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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Foresight Solar & Technology Vct Plc | LSE:FTSV | London | Ordinary Share | GB00B640GZ49 | 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% | 4.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMFTSV
FORESIGHT SOLAR & INFRASTRUCTURE VCT PLC
Summary Financial Highlights
-- Net asset value per Ordinary Share at 30 June 2016 was 100.7p after
payment of 6.0p in dividends (30 June 2015: 109.9p).
-- Net asset value per C Share at 30 June 2016 was 80.5p after payment of
5.0p in dividends (30 June 2015: 91.7p).
-- Net asset value per D Share at 30 June 2016 was 99.4p.
-- Total net asset value return (including dividends paid since launch) at
30 June 2016 is 123.7p for the Ordinary Shares fund, 90.5p for the C
Shares fund and 99.4p for the D Shares fund.
-- The D Shares fund launched on 1 February 2016 and has raised GBP3.1
million at the time of writing.
Ordinary Shares Fund
-- Two interim dividends of 3.0p per Ordinary Share were paid on 13 November
2015 and 8 April 2016.
-- An interim dividend of 3.0p per Ordinary Share will be paid on 18
November 2016 based on an ex-dividend date of 3 November 2016 and a
record date of 4 November 2016.
-- Fifth anniversary of final allotment under the original offer is 8
November 2016.
C Shares Fund
-- Two interim dividends of 2.5p per C Share were paid on 13 November 2015
and 8 April 2016.
-- An interim dividend of 2.5p per C Share will be paid on 18 November 2016
based on an ex-dividend date of 3 November 2016 and a record date of 4
November 2016.
-- One new investment was made during the year totalling GBP0.95 million and
one new investment of GBP3.7 million was made during July 2016. The fund
is considered fully invested.
D Shares Fund
-- One new investment was made during the year totalling GBP1.6 million.
Dividend History
Ordinary Shares Dividend per share
8 April 2016 3.0p
13 November 2015 3.0p
10 April 2015 3.0p
14 November 2014 3.0p
4 April 2014 3.0p
25 October 2013 3.0p
12 April 2013 2.5p
31 October 2012 2.5p
Total 23.0p
C Shares Dividend per share
8 April 2016 2.5p
13 November 2015 2.5p
10 April 2015 2.5p
14 November 2014 2.5p
Total 10.0p
Chairman's Statement
Introduction
As outlined in my statement last October, 2015 saw a significant
strategic shift in the UK Government's policies with respect to
renewable energy investment. Although this has fundamentally changed the
landscape for future investment in PV solar, as an established owner of
assets these changes have not had a material detrimental effect on our
existing portfolio.
Performance - Ordinary Shares Fund
The underlying net asset value decreased by 3.2p per Ordinary Share
before deducting the 6.0p per Ordinary Share dividend paid during the
year. However, this reduction also includes an accrual for a performance
incentive fee to the investment manager of approximately 5.9p per
Ordinary Share, which would become payable should the total
distributions on exit exceed 100p per Ordinary Share.
The valuation of the UK portfolio decreased by approximately GBP291,000
(0.8p per Ordinary Share) principally as a result of the Government's
removal of Levy Exemption Certificates (LECs) for renewable energy
schemes from August 2015. Other negative factors were a material
increase in future business rates for solar plants, poorer levels of
irradiation across the UK during the year under review (actual plant
performance performed ahead of expectations) and lower power prices. The
overall impact was partially offset by improvements in the valuations of
our European assets.
The restructuring of the debt component of our Italian holdings was
completed in February 2016, and we expect to see distributions to the
VCT recommence in the 2016/17 year. We decided during the year to
dispose of La Castilleja. This transaction is progressing and a
provision against the previous carrying value of this asset has been
taken to reflect likely disposal proceeds. There remains a possibility
that the Company will recover some of these Spanish asset losses from
the international arbitration proceedings we have taken against the
Government of Spain for breaching the protections available under the
Energy Charter Treaty. The Spanish and Italian assets account for circa
15% of the Ordinary Share portfolio.
The overall performance of the Ordinary Shares fund remains robust and
the total return since inception as at 30 June 2016 was 123.7p per
Ordinary Share compared with the fund's original target of a total 5
year return of 130.0p per Ordinary Share.
Ordinary Shareholder Individual Option to Remain Invested
The fifth anniversary of the final closing of the original public
offering of the Ordinary Shares will occur in November of this year and
Shareholders will be given the option to retain or divest their
investment. During the year the Investment Manager began exploring
options for the generation of liquidity to fund shareholders' returns
including through a refinancing or sale of all or part of the Ordinary
Share portfolio. The Board has included with the Annual Report &
Accounts a letter to shareholders providing an update in this regard.
i. Movement in Net Asset Value of the Ordinary Shares Fund
During the year, the net asset value of the Ordinary Shares fund
decreased to 100.7p per share (GBP38.6 million) at 30 June 2016 from
109.9p per share (GBP42.1 million) at 30 June 2015. The main reason
behind the fall in net assets was the accrual of the Manager's
performance incentive fee (5.9p) and a dividend payment of 6.0p per
Ordinary Share. This is summarised further in the table below:
GBP'000 Pence per Ordinary Share
NAV at 30 June 2015 42,111 109.9
Dividends paid (2,298) (6.0)
UK investments valuation decrease (291) (0.8)
Italian investments valuation increase 1,795 4.7
Spanish investments valuation decrease (132) (0.2)
Performance incentive fee (2,270) (5.9)
Other (362) (1.0)
NAV at 30 June 2016 38,553 100.7
ii. Cash & Deal Flow
The Ordinary Shares fund had cash and liquid resources of GBP1.9 million
at 30 June 2016. The Company receives regular interest and loan stock
payments and dividends from its underlying investments enabling it to
continue to fund its dividend policy as well as meeting expenses in the
ordinary course of business as they fall due.
iii. Investment Gains & Losses
There were no realised gains or losses during the year for the Ordinary
Shares fund.
During the period the Ordinary Shares fund recognised unrealised gains
of GBP1,372,000. Further information regarding the breakdown of this
amount is contained in the Manager's Report.
iv. Running Costs
The annual management fee of the Ordinary Shares fund is calculated as
1.5% of Net Assets. During the period the management fees (excluding the
accrued performance incentive fee) totalled GBP613,000, of which
GBP153,000 was charged to the revenue account and GBP460,000 was charged
to the capital account.
v. Ordinary Share Dividends
The Board originally planned to pay dividends of 5.0p per Ordinary Share
each year throughout the life of Foresight Solar & Infrastructure VCT
plc after the first year, payable bi-annually via dividends of 2.5p per
Ordinary Share in April and October each year. The level of dividends is
not, however, guaranteed. The Board is pleased to announce that the next
interim dividend, of 3.0p per Ordinary Share, will be paid on 18
November 2016 based on an ex-dividend date of 3 November 2016 and a
record date of 4 November 2016, which means that total dividends of
26.0p per Ordinary Share will have been paid since launch.
vi. Ordinary Share Issues & Buybacks
During the year under review, 26,094 Ordinary Shares were repurchased
for cancellation. No new shares were issued.
Performance - C Shares Fund
The underlying net asset value decreased by 6.2p per C Share before
deducting the 5.0p per C share dividend paid during the year.
The valuation of the UK portfolio decreased by approximately GBP569,000
(4.5p per C Share). This decrease in valuation was driven principally by
the removal of Levy Exemption Certificates (LECs) for renewable energy
by the Government from August 2015, lower irradiation than expected and
a reduction in actual and forecast power prices. The C shares fund has a
greater exposure to ROC subsidised projects than the Ordinary shares
fund. This means a greater proportion of project revenues are exposed to
changes in wholesale power prices. The US solar investment in the C
share portfolio helps to diversify this particular risk.
The overall performance of the C Shares fund to date and the time it
took to invest the proceeds of the original offer is disappointing but
the opportunity to refinance the portfolio together with other
operational efficiencies being implemented should see performance
improving, albeit the original target of 120p per C Share remains
challenging.
i. Movement in Net Asset Value of the C Shares Fund
During the period, the net assets of the C Shares fund decreased to
80.5p per share (GBP10.1 million) at 30 June 2016 from 91.7p per share
(GBP11.5 million) as at 30 June 2015, largely due to the aggregate
performance of the investment portfolio and dividends paid. This is
summarised further in the table below:
GBP'000 Pence per C share
NAV at 30 June 2015 11,477 91.7
Dividends paid (625) (5.0)
UK investments valuation decrease (569) (4.5)
Other (216) (1.7)
NAV at 30 June 2016 10,067 80.5
ii. Cash & Deal Flow
During the year, the C Shares fund invested GBP0.95 million in the EOSOL
project in Lancaster, California. The project has been operational since
2013 and the region benefits from some of the highest irradiation levels
in the world. Following the year end the C Shares fund invested GBP3.7
million in a 5 MW project at Marchington, Staffordshire. The site was
connected to the grid in March 2016 and benefits from a ROC subsidy. At
30 June 2016 the C Shares fund had cash resources of GBP4,000.
The Company receives regular interest and loan stock payments and
dividends from its underlying investments enabling it to continue to
fund its dividend policy as well as meeting expenses in the ordinary
course of business as they fall due.
iii. Investment Gains & Losses
There were no realised gains or losses during the year.
During the year the C Shares fund recognised unrealised losses of
GBP569,000. Further information regarding the breakdown of this amount
is contained in the Manager's Report.
iv. Running Costs
The annual management fee of the C Shares fund is calculated as 1.75% of
Net Assets. During the year the management fees totalled GBP188,000, of
which GBP47,000 was charged to the revenue account and GBP141,000 was
charged to the capital account.
v. C Share Dividends
The Board is pleased to announce that the next interim dividend, of 2.5p
per C Share, will be paid on 18 November 2016 based on an ex-dividend
date of 3 November 2016 and a record date of 4 November 2016.
vi. C Share Issues & Buybacks
There were no C Share buybacks and no new shares were issued during the
year.
Outlook - C Shares Fund
The proceeds of the C Share offer have now been fully deployed into new
projects. This has taken considerably longer than originally anticipated
which has had a negative impact on the overall returns generated by the
C Shares fund. With the fund now fully invested we expect returns to
improve especially if power prices recover strongly.
D Shares Fund
The D Shares fund offer opened on 1 February 2016, following a window of
opportunity to invest in energy generating investments (subject to them
not benefitting from any form of Government subsidy) for a very short
period until 5 April 2016, after which time they were prohibited for
VCTs. After 5 April 2016 the fund will invest in energy related
infrastructure investments such as smart meters. The D Shares fund has
raised GBP3.1 million at the time of writing.
Name Change
Following the launch of the D Share Offer in February 2016, which has
both a solar and more general infrastructure mandate, the Board
considered it appropriate to amend the name of the Company from
Foresight Solar VCT plc to Foresight Solar & Infrastructure VCT plc to
reflect the wider remit of the Company across all three of its share
classes.
Annual General Meeting
The Company's Annual General Meeting will take place on 8 December 2016
at 1pm. I look forward to welcoming you to the Meeting, which will be
held at the offices of Foresight Group in London. Details can be found
on page 57.
Overall Company Outlook
The O Share portfolio continues to perform in line with expectations. As
a mature solar fund based on both FiT and ROC revenues, its future
performance will be enhanced by a successful outcome to the manager's
portfolio optimisation programme including locking in more stable power
price agreements. It will also seek to negotiate land lease extensions
that should generate enhanced revenues and value from the UK projects.
Within the European portfolio, the successful refinancing of the
portfolio of Italian solar assets has led to an increase in value but a
small provision has been taken against the value of the Spanish asset,
to reflect the likely proceeds from an ongoing disposal process.
The performance of the C Share portfolio in the last year has been
impacted by several negative factors, namely the abrupt removal of LECs
by the UK government in August 2015, poorer than anticipated levels of
irradiation, an overall fall in power prices and the delay in investing
all of the C Share monies. Our objective is to focus on a combination of
operational and financing improvements and, with our final investment at
Marchington now generating revenue, we hope the trend in NAV will
improve; although we are unlikely to achieve the C Share fund's original
target of 120p per share.
David Hurst-Brown
Chairman
28 October 2016
Strategic Report
Introduction
This Strategic Report, on pages 5 to 9, has been prepared in accordance
with the requirements of Section 414 of the Companies Act 2006 and best
practice. Its purpose is to inform the members of the Company and help
them to assess how the Directors have performed their duty to promote
the success of the Company, in accordance with Section 172 of the
Companies Act 2006.
Foresight Solar & Infrastructure VCT plc Ordinary Shares Fund
Foresight Solar & Infrastructure VCT plc originally raised GBP37.8
million through an Ordinary Share issue in 2010/2011 and 2011/2012. This
fund currently has investments and assets totalling GBP38.6 million. The
number of Ordinary Shares in issue at 30 June 2016 was 38,290,862.
Foresight Solar & Infrastructure VCT plc C Shares Fund
In 2013/2014 and 2014/2015, GBP13.1 million was raised for the C Shares
fund. This fund currently has investments and assets totalling GBP10.1
million. The number of C shares in issue at 30 June 2016 was 12,509,245.
Foresight Solar & Infrastructure VCT plc D Shares Fund
Foresight Solar & Infrastructure VCT plc is currently raising funds
through a D Share issue. The fund currently has investments and assets
totalling GBP2.0 million. The number of D shares in issue at 30 June
2016 was 1,997,691.
Summary of the Investment Policy
Foresight Solar & Infrastructure VCT plc invests mainly in unquoted
companies that generate electricity from solar power systems and benefit
from long-term government-related price guarantees as well as companies
that generate and sell data derived from their ownership and operation
of smart data assets.
Investment Objectives
Ordinary Shares Fund
The key objective of the Ordinary Shares fund is to distribute 130.0p
per share, through a combination of tax-free income, buy-backs and
tender offers before the sixth anniversary of the closing date of the
offer.
C Shares Fund
The key objective of the C Shares fund is to distribute 120.0p per share,
through a combination of tax-free income, buy-backs and tender offers
before the sixth anniversary of the closing date of the offer.
D Shares Fund
The key objective of the D Shares fund is to distribute between 110.0p
and 115.0p per share, through a combination of tax-free income,
buy--backs and tender offers before the sixth anniversary of the closing
date of the offer.
Performance and Key Performance Indicators (KPIs)
The Board expects the Manager to deliver a performance which meets the
objectives of the three classes of shares. The KPIs covering these
objectives are net asset value performance and dividends paid, which,
when combined, give net asset value total return. Additional key
performance indicators reviewed by the Board include the discount of the
share price relative to the net asset value and total expenses as a
proportion of shareholders' funds.
A record of some of these indicators is contained below and on the
following page. The total expense ratio in the period was 2.7% and the
average discount at which shares were repurchased in the market was
0.7%. The level of these KPIs compare favourably with the wider VCT
marketplace based on independently published information.
A review of the Company's performance during the financial year, is
contained within the Manager's Report. The Board assesses the
performance of the Manager in meeting the Company's objective against
the primary KPIs highlighted above.
30 June 2016 30 June 2015
Ordinary Ordinary
Shares C Shares D Shares Shares C Shares D Shares
Net asset
value per
share 100.7p 80.5p 99.4p 109.9p 91.7p N/A
Net asset
value total
return 123.7p 90.5p 99.4p 126.9p 96.7p N/A
Ordinary Ordinary
Shares C Shares D Shares Shares C Shares D Shares
Share price 92.5p 84.0p 100.0p 102.5p 93.5p N/A
Share price
total
return 115.5p 94.0p 100.0p 119.5p 98.5p N/A
Ordinary Ordinary
Shares C Shares D Shares Shares C Shares D Shares
Dividends
paid from
inception 23.0p 10.0p - 17.0p 5.0p N/A
Dividends
paid in the
year 6.0p 5.0p - 6.0p 5.0p N/A
Dividend
yield % 6.5 6.0 - 5.9 5.3 N/A
Ordinary Shares Fund
Share price discount to NAV at 30 June 2016 8.1%
Average discount on buybacks 0.7%
Shares bought back during the year under review 26,094
Decrease in net asset value during year (after adding
back 6.0p dividend) 2.9%
Total expense ratio 2.5%
C Shares Fund
Share price premium to NAV at 30 June 2016 4.3%
Average discount on buybacks -
Shares bought back during the year under review -
Decrease in net asset value during year (after adding
back 5.0p dividend) 6.8%
Total expense ratio 3.2%
D Shares Fund
Share price premium to NAV at 30 June 2016 0.6%
Average discount on buybacks -
Shares bought back during the year under review -
Increase in net asset value during year N/A
Total expense ratio 3.4%
Strategies for achieving objectives
Investment Policy
Foresight Solar & Infrastructure VCT plc invests mainly in unquoted
companies that generate electricity from solar power systems and benefit
from long-term government-related price guarantees as well as companies
that generate and sell data derived from their ownership and operation
of smart data assets.
Investment securities
The Company invests in a range of securities including, but not limited
to, ordinary and preference shares, loan stock, convertible securities,
and fixed-interest securities as well as cash. Unquoted investments are
usually structured as a combination of ordinary shares and loan stock.
Non Qualifying Investments may include holdings in money market
instruments, short-dated bonds, unit trusts, OEICs, structured products,
guarantees to banks or third parties providing loans or other investment
to investee companies and other assets where Foresight Group believes
that the risk/return portfolio is consistent with the overall investment
objectives of the portfolio.
UK companies
Investments are primarily made in companies which are substantially
based in the UK. The companies in which investments are made must have
no more than GBP15 million of gross assets at the time of investment for
funds raised after 6 April 2012 (or GBP7 million if the funds being
invested were raised after 5 April 2006 but before 6 April 2012) to be
classed as a VCT qualifying holding.
Asset mix
The Company invests in unquoted companies that seek to generate solar
electricity and benefit from long-term government-backed price
guarantees. Investments may be made in companies seeking to generate
renewable energy from other sources provided that these benefit from
similar long-term government-backed price guarantees. No investments of
this nature have been made to date. The Board has ensured that at least
70% of net funds raised under the Offer have been invested in companies
whose primary business is the generation of solar electricity. Any
uninvested funds are held in cash, interest bearing securities or other
investments.
Risk diversification and maximum exposures
Risk is spread by investing in a number of different companies and by
targeting a variety of separate locations for the solar power assets.
The maximum amount invested by the Company in any one company is limited
to 15% of the portfolio at the time of investment. The value of an
investment is expected to increase over time as a result of trading
progress and a continuous assessment is made of its suitability for
sale. Solar projects can in aggregate exceed this limit but suitable
structures are put in place so that individual corporate investments do
not. Although risk is spread across different companies, concentration
risk is fairly high, given that a significant portion are all UK Solar
projects.
Borrowing powers
The Company's Articles permit borrowing, to give a degree of investment
flexibility. The Board's current policy is not to use borrowing. In any
event, under the Company's Articles no money may be borrowed without the
sanction of an ordinary resolution if the principal amount outstanding
of all borrowings by the Company and its subsidiary undertakings (if
any), then exceeds, or would as a result of such borrowing exceed, a
principal amount equal to the aggregate of the share capital and
consolidated reserves of the Company and each of its subsidiary
undertakings as shown in the audited consolidated balance sheet. The
underlying portfolio companies in which Foresight Solar & Infrastructure
VCT plc invests may utilise bank borrowing or other debt arrangements to
finance asset purchases but such borrowing would be non-recourse to
Foresight Solar & Infrastructure VCT plc.
VCT regulation
The investment policy is designed to ensure that the Company continues
to qualify and is approved as a VCT by HM Revenue & Customs ("HMRC").
Amongst other conditions, the Company may not invest in a single company
more than 15% of its gross assets at the time of making any investment
and must have at least 70% by value of its investments throughout the
period in shares or securities in qualifying holdings, of which the
specified percentage by value in aggregate must be in ordinary shares
which carry no preferential rights (although only 10% of any individual
investment needs to be in the ordinary shares of that Company). In
respect of capital raised before 6 April 2011 the specified percentage
was 30% and in respect of capital raised on or after 6 April 2011 the
specified percentage was 70%.
Management
The Board has engaged Foresight Group as discretionary investment
manager. Foresight Fund Managers Limited also provides or procures the
provision of company secretarial, administration and custodian services
to the Company.
Foresight Fund Managers Limited is the secretary of the Company.
Foresight Group prefers to take a lead role in the companies in which it
invests. Larger investments may be syndicated with other investing
institutions, or strategic partners with similar investment criteria.
A review of the investment portfolio and of market conditions during the
year is included within the Manager's Report.
Environmental, Human Rights, Employee, Social and Community Issues
The Company's investments have been made in clean energy and
environmental infrastructure projects which have clear environmental
benefits.
The Board recognises the requirement under Section 414 of the Act to
provide information about environmental matters (including the impact of
the Company's business on the environment), employee, human rights,
social and community issues; including information about any policies it
has in relation to these matters and effectiveness of these policies. As
the Company has no employees or policies in these matters this
requirement does not apply.
Gender diversity
The Board currently comprises three male Directors. The Board is,
however, conscious of the need for diversity and will consider both male
and female candidates when appointing new Directors.
The Manager has an equal opportunities policy and currently employs 79
men and 52 women.
Dividend policy
The Board plans to pay dividends of 5.0p per share each year throughout
the life of Foresight Solar & Infrastructure VCT plc after the first
year, payable bi-annually via dividends of 2.5p per share in April and
October each year. The level of dividends is not however, guaranteed.
Purchase of own shares
It is the Company's policy, subject to adequate cash availability, to
consider repurchasing shares when they become available in order to help
provide liquidity to the market in the Company's shares.
Principal risks, risk management and regulatory environment
The Board carries out a regular and robust review of the risk
environment in which the company operates. The principal risks and
uncertainties identified by the Board which might affect the Company's
business model and future performance, and the steps taken with a view
to their mitigation, are as follows:
Economic risk: events such as economic recession or general fluctuation
in stock markets and interest rates may affect the performance of
projects, as well as affecting the Company's own share price and
discount to net asset value. Mitigation: the Company invests in a
portfolio of investments and maintains sufficient cash reserves to be
able to meet its liabilities.
VCT qualifying status risk: the Company is required at all times to
observe the conditions laid down in the Income Tax Act 2007 for the
maintenance of approved VCT status. The loss of such approval could lead
to the Company losing its exemption from corporation tax on capital
gains, to investors being liable to pay income tax on dividends received
from the Company and, in certain circumstances, to investors being
required to repay the initial income tax relief on their investment.
Mitigation: the Manager keeps the Company's VCT qualifying status under
continual review, seeking to take appropriate action to maintain it
where required, and its reports are reviewed by the Board on a quarterly
basis. The Board has also retained RW Blears LLP to undertake an
independent VCT status monitoring role.
Investment and liquidity risk: many of the Company's investments are in
small and medium-sized unquoted companies which are VCT qualifying
holdings, and which by their nature entail a higher level of risk and
lower liquidity than investments in larger quoted companies. Mitigation:
the Directors aim to limit the risk attaching to the portfolio as a
whole by careful selection, close monitoring and timely realisation of
investments, by carrying out rigorous due diligence procedures. The
Board reviews the investment portfolio with the Manager on a regular
basis.
Legislative and regulatory risk: in order to maintain its approval as a
VCT, the Company is required to comply with current VCT legislation in
the UK, which reflects the European Commission's State aid rules.
Changes to the UK legislation or the State aid rules in the future could
have an adverse effect on the Company's ability to achieve satisfactory
investment returns whilst retaining its VCT approval. Mitigation: The
Board and the Manager monitor political developments and where
appropriate seek to make representations either directly or through
relevant trade bodies.
Natural disasters: severe weather/natural disasters could lead to
reduction in performance and value of the assets. Mitigation: there is
no mitigation that can be taken against natural disasters; however, our
Operations and Maintenance provider is able to respond quickly to repair
any damage and reduce the amount of down time.
Internal control risk: the Company's assets could be at risk in the
absence of an appropriate internal control regime. This could lead to
theft, fraud, and/or an inability to provide accurate reporting and
monitoring. Mitigation: the Board regularly reviews the system of
internal controls, both financial and non-financial, operated by the
Company and the Manager. These include controls designed to ensure that
the Company's assets are safeguarded and that proper accounting records
are maintained.
Financial risk: inappropriate accounting policies might lead to
misreporting or breaches of regulations. Mitigation: the Manager is
continually reviewing accounting policies and regulations, and its
reports are reviewed by the Board on a quarterly basis.
Viability Statement
In accordance with principle 21 of the AIC Code of Corporate Governance
published by the AIC in February 2015, the Directors have assessed the
prospects of the Company over the three year period to 30 June 2019.
This three year period is used by the Board during the strategic
planning process and is considered reasonable for a business of its
nature and size.
In making this statement, the Board carried out an assessment of the
principal risks facing the Company, including those that might threaten
its business model, future performance, solvency, or liquidity.
The Board also considered the ability of the Company to raise finance
and deploy capital. This assessment took account of the availability and
likely effectiveness of the mitigating actions that could be taken to
avoid or reduce the impact of the underlying risks, including the
Manager adapting their investment process to take account of the more
restrictive VCT investment rules.
This review has considered the principal risks which were identified by
the Board. The Board concentrated its efforts on the major factors that
affect the economic, regulatory and political environment.
The Directors have also considered the Company's income and expenditure
projections and underlying assumptions for the next three years and
found these to be realistic and sensible.
Based on the Company's processes for monitoring cash flow, share price
discount, ongoing review of the investment objective and policy, asset
allocation, sector weightings and portfolio risk profile, the Board has
concluded that there is a reasonable expectation that the Company will
be able to continue in operation and meet its liabilities as they fall
due over the three years to 30 June 2019.
Performance-related incentives
Ordinary Shares fund
After distributions of 100.0p per Ordinary Share issued under the Offer
and remaining in issue at the date of calculation have been paid to
Ordinary shareholders of the Company, Foresight Group will become
entitled to a performance incentive which will be calculated at the rate
of 20% of distributions in excess of 100.0p per Ordinary Share until
total distributions reach 130.0p per share and 30% above that level.
C Shares fund
After distributions of 100.0p per C Share issued under the Offer and
remaining in issue at the date of calculation have been paid to C
shareholders by the Company, Foresight Group will become entitled to a
performance incentive which will be calculated at the rate of 20% of
distributions in excess of 100.0p per C Share until total distributions
reach 120.0p per share and 30% above that level.
D Shares fund
After distributions of 100.0p per D Share issued under the offer and
remaining in issue at the date of calculation have been paid to D
shareholders by the Company, Foresight Group will become entitled to a
performance incentive which will be calculated at the rate of 20% of
distributions in excess of 100.0p per D Share until total distributions
reach 115.0p per share and 30% above that level.
Valuation Policy
Investments held by the Company have been valued in accordance with the
International Private Equity and Venture Capital Valuation ("IPEVCV")
guidelines (December 2015) developed by the British Venture Capital
Association and other organisations. Through these guidelines,
investments are valued as defined at 'fair value'. Ordinarily, unquoted
investments will be valued at cost for a limited period following the
date of acquisition, being the most suitable approximation of fair value
unless there is an impairment or significant accretion in value during
the period. The portfolio valuations are prepared by Foresight Group,
reviewed and approved by the Board quarterly and subject to review by
the auditors annually.
A broad range of assumptions are used in our valuation models. These
assumptions are based on long-term forecasts and are not affected by
short-term fluctuations in inputs, be it economic or technical. Under
the normal course of events, we would expect asset valuations to reduce
each period due to the finite nature of the cash flows.
VCT Tax Benefit for Shareholders
To obtain VCT tax reliefs on subscriptions up to GBP200,000 per annum, a
VCT investor must be a 'qualifying' individual over the age of 18 with
UK taxable income. The tax reliefs for subscriptions since 6 April 2006
are:
-- Income tax relief of 30% on subscription for new shares, which is forfeit
by shareholders if the shares are not held for more than five years;
-- VCT dividends (including capital distributions of realised gains on
investments) are not subject to income tax in the hands of qualifying
holders; and
-- Capital gains on disposal of VCT shares are tax-free, whenever the
disposal occurs.
Venture Capital Trust Status
Foresight Solar & Infrastructure VCT plc is approved by HMRC as a
venture capital trust (VCT) in accordance with Part 6 of the Income Tax
Act 2007. It is intended that the business of the Company be carried on
so as to maintain its VCT status.
The Directors have managed, and continue to manage, the business in
order to comply with the legislation applicable to VCTs. The Board has
appointed RW Blears LLP to monitor and provide continuing advice in
respect of the Company's compliance with applicable VCT legislation and
regulation. As at 30 June 2016 the Company had 74.68% (2015: 81.0%) of
its funds in such VCT qualifying holdings.
Future Strategy
The Company will limit its future investment in new energy and
infrastructure related projects for the D share class as well as
optimising the performance and returns from the existing portfolio of
solar and infrastructure assets. This will enable the Board to deliver
an attractive exit for those investors who elect to redeem their
investments after the five-year holding period, whilst targeting an
attractive dividend yield for those Shareholders who elect to remain
invested in the Company for the longer term.
David Hurst-Brown
Director
28 October 2016
Manager's Report
UK Regulatory and Market Changes
UK assets account for 85% of the Company's total investment valuation
and, while there have been certain specific adjustments to certain
mechanisms within the national regulatory framework, the Investment
Manager believes that the UK Government remains committed to the
development of renewable energy as part of its long-term objective of
reducing the carbon intensity of the UK economy.
Following the consultations in July 2015, the Department of Energy and
Climate Change ("DECC") announced in December 2015 it would close the
Renewable Obligation Scheme ("RO Scheme") to new solar PV of 5MW and
below from 1 April 2016 onwards, subject to certain grace periods. This
was driven by the significant increase in the installed capacity of UK
solar in recent years, with the Solar Trade Association estimating that
UK solar capacity surpassed 10GW at the end of March 2016. DECC had
previously flagged that it would continue to monitor the deployment of
new installations and the subsequent impact this would have on the Levy
Control Framework ("LCF"). It should be noted that the changes to the RO
Scheme described above had no impact on the existing installed capacity
of the UK component of the Company's portfolio.
In July 2015, DECC also announced the postponement of the 2015 auction
under the Contracts for Difference ("CfD") scheme for large renewables
projects. In November 2015, the mechanism was suspended indefinitely
amidst a purported overspend within the LCF and in February 2016, the
then Energy Secretary Amber Rudd confirmed that there are currently no
plans for large-scale solar to be handed future contracts under the CfD
mechanism.
On 23 June 2016, the UK Government held a referendum in which the
majority of the electorate voting indicated a preference for the UK to
leave the European Union. Whilst unexpected, we expect the result to
have limited, if any, impact on the Company. The fundamentals of the UK
solar sector are not materially underpinned by any EU regulation or
legislation. The Renewable Obligation and the Levy Control Framework are
enshrined in the Law of England and Wales and do not require
transposition from EU Directives or other legislation. Asset revenue
streams are principally driven by UK Government subsidies and UK
wholesale power prices and all of the Company's UK operational costs are
denominated in Pound Sterling. The main costs to the portfolio are land
leases and O&M contracts which have been secured under long term
contracts. Financing costs also have a limited exposure to interest rate
movements.
In July 2016, it was announced that DECC would be dissolved and the
department's functions would be transferred to the new Department of
Business, Energy and Industrial Strategy a combination of DECC and the
Department of Business, Innovation and Skills. The new department will
be led by the Rt. Hon. Greg Clark, the former Communities Secretary who
has also held the position of shadow Energy Secretary in the past. The
appointment has been broadly well-received by those in the renewable
industry, as the Minister has previously been vocal of his support for
renewable energy and the green economy. While the impact this will have
on the renewable energy sector is at this point unclear, there are
several positives that may result from the decision such as the ability
for more co-ordinated policy decisions.
Following these announcements, the Investment Manager does not
anticipate any further regulatory changes that may impact the UK's
renewable initiatives or the Government's commitment to the 2008 Climate
Change Act targets. Indeed, on 30 June 2016 the Government approved the
Fifth Carbon Budget demonstrating its continued commitment to the
development of renewable and low carbon energy supply. This commitment
is set within the context of further strengthening of the international
consensus regarding the requirement to implement climate change
mitigation actions, as evidenced by the ratification of the 2015 Paris
Agreement on reducing greenhouse gas emissions by the US and China on 3
September 2016.
Power Prices
UK power prices continued a downward trend throughout the year, driven
in part by lower gas prices due to stockpiles of natural gas and above
average winter temperatures during the fourth quarter of 2015. The
market experienced a recovery in spot prices in Q2 2016 supported by an
increase in gas prices with average power prices increasing to levels
above GBP40/MWh by the end of the quarter. Despite this recovery, the
Company has revised downwards its forecast power prices by an average of
c. 11% over the year for valuation purposes, in line with the most
recently published advisor reports.
The Company's power curve assumptions are solely based on a blended
average of the forecasts provided by a number of third party consultants
and the Investment Manager believes that the recent power price declines
have been appropriately reflected. It should be noted that the Company's
forecasts continue to assume an increase in power prices in real terms
over the medium to long-term of 2.0% per annum.
It should also be noted that although the Investment Manager
incorporates the latest curves published by its third party consultants
in the Company's NAV calculations, the reports are published relatively
infrequently and tend to display a lag to actual market developments. As
such, the recent recovery in spot prices has not yet been reflected in
the Company's NAV.
The impact of falling power prices can be mitigated, to a certain extent,
by the fact that c. 78% of portfolio revenues received are from fixed
electricity price contracts, subsidies and associated green benefits
which are grandfathered and index-linked.
Portfolio Optimisation
The Investment Manager has run a number of concurrent processes to
maximise the free cash being generated by the portfolio. As well as
increasing the technical efficiency of the sites, the asset management
team has been able to significantly improve the commercial terms across
a number of contracts.
Power Purchase Agreements
To date, the Company has adopted a Power Purchase Agreement ("PPA")
strategy that seeks to optimise revenues from power generated, whilst
maintaining the flexibility to manage the portfolio appropriately.
During the year the Investment Manager used the significant scale of its
wider portfolio (including assets not owned by the Company) in order to
optimise the PPA and commercial terms of the Company's portfolio.
During the year the Company entered into new PPA contracts and secured
an increase in passthrough rates for the sale of both ROCs and
electricity against the original contracts, resulting in an increase of
3% for ROC passthrough rates and 4.6% for electricity sales passthrough
rates.
The Company will benefit from further upward movements if power prices
continue to increase as forecast by independent consultants. At the same
time, the existing PPA contracts allow the Investment Manager to fix the
price at any time by giving notice to the offtaker, thereby mitigating
the risk of revenue reductions from significant downward movements in
prices. It should be noted that the PPAs also provide the flexibility to
incorporate new technologies such as batteries and storage, which may
provide potential upside in the future.
Project Insurance
Over the past two years the like for-like cost of insurance across the
portfolio has fallen by over 50%. This reduction in cost has been
achieved at the same time as improving the terms of cover such as
lowering the level of claim deductibles. The Investment Manager has
fixed the current price for a three-year period, subject to certain loss
limits not being breached.
O&M Service
O&M costs are expected to decrease in the short and medium term as the
increase in total UK solar installed capacity allows for market
consolidation and economies of scale. The Investment Manager aims to
improve cost efficiency by renegotiating the majority of the existing
O&M agreements when current agreements expire. This will allow the
Company to secure competitive renewal terms while ensuring the standard
of work expected by the Investment Manager is met, either by entering
new contracts with the existing O&M contractor or by appointing a new
contractor.
As part of this process, Brighter Green Engineering ("BGE"), a
subsidiary of Foresight Group, was appointed as O&M contractor to the
FiT sites in Q2 2016. This has resulted in a decrease in annual fees and
an uplift in asset performance since the company took over the sites,
driven by the company's technical expertise and market leading incident
response times.
Further to the reduction in cost, the new contract provides for a
comprehensive scope of work in excess of that typically offered by
competitors, including:
-- Full turnkey scope including, but not limited to, unlimited corrective
maintenance (with key components replaced), response times, high-voltage
works, plant security and monitoring;
-- Frequent module and panel cleaning;
-- Annual thermographic study of all modules, with further investigation
and/or laboratory testing in case of malfunctions as required in
preparation of claims;
-- Annual voltage and current testing of a photovoltaic modules sample in
order to confirm that module output power is in line with manufacturer
technical specifications;
-- Assistance with laboratory testing of up to 50 modules annually
(including demounting, mounting, transport);
-- Annual testing of transformer oil and two-yearly testing of partial
discharge activity on all switchgear. These activities are typically only
recommended by the equipment manufacturers but the Investment Manager has
included it in the scope as mandatory, recognising the importance of
high-voltage equipment on site, regarding their replacement cost in case
of catastrophic faults, and particularly the associated plant downtime
and costs; and
-- Full management of Landscape and Environmental Management Plans, ensuring
compliance with planning conditions and collaborations with ecologists to
enhance biodiversity.
We expect similar efficiencies to be secured for other assets in the
portfolio once the existing O&M contractual terms reach either the end
of their two year guaranteed performance period, when applicable, or
final contract term, further reducing costs to the Company.
Portfolio Performance - Ordinary Shares UK Assets
The UK assets account for 85% of the total investment valuation.
Although the technical efficiency of the plants was above the
expectations of the investment manager total production was slightly
below long term expectations due to solar irradiation being 4.1% below
expectations over the year.
The principal UK assets in the Ordinary Shares fund are as follows:
-- Four plants in Kent, Somerset and Wiltshire which all possess index
linked Feed-in Tariffs (FiTs) over 25 years. These assets have a
favorable yield profile in relation to later ROC-based projects and
benefit from the low cost of the bond re-financing, executed in 2013; and
-- the Turweston 16.45 MW project in Buckinghamshire which benefits from 1.4
ROCs.
Irradiation expectations are formed at the point of acquisition and
validated by independent technical advisers. The irradiation variance
for the period represents short-term volatility levels which would not
be considered atypical, though the irradiation forecasts produced at the
time of acquisition are prepared based on a normal probability
distribution of long term historical annual irradiation data and don't
incorporate such intra-period volatility. For reference, the irradiance
variance verified for the year to June 2015 were 6.6% above forecast.
European Assets
Production from the Italian and Spanish assets was in line with
expectations of the Investment Manager. While irradiation levels across
the European assets mirrored the low levels seen in the UK strong
technical performance more than compensated for the lower levels of
solar resources available.
Sale of La Castilleja
The Investment Manager has explored the possibility of both refinancing
and selling the La Castilleja investment. Given that the proposed
restructuring terms were unattractive, and also required a further
equity injection, a sale was pursued. Following a tender exercise, the
sale exchanged after the period end. The year-end valuation in these
accounts represents the proposed sale price.
Although the agreed sale price was at a discount to the initial equity
investment, the Investment Manager believes it represented good value
for investors under the strained circumstances especially considering
future political uncertainty.
Concurrently, in order to allow the Fund to recover the damages created
from a change-in-law, the Investment Manager has been pursuing
arbitration against the Spanish government for the breach of fair and
equitable treatment of investors provided under the Energy Charter
Treaty ("ECT"), to which Spain is a party. A litigation funding
agreement is in place to limit the cost risks of this litigation.
This will be a lengthy process but will be unaffected by the sale.
Refinancing of Italian Assets
In Q1 2016 the Investment Manager refinanced existing debt across the
Italian investments, reducing the cost of debt and restoring cash
distributions following a period of political uncertainty. Alongside
further asset optimisation and consolidation the refinancing has led to
an increase in the asset valuations.
Exit
The fifth anniversary of the final closing of the original public
offering of the Ordinary Shares will occur in November of this year.
During the year the Investment Manager began exploring options for the
generation of liquidity to shareholders through a refinancing or sale of
all or part of the Ordinary Share portfolio. The Board has included with
the Annual Report & Accounts a letter to shareholders providing an
update in this regard.
Portfolio Performance - C Shares
Mirroring the performance of the Ordinary shares, the technical
efficiency of the plants was above the expectations of the investment
manager but total production was below long term expectations due to
solar irradiation being 5.4% below expectations over the year.
Irradiation levels are measured by site specific monitoring equipment
and so local weather patterns can vary between portfolios.
The C Shares fund has acquired equity ownership of the 3.6MW portfolio
located in Lancaster, California, a region which benefits from some of
the highest levels of irradiance in the world. To date the project has
performed above base case projections. The C Shares fund invested c.
GBP1 million in the project in September 2015 via Skibo Solar III
Limited.
Following the acquisition of the 5MW Marchington plant the share class
is now fully deployed. The site, located in Staffordshire, was connected
to the grid in March 2016.
The Investment Manager is currently investigating refinancing options
for short-term debt in respect of one asset within portfolio of this
share class, being the 6 MW Saron project; this is being undertaken as
part of a wider refinancing exercise of several solar portfolios
(including assets not owned by the Company).
Risk Management
Reliance is placed on the internal systems and controls of the
Investment Manager and external service providers such as the
Administrator to effectively manage risk across the portfolio. Foresight
has a comprehensive Risk Management framework in place which is reviewed
on a regular basis by the Directors.
Environmental Social and Governance Considerations
The Company believes Environmental, Social and Governance ("ESG")
considerations play an important part in delivering responsible and
sustainable growth for the long term. These factors have been integrated
into all stages of the investment process, and are actively supported by
all involved, regardless of seniority. With that in mind, the Company
has developed its Responsible Investment Framework to provide a suitable
operational framework in matters related to the investment process, such
that ESG has become part of the normal day-to-day operation.
Health and Safety
There were no health and safety incidents reported during the period.
The Investment Manager has appointed a health and safety consultant to
review all portfolio assets to ensure they not only meet, but exceed,
industry and legal standards.
Environmental
Further to the environmental advantages of large scale renewable energy,
each investment is closely scrutinised for localised environmental
impact. Where improvements can be made, the Company will work with
planning and local authorities to minimise visual and auditory impact of
sites.
Biodiversity Assessments
The Investment Manager is actively exploring ways of maximising the
biodiversity and wildlife potential for all of its UK solar assets. As
such, the Investment Manager has prepared a series of site specific
biodiversity enhancement and management plans to secure long-term gains
for wildlife such as:
-- Management of grassland areas within the security fencing;
-- Management of hedgerows and associated hedge banks;
-- Management of field boundaries between security fencing and hedgerows;
-- Management of woodland blocks;
-- Installation of Herptile/Reptile hibernacula;
-- Installation of boxes for bats, owls and kestrels; and
-- Installation of bee hives.
As part of our EPC contracts, contractors are obliged to design plants
in such a way that they allow for sheep grazing.
Social
The Investment Manager has actively sought to engage with the local
communities of the solar assets. Open days have been arranged for local
residents, businesses and schools to visit the sites where they can
learn more about the benefits of solar and the need for more stable
renewable policy support.
Outlook
Having focused on the consolidation and optimisation of the portfolio
the Investment Manager has leveraged its experience in the sector to
implement several value-enhancing strategies to the benefit of
Shareholders.
As one of the largest solar asset managers in the UK, with over 620MW of
UK solar assets under management, the Investment Manager is uniquely
positioned to optimise these assets driving value for investors though
increasing exit valuations.
The market dynamics will improve further if the recent recovery in UK
wholesale power market continues as forecast. We believe the Company is
well positioned through its floating PPA exposure to benefit from any
additional upward movements resulting in increased revenue generation,
further underpinning returns to Shareholders.
Whilst we do not expect the result of the EU referendum in June and the
resulting dissolution of DECC to have an immediate impact on the Fund,
we will continue to monitor developments carefully, and report to
investors in due course.
Over the next twelve months, the Investment Manager will continue to
focus on maximising the operational performance of the existing
portfolio, whilst looking to maximise value on any exit.
Dan Wells
Partner
28 October 2016
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and the
financial statements, in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for
each financial year. Under that law the Directors have elected to
prepare the financial statements in accordance with UK Accounting
Standards and applicable law (UK Generally Accepted Accounting Practice)
including FRS 102, the Financial Reporting Standard applicable in the UK
and Republic of Ireland.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Company and of the profit or loss of the
Company for that period.
In preparing these financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the
financial statements; and
- prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Company's transactions and
disclose with reasonable accuracy at any time the financial position of
the Company and enable them to ensure that its financial statements
comply with the Companies Act 2006. They have general responsibility for
taking such steps as are reasonably open to them to safeguard the assets
of the Company and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible
for preparing a Directors' Report, Directors' Remuneration Report and
Corporate Governance Statement that comply with that law and those
regulations.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website
(which is delegated to Foresight Group and incorporated into their
website). Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation in
other jurisdictions.
We confirm that to the best of our knowledge:
- the financial statements, prepared in accordance with the applicable
set of accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company;
- the Annual Report includes a fair review of the development and
performance of the business and the position of the Company together
with a description of the principal risks and uncertainties that the
Company faces; and
- the report and accounts, taken as a whole, are fair, balanced, and
understandable and provide the necessary information for the
shareholders to assess the company's performance, business model and
strategy.
On behalf of the Board
David Hurst-Brown
Chairman
28 October 2016
Unaudited Non-Statutory Analysis of the Share Classes
Income
Statements
for the year
ended 30 June
2016
Ordinary Shares Fund C Shares Fund D Shares Fund
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment
holding
gains/losses - 1,372 1,372 - (569) (569) - - -
Income 827 - 827 140 - 140 6 - 6
Investment
management
fees (153) (2,730) (2,883) (47) (141) (188) (2) (5) (7)
Other expenses (343) - (343) (131) - (131) (10) - (10)
Return/(loss)
on ordinary
activities
before
taxation 331 (1,358) (1,027) (38) (710) (748) (6) (5) (11)
Taxation (66) 66 - - - - - - -
Return/(loss)
on ordinary
activities
after
taxation 265 (1,292) (1,027) (38) (710) (748) (6) (5) (11)
Return/(loss)
per share 0.7p (3.4)p (2.7)p (0.3)p (5.7)p (6.0)p (0.3)p (0.3)p (0.6)p
Balance Sheets
at 30 June 2016
Ordinary
Shares Fund C Shares Fund D Shares Fund
GBP'000 GBP'000 GBP'000
Fixed assets
Investments held at fair
value through profit or
loss 40,121 9,924 1,620
Current assets
Debtors 408 191 2,015
Money market securities
and other deposits 9 - -
Cash 1,867 4 -
2,284 195 2,015
Creditors
Amounts falling due
within one year (3,852) (52) (1,649)
Net current
(liabilities)/assets (1,568) 143 366
Net assets 38,553 10,067 1,986
Capital and reserves
Called-up share capital 383 125 20
Share premium account - 1,572 1,977
Capital redemption
reserve 2 - -
Profit and loss account 38,168 8,370 (11)
Equity shareholders'
funds 38,553 10,067 1,986
Number of shares in
issue 38,290,862 12,509,245 1,997,691
Net asset value per 100.7p 80.5p 99.4p
share
At 30 June 2016 there was an inter-share debtor/creditor of GBP1,574,000
which has been eliminated on aggregation.
Reconciliations of Movements in Shareholders' Funds
for the year ended 30 June 2016
Share Capital Profit
Called-up premium redemption and loss
share capital account reserve account Total
Ordinary Shares Fund GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 July 2015 383 - 2 41,726 42,111
Expenses in relation to
prior year share
issues - - - (206) (206)
Repurchase of shares - - - (27) (27)
Dividends - - - (2,298) (2,298)
Loss for the year - - - (1,027) (1,027)
As at 30 June 2016 383 - 2 38,168 38,553
Share Capital Profit
Called-up premium redemption and loss
share capital account reserve account Total
C Shares Fund GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 July 2015 125 1,609 - 9,743 11,477
Expenses in relation to
prior year share
issues - (37) - - (37)
Dividends - - - (625) (625)
Loss for the year - - - (748) (748)
As at 30 June 2016 125 1,572 - 8,370 10,067
Share Capital Profit
Called-up premium redemption and loss
share capital account reserve account Total
D Shares Fund GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 July 2015 - - - - -
Share issue in the year 20 2,015 - - 2,035
Expenses in relation to
share issues - (38) - - (38)
Loss for the year - - - (11) (11)
As at 30 June 2016 20 1,977 - (11) 1,986
Audited Income Statement
for the year ended 30 June 2016
Year ended Year ended
30 June 2016 30 June 2015
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment holding
gains - 803 803 - 5,525 5,525
Income 973 - 973 1,155 - 1,155
Investment
management fees (202) (2,876) (3,078) (205) (616) (821)
Gains on the value
of derivatives - - - - 154 154
Other expenses (484) - (484) (433) - (433)
Return/(Loss) on
ordinary
activities before
taxation 287 (2,073) (1,786) 517 5,063 5,580
Taxation (66) 66 - (107) 107 -
Return/(Loss) on
ordinary
activities after
taxation 221 (2,007) (1,786) 410 5,170 5,580
Return/(Loss) per
share:
Ordinary Share 0.7p (3.4)p (2.7)p 1.0p 13.9p 14.9p
C Share (0.3)p (5.7)p (6.0)p 0.2p (1.2)p (1.0)p
D Share (0.3)p (0.3)p (0.6)p N/A N/A N/A
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
Year ended 30 June 2016 capital GBP'000 account GBP'000 reserve GBP'000 account GBP'000 Total GBP'000
As at 1 July 2015 508 1,609 2 51,469 53,588
Share issue in the year 20 2,015 - - 2,035
Expenses in relation to
prior year share issues - (75) - (206) (281)
Repurchase of shares - - - (27) (27)
Dividends - - - (2,923) (2,923)
Loss for the year - - - (1,786) (1,786)
As at 30 June 2016 528 3,549 2 46,527 50,606
Called-up Share Capital Profit
share premium redemption and loss
Year ended 30 June 2015 capital GBP'000 account GBP'000 reserve GBP'000 account GBP'000 Total GBP'000
As at 1 July 2014 508 12,336 2 38,466 51,312
Expenses in relation to
prior year share issues - (27) - (336) (363)
Repurchase of shares - - - (16) (16)
Cancellation of share
premium - (10,700) - 10,700 -
Dividends - - - (2,925) (2,925)
Loss for the year - - - 5,580 5,580
As at 30 June 2015 508 1,609 2 51,469 53,588
Audited Balance Sheet
at 30 June 2016
Registered Number: 07289280
As at As at
30 June 30 June
2016 2015
GBP'000 GBP'000
Fixed assets
Investments held at fair value through profit or loss 51,665 51,705
Current assets
Debtors 1,040 720
Money market securities and other deposits 9 9
Cash 1,871 1,221
2,920 1,950
Creditors
Amounts falling due within one year (3,979) (67)
Net current (liabilities)/assets (1,059) 1,883
Net assets 50,606 53,588
Capital and reserves
Called-up share capital 528 508
Share premium account 3,549 1,609
Capital redemption reserve 2 2
Profit and loss account 46,527 51,469
Equity shareholders' funds 50,606 53,588
Net asset value per share
Ordinary Share 100.7p 109.9p
C Share 80.5p 91.7p
D Share 99.4p N/A
Audited Cash Flow Statement
for the year ended 30 June 2016
Year Year
ended ended
30 June 30 June
2016 2015
GBP'000 GBP'000
Cash flow from operating activities
Investment income received 1,098 686
Deposit and similar interest received 1 1
Investment management fees paid (808) (818)
Secretarial fees paid (170) (167)
Other cash payments (549) (289)
Net cash outflow from operating activities and returns
on investment (428) (587)
Returns on investment and servicing of finance
Purchase of investments* (1,361) (1,808)
Net proceeds on sale of investments 3,824 4,071
New proceeds on sale of financial assets - 662
Net capital inflow from financial investment 2,463 2,925
Equity dividends paid (2,923) (2,925)
Financing
Proceeds of fund raising** 1,642 -
Expenses of fund raising (61) (463)
Repurchase of own shares*** (43) (36)
1,538 (499)
Increase/(decrease) in cash 650 (1,086)
Reconciliation of net cash flow to movement in net
funds
Increase/(decrease) in cash and cash equivalents for
the year 650 (1,086)
Net cash and cash equivalents at start of year 1,230 2,316
Net cash and cash equivalents at end of year 1,880 1,230
Analysis of changes in net cash
At At
1 July Cash 30 June
2015 flow 2016
GBP'000 GBP'000 GBP'000
Cash and cash equivalents**** 1,230 650 1,880
* Cash of GBP1,620,000 for the investment in Shaftesbury Solar I limited
is held in the Company's bank account and is therefore not included in
the Company's cashflows
** This does not include GBP377,000 funds raised which remain receivable
at 30 June 2016
*** GBP16,000 relates to the repurchase of own shares during the year
ended 30 June 2015 and which were in creditors at that date.
**** including money market securities and other deposits
Notes to the accounts
1. The audited Annual Financial Report has been prepared on the basis of
accounting policies set out in the statutory accounts of the Company for
the year ended 30 June 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.
2. These are not statutory accounts in accordance with S436 of the
Companies Act 2006. The full audited accounts for the year ended 30 June
2016, which were unqualified and did not contain any statements under
S498(2) or S498(3) of Companies Act 2006, will be lodged with the
Registrar of Companies. Statutory accounts for the year ended 30 June
2016 including an unqualified audit report and containing no statements
under the Companies Act 2006 will be delivered to the Registrar of
Companies in due course.
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 GBP38,553,000 (2015: GBP42,111,000) and on 38,290,862 Ordinary
Shares (2015: 38,316,956), being the number of Ordinary Shares in issue
at that date.
Net asset value per C Share is based on net assets at the year end of
GBP10,067,000 (2015: GBP11,477,000) and on 12,509,245 C Shares (2015:
12,509,245), being the number of C Shares in issue at that date.
Net asset value per D Share is based on net assets at the year end of
GBP1,986,000 (2015: GBPN/A) and on 1,997,691 D Shares (2015: N/A), being
the number of D Shares in issue at that date.
5. Return per share
Year ended 30 June 2016 Year ended 30 June 2015
Ordinary Ordinary
Shares C Shares D Shares Shares C Shares D Shares
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Total (loss)/return after taxation (1,027) (748) (11) 5,708 (128) N/A
Total (loss)/return per share (note a) (2.7)p (6.0)p (0.6)p 14.9p (1.0)p N/A
Revenue return/(loss) from ordinary activities after
taxation 265 (38) (6) 391 19 N/A
Revenue return/(loss) per share (note b) 0.7p (0.3)p (0.3)p 1.0p 0.2p N/A
Capital (loss)/return from ordinary activities after
taxation (1,292) (710) (5) 5,317 (147) N/A
Capital (loss)/return per share (note c) (3.4)p (5.7)p (0.3)p 13.9p (1.2)p N/A
Weighted average number of shares in issue during
the year 38,302,982 12,509,245 1,765,163 38,331,915 12,509,245 N/A
Notes:
a) Total return per share is total return after taxation divided by the
weighted average number of shares in issue during the year.
b) Revenue return per share is revenue return after taxation divided by
the weighted average number of shares in issue during the year.
c) Capital return per share is capital return after taxation divided by
the weighted average number of shares in issue during the year.
6. The Annual General Meeting will be held at 1.00pm on 8 December
2016 at the offices of Foresight Group LLP, The Shard, 32 London Bridge
Street, London, SE1 9SG.
7. Income
Year ended Year ended
30 June 30 June
2016 2015
GBP'000 GBP'000
Loan stock interest 972 1,153
Bank interest 1 2
973 1,155
8. Investments held at fair value through profit or loss
2016 2015
GBP'000 GBP'000
Unquoted investments 51,665 51,705
51,665 51,705
Unquoted & Total
Company GBP'000
Book cost as at 1 July 2015 39,373
Opening investment holding gains 12,332
Valuation at 1 July 2015 51,705
Movements in the year:
Purchases at cost 2,981
Disposal proceeds (3,824)
Investment holding gains 803
Valuation at 30 June 2016 51,665
Book cost at 30 June 2016 38,530
Closing investment holding gains 13,135
Valuation at 30 June 2016 51,665
Unquoted & Total
Ordinary Shares Fund GBP'000
Book cost as at 1 July 2015 29,373
Opening investment holding gains 12,324
Valuation at 1 July 2015 41,697
Movements in the year:
Purchases at cost 411
Disposal proceeds (3,359)
Investment holding gains 1,372
Valuation at 30 June 2016 40,121
Book cost at 30 June 2016 26,425
Closing investment holding gains 13,696
Valuation at 30 June 2016 40,121
Unquoted & Total
C Shares Fund GBP'000
Book cost as at 1 July 2015 10,000
Opening investment holding gains 8
Valuation at 1 July 2015 10,008
Movements in the year:
Purchases at cost 950
Disposal proceeds (465)
Investment holding losses (569)
Valuation at 30 June 2016 9,924
Book cost at 30 June 2016 10,485
Closing investment holding losses (561)
Valuation at 30 June 2016 9,924
Unquoted & Total
D Shares Fund GBP'000
Book cost as at 1 July 2015 -
Opening investment holding gains -
Valuation at 1 July 2015 -
Movements in the year:
Purchases at cost 1,620
Disposal proceeds -
Investment holding gains -
Valuation at 30 June 2016 1,620
Book cost at 30 June 2016 1,620
Closing investment holding gains -
Valuation at 30 June 2016 1,620
9. Transactions with the manager
Foresight Group, which acts as investment manager to the Company in
respect of its venture capital investments earned fees of GBP808,000 in
the year (2015: GBP821,000).
Foresight Fund Managers Limited provides administration services to the
Company, and received fees of GBP170,000 during the year (2015:
GBP167,000). The annual administration and accounting fee (which is
payable together with any applicable VAT) is 0.3% of the net funds
raised by the offer (subject to a minimum index-linked fee of GBP60,000
for each of the Ordinary, C Share and D Share funds).
At the balance sheet date there was GBP3,000 due from Foresight Group
(2015: GBP3,000 due to Foresight Group).
Foresight Group is responsible for external costs such as legal and
accounting fees, incurred on transactions that do not proceed to
completion ('abort expenses'). In line with industry practice, Foresight
Group retain the right to charge arrangement and syndication fees and
Directors' or monitoring fees ('deal fees') to companies in which the
Company invests. From this, Foresight Group received from investee
companies arrangement fees of GBP49,000 in the year (2015: GBP579,000).
END
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq 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 Solar & Infrastructure VCT plc via Globenewswire
http://www.foresightgroup.eu/
(END) Dow Jones Newswires
October 28, 2016 10:04 ET (14:04 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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