earned fees of
£1,736,000 (30 June 2023: £1,492,000; 31 December 2023: £3,035,000). A
performance incentive fee of £1,115,000 (30 June 2023: £nil; 31 December
2023: £734,000) was paid in the period with an additional provision of
£1,312,000 (30 June 2023: £734,000; 31 December 2023: £1,115,000)
recognised as at the period end.
During the period, administration services of a total cost of £101,000 (30
June 2023: £91,000; 31 December 2023: £197,000) were delivered to the
Company by Foresight Group LLP, Company Secretary.
At 30 June 2024, the amount due from Foresight Group LLP was £46,000 (30 June
2023: £nil; 31 December 2023: (£8,000)).
A copy of the Unaudited Half-Yearly Financial Report will be submitted to the
National Storage Mechanism in accordance with UK Listing Rules
(“UKLR”)11.4.1 / UKLR 6.4.1 and UKLR 6.4.3.
END
For further information, please contact:
Company Secretary
Foresight Group LLP
Contact: Stephen Thayer Tel: 0203 667 8100
Investor Relations
Foresight Group LLP
Contact: Andrew James Tel: 0203 667 8181