Half-year report
20/12/2024 18:44
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FORESIGHT TECHNOLOGY VCT PLC
LEI: 21380013CXOR8N6OD977
Financial Highlights
Company
* Net Asset Value per FWT Share at 30 September 2024 was 98.2p (31 March 2024:
98.8p).
* During the period, under the Offer for subscription for the Foresight WAE
Technology Shares fund (the “FWT Shares fund”), dated 6 September 2023,
£3.1 million of new funds were raised.
* During the period, the Company invested in four new portfolio companies and
executed five follow-on investments into existing companies.
* Since the end of the reporting period, a further £2.5 million has been
raised, bringing the total funds raised to £38.0 million.
* Since the end of the reporting period, one new and three follow-on
investments have been made, bringing total deployment to £27.1 million.
Chairman’s Statement
On behalf of the Board, I am pleased to present the Unaudited Half-Yearly
Financial Report for Foresight Technology VCT Plc for the six months ended 30
September 2024 and to provide you with an update on the developments affecting
the Company.
COMPANY
The Foresight WAE Technology VCT share class (the “FWT Shares”) was
launched in December 2019, and represents an exciting investment opportunity
made possible by the collaboration between Foresight Group and WAE
Technologies Limited (“WAE”), a technology and engineering services
business, originally spun out of the Williams Formula 1 business.
The share class provides investors with the opportunity to invest in a
portfolio of early-stage companies with high growth-potential, developing
innovative and occasionally transformational technologies across a range of
different sectors. It builds on the successful relationship that Foresight and
WAE have enjoyed from their launch of the Foresight WAE Technology EIS Fund
(the “EIS fund”) in November 2016, which has raised over £60 million to
date and has made over thirty investments across a range of different sectors
so far.
Fundraising and share issues
The Offers for subscription, dated 6 September 2023 and relaunched on 5
September 2024, are each up to £15 million (with an overallotment facility
for up to an additional £10 million) through the issue of FWT Shares. During
the six months ended 30 September 2024, across the latter Offer, 3.0 million
FWT Shares were allotted, raising a further £3.1 million, bringing the total
funds raised to over £35.5 million.
Post period end, a further 2.5 million FWT Shares were allotted, increasing
the total funds raised to £38.0 million.
Portfolio and deal activity
During the period the Net Asset Value per share decreased by 0.6% from 98.8p
per share as at 31 March 2024 to 98.2p as at 30 September 2024. A detailed
analysis of the investment portfolio performance over the period is given in
the Investment Manager’s Review.
During the period under review the Investment Manager completed four new and
five follow-on investments in exciting companies costing a total of £4.2
million. The new investments that were completed in the period were into
Cavero Quantum Limited, Lifelight Limited, Bitfount Limited and Illumion
Limited. The follow-on investments that were completed in the period were
into, Acuflow Limited, dRisk Inc, Vector Photonics Limited, Forefront RF
Limited and VividQ Limited.
Details of each of the top 10 companies by value as at 30 September 2024 can
be found in the Investment Manager’s review.
As at 30 September 2024, the FWT shares had made investments totalling £24.4
million in 32 exciting portfolio companies. An additional two investments were
acquired as part of the merger with the Ordinary share class, bringing the
total number of investments for the FWT Share class to 34. Post period end,
the FWT Shares made one new and three follow-on investments totalling £2.7
million.
The Investment 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 environment.
Following the fundraising over the last couple of years, as well as the
fundraising for the ongoing September 2024 Offer, the Company is in a position
to fully support the portfolio, where appropriate, and exploit potential
attractive investment opportunities.
Management fees
The annual management fee of the Company is calculated as 2.0% of Net Assets
and equated to £348,000 during the period. The Board believe that the annual
management fee represents good value for investors.
Responsible investing
The analysis of environmental, social and governance (“ESG”) issues is
embedded in the Investment 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 Investment 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, these
portfolio companies are assessed and progress measured against these
principles.
Buybacks
On 20 September 2023, the Board announced a variation to the buyback policy
for the former Ordinary Shareholders that would allow them to benefit from a
buyback at a nil discount to NAV in respect of FWT Shares, which they hold as
a result of the share class merger that completed on 5 July 2023. This Buyback
offer remained open until 20 September 2024.
The buyback under variation of the policy was completed post period end on 1
October 2024 with 88,986 shares being purchased at a price of 98.3p per share.
Sunset clause
As explained in the Annual Report, a “sunset clause” applies to the
current approved scheme for EIS and VCT tax reliefs. In the Annual Report we
discussed how 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.
We are 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
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 we 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 experienced Investment
Manager and a continued 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 Investment
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.
The Investment 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 launched a new offer on 5 September 2024 to raise
further funds over 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.
Ernie Richardson
Chairman
20 December 2024
FWT Shares
Investment Manager’s Review
Summary
Between its launch on 20 December 2019 and the end of the reporting period,
the Company has raised £35.5 million. The Offer provides investors with the
opportunity to invest in a portfolio of early-stage companies with high
growth-potential, developing innovative and occasionally transformational
technologies across a range of different sectors. As at 30 September 2024, the
Company had made investments into 34 companies totalling £24.4 million. Exit
opportunities are currently being actively reviewed with a hope to realise
value from the investment portfolio in the next financial year. Investments
into four new and five existing companies were made during the period. These
investments are summarised below:
Bitfount*: a connector of data owners, algorithm developers and problem
solvers to enable training, running and evaluation of AI models and advanced
analytics without any data centralisation.
Cavero Quantum*: developer of the most secure, software-based cryptographic
keys in the world.
dRisk: an AI company developing a new kind of human-AI interaction tool for
making predictions, finding unknown unknowns and getting more value out of
enterprise data.
Forefront RF: a manufacturer of next generation radio frequency modules.
Illumion*: developer of high-throughput optical tools to accelerate battery
material development.
Lifelight*: developer of an app which can take blood pressure, pulse and
breathing rate estimates in 40 seconds, just by looking into a mobile device.
Acu-Flow: a developer of surface acoustic wave nebulisers enabling the
delivery of next-generation respiratory pharmaceuticals.
Vector Photonics: a University of Glasgow spin-out commercialising the next
generation of semiconductor laser devices. VividQ: a technology company
enabling the next generation of holographic displays.
VividQ: a technology company enabling the next generation of holographic
displays.
*New Investment in the period.
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 March 2024. A
detailed explanation can be found on pages 30 and 31 of the Annual Report and
Accounts which is available on Foresight Group’s website
www.foresightgroup.eu 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 Investment 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
Investment 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 Financial Conduct
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 Chairman’s Statement, Strategic Report and Notes to the Accounts of the
31 March 2024 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
through the cash generated from fundraising activities. 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
Ernie Richardson
Chairman
20 December 2024
Unaudited Income Statement
for the six months ended 30 September 2024
Six months ended Six months ended Year ended
30 September 2024 30 September 2023 31 March 2024
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Investment holding gains/(losses) — 220 220 — (856) (856) — (1,086) (1,086)
Income 140 — 140 866 — 866 941 — 941
Investment management fees (87) (261) (348) (62) (186) (248) (135) (404) (539)
Other expenses (232) — (232) (235) — (235) (459) — (459)
(Loss)/return before taxation (179) (41) (220) 569 (1,042) (473) 347 (1,490) (1,143)
Taxation — — — — — — — — —
(Loss)/return after taxation (179) (41) (220) 569 (1,042) (473) 347 (1,490) (1,143)
(Loss)/return per share
FWT share (0.5)p (0.1)p (0.6)p (1.0)p (0.9)p (1.9)p (1.8)p (2.5)p (4.3)p
Ordinary share n/a n/a n/a 2.3p (2.4)p (0.1)p 2.3p (2.4)p (0.1)p
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 September 2024
Called-up share capital Share premium account Capital redemption reserve Distributable reserve* Capital reserve* Revaluation reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 April 2024 324 29,132 208 272 199 1,923 32,058
Share issues in the period 31 3,083 — — — — 3,114
Expenses in relation to share issues — (116) — — — — (116)
Investment holding gains — — — — — 220 220
Management fees charged to capital — — — — (261) — (261)
Revenue loss for the period — — — (179) — — (179)
As at 30 September 2024 355 32,099 208 93 (62) 2,143 34,836
* Total distributable reserves at 30 September 2024 were £31,000 (31 March
2024: £471,000).
Unaudited Balance Sheet at 30 September 2024
Registered Number: 07289280
As at 30 September 2024 (unaudited) As at 30 September 2023 (unaudited) As at 31 March 2024 (audited)
£’000 £’000 £’000
Fixed assets
Investments held at fair value through profit or loss 26,560 20,048 22,111
Current assets
Debtors 88 88 983
Cash and cash equivalents 8,435 5,848 9,276
8,523 5,936 10,259
Creditors
Amounts falling due within one year (247) (306) (312)
Net current assets 8,276 5,630 9,947
Net assets 34,836 25,678 32,058
Capital and reserves
Called-up share capital 355 254 324
Share premium 32,099 22,152 29,132
Capital redemption reserve 208 208 208
Distributable reserve 93 494 272
Capital reserve (62) 417 199
Revaluation reserve 2,143 2,153 1,923
Equity shareholders' funds 34,836 25,678 32,058
Net asset value per share
FWT Share 98.2p 101.0p 98.8p
Unaudited Cash Flow Statement
for the six months ended 30 September 2024
Six months ended 30 September 2024 (unaudited) £’000 Six months ended 30 September 2023 (unaudited) £’000 Year ended 31 March 2024 (audited) £’000
Cash flow from operating activities
Deposit and similar interest received 140 44 119
Investment management fees paid (216) (261) (689)
Secretarial fees paid (27) (39) (103)
Other cash payments (195) (149) (371)
Net cash outflow from operating activities (298) (405) (1,044)
Cash flow from investing activities
Purchase of investments (3,500) (853) (3,146)
Investments pending completion — — (729)
Net proceeds on sale of investments — — —
Investment income received — 822 822
Net cash outflow from investing activities (3,500) (31) (3,053)
Cash flow from financing activities
Proceeds of fund raising 3,087 2,816 9,996
Expenses of fund raising (130) (66) (157)
Equity dividends paid — (1,903) (1,903)
Net cash inflow from financing activities 2,957 847 7,936
Net (outflow)/inflow of cash in the period (841) 411 3,839
Reconciliation of net cash flow to movement in net funds
(Decrease)/increase in cash for the period (841) 411 3,839
Net cash at start of period 9,276 5,437 5,437
Net cash at end of period 8,435 5,848 9,276
Analysis of changes in net debt At 1 April 2024 £’000 Cash Flow £’000 At 30 September 2024 £’000
Cash and cash equivalents 9,276 (841) 8,435
Notes to the Unaudited Half-Yearly Results
for the six months ended 30 September 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 March 2024. Unquoted investments have been valued in
accordance with International Private Equity and Venture Capital Valuation
Guidelines (as updated in December 2022).
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 September
2024 and 30 September 2023 has been neither audited nor formally reviewed.
Statutory accounts in respect of the year ended 31 March 2024 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 2024 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 for the six months
ended 30 September 2024 will be sent to shareholders via their chosen method
of communication and are available for inspection at the Registered Office of
the Company at The Shard, 32 London Bridge Street, London, SE1 9SG. Copies are
also available electronically at www.foresightgroup.eu.
4 Net asset value per share
The Net Asset Value per share is based on net assets at the end of the period
and on the number of shares in issue at that date.
Net assets £’000 Number of FWT Shares in issue
30 September 2024 34,836 35,459,937
30 September 2023 25,678 25,419,835
31 March 2024 32,058 32,445,165
5 Return per share
The weighted average number of shares used to calculate the respective returns
are shown in the table below:
Number of Shares
Ordinary Shares FWT Shares
Six months ended 30 September 2024 n/a 35,347,041
Six months ended 30 September 2023 34,593,623 24,608,698
Six months ended 31 March 2024 34,593,623 26,203,986
Earnings for the period should not be taken as a guide to the results for the
full year.
6 Income
Six months ended 30 September 2024 (unaudited) £’000 Six months ended 30 September 2023 (unaudited) £’000 Year ended 31 March 2024 (audited) £’000
Dividends received — 822 822
Bank interest 140 44 119
Total Income 140 866 941
7 Investments held at fair value through profit or loss
£’000
Book cost at 1 April 2024 20,188
Investment holding gains at 1 April 2024 1,932
Valuation at 1 April 2024 22,111
Movements in the period:
Purchases at cost 4,229
Disposal proceeds —
Realised gains —
Investment holding gains 220
Valuation at 30 September 2024 26,560
Book cost at 30 September 2024 24,417
Investment holding gains at 30 September 2024 2,143
Valuation at 30 September 2024 26,560
8 Transactions with the Investment Manager
Foresight Group LLP was appointed as Investment Manager on 27 January 2020 and
earned fees of £348,000 in the six months ended 30 September 2024 (six months
ended 30 September 2023: £248,000; year ended 31 March 2024: £539,000).
Foresight Group LLP is the Company Secretary (appointed in November 2017) and
received, directly and indirectly, for accounting and company secretarial
services, fees of £50,000 in the six months ended 30 September 2024 (six
months ended 30 September 2023: £39,000; year ended 31 March 2024: £81,000).
At the balance sheet date there was no balance due from or to (30 September
2023: £22,000 due from; 31 March 2024: £46,000 due to) Foresight Group LLP.
No amounts have been written off in the period in respect of debts due to or
from related parties
9 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.
10 Post balance sheet event
Between the year end and the date of this report, under the offer for
subscription to raise up to £15 million FWT shares (with an overallotment
facility to raise up to a further £10 million), the Company issued a total of
2,463,884 shares which raised funds of £2.5 million.
Between the 30 September 2024 and the date of this report, the company
invested a total of £2.7 million across one new and three existing investee
companies.
END
For further information please contact:
Gary Fraser, Foresight Group: 020 3667 8181