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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Foresight Enterprise Vct Plc | LSE:FTF | London | Ordinary Share | GB00B07YBS95 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 57.50 | 56.00 | 59.00 | 57.50 | 57.50 | 57.50 | 0.00 | 00:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Unit Inv Tr, Closed-end Mgmt | 9.9M | 6.22M | 0.0263 | 21.86 | 136.19M |
TIDMFTF FORESIGHT 4 VCT PLC Summary Financial Highlights -- Net asset value per Ordinary Share at 31 March 2016 was 70.4p (31 March 2015: 83.9p), after allowing for the 4.0p per share dividend paid on 18 December 2015. -- On 10 August 2015 the O and C Share funds were merged. On the basis of the conversion ratio of 1.022646, 19,101,896 new Ordinary Shares were allotted. -- A 25.0p dividend per C Share was paid to C Shareholders on 6 August 2015. -- Seven new investments were made by the fund totalling GBP7.2 million and two follow-on investments were made totalling GBP0.2 million. -- The fund realised GBP0.9 million from sales and loan redemptions from four portfolio companies. Chairman's Statement Performance In the year to 31 March 2016, the net asset value per Ordinary Share decreased by 11.3% to 70.4p from 83.9p at 31 March 2015, after allowing for the 4.0p per share dividend paid in December 2015. Overall, the Board is pleased with the composition of the portfolio, particularly the prospects for the recent addition of seven new investments for a total consideration of GBP7.2 million. Of these new investments made during the year, several are already making encouraging progress, particularly Itad and Specac. Reflecting the Board and Manager's confidence in the current portfolio, the performance in the last quarter of the year under review showed an increase in underlying NAV of 2.5%. We believe the portfolio is well placed to deliver growth, underpin future dividends and enhance shareholder returns. The overall fall in the year is, however, disappointing and was largely due to the performance of one portfolio company, Aerospace Tooling, which saw a reduction or delay in orders as some of its customers were severely impacted by the significant drop in the price of oil. Although it did not feel the impact as acutely as Aerospace Tooling, TFC Europe also suffered a drop in revenues from market driven factors related to the fall in the price of oil. Aerospace Tooling was reduced by GBP4.6 million or 7.9p per share. Some encouraging progress has been made in winning orders and acquiring new customers but this process and the related sales cycles inevitably takes time. A new, experienced, CEO was appointed in January 2016 and the company is now returning to profitability. Despite the further provisions against the valuation following the period of sustained difficult trading conditions, I would like to remind Shareholders that the Company has previously repaid the entire cost of the original investment to the VCT. Derby-based Datapath Group is the largest holding in the portfolio, being valued at GBP8.7 million and is a world leading innovator in the field of computer graphics and video-wall display technology utilised in a number of international markets. The company is increasing market share in control rooms, betting shops and signage and entering other new areas such as the medical market. For the year to 31 March 2015, an operating profit of GBP6.8 million was achieved on sales of GBP20.3 million, with the North American division trading ahead of budget. The Board and Manager continue to focus on derisking large portfolio exposures such as Datapath and, in November 2015, Datapath paid a special dividend of GBP2.1 million to the Company. This was met principally from the company's own cash resources and management loans which are expected to be repaid from internally generated cash flow over the next year. For a detailed review of all of the Company's investments I refer you to the Manager's Report that starts on page 10 of the Annual Report and Accounts. Dividends Prior to the merger, on 6 August 2015, a special dividend of 25.0p per C Share was paid to C Shareholders, following good performance of the portfolio including the sale of Defaqto Group Limited on 30 March 2015 for GBP9.5 million, as announced on 31 March 2015. Holders of C Shares receiving this dividend were also given the opportunity to reinvest their dividend proceeds into new Ordinary Shares by way of a top up offer. An interim dividend of 4.0p per Ordinary Share for the year ended 31 March 2016 was paid on 18 December 2015 to the Shareholders on the register on 3 December 2015. It continues to be the Company's policy to provide a flow of tax-free dividends, generated from income and from capital profits realised on the sale of investments. Distributions will, however, inevitably be dependent on cash being generated from portfolio investments and successful realisations. The recent and continuing success in generating cash from portfolio investments within the fund gives the Board confidence that it will be able to maintain the future payment of dividends to Shareholders. Merger, Top-up Share Issues and Share Buy-backs On 10 August 2015 the O and C share funds were merged, based on the net asset value of the Company's C Shares as at 31 March 2015 of 85.8p per C Share (being the audited NAV per C Share of 110.8p as at 31 March 2015, adjusted to take account of the 25.0p per C Share dividend paid on 6 August 2015) and the NAV of the Company's Ordinary Shares as at 31 March 2015 of 83.9p. The conversion ratio was 1.022646. On the basis of this conversion ratio, 19,101,896 new Ordinary Shares were allotted. In accordance with the terms of the dividend reinvestment offer referred to above, on 11 August 2015, 423,717 Ordinary Shares were allotted at 83.9p per share. During the period under review 434,528 Ordinary Shares were repurchased for cancellation at a cost of GBP266,000. These were purchased at a discount to NAV ranging from 20.9% to 30.1%. Shareholder Communication As part of its ongoing commitment to improving shareholder communication the Board has solicited shareholder views by means of a survey in 2016 and has also held a successful Shareholder Forum in June 2016. As the event was oversubscribed we will be in touch later this year about opportunities to attend similar events. VCT Legislation As previously discussed, changes to VCT regulations were finally confirmed on 18 November 2015. There were no material changes to those detailed in my interim report. One of the principal purposes of the changes was to prevent VCT investment being used to acquire existing shares or the principal trade or assets of businesses. The key aspects of the proposed new rules are as follows: -- Introducing an 'age of company' restriction of a maximum of seven years at the time of first VCT investment; -- Introducing a lifetime state aided investment limit of GBP12 million; and -- Prohibiting VCT investment financing acquisitions (as mentioned above). Although the recent rule changes preclude VCTs investing in replacement capital transactions, the Treasury and HMRC have since agreed to review this policy following representations from inter alia the British Venture Capital Association, the Association of Investment Companies, a number of legal firms and VCT managers, including Foresight Group. Rather than an absolute restriction on replacement capital transactions, this review will consider relaxing the current rules to enable VCTs to invest an element of replacement capital alongside a significant element of growth capital in any particular transaction, possibly up to a maximum of 50% of the total amount invested. Agreement for the change is currently expected to take up to two years and shareholders will be kept informed of any significant developments. If concluded satisfactorily, the range of potential investment opportunities for VCTs would be widened, compared to the more restrictive regime that currently applies. Brexit There are two principal areas where the implementation of Brexit could impact the VCT: 1. Investee Companies - there has been much debate on the possible impact on trade between Europe and the UK following the Brexit vote and how this will impact UK corporates. Although it is much too early to say how large or small the impact may ultimately be, we do not believe that the impact will be material in the short to medium term; and 2. Regulation - many parts of the current VCT legislation has been cast from EU State Aid Directives, however, we do not believe that even following Brexit that changing VCT legislation will be a priority for the UK Government and therefore we do not expect any changes to the existing legislation in the short to medium term. Merger Consideration The Board has been closely monitoring the successful merger of Foresight VCT plc and Foresight 2 VCT plc following Shareholder approval in December 2015. Although the Board has not formally engaged with another company at this time, it is considering whether a merger and the benefits therefrom would be in Shareholders long term interests and hopes to provide a further update in that regard in due course. Restatement of reserves The Company completed a cancellation of GBP30,963,251 and GBP1,750,587 of the amounts standing to the credit of share premium account and capital redemption reserve respectively on 29 November 2012. The amounts so cancelled created additional distributable reserves which could be used to support dividend payments or distributions, buy-backs, set off losses against and for other corporate purposes. The cancellation has not been reflected in the financial statements for the years ended 31 March 2013 to 31 March 2015 and has now been corrected in the enclosed financial statements. Annual General Meeting The Company's Annual General Meeting will take place on 30 September 2016 at 1.00pm. I look forward to welcoming you to the Meeting, which will be held at the offices of Shakespeare Martineau LLP in London.
Details can be found on page 62 of the Annual Report and Accounts. Prior to the formal business of the Annual General Meeting, Foresight Group, the investment Manager and two investee companies will give presentations between 12.00pm and 1.00pm. Outlook Although there is still considerable uncertainty in continental Europe as a result of stresses within the Euro area the UK economy is in reasonable health and many businesses are making steady progress. The recent decision resulting from the referendum on 23 June, for the UK to begin negotiations to leave the European Union has also given rise to further uncertainty and it will take time to gauge the full effect that this may have for the Company. Many of the familiar risks, both financial and political, remain and there can be no grounds for complacency as all of our investments operate in competitive environments. We hope that the effect of the improvement in the economy over the last few years continues, as this has been reflected in the improving performance of the private equity part of the portfolio. Within the portfolio, there is an ongoing focus on performance and realisations, refinancings, dividends and loan repayments which underpin the Board's dividend commitment to Shareholders. It has also enabled several new investments to be made which we anticipate will further enhance Shareholder returns. Philip Stephens Chairman 29 July 2016 Manager's Report In the year under review for 31 March 2016, the net asset value per Ordinary Share decreased by 11.3% to 70.4p per share from 83.9p per share as at 31 March 2015 (after taking into account the 4.0p per share dividend paid in December 2015). During the year the Company was negatively impacted in particular by a GBP4.6 million reduction in the valuation of one investment, Aerospace Tooling Holdings, due to a lower level of orders from its two largest customers, but benefitted from good performances by several portfolio companies and the receipt of a GBP2.1 million dividend from Datapath and a recapitalisation of GBP710,000 from TFC. On 10 August 2015, the merger of the Ordinary Share and C Share classes was completed. A special dividend of 25.0p per C Share was paid on 6 August 2015 reflecting the performance of the C Share class portfolio and, in particular, the sale of Defaqto Group Limited on 30 March 2015 for GBP9.5 million. The merger was effected by converting the C Shares into new Ordinary Shares on a relative net asset value basis using the audited NAVs of the Ordinary Share and C Share as at 31 March 2015, adjusted for any material movements up to the date of conversion. Based on the audited net asset value as at 31 March 2015 of 85.8p per C share (being the audited NAV per C Share of 110.8p as at 31 March 2015, adjusted to take into account of the above mentioned 25.0p per share dividend) and the NAV per Ordinary Share as at 31 March 2015 of 83.9p, the conversion ratio was 1.022646. An interim dividend of 4.0p per Ordinary Share was paid on 18 December 2015 to shareholders on the Register on 3 December 2015. Having realised a significant number of investments over recent years, the principal focus in the year under review was making new investments. Seven new investments were made, several of which are already making encouraging progress, particularly Itad and Specac. Further details of these new investments can be found in the Portfolio Review later in this report. Foresight Group continues to see a number of high quality private equity investment opportunities. Foresight believes that, with the UK and US economies slowly recovering, investing in growing, well managed private companies should, based on past experience, generate attractive returns over the longer term. Based on its current deal flow, Foresight believes that attractive deals are currently available. The recent Brexit referendum results on the United Kingdom leaving the European Union is not expected to result in any immediate material changes to the overall portfolio. Any prolonged weakness in Sterling will benefit those companies in the portfolio with a high proportion of exports. Impact of recent changes to VCT legislation The budget in July 2015 introduced a number of significant changes to VCT legislation. Following receipt of EU State Aid approval, these regulatory changes took effect from 18 November 2015, the date of Royal Assent to the Finance Act 2015. Two of these changes in particular are expected to impact the future management of all VCTs. First the restriction on the age of a company that is eligible for investment by a VCT (generally no more than seven years from the date of the company's first commercial sale) and second, restrictions on VCT funds being used in acquiring an interest in another company or existing business. By precluding replacement capital transactions, such as shareholder recapitalisations, management buy-outs or buy-ins and funding acquisitions by investee companies, the restrictions are designed to encourage more development capital transactions and investment in generally younger, less mature companies. Foresight VCTs already invest in all these types of transactions so, although the proposed changes will result in a change of investment emphasis, they are not expected to have a material impact. Foresight VCTs will continue to focus on investing in established, growing, profitable companies with an attractive risk/return profile as at present but will change emphasis from replacement capital transactions to development capital investments, including investing in earlier stage companies with a clear path to profitability. It will not be the policy, except in exceptional circumstances, to invest in start up companies. Foresight Group has a strong track record in development capital transactions, having invested in both growth capital and replacement capital transactions since its formation over 30 years ago. For example, 40% of all investments made since 2010 were development capital transactions. Since then, 14 of these investments have been successfully realised, generating an average return of 2.2 times original cost. With this long and successful track record, Foresight's marketing efforts have been refocused towards finding suitable, later stage development capital investment opportunities, with the aim of accelerating their growth. A number of such opportunities are currently under active consideration. Foresight remains confident that sufficient, suitable new and attractive investment opportunities can be sourced which will meet its return criteria and comply with the VCT rules. While the full implications of the new rules have yet to be established, it is clear that, over the medium term, as existing investments are realised, this change in investment emphasis and the nature of new investments may lead to an increase in the VCTs' risk profile. Over the medium term, however, any such increase in risk profile could be tempered by a favourable outcome to the proposed VCT policy review, as mentioned below. The rule changes will, however, make the VCTs' operating environment more complicated and could limit the number of opportunities available for investment. Similarly, the Company may not necessarily be able to provide further investment funds for companies already in its portfolio. Proposed VCT Policy Review Although the recent rule changes preclude VCTs investing in replacement capital transactions, the Treasury and HMRC have since agreed to review this policy following representations from inter alia the British Venture Capital Association, the Association of Investment Companies and a number of legal firms and consider relaxing the current rules to enable VCTs to invest an element of replacement capital alongside a significant element of growth capital in any particular transaction. At this stage, it is not possible to forecast the outcome of the review, and Shareholders will be kept informed of any significant developments. If this review concludes satisfactorily, the range of potential investment opportunities for VCTs would be widened, compared to the more restrictive regime that currently applies. Portfolio Review 1. New Investments Company GBP ABL Investments Limited 1,000,000 FFX Group Limited 1,372,000 Hosital Services Limited 1,200,000 Itad Limited 1,000,000 Protean Software Limited 1,000,000 Specac International Limited 650,000 The Business Advisory Limited 1,000,000 Total 7,222,000 During the year, GBP7.2 million was invested in the above seven companies, each well established, growing and profitable. In September 2015, as part of a GBP4.2 million round alongside other Foresight VCTs, the Company invested GBP1.0 million in ABL Investments Limited ("ABL") to support its continuing growth. ABL, based in Wellingborough, Northants and with a manufacturing subsidiary in Serbia, manufactures and distributes office power supplies and distributes monitor arms, cable tidies and CPU holders to office equipment manufacturers and distributors across the UK. In September 2015, as part of a GBP3.9 million round alongside other Foresight VCTs, the Company invested GBP1.4 million in FFX Group Limited to support the continuing growth of this Folkestone based multi- channel distributor of power tools, hand tools, fixings and other building products. Since launching its ecommerce channel in 2011, FFX has grown rapidly supplying a wide range of tools to builders and tradesmen nationally. In September 2015, as part of a GBP4.5 million round alongside other Foresight VCTs, the Company invested GBP1.2 million in Hospital Services Limited (HSL) to support its continuing growth. Based in Belfast and
Dublin, HSL distributes, installs and maintains high quality healthcare equipment supplied by global partners such as Hologic, Fujifilm and Shimadzu, as well as supplying related consumables. In September 2015, as part of a GBP4.0 million round alongside other Foresight VCTs, the Company invested GBP1.0 million in Itad Limited, a long established consulting firm which monitors and evaluates the impact of international development and aid programmes, largely in developing countries. Customers include the UK Government's Department for International Development, other European governments, philanthropic foundations, charities and international NGOs. Most contracts are long term, providing good revenue visibility, while more than half of the employees being experienced consultants. In July 2015, the Company invested GBP1.0 million as part of a GBP4.0 million round alongside other Foresight VCTs to finance a management buy-in/buy-out of Coventry based Protean Software Limited ("Protean") and fund planned growth. Protean develops and sells business management and field service management software for organisations involved in the supply, installation and maintenance of equipment, across sectors including facilities management, HVAC and elevator installation. Foresight has introduced two experienced software executives as CEO and Chairman respectively, who are working alongside three of the current directors to drive the business forward and execute growth plans. In April 2015, the Company and Foresight 3 VCT each invested GBP650,000 in shares and loan notes, alongside a further a GBP1.3 million investment by Foresight VCT, in Specac International Limited ("Specac") to finance a GBP2.6 million management buy-out of Specac Limited from Smiths Group plc. The three Foresight VCTs together acquired a majority equity shareholding with the management team holding the remaining equity. Specac, based in Orpington, Kent, is a long established, scientific instrumentation accessories business, manufacturing high specification sample analysis and sample preparation equipment used across a broad range of applications in testing, research and quality control laboratories and other end markets worldwide. The company's products are primarily focused on supporting IR Spectroscopy, an important analytical technique widely used in research and commercial/ industrial laboratories. In September 2015, as part of a GBP3.3 million round alongside other Foresight VCTs, the Company invested GBP1.0 million in The Business Advisory Limited. This company provides a range of advice and support services to UK based small businesses seeking to gain access to Government tax incentives, largely on a contingent success fee basis. With a large number of small customers signed up under medium term contracts, the company enjoys a high level of recurring income and good visibility on future revenues. 1. Follow-on funding Company GBP The SkillsGroup (formerly AtFutsal Group) 34,000 Autologic diagnostics Group Limited* 160,000 Total 194,000 *Representing capitalised interest. 1. Realisations In July 2015, TFC Europe effected a successful recapitalisation and share reorganisation, through which the Foresight VCTs were repaid all their outstanding loans, together with all accrued interest and a redemption premium. The Company was repaid GBP710,000 and increased its shareholding from 17.87% to 22.23%. An amount of GBP58,000 was received from the administrators of i-Plas Group during the year. During the year, 62,982 ordinary shares in AIM listed Zoo Digital were sold, realising GBP7,000. In November 2015, the Company received a dividend of GBP2.1 million from Datapath. In March 2016 the Company's interest in O-Gen Acme Trek was sold to Blackmead Infrastructure Limited, a subsidiary of Foresight's Inheritance Tax Solution, at book value for an initial cash consideration of GBP107,000 and a deferred consideration of GBP516,000. 1. Material provisions to a level below cost in the year Company GBP Aerospace Tooling Corporation Limited 4,560,000 AlwaysOn Group Limited 182,000 Autologic Diagnostics Group Limited 306,000 Trilogy Communications Holdings Limited 60,000 The SkillsGroup (formerly named AtFutsal Group) 412,000 VectorCommand Limited 302,000 Total 5,822,000 The valuation of the investment in Aerospace Tooling Holdings Limited was reduced by GBP4.6 million to GBP987,000 during the year due to a lower level of orders from its two largest customers. The cost of investment at the year-end was GBP150,000. The full original cost of the investment has already been repaid to Foresight 4 VCT plc. 1. Performance Summary The net asset value per Ordinary Share decreased by 11.3% to 70.4p per share as at 31 March 2016 from 83.9p per share as at 31 March 2015 (after incorporating the 4.0p per share dividend paid in December 2015). As explained below, the net asset value was negatively impacted by a GBP4.6 million reduction in the valuation of Aerospace Tooling Holdings. However, during the year the Company benefitted from good performances by several portfolio companies. Together with Itad and Specac, Blackstar Amplificiation Holdings Limited, CoGen Limited, Ixaris Systems Limited, Positive Response Communications Limited, and The Bunker Secure Hosting limited all performed well, supporting an increase in their aggregate valuation of over GBP2.3 million. Seven new investments totalling GBP7.2 million were made during the year and are already making encouraging progress, particularly Itad and Specac. Itad has won several large long term contracts, providing good revenue visibility for the current and future years, while Specac successfully launched new products and increased sales, particularly in the important US market. TFC's valuation was reduced by GBP706,000 during the year reflecting reduced demand from the Oil & Gas sector in marked contrast to positive signs of improvement across a variety of other industry sectors. As a consequence of the VCT rule changes referred to above, Foresight's marketing efforts have already been refocused towards finding more suitable, later stage development capital investment opportunities, with the aim of accelerating the growth of established, profitable companies. A number of such opportunities are currently under active consideration. The M&A market continues to be active, providing opportunities for future realisations. Portfolio Company Highlights In September 2015, as part of a GBP4.2 million round alongside other Foresight VCTs, the Company invested GBP1.0 million in ABLInvestments Limited ("ABL") to support further growth. ABL, based in Wellingborough, Northants and with a manufacturing subsidiary in Serbia, manufactures and distributes office power supplies and distributes monitor arms, cable tidies and CPU holders to office equipment manufacturers and distributors across the UK. Founded in 2003, ABL has grown strongly over the last five years, achieving an EBITDA of GBP1.9 million on sales of GBP5.5 million in its financial year to 31 August 2015, reflecting a strong focus on customer service, speed of delivery and value for money. Growth is forecast to be achieved by broadening the product range and customer base in the UK, improving efficiency, marketing materials and the website and, in due course, expanding internationally. A new Chairman with experience of the office supplies market has been appointed to the Board, alongside a new Finance Director, with plans in hand to recruit a COO. A Financial Controller and additional salesmen have been recruited. In June 2013, the Company invested GBP1.5 million alongside other Foresight VCTs in a GBP3.5 million investment in Dundee-based Aerospace Tooling Holdings ("ATL"), a well-established specialist engineering company. ATL provides repair, refurbishment and remanufacturing services to large international companies for components in high-specification aerospace and turbine engines. With a heavy focus on quality assurance, the company enjoys well established relationships with companies serving the aerospace, military, marine and industrial markets. In the year to 30 June 2014, a number of large orders underpinned exceptional growth, with turnover doubling and EBITDA profits increasing significantly to a record GBP4.3 million. Reflecting particularly strong cash generation, the company effected a recapitalisation and dividend distribution in September 2014, returning the entire GBP3.5 million cost of the Foresight VCTs' investments made only 15 months previously. Having received full repayment of its loan of GBP1.4 million and dividends of GBP150,000 equal to the cost of its equity investment, the Company retained its original 23% equity shareholding in the company, effectively at nil cost. Although sales and profitability were expected to be lower in the year to 30 June 2015, the actual trading results were weaker than budgeted, EBITDA of GBP2.5 million being achieved on sales of GBP8.1 million, reflecting weak trading in the final quarter of the year due to a premature reduction of work under a major defence contract. This unexpected early contract termination was subsequently followed by a significant reduction in work for an important customer in the Oil and Gas industries, as a consequence of the falling oil price. With poor order visibility, costs were reduced, management changes made and sales efforts increased substantially. Trading in the first half to December 2015 continued to be weak, with EBITDA losses being incurred on significantly lower sales. A new
experienced CEO was appointed in January 2016 and the company has since seen improving sales, winning new customers and is now returning to profitability. Following a merger with Data Continuity Group in April 2014, AlwaysOn Group implemented a major reorganisation, involving significant cost reductions and a subsequent change in the year end to June 2015. The merged business now provides data backup services, connectivity and Microsoft's Skype for Business (formerly known as Lync) collaboration software (AlwaysOn being a Microsoft Gold partner) to SMEs and larger enterprises. For the year to 31 March 2015, losses were successfully stemmed, with a small EBITDA profit being achieved on sales of GBP8.0 million and reasonable cash balances at that date. In the current year, trading continues at a similar level with small losses being incurred. Revenues for the merged entity were slightly behind budget, due to weaker product sales and data back-up renewals, while managed services performed ahead of expectations. Further cost reductions were also implemented. To improve the company's digital presence and channel sales of Lync (to be rebranded Skype for Business), a new Head of Marketing was recruited, who has had a beneficial impact on sales. With a number of significant pipeline opportunities being generated through partners for Skype for Business, performance is expected to improve significantly as these convert into orders. In view of the overall weak trading performance, a provision of GBP182,000 was made against the cost of the investment during the period. Following the GBP48.0 million secondary buy-out of Autologic Diagnostics Group, an automotive diagnostics software company, by Living Bridge (formerly ISIS Private Equity) in January 2012, the Company retained investments in equity and loan stock valued at GBP2.0 million. For the year to 31 December 2014, Autologic reported an EBITDA of GBP5.4 million on sales of GBP19.7 million, with relatively stronger sales in the UK and Europe compared with the USA. In May 2015, a new business model was launched to generate recurring revenues and improve the quality of the company's earnings from a new product, Assist Plus, and associated Assist Plus service. This change in strategy towards a pure recurring revenue model has resulted in certain exceptional costs being incurred impacting EBITDA which fell to, GBP4.0 million on revenues of GBP18.5 million for the year to 31 December 2015, in line with expectations. At 31 March 2016, the company had cash balances of over GBP6.0 million. Management are transitioning the existing customer base onto the new support service platform and growing sales of the new product and service to both new and existing customers. Depending on the number of existing customers transitioning onto the new product and service and along with the level of new customer sales, this change in strategy will also impact EBITDA in 2016 but is expected to increase shareholder value over the longer term. Initial signs are promising, with largely positive feedback from customers. Biofortuna, established in 2008, is a molecular diagnostics business based in the North West, which has developed unique expertise in the manufacture of freeze dried, stabilised DNA tests. Biofortuna develops and sells both its own proprietary tests as well as a comprehensive range of contract manufacturing services. A GBP1.3 million round to finance capital expenditure and working capital was completed in August 2013, in which the Company invested GBP198,000 in the first tranche and a further GBP102,000 in the second, final tranche in April 2014. For the year to March 2015, a substantially reduced operating loss of GBP528,000 was incurred on higher sales of GBP1.1 million (2014: an operating loss of GBP1.1 million on sales of GBP325,000). Trading in the year to 31 March 2016 was well ahead of budget and the previous year, with an improved, reduced EBITDA loss, the profitable Contract Manufacturing division helping to offset investment in the proprietary products being developed by the Molecular Diagnostics division. To finance the development of new products, a GBP1.6 million round was concluded in January 2015, of which GBP890,000 was committed by the Foresight VCTs. The Company committed to invest GBP429,000, of which GBP256,000 was invested as the first tranche. With a lower than planned cash outflow, the second, final tranche is now expected to be drawn down during late 2016. In July 2012, the Company invested GBP1.0 million in Northampton based Blackstar Amplification Holdings alongside GBP2.5 million from Foresight VCT to finance a management buy-out and provide growth capital. Blackstar was founded in 2004 by four senior members of the new product development team at Marshall Amplification to design and manufacture a range of innovative guitar amplifiers. Following commercial launch in 2007, sales grew rapidly, reflecting new product launches, entry into new markets, and a global brand was soon established. In the year to 30 April 2015, the company achieved an EBITDA of GBP537,000 on sales of GBP8.6 million (2014: GBP323,000 EBITDA on sales of GBP8.6 million). Trading in the current year to 30 April 2016 resulted in an increased EBITDA on slightly lower sales, reflecting increased margins and the full impact of cost reductions made in 2014. The budget for future contracts for the current year shows further growth in profits and higher sales. Blackstar continues to be the number two guitar amplifier brand by units sold in the UK and USA. Management are focused on increasing sales, albeit in a price sensitive market, while improving margins, as well as selectively replacing distributors where appropriate. In the first eleven months or 1 May 2015 to 31 March 2016 of the financial year ending 30 April 2016, the company recorded sales of GBP6.9 million and an EBITDA of GBP407,000. On a like-for-like basis, sales were slightly behind of the prior year and EBITDA was flat. The decline in sales is primarily a direct result of SJE, one of the Company's key Korean based suppliers, effectively entering administration. While the Company has dual and tri-source supplier arrangements in place, SJE's failure led to short term supply chain disruption. Looking ahead, the company is forecasting sales of GBP9.5 million and EBITDA of GBP900,000 for the financial year commencing 1 May 2016. Encouraging progress continues to be made into the consumer products market. The company currently has a presence in over 35 countries worldwide and its products are stocked in over 2,500 stores globally, including Maplins and Argos stores in the UK. New product development remains a key focus. A new division, Dist-X, has been established to leverage Blackstar's UK distribution capabilities by distributing other, non-competition Music Instrument brands. Building on the success of its GBP48.0 million, 10MW Birmingham Bio Power Limited project ("BBPL") with Carbonarius (a 50:50 joint venture with Plymouth-based Una Group), O-Gen UK has become the UK's leading independent developer of Advanced Conversion Technology waste to energy projects. In March 2015, O-Gen UK and Una Group combined their two teams into a new company, CoGen Limited, to further develop their substantial, combined pipeline of projects. In order to accelerate growth and provide additional working capital, a new investor subscribed GBP750,000 for equity in CoGen, alongside a loan of GBP500,000 from Una Group. Funds managed by Foresight hold 22.13% of CoGen's equity, including Foresight VCT (3.53%), Foresight 3 VCT (7.73%), Foresight 4 VCT (8.55%) and the Foresight UK Sustainable EIS fund (2.32%). O-Gen UK remains the shareholder in BBPL. In March 2015, CoGen reached financial close on a GBP53.0 million, 10MWe waste wood to energy plant in Welland, Northamptonshire, using the same technology and partners as BBPL. This latest project was funded with investment from Balfour Beatty plc, Equitix and Noy (an Israeli investment fund), with CoGen earning development fees on the transaction while retaining a 12.5% shareholding in the project. Also in March, CoGen completed the acquisition of the entire O-Gen Plymtrek site in Plymouth, originally developed by Carbonarius and MITIE plc, on which an GBP8.0 million 4.5MW waste to energy plant is planned to be built utilising much of the footprint of the existing plant. The funding for this transaction was provided by Aurium Capital Markets, with CoGen owning 50% of the acquisition vehicle and Aurium 50% but with a prior ranking return on the latter's invested capital. In October 2015, CoGen reached financial close on a GBP97.0 million, 21.5MW project in Ince Park, Merseyside to be fuelled with circa 160,000 tonnes per annum of recycled wood fibre. All of the funding was provided by the Bioenergy Infrastructure Group ("BIG", of which Foresight Group is a co-sponsor) through a combination of shareholder loan and shares which receive a preferential return. Cogen is developing its pipeline of projects and funding relationships, with active support from Foresight and BIG. The market has become more uncertain with the Government's changes in renewables policy, in particular uncertainty relating to future CfD auctions. Cogen's primary deal pipeline comprises four projects in Northern England and it plans to bid in the CfD auction due at the end of 2016, with the aim of closing projects, if successful in that auction, during 2017. BIG is expected to jointly fund this process, requiring a total of GBP5.0 million of investment. Year of financial Project Name Project Size (GBPm) close Shareholding Birmingham Bio Power Limited 48 2013 20.0% Plymouth 20 2015 50.0%
Welland 53 2015 12.5% Ince Park 97 2015 20.0% It is unlikely that full value will be secured for Foresight VCT's stakes in Cogen and O-Gen UK until the portfolio of plants is fully operational. However, Foresight will keep this situation under review. In February 2014, the O-Gen Acme Trek facility in Stoke-on-Trent was granted planning permission for an enlarged 8MW waste wood to energy plant. It was not possible, however, to finance and redevelop the site as a project qualifying for ROCs in time for the ROC deadline. In March 2016 the Company's interest in O-Gen Acme Trek was sold to Blackmead Infrastructure Limited, a subsidiary of Foresight's Inheritance Tax Solution, at book value for an initial cash consideration and a deferred consideration element. Derby-based Datapath Group is a world leading innovator in the field of computer graphics and video-wall display technology utilised in a number of international markets. The company is increasing its market share in control rooms, betting shops and signage and entering other new markets such as medical. For the year to 31 March 2015, an operating profit of GBP6.8 million was achieved on sales of GBP19.3 million, with the North American division trading ahead of budget (2014: record operating profits of GBP7.4 million on sales of GBP18.7 million). In November 2015, Datapath paid dividends of GBP6.3 million, comprising GBP2.1 million to the Company and the same amount to Foresight 2 VCT and Foresight 3 VCT. This was met principally from the company's own cash resources and short term loans which are expected to be repaid from internally generated cash flow over the next year. For the year to March 2016, the company made an operating profit of GBP5.9 million on sales of GBP19.9 million. In September 2015, as part of a GBP3.9 million round alongside other Foresight VCTs, the Company invested GBP1.4 million in FFX Group Limited to support the continuing growth of this Folkestone based multi- channel distributor of power tools, hand tools, fixings and other building products. Since launching its ecommerce channel in 2011, FFX has grown rapidly supplying a wide range of tools to builders and tradesmen nationally. For the year to 31 March 2015, the company achieved an EBITDA of GBP1.3 million on sales of GBP23.0 million. The management team has been strengthened by the appointment of two new Joint Managing Directors and a new Chairman, each with experience of successfully developing similar businesses. The relocation into a nearby, much larger warehouse at Lympne in early 2016 was completed successfully. In May 2012, the Company invested GBP693,000 in Flowrite Refrigeration Holdings alongside other Foresight VCTs to finance the GBP3.2 million management buy-out of Kent-based Flowrite Services Limited. Flowrite Refrigeration Holdings provides refrigeration and air conditioning maintenance and related services nationally, principally to leisure and commercial businesses such as hotels, clubs, pubs and restaurants. In the year to 31 October 2014, the company traded well, achieving an operating profit of GBP740,000 on sales of GBP10.8 million after substantial investment in new engineers and systems. In July 2015, the company completed another recapitalisation, returning GBP156,000 of accrued interest to the Foresight VCTs, including GBP78,000 to the Company, taking total cash returned on this investment to 85% of cost. For the 14 months to 31 December 2015, the company achieved a disappointing operating profit of GBP404,000 on sales of GBP12.8 million, reflecting difficulties arising from installing a new workflow IT system to improve operational efficiency and optimise profitability. To drive the business forward, steps were taken in August 2015 to broaden the management team through the appointment of a new Chairman and a new Finance Director. In September 2015, as part of a GBP4.5 million round alongside other Foresight VCTs, the Company invested GBP1.2 million in Hospital Services Limited (HSL) to support its continuing growth. Based in Belfast and Dublin, HSL distributes, installs and maintains high quality healthcare equipment supplied by global partners such as Hologic, Fujifilm and Shimadzu, as well as supplying related consumables. HSL has particular expertise in the radiology, ophthalmic, endoscopy and surgical sectors. For the year to 31 March 2015, the company achieved EBITDA of GBP1.7 million on revenues of GBP7.2 million. A new, experienced Non-Executive Chairman and a Commercial Director have been appointed to the Board. In September 2015, as part of a GBP4.0 million round, alongside other Foresight VCTs, the Company invested GBP1.0 million in Itad Limited, a long established consulting firm which monitors and evaluates the impact of international development and aid programmes, largely in developing countries. Customers include the UK Government's Department for International Development, other European governments, philanthropic foundations, charities and international NGOs. For the year to 31 January 2015, Itad achieved an EBITDA of GBP1.5 million on revenues of GBP8.8 million with significant future growth forecast. A number of significant contracts have been won recently and, as most contracts are long term, this provides good revenue visibility for the current and future years. Ixaris Systems has developed and operates Entropay, a web-based global prepaid payment service using the VISA network. Ixaris also offers its IxSol product on a 'Platform as a Service' basis to enable enterprises to develop their own customised global applications for payments over various payment networks. During 2013, the company invested in developing and marketing its Ixaris Payment System, the platform that runs IxSol, to financial institutions. The platform enables financial institutions to offer payment services to customers based on prepaid cards. This division continues to make good progress. The first deployment went live in late 2015, the second in early 2016 and a third expected shortly. Ixaris was awarded an EU grant of EUR2.5 million, of which EUR1.6 million will be received over three years, to help fund the existing platform technology roadmap, which highlights the innovative nature of the Payment System. For part of the year to 31 December 2015, the company operated at around EBITDA and cash flow break even while continuing to invest further in Ixsol and Ixaris Payment System. For the full year to 31 December 2015, reflecting strong trading and continuing investment in software and systems, an EBITDA loss of GBP501,000 was incurred on sales of GBP10.8 million, ahead of budget (2014: EBITDA loss of GBP622,000 on sales of GBP9.5 million). In December 2014, the Company invested GBP500,000 alongside other Foresight VCTs in a GBP2.0 million round to finance a shareholder recapitalisation of Positive Response Communications. Established in 1997, the company monitors the safety of people and property from its 24 hour monitoring centre in Dumfries, Scotland. Customers include several major restaurant and retail chains. For the year ended 31 March 2015, an EBITDA of GBP637,000 was achieved on sales of GBP2.0 million. In the financial year to 31 March 2016, sales grew modestly with reduced EBITDA profits, reflecting investment in improving efficiency and systems and recruitment of more sales staff. The management team has been strengthened with the appointment of three experienced executives as Chairman, CEO and Finance Director respectively. In April 2013, the Company invested GBP650,000 alongside other Foresight VCTs in a GBP1.8 million round to finance a management buy- out of Procam Television Holdings. Procam is one of the UK's leading broadcast hire companies, supplying equipment and crews for UK location TV production to broadcasters, production companies and other businesses for over 20 years. Headquartered in Acton, London, with additional facilities in Manchester, Edinburgh and Glasgow, Procam is a preferred supplier to BSkyB and an approved supplier to the BBC and ITV. Revenues and profits have grown strongly, following the introduction of new camera formats, acquisitions in both the UK and USA and increased sales and marketing efforts. In December 2014, Procam acquired True Lens Services, based in Leicester, which specialises in the repair, refurbishment and supply of camera lenses with further support from the Foresight VCTs. In March 2015, in order to service the requirements of many of its existing UK customers and enter the large US market, Procam acquired HotCam New York City which provides camera, audio and lighting rental for TV production, plus crew and related production services. These two acquisitions were supported by a further investment of GBP1.3 million from the Foresight VCTs, of which the Company invested GBP451,385. Other acquisition opportunities are under active consideration. In February 2016, ProCam acquired the trading assets of the film division of Take 2 Films which provides digital and film camera equipment for Film and TV. This was funded by bank debt and asset finance facilities. For the year to 31 December 2014, the company achieved an EBITDA of GBP2.3 million on revenues of GBP8.1 million, ahead of the prior year, reflecting organic growth and the integration of the Hammerhead acquisition. Trading in the year to 31 December 2015 was strong with an EBITDA of GBP3.3 million being achieved on sales of GBP11.5 million, reflecting both organic growth, driven principally by the strong performance of the London office, and impact of the acquisitions. In July 2015, as part of a GBP4.0 million round alongside other Foresight VCTs, the Company invested GBP1.0 million in Coventry-based Protean Software. Protean develops and sells business management and
field service management software, together with related support and maintenance services, to organisations involved in the supply, installation and maintenance of equipment, across a number of sectors including facilities management, HVAC and elevator installation. Protean's software suite offers both desktop and mobile variants used on engineers' Android devices. A new CEO and an experienced Chairman were appointed at completion and a new Financial Controller recruited subsequently. For the year to 31 March 2015, EBITDA of GBP900,000 was achieved on sales of GBP3.0 million. Trading in the year to 31 March 2016 was ahead of the previous year while profits were in line with the previous year, reflecting increased investment. In April 2015, Foresight funds invested GBP2.6 million in shares and loan notes in Specac International ("Specac") to finance a management buy-out of Specac Limited from Smiths Group plc. The Company invested GBP650,000, alongside GBP1.3 million from Foresight VCT and GBP650,000 from Foresight 3 VCT, together acquiring a majority equity shareholding with the management team holding the remaining equity. Based in Orpington, Kent, Specac is a long established, leading scientific instrumentation accessories business, manufacturing high specification sample analysis and sample preparation equipment used for a broad range of applications in testing, research and quality control laboratories and other end markets Worldwide. The company's products are primarily focused on supporting IR Spectroscopy, an important analytical technique widely used in research and commercial/ industrial laboratories. For the year to 31 July 2015, the company achieved EBITDA of GBP906,000 on sales of GBP6.9 million. Trading in the current year has exceeded expectations with profit growth ahead of forecast, reflecting greater focus on sales and costs. The company has accelerated new product development and successfully launched new products. A non- executive Chairman has also been appointed with a strong sales and marketing background in the scientific instrumentation market who will complement the existing management team and assist in developing the business. TFC Europe, a leading distributor of technical fasteners in the UK and Germany, performed satisfactorily during the year to 31 March 2015, achieving an operating profit of GBP2.8 million on sales of GBP20.3 million (2014: operating profit of GBP2.8 million on sales of GBP19.5 million). Trading in the year to 31 March 2016, however, was appreciably weaker than budgeted due to a general downturn in the UK manufacturing sector, particularly the Oil and Gas sector. In July 2015, the company effected a successful recapitalisation, as a result of which GBP2.4 million was received by the Foresight VCTs, repaying all their outstanding loans, together with accrued interest and a redemption premium. The overall Foresight shareholding increased from 53.6% to 66.7%. The Company received GBP710,000 and increased its shareholding from 17.87% to 22.23%. A number of senior management changes and promotions were made to facilitate the planned retirement of the Chairman, helping the CEO to drive strategic growth projects, particularly in Germany and to focus on new customer targets within the aerospace sector. In April 2015, two senior managers were promoted to Sales Director and Commercial Director roles. A Group Operations Manager has been appointed to drive cost efficiencies and introduce best operational practice across the Group. A new, experienced Chairman joined the Board in January 2016 and is evaluating TFC's sales strategy and industry focus. The Bunker Secure Hosting, which operates two ultra-secure data centres, continues to generate substantial profits at the EBITDA level. For the year to 31 December 2015, an EBITDA of GBP2.2 million was achieved on sales of GBP9.6 million (2014: EBITDA of GBP2.2 million on sales of GBP9.1 million). Recurring annual revenues presently exceed GBP9.3 million while cash balances remain healthy. On 31 March 2015, The Bunker repaid all its shareholder loans and outstanding interest totalling GBP6.5 million, financed through a GBP5.7 million secured medium term bank loan plus GBP1.0 million from its own cash resources. In total, GBP5.1 million was repaid to the Foresight VCTs, comprising GBP3.0 million of loan principal and GBP2.1 million of interest. The Company received GBP2.0 million, comprising GBP1.5 million of loan principal and GBP503,000 of interest. The company has now commenced a trial with a large distributor which serves many value added resellers. A new, experienced Sales Manager has been recruited to lead channel sales. A number of acquisitions have been reviewed with a view to increasing the scale of operations. In September 2015, as part of a GBP3.3 million round alongside other Foresight VCTs, the Company invested GBP1.0 million in The Business Advisory Limited. This company provides a range of advice and support services to UK-based small businesses seeking to gain access to Government tax incentives, largely on a contingent success fee basis. With a large number of small customers signed up under medium term contracts, the company enjoys a high level of recurring income and good visibility on future revenues. For the year to 30 September 2015, the Company achieved a net profit before tax of GBP1.4 million on sales of GBP4.2 million, well ahead of the prior year. Management has been strengthened by the appointment of a new COO in January 2016 and a new experienced, non-executive Chairman. In August 2013, the Company invested GBP1.0 million alongside Foresight VCT in a GBP2.5 million shareholder recapitalisation of Stockport based Thermotech Solutions (formerly Fire and Air Services). Thermotech is a hard facilities management provider with two divisions, Mechanical Services and Fire Protection, which designs, installs and services air conditioning and fire sprinkler systems for retail, commercial and residential properties through a national network of engineers. The company focusses primarily on the retail sector and enjoys long term customer relationships and multi-year preferred supplier contracts with various blue chip high street retailers, giving good revenue visibility. Since investment, good progress has been made in diversifying and rebalancing the spread of revenues, with greater emphasis on service and maintenance. For the year to 31 March 2015, an EBITDA of GBP1.1 million was achieved on sales of GBP7.8 million, some 40% ahead of the previous year (2014: an EBITDA of GBP714,000 on sales of GBP5.6 million), reflecting significant contract wins and resultant strong cash generation. For the year to 31 March 2016, both the Fire Protection and Mechanical Services divisions experienced good performances. However, the Mechanical Services first quarter was lower than expected due to delays on three projects. EBITDA for the year was slightly behind last year as a consequence but the project pipeline for the current year is encouraging. Good progress has been made in further developing the business, including revamping the brand, optimising the website, introducing telesales and strengthening various functions. A new non-executive Chairman has been appointed, bringing extensive experience from the facilities management and business services sectors. Terms have been agreed on an attractively priced acquisition and a large proportion of the consideration will be paid on a deferred basis. Bank funding is currently being sought to finance the acquisition. Trilogy Communications continues to face a difficult trading environment, with both broadcast market and defence revenues weaker than twelve months ago. Despite strong trading results up to 2012 reflecting large defence contract orders from partners such as Northrop Grumman and Raytheon, the company's trading has since been badly affected by delays in long-term US defence programme orders. For the year to February 2015, an EBITDA loss of GBP509,000 was incurred on sales of GBP3.9 million. For the year to February 2016, revenues of GBP2.9 million were incurred on a normalised EBITDA loss of GBP537k reflecting a fall in defense revenues. The departure of the CEO, who was already under review by Foresight, has not adversely impacted the business, but has facilitated the appointment of a new Sales Director. Between them they have secured the first of five expected $900k orders, to be placed throughout calendar 2016. If received this would underpin a profitable result for FY 2017. Additional orders from Lockheed Martin and Northrop Grumman indicate a strong defence pipeline, with the Company being confident that a total of GBP4.8m of defence orders will be placed during the current financial year. A provision of GBP60,000 was made against the cost of the investment during the period reflecting, poor results. Reflecting continued difficult trading conditions and reducing sales of its fire and emergency simulation software, Vector Command, an investment inherited from the acquisition of Advent VCT in August 2004, was placed into administration in May 2016, with no prospect of any recoveries. A full provision of GBP302,000 was accordingly made against this investment. Russell Healey Head of Private Equity Foresight Group 29 July 2016 The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority require certain disclosures in relation to the annual financial report, as follows: Principal risks, risk management and regulatory environment The Board believes that the principal risks faced by the Company are: -- Economic risk - events such as an economic recession and movement in interest rates could affect smaller companies' performance and valuations. The Company mitigates this risk by investing in a diversified
portfolio of companies across a variety of sectors which provides protection against such events. -- Loss of approval as a Venture Capital Trust - the Company must comply with Section 274 of the Income Tax Act 2007 which allows it to be exempted from corporation tax on investment gains. Any breach of these rules may lead to: the Company losing its approval as a VCT; qualifying shareholders who have not held their shares for the designated holding period having to repay the income tax relief they obtained; and future dividends paid by the Company becoming subject to tax in the hands of investors. The Company would also lose its exemption from corporation tax on capital gains. To mitigate this risk the company employs specialists lawyers to monitor and advise on matters that may impact qualifying status. -- Investment and strategic - inappropriate strategy, poor asset allocation or consistently weak stock selection leading to under performance and poor returns to shareholders. To mitigate this risk the Company ensures its directors have the appropriate qualities and experience to make decisions that maximise shareholder benefit. -- Regulatory - the Company is required to comply with the Companies Acts 2006, the rules of the UK Listing Authority and United Kingdom Accounting Standards. Breach of any of these might lead to suspension of the Company's Stock Exchange listing, financial penalties or a qualified audit report. To mitigate this risk the company ensures the staff of the Investment Manager have the appropriate knowledge and experience to prevent breaches of any required standards and where appropriate will seek professional advice on regulatory matters concerning the company. -- Reputational - inadequate or failed controls might result in breaches of regulations or loss of shareholder trust. To mitigate this risk the Company maintains a transparent relationship with its shareholders and regularly solicits their views. -- Operational - failure of the Manager's or Company Secretary's accounting systems or disruption to its business leading to an inability to provide accurate reporting and monitoring. To mitigate this risk the Company has a business continuity plan in place and regularly reviews all third party service providers to ensure they have similar plans and procedures in place. -- Financial - inadequate controls might lead to misappropriation or loss of assets. Inappropriate accounting policies might lead to misreporting or breaches of regulations. Additional financial risks, including interest rate, credit, market price and currency, are detailed later in this note. -- Market risk - investment in AIM traded, ISDX Growth Market traded and unquoted companies by its nature involves a higher degree of risk than investment in companies traded on the main market. In particular, smaller companies often have limited product lines, markets or financial resources and may be dependent for their management on a small number of key individuals. In addition, the market for stock in smaller companies is often less liquid than that for stock in larger companies, bringing with it potential difficulties in acquiring, valuing and disposing of such stock. -- Liquidity risk - the Company's investments, both unquoted and quoted, may be difficult to realise. Furthermore, the fact that a share is traded on AIM or ISDX Growth Markets does not guarantee that it can be realised. The spread between the buying and selling price of such shares may not reflect the price that any realisation is actually made. The Board regularly reviews the principal risks and uncertainties facing the Company which the Board and the Manager have identified and the Board sets out delegated controls designed to manage those risks and uncertainties. Key risks within investment strategy are managed by the Board through a defined investment policy, with guidelines and restrictions, and by the process of oversight at each Board meeting. Operational disruption, accounting and legal risks are also covered at least annually and regulatory compliance is reviewed at each Board meeting. The Directors have adopted a robust framework of internal controls which is designed to monitor the principal risks and uncertainties facing the Company and provide a monitoring system to enable the Directors to mitigate these risks as far as possible. Details of the Company's internal controls are contained in the Corporate Governance and Internal Control sections. The Company's financial instruments comprise: -- Equity shares, debt securities and fixed interest securities that are held in accordance with the Company's investment objective as set out in the Directors' Report. -- Cash, liquid resources, short-term debtors, creditors and derivatives that arise directly from the Company's operations. Audited Income Statement for the year ended 31 March 2016 Year ended Year ended 31 March 2016 31 March 2015 Revenue Capital Total Revenue Capital Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Investment holding gains - 3,931 3,931 - 9,322 9,322 Realised losses on investments - (10,434) (10,434) - (1,701) (1,701) Income 2,570 - 2,570 1,147 - 1,147 Investment management fees (279) (839) (1,118) (265) (794) (1,059) Transaction costs - - - (11) - (11) Other expenses (499) - (499) (426) - (426) Return/(loss) on ordinary activities before taxation 1,792 (7,342) (5,550) 445 6,827 7,272 Taxation - - - (61) 61 - Return/(loss) on ordinary activities after taxation 1,792 (7,342) (5,550) 384 6,888 7,272 Return per share: Ordinary Share 3.1p (12.7)p (9.6)p 0.4p (3.2)p (2.8)p C Share n/a n/a n/a 1.3p 43.5p 44.8p The total column of this statement is the profit and loss account of the Company and the revenue and capital columns represent supplementary information. All revenue and capital items in the above Income Statement are derived from continuing operations. No operations were acquired or discontinued in the year. The Company has no recognised gains or losses other than those shown above, therefore no separate statement of total recognised gains and losses has been presented. Audited Reconciliation of Movements in Shareholders' Funds Called-up Share Capital Profit share premium redemption and loss capital account reserve account Total Year ended 31 March 2016 Company GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 As at 1 April 2015 570 4,847 261 47,165 51,469 Share issues in the year 8 347 - - 355 Expenses in relation to previous share issues** - (47) - - (47) Repurchase of shares (4) - 4 (266) (266) Dividends - - - (6,970) (6,970) Loss for the year - - - (5,550) (5,550) As at 31 March 2016 574 5,147 265 34,379*** 40,365 Called-up share Share premium account Capital redemption reserve Profit and loss account Restated capital (restated) (restated) (restated) Total Year ended 31 March 2015 Company GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 As at 1 April 2014 573 4,918* 258* 40,056* 45,805 Expenses in relation to previous years share issues** - (71) - - (71) Repurchase of shares (3) - 3 (163) (163) Return for the year - - - 7,272 7,272 As at 31 March 2015 570 4,847 261 47,165*** 52,843 * Refer to note 10 **Trail commission payable to financial advisors in the year. *** Of this amount GBP20,949,000 (2015: GBP37,665,000) is realised and distributable. Audited Balance Sheet at 31 March 2016 Registered Number: 03506579 Restated As at As at 31 March 2016 31 March 2015 GBP'000 GBP'000 Fixed assets Investments held at fair value through profit or loss 37,738 38,223 Current assets Debtors 959 736 Money market securities and other deposits 1,773 4,400
Cash 62 9,632 2,794 14,768 Creditors Amounts falling due within one year (167) (148) Net current assets 2,627 14,620 Net assets 40,365 52,843 Capital and reserves Called-up share capital 574 570 Share premium account 5,147 4,847* Capital redemption reserve 265 261* Profit and loss account 34,379 47,165* Equity shareholders' funds 40,365 52,843 Net asset value per share: Ordinary Share 70.4p 83.9p C Share n/a 110.8p *Refer to Note 10 Audited Cash Flow Statement for the year ended 31 March 2016 Year ended Year ended 31 March 31 March 2016 2015 GBP'000 GBP'000 Cash flow from operating activities Investment income received 563 1,000 Dividends received from investments 2,117 150 Deposit and similar interest received 24 4 Investment management fees paid (1,118) (1,059) Secretarial fees paid (157) (117) Other cash payments (379) (260) Net cash inflow/(outflow) from operating activities and returns on investment 1,050 (282) Returns on investment and servicing of finance Purchase of unquoted investments (7,256) (1,766) Net proceeds on sale of investments 717 13,742 Net proceeds on deferred consideration 7 87 Net proceeds on liquidation of investments 58 - Net capital (outflow)/inflow from financial investment (6,474) 12,063 Equity dividends paid (6,970) - Management of liquid resources Movement in money market funds 2,627 (3,763) 2,627 (3,763) Financing Proceeds of fund raising 355 - Expenses of fund raising for previous years (47) (71) Repurchase of own shares (111) (163) 197 (234) Net (outflow)flow/inflow of cash for the year (9,570) 7,784 Reconciliation of net cash flow to movement in net funds (Decrease)/increase in cash for the year (9,570) 7,784 Net cash at start of year 9,632 1,848 Net cash at end of year 62 9,632 Analysis of changes in net debt At 1 April 2015 Cash flow At 31 March 2016 GBP'000 GBP'000 GBP'000 Cash and cash equivalents 9,632 (9,570) 62 Notes to the accounts 1. These are not statutory accounts in accordance with S436 of the Companies Act 2006. The full audited accounts for the year ended 31 March 2016, which were unmodified and did not contain any statements under S498(2) of Companies Act 2006 or S498(3) of Companies Act 2006, will be lodged with the Registrar of Companies. Statutory accounts for the year ended 31 March 2016 including an unmodified audit report and containing no statements under the Companies Act 2006 will be delivered to the Registrar of Companies in due course. 2. The disclosures in this announcement have been prepared on the basis of accounting policies set out in the statutory accounts of the Company for the year ended 31 March 2016. All investments held by the Company are classified as 'fair value through the profit and loss'. Unquoted investments have been valued in accordance with IPEVC guidelines. Quoted investments are stated at bid prices in accordance with the IPEVC guidelines and Generally Accepted Accounting Practice. 3. Copies of the Annual Report will be sent to shareholders and will be available for inspection at the Registered Office of the Company at The Shard, 32 London Bridge Street, London, SE1 9SG and can be accessed on the following website: www.foresightgroup.eu 4. Net asset value per share Net asset value per Ordinary Share is based on net assets at the year end of GBP40,364,641 (2015: GBP32,139,000) and on 57,375,499 (2015: 38,284,414) Ordinary Shares, being the number of Ordinary Shares in issue at that date. 5. Return per share Year ended Year ended 31 March 2016 31 March 2015 Ordinary Ordinary Shares Shares C Shares GBP'000 GBP'000 GBP'000 Total return/(loss) after taxation (5,550) (1,091) 8,363 Total return/(loss) per share (note a) (9.6)p (2.8)p 44.8p Revenue return/(loss) from ordinary activities after taxation 1,792 149 235 Revenue return/(loss) per share (note b) 3.1p 0.4p 1.3p Capital return/(loss) from ordinary activities after taxation (7,343) (1,240) 8,128 Capital return/(loss) per share (note c) (12.7)p (3.2)p 43.5p Weighted average number of shares in issue in the period* 57,567,321 38,445,770 18,680,907 * The weighted average number of shares has been adjusted to take account of the O and C Share fund merger on 10 August 2015. Notes: a) Total return/(loss) per share is total return after taxation divided by the weighted average number of shares in issue during the year. b) Revenue return/(loss) per share is revenue return after taxation divided by the weighted average number of shares in issue during the year. c) Capital return/(loss) per share is capital return after taxation divided by the weighted average number of shares in issue during the year. 6. Annual General Meeting The Company's Annual General Meeting will take place on 30 September 2016 at 1.00pm at the offices of Shakespeare Martineau LLP in London. Details can be found on page 62 of the Annual Report and Accounts. Prior to the formal business of the Annual General Meeting, Foresight Group, the investment Manager and two investee companies will give presentations between 12.00pm and 1.00pm. 7. Income Year ended 31 March 2016 Year ended 31 March 2015 GBP'000 GBP'000 Loan stock interest 428 993 Dividends receivable 2,117 150 Overseas based Open Ended Investment Companies ("OEICS") 24 4 Bank deposits 1 - 2,570 1,147 8. Investments held at fair value through profit or loss 2016 2015 GBP'000 GBP'000 Quoted investments 282 289 Unquoted investments 37,456 37,934 37,738 38,223 Company Quoted Unquoted Total GBP'000 GBP'000 GBP'000 Book cost as at 1 April 2015 847 31,311 32,158 Investment holding (losses)/gains (558) 6,623 6,065 Valuation at 1 April 2015 289 37,934 38,223 Movements in the year: Purchases at cost* - 7,416 7,416 Disposal proceeds *** (7) (875) (882) Realised losses**** (13) (10,414) (10,427) Investment holding gains ** 13 3,395 3,408 Valuation at 31 March 2016 282 37,456 37,738 Book cost at 31 March 2016 827 27,438 28,265 Investment holding (losses)/gains (545) 10,018 9,473 Valuation at 31 March 2016 282 37,456 37,738 Ordinary Shares Fund Quoted Unquoted Total GBP'000 GBP'000 GBP'000 Book cost as at 1 April 2015 847 24,474 25,321 Investment holding (losses)/gains (558) 4,709 4,151 Valuation at 1 April 2015 289 29,183 29,472 Movements in the year: Purchases at cost* - 6,016 6,016 Disposal proceeds *** (7) (875) (882)
Realised losses**** (13) (10,414) (10,427) Investment holding gains ** 13 4,308 4,321 Transfer of C Shares fund - book cost - 8,237 8,237 Transfer of C Shares fund - investment holding gains - 1,001 1,001 Valuation at 31 March 2016 282 37,456 37,738 Book cost at 31 March 2016 827 27,438 28,265 Investment holding (losses)/gains (545) 10,018 9,473 Valuation at 31 March 2016 282 37,456 37,738 C Shares Fund Quoted Unquoted Total GBP'000 GBP'000 GBP'000 Book cost as at 1 April 2015 - 6,837 6,837 Investment holding gains - 1,914 1,914 Valuation at 1 April 2015 - 8,751 8,751 Movements in the year: Purchases at cost - 1,400 1,400 Investment holding losses - (913) (913) Transfer to Ordinary Shares fund - book cost - (8,237) (8,237) Transfer to Ordinary Shares fund - investment holding gains - (1,001) (1,001) Valuation at 31 March 2016 - - - Book cost at 30 September 2015 - - - Investment holding gains - - - Valuation at 31 March 2016 - - - * Capitalised interest of GBP160,000 was recognised by the Ordinary Shares fund in the year and is included within purchases at cost. ** Investment holding gains in the income statement includes GBP516,000 of deferred consideration recognised in the year by the Ordinary Shares fund and GBP7,000 that was received and transferred from investment holding gains in the period. *** Disposal proceeds includes GBP107,000 not within the cashflow statement as this amount is within debtors. **** Realised losses in the income statement includes GBP7,000 that was received and transferred from investment holding gains in the period. 9. Transactions with the manager Foresight Group, which acts as investment manager to the Company in respect of its investments earned fees of GBP1,118,000 during the year (2015: GBP1,059,000). Foresight Fund Managers Limited, Company Secretary, received fees of GBP157,000 (2015: GBP157,000) during the year. The annual secretarial fee (which is payable together with any applicable VAT) is adjusted annually in line with the UK Retail Prices Index. At the balance sheet date there was GBP1,000 due from (2015: GBP20,000 due to) Foresight Group and GBPNil (2015: GBP40,000) due to Foresight Fund Managers Limited. No amounts have been written off in the year in respect of debts due to or from related parties. 10. Restatement of capital and reserves On 28 November 2012, GBP30,963,251 of share premium, and GBP1,750,587 of capital redemption reserve were cancelled by order of the High Court. However, the balances were not moved to the profit and loss account at 31 March 2013. The share premium, capital redemption reserve and profit and loss account have been restated to adjust for this. There is no impact on the profit and loss account or the net asset value of the Company in this or any earlier period. The impact of this is shown in the table below: 31 March 2015 31 March 2015 1 April 2014 1 April 2014 (as reported) (as restated) (as reported) (as restated) GBP'000 GBP'000 GBP'000 GBP'000 Share premium account 35,810 4,847 35,881 4,918 Capital redemption reserve 2,012 261 2,009 258 Profit and loss account 14,451 47,165 7,342 40,056 END This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients. The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Foresight 4 VCT PLC via Globenewswire HUG#2032046 http://www.foresightgroup.eu/
(END) Dow Jones Newswires
July 29, 2016 11:22 ET (15:22 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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