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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Acuity Vct 3 | LSE:AQT3 | London | Ordinary Share | GB00B0LHSD82 | 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% | 14.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMAQT3
ACUITY VCT 3 PLC
Summary
* Net asset value per Ordinary Share as at 31 March 2011 decreased to 18.6p
from 61.9p as at 30 September 2010.
* The Company made six follow-on investments totalling GBP2,325,000 during the
six months under review: The Fin Machine Company ( GBP750,000), Loseley Dairy
Ice Cream ( GBP650,000), Red Reef Media ( GBP350,000), Munro Global ( GBP300,000),
Future Noise ( GBP150,000) and Brand Acquisitions ( GBP125,000).
* Cash proceeds of GBP2,243,883 realised from three investments: Amber Taverns
( GBP912,710), Mount Engineering ( GBP889,114) and Electra Private Equity
( GBP442,059).
* Change of Investment Manager to Foresight Group CI Limited.
+-------------------------------------------+----------------+-----------------+
| |Six months ended| Year ended|
| | 31 March 2011|30 September 2010|
+-------------------------------------------+----------------+-----------------+
|Net asset value per Ordinary Share | 18.6p| 61.9p|
+-------------------------------------------+----------------+-----------------+
|Net asset value per Ordinary Share | | |
|(including all dividends paid since | 23.1p| 66.4p|
|inception of the Company) | | |
+-------------------------------------------+----------------+-----------------+
|Revenue return per Ordinary Share | (4.3)p| (1.0)p|
+-------------------------------------------+----------------+-----------------+
|Total return per Ordinary Share | (43.4)p| (23.2)p|
+-------------------------------------------+----------------+-----------------+
Chairman's Statement
Dear Shareholder,
Your Company has experienced significant changes since 31 January 2011, the date
when the audited accounts for the financial year ended 30 September 2010 were
published. I consider it important to highlight these matters and so this Half-
Yearly Financial Report is much longer than usual, incorporating the following
statement from myself and also a detailed report from Foresight Group
('Foresight'), your Company's new investment manager.
Reduction in Net Asset Value, Change of Manager and Portfolio Review
On 1 April 2011, an RNS announcement was released highlighting that the
Company's net asset value was expected to be substantially lower than previously
reported following Foresight's initial review of the investment portfolio and
the Company's financial position. I regret to have to inform you that, for the
reasons explained more fully below, your Company's net asset value has fallen by
70% from GBP21.3m (61.9p per Ordinary Share) as at 30 September 2010 to GBP6.4m
(18.6p per Ordinary Share) as at 31 March 2011.
These particularly disappointing results reflect the poor performance of the
former investment manager. Although providing no consolation for shareholders,
this outcome clearly vindicates the Board's decision in October 2010, when the
net asset value fell significantly, to replace the former investment manager,
Acuity Capital Management Limited ('Acuity'), through a competitive selection
process. It was decided just before Christmas last year by your Board and the
Board of Acuity Growth VCT plc (now renamed Foresight 5 VCT plc ('Foresight
5')) to appoint Foresight as the new investment manager. There was a need to co-
ordinate the change of investment manager between the two VCTs and a
considerable delay occurred while a termination agreement was negotiated by the
Board of Foresight 5. Foresight was subsequently appointed as the new investment
manager by the Board of Foresight 5 on 24 February 2011 and by your Board on 1
April 2011. Your Board decided to delay the appointment of Foresight until after
the Company's AGM on 24 March 2011, by which time Foresight had completed their
initial investigation on behalf of Foresight 5 which enabled a substantially
lower termination fee to be negotiated with Acuity.
As explained more fully in their report below, Foresight found that your Company
had been left with insufficient funds to meet the urgent and substantial funding
requirements of several investee companies which had built up during the
extended appointment process. This was despite GBP2.2m being received in the six
months ended 31 March 2011 from the successful sales of the investments in Amber
Taverns ( GBP0.9m) and Mount Engineering ( GBP0.9m) and the sale of over 27,000
Electra Private Equity shares ( GBP0.4m). In the six months ended 31 March 2011
before Foresight's eventual appointment as the new investment manager, a further
GBP2.3m was invested by the former investment manager to support existing
portfolio companies. The largest of these investments were into Loseley Dairy
( GBP0.65m), Red Reef Media ( GBP0.35m) and Munro Global ( GBP0.3m). Based on Foresight's
overall assessment of the cash positions of Acuity 3 and Foresight 5 and, inter
alia, the cash requirements, prospects, risks, potential returns and exit timing
for each investee company, it was decided to no longer meet requests for further
funding from Loseley Dairy, Munro Global, Brand Acquisitions and Future Noise.
The first three of these companies have subsequently appointed administrators or
are being liquidated and the investments in all four companies have been written
down to nil.
A combination of the continued disappointing performance of the portfolio, poor
investment strategy and management by the previous investment manager and the
use of different valuation methodologies proposed by Foresight and accepted by
the Board in light of currently available information has ultimately resulted in
the above fall in net asset value. Reductions have unfortunately been necessary
in the valuations of all unquoted investee companies. Of the overall reduction
of GBP14.9m, 39% related to write-offs following decisions by Foresight not to
continue supporting the loss making businesses described above and 61% resulted
from applying different valuation methodologies in the light of currently
available information. Major reductions in net asset values from those values as
at 30 September 2010 have occurred in the following investments: Loseley Dairy
( GBP2.1m); Brand Acquisitions ( GBP1.7m); Future Noise ( GBP0.8m) and Munro Global
( GBP1.2m), all of which have been written down to nil. Further related reductions
totalling GBP1.2m have had to be made against irrecoverable accrued interest of
which GBP0.5m was in respect of Fin Machine. A reduction of GBP3.2m has been made
against the investment in Fin Machine which experienced continuing liquidity
problems. These have been addressed by additional investment and further
strengthening of the management team through new appointments and changes
instigated by Foresight. Other substantial reductions in valuations have been
made against the investments in Defaqto ( GBP0.7m) and Red Reef Media ( GBP1.5m) as a
result of the application of different valuation methodologies referred to
above. Foresight has reviewed the strategy for each investee company with the
Board and further details on the investment portfolio are contained within the
Investment Manager's Report.
Corporate Strategy
The Board is currently reviewing its capital raising and strategic options,
which may include a pre-emptive shareholder offer. Foresight has proposed a pre-
emptive shareholder offer of ten per cent of the issued share capital, but your
Board does not think it appropriate to ask shareholders for further funds when
there is no immediate cash requirement and funds raised thereby would only be
modest. Any such fund raising will be considered as part of the Board's
strategic review. The review of strategic options will include evaluating
potential merger options for the Company.
The Directors have agreed to defer payment of their fees during this difficult
time, until in the view of your Board, your Company's cash position has
improved. Additionally, Acuity has agreed to defer the fees relating to their
termination until 1 October 2011 when payments will recommence on a quarterly
basis with a final payment on 1 January 2012.
Until the performance of the portfolio can be improved, there is no realistic
prospect of either dividends being paid or share buy backs being implemented in
the foreseeable future.
Outlook
As requested by your Board, Foresight has now completed its review of the
Company and each of the investments in the portfolio. Foresight has highlighted
to the Board that the reduction in net asset value has been compounded in the
case of a number of portfolio companies by the impact of shareholder and other
debt within the capital structure of these investee companies. This has led to a
disproportionately large fall in the value of certain of Acuity 3's investments
when compared with the fall in the overall value of these companies. The impact
of shareholder and other debt also has the potential to compound value increases
if the trading and prospects of the portfolio companies improve and bank debt is
repaid. Foresight believes that the investment portfolio includes a number of
companies which have potential over time to create value for shareholders
significantly in excess of their present valuations which would result in your
Company's net asset value increasing over time.
Stuart Stradling
Chairman
1 June 2011
Investment Manager's Report
Introduction
This is Foresight Group's ('Foresight') first report since being appointed as
the new investment manager of Acuity VCT 3 Plc ('Acuity 3' or the 'Company') on
1 April 2011. Foresight was also appointed as the new investment manager of
Acuity 3's closely related sister VCT, Acuity Growth VCT Plc (renamed Foresight
5 VCT Plc ('Foresight 5'), on 24 February 2011. In both cases Foresight replaced
the former investment manager, Acuity Capital Management Ltd ('Acuity').
Foresight Fund Managers Ltd has similarly replaced Acuity as Company Secretary
of both VCTs with effect from these dates. This Investment Manager's Report is
rather more extensive than normal, as there is much to cover.
The investment portfolio is reviewed by individual investment in detail below.
At 31 March 2011, the Acuity 3 portfolio principally comprised nine unquoted
investments, the majority of the value of the portfolio. The portfolios of
Acuity 3 and Foresight 5 largely overlap.
Reductions in Net Asset Values
In summary, but as explained in more detail below, at the time of Foresight's
appointment, Acuity 3 was left with insufficient funds to support the continuing
funding requirements of the existing portfolio while the quality of various
investments was appreciably poorer than expected. Combined with the continued
poor performance of the portfolio and the use of different valuation
methodologies proposed by Foresight and accepted by the Board in light of
currently available information, this has resulted in a substantial reduction in
the net asset value.
Acuity 3's net assets value has fallen by 70% from GBP21.3m (61.9p per Ordinary
Share) as at 30 September 2010 to GBP6.4m (18.6p per Ordinary Share) as at 31
March 2011.
Corporate Strategy
Foresight has proposed a pre-emptive shareholder offer of ten per cent of the
issued share capital, but your Board does not think it appropriate to ask
shareholders for further funds when there is no immediate cash requirement and
the funds raised thereby would only be modest. Any such fundraising will be
considered as part of the Board's strategic review. The review of strategic
options will include evaluating potential merger options for the Company.
Recent Background
i. Selection of Foresight as Investment Manager
In preparation for and as part of a selection process for a new investment
manager instituted by the Boards of both Acuity 3 and Foresight 5 in late 2010,
Foresight carried out a detailed review of the two VCTs and also of each
individual investment in the portfolio, using information solely from public
sources. This review highlighted a number of potential issues within the VCTs
and certain investee companies
Foresight was formally appointed as investment manager of Foresight 5 on 24
February and of Acuity 3 on 1 April 2011. Foresight, having already completed an
initial review of the Foresight 5 portfolio which is substantially similar, was
already very familiar with the portfolio of the Company on appointment by the
Board.
ii. Assessment of Acuity 3 and Investee Companies
As planned, the Foresight team rapidly embarked on a heavy programme of
information and data gathering, meetings and assessments of each investee
company, covering, inter alia, management, markets, business model and
performance, cash requirements as well as exit potential and timing.
Subsequently, detailed research was then carried out to arrive at appropriate
valuations for the nine unquoted investments. Reductions have unfortunately been
necessary in the valuations of all nine unquoted investments, in part due to the
additional information gathered by Foresight. In most cases these reductions
have been substantial, particularly Loseley Dairy, Brand Acquisitions, Future
Noise and Munro Global, all of which have been written down to nil, as well as
Fin Machine, Defaqto and Red Reef Media. Further details are set out in the
portfolio review below.
iii. Cash Position
At 31 March 2011, Acuity 3 had cash and relatively realisable listed investments
of only around GBP1.2m, before paying termination payments to the former
investment manager of some GBP360k. This was insufficient to meet its share of the
urgent funding requirements of five portfolio companies, representing a major
part of the portfolio by value. These urgent requirements totalled GBP2.5m, of
which half was required from Acuity 3 and half from Foresight 5. These five
investee companies also had other foreseeable funding requirements totalling
GBP2.8m, giving an overall total of GBP5.3m (again of which half was required from
Acuity 3 and half from Foresight 5).
Foresight had expected Acuity 3 to have more cash resources, as (i) GBP0.9m of
cash had been realised from the successful sale of the investment in Amber
Taverns in November 2010 reflecting an exit multiple of 2.9 times, (ii) GBP0.9m of
cash had been realised following the takeover of AiM listed Mount Engineering
again in November 2010, and (iii) GBP0.4m was received following sales of over
27,000 Electra Private Equity shares during February and March 2011. In the five
months from October 2010 to February 2011, all these funds had been invested as
follow on investments in six investee companies. Five of these were the same
five referred to above (and below) that still left GBP5.3m of funding requirements
which could not realistically be met.
As a consequence, neither of the two VCTs could provide further funds to some,
or possibly all, of these five investee companies and, if they did so, would
have little or no cash to pay their operating expenses. Based on Foresight's
overall assessment of inter alia cash requirements, prospects, risks, potential
returns and exit timing for each investee company, it was decided to no longer
meet requests for further funding from Loseley Dairy, Munro Global, Brand
Acquisitions and Future Noise, which were all significantly loss making and
presented very challenging investment cases.
These decisions thereby cast doubt on the continuing viability of some of these
companies and on their current valuations. During April and May following
extensive consideration of the strategic options for each business, Munro
Global, Brand Acquisitions and Loseley Dairy all appointed
administrators/liquidators. The outlook for Future Noise is challenging.
The decision was made to provide urgent but limited funds to support the
turnaround of Fin Machine by investing GBP250,000 by way of loan stock from each
VCT on 8 April 2011.
The remaining four unquoted investee companies, mainly in the media sector, had
no immediate cash requirements and some are trading well. However, in most
cases, their valuations have been reduced materially as a result of applying
different valuation methodologies in the light of currently available
information. In a number of cases these reductions have been compounded by the
impact of significant levels of shareholder and other debt within the capital
structures of the investee companies. This has led to a disproportionately large
fall in the value of certain of Acuity 3's investments when compared with the
fall in the overall value of these companies. As part of their assessment
process, Foresight reviewed whether or not any of the investments in these
companies could be realised quickly but concluded that this was impractical
immediately at anything other than 'fire sale' prices.
iv. Valuations of Investee Companies
Foresight's detailed assessments and proposed valuations of all investments as
at 31 March 2011, including the listed shareholdings and nine unquoted investee
companies, have been discussed and agreed with the Board and also discussed with
(but not formally reviewed by) the auditors. The Boards of Acuity 3 and
Foresight 5 have agreed a consistent valuation approach and methodology with
respect to each investee company held in both VCTs. These valuations are
summarised in the table below, and are compared with the last published
valuations as at 30 September 2010, prepared by the former investment manager.
ACUITY 3 INVESTMENT SUMMARY
31 March 2011 30 September 2010
----------------------- ----------------------
Additions/ Valuation
(Disposals) Movement
since 30 since 30
Amount September September Valuation Amount
Invested Valuation 2010* 2010 Methodology Invested Valuation
GBP GBP GBP GBP GBP GBP
Investment
=--------------------------------------------------------------------------------------------
Factory Earnings
Media 1,925,002 2,506,680 - (1,156,619) multiple 1,925,002 3,663,299
Limited
Connect2 Earnings
Media 2,250,000 1,049,200 - (1,400,870) multiple 2,250,000 2,450,070
Limited
Defaqto Earnings
Group 1,285,383 1,057,245 - (707,687) multiple 1,285,383 1,764,932
Limited
Electra
Private 417,272 532,160 (352,634) 77,086 Bid price 769,906 807,708
Equity Plc**
The Fin
Machine 4,010,000 351,600 750,000 (3,192,725) Earnings 3,260,000 2,794,325
Company multiple
Limited
PFS Downing
Active 218,137 221,029 - 1,400 Bid price 218,137 219,629
Management
Jelf Group 250,222 142,205 - 31,273 Bid price 250,222 110,932
Plc
Zamano Plc 750,000 124,688 - (15,937) Bid price 750,000 140,625
Red Reef Earnings
Media 1,838,232 61,362 350,000 (1,536,143) multiple 1,488,232 1,247,505
Limited
Managed
Support 887,584 55,293 - (82,273) Bid price 887,584 137,566
Services Plc
Sport Media 500,000 - - (10,000) Discounted 500,000 10,000
Group Plc bid price
Future Noise 1,398,046 - 150,000 (833,941) Nil value 1,248,046 683,941
Limited
Munro Global 1,915,000 - 300,000 (1,183,306) Nil value 1,615,000 883,306
Limited
Brand
Acquisitions 2,025,000 - 125,000 (1,746,139) Nil value 1,900,000 1,621,139
Limited
Loseley
Dairy Ice 2,547,548 - 650,000 (2,073,454) Nil value 1,897,548 1,423,454
Cream
Limited
Amber
Taverns - - (500,000) (123,682) Sold 500,000 623,682
Limited***
Mount
Engineering - - (759,000) (86,743) Sold 759,000 845,743
Plc
---------------------------------------------------------------------------------
22,217,426 6,101,462 713,366 (14,039,760) 21,504,060 19,427,856
---------------------------------------------------------------------------------
------------ -----------
Net current
assets less 268,192 1,837,070
liabilities
------------ -----------
------------ -----------
Net assets 6,369,654 21,264,926
------------ -----------
Number of
shares in 34,337,164 34,337,164
issue
Net asset
value per 18.6p 61.9p
share
=--------------------------------------------------------------------------------------------
Note:
In addition to the investments detailed above, a GBP0.25m investment was made in
Fin Machine in early April.
* Gross of additions/(disposals)
** GBP0.4 was received by Acuity 3 following sales of over 27,000 Electra Private
Equity shares during February and March 2011.
***Amber Taverns was sold in November 2010 realising cash proceeds of GBP0.9m.
This table shows the new valuations of the unquoted investments are lower in all
cases and, in most cases, appreciably lower than the valuations shown in the
audited accounts as at 30 September 2010. Of the GBP14.9m reduction in net asset
value, 39% was because of write-offs following decisions by Foresight not to
continue to support certain loss making businesses and 61% resulted from
applying different valuation methodologies. While reviewing and assessing each
investee company, new information came to light on several of the companies
which had a material adverse bearing on their valuations.
Other information relating to the period after 30 September 2010 is now
reflected in the valuations as at 31 March 2011. An announcement was made on 1
April 2011 by the Board that the Company's net assets would be substantially
lower than the last published figure.
Acuity 3's net asset value has fallen by 70% from GBP21.3m (61.9p per Ordinary
Share) as at 30 September 2010 to GBP6.4m (18.6p per Ordinary Share) as at 31
March 2011.
A combination of the continued disappointing performance of the portfolio, poor
investment strategy and management by the previous investment manager, and the
use of different valuation methodologies in the light of currently available
information has ultimately resulted in the above fall in net asset value.
Reductions have unfortunately been necessary in the valuations of all unquoted
investee companies. Major reductions in valuations from those as at 30 September
2010 have occurred in the following investments: Loseley Dairy ( GBP2.1m); Brand
Acquisitions ( GBP1.7m); Future Noise ( GBP0.8m) and Munro Global ( GBP1.2m), all of
which have been written down to nil. Further related reductions totalling GBP1.2m
have had to be made against irrecoverable accrued interest of which GBP0.5m
related to Fin Machine. A reduction of GBP3.2m has been made against the
investment in Fin Machine which experienced continuing liquidity problems. These
have been addressed by additional investment and further strengthening of the
management team through new appointments and changes instigated by Foresight.
Other major reductions in valuations have been made against the investments in
Defaqto ( GBP0.7m), Connect2 Media ( GBP1.4m), Factory Media ( GBP1.1m) and Red Reef
Media ( GBP1.5m), reflecting changes in valuation methodologies in light of
currently available information. Further details on the investment portfolio are
set out later in this report.
Recent Developments
On 19 April 2011, the principal trading subsidiary of Munro Global was sold to
SPA Future Thinking, a market research firm, for a nominal sum. Munro Global is
subsequently being liquidated. The sale followed an intensive review of the
strategic options for this loss making business.
In addition, during April and May, administrators were appointed to Loseley
Dairy and Brand Acquisitions. In both cases, the appointment of administrators
followed a detailed assessment of the strategic options and several failed
attempts to sell these companies.
On 24 May 2011 Electra Private Equity Plc published their Half-Yearly Financial
Report. Following this announcement the Company's holding in Electra Private
Equity Plc was sold realising GBP548,597 for Acuity 3, an uplift of 3.1% on the
valuation as at 31 March 2011.
Future Investment Strategy
Foresight believes that the Company should raise further capital to provide it
with sufficient funds to contribute to the likely future cash requirements of
the existing investee companies and provide a degree of funding flexibility. The
Company is small, with a highly concentrated portfolio comprising only a few
investments. Further funds would enable the Company to invest in new
opportunities generated from Foresight's strong deal flow and so diversify its
portfolio over time. These would include growth capital opportunities,
Management Buy Outs (MBOs) and Management Buy Ins (MBIs) in a range of different
sectors. Foresight recognises that shareholders want to receive dividends and
endeavours to pay where possible regular, recurring dividends to shareholders in
all its VCTs. Foresight will endeavour to pay dividends as soon as practicable
but given the current state of the portfolio that is unlikely for the
foreseeable future.
Foresight believes that the investment portfolio includes a number of companies
which have the potential over time to create value for shareholders
significantly in excess of their present valuations and that, with additional
funds to make new investments, your Company's net asset value should increase
over time.
Portfolio Review
On 31 March 2011, the Acuity 3 portfolio comprised two categories of
investments, namely six listed shareholdings and nine unquoted investments.
There is significant overlap between the holdings of Acuity 3 and its sister
VCT, Foresight 5.
Listed Shareholdings
Acuity 3's holding in Mount Engineering was sold during the period for GBP0.9m, an
uplift of GBP45,000 on the valuation at 30 September 2010. In addition, GBP0.4m was
received by Acuity 3 following sales of over 27,000 Electra Private Equity
shares during February and March 2011, leaving shares worth GBP532,160 on 31 March
2011. This holding has since been sold realising GBP548,597, representing an
uplift of 3.1% on the valuation on 31 March 2011. The total valuation of the
remaining five listed investments as at 31 March 2011 was GBP543,215 a reduction
of GBP75,537 compared to the valuation of GBP618,752 on 30 September 2010.
Before Foresight was able to set up trading accounts with stockbrokers in order
to be in a position to trade the listed shareholdings, on 1 April Sports Media
Group's shares were suspended from trading and the Company was placed into
administration resulting in a total write off.
Unquoted investments
BRAND ACQUISITIONS
Brand Acquisitions wholly owned the Peter Werth and Pink Soda clothing brands.
Peter Werth was the company's core brand, generating 94% of sales, and provided
a full range of casual wear to the men's market, primarily aimed at 25-35 year
olds. Pink Soda designed fashion items for the women's market.
Both brands designed two ranges a year, Spring/Summer and Autumn/Winter, and the
manufacture of the designs was out-sourced to 15 suppliers worldwide. Finished
products were shipped to England to the company's warehouse in Enfield and then
distributed to over 400 retailers across the UK, Ireland, Switzerland and
Germany. Products were also distributed to 35 concessions in House of Fraser
stores and the company's sole retail outlet in the Liverpool Met Centre. The
company undertook all sales and marketing activity in-house.
In addition to selling 'Full Price' ranges to retailers, the company sold an
'Off Price' range to large UK discount retailers TK Maxx and M&M Direct. In the
last financial year the 'Full Price' range accounted for 75% of sales at a 48%
gross margin and 'Off Price' sales accounted for 25% of sales at a 19% gross
margin.
Sales for the current financial year ending 31 January 2012 were behind forecast
and the Company requested further funding from Foresight 5 and Acuity 3. Having
reviewed the investment case, Foresight decided to no longer support the company
with further investment. Brand Acquisitions went into administration in May
2011.
Financial summary ( GBP000's)
Year ended 31 January 2011
=----------------------------------------------------
Turnover 10,834
=----------------------------------------------------
Gross profit 4,387
=----------------------------------------------------
EBITDA (1,252)
=----------------------------------------------------
EBIT (1,501)
=----------------------------------------------------
Net assets/(liabilities) (423)
=----------------------------------------------------
Investment summary ( GBP000's)
Foresight 5 Acuity 3 Total
=-----------------------------------------------------------
% of fully diluted equity 32% 16% 48%
=-----------------------------------------------------------
Investment since 30/09/10 125 125 250
=-----------------------------------------------------------
Total investment cost 2,914 2,025 4,939
=-----------------------------------------------------------
=-----------------------------------------------------------
Valuation at 30/09/10 2,253 1,621 3,874
=-----------------------------------------------------------
Valuation at 31/03/11 - - -
=-----------------------------------------------------------
CONNECT2 MEDIA
Connect2 Holdings, which trades as Connect2 Media, is a developer, publisher and
distributor of digital media entertainment on a range of devices including
mobile phones, portable games consoles, Blackberrys, Android, Windows Mobile,
iPhones, PCs and interactive TVs. The Company is headquartered in Manchester and
has offices in Europe, Middle East, Asia and the Americas. In 2010 Connect2
Media expanded its operations in North America with the acquisition of Sennari
which develops and distributes prize based incentivised games for mobile phones.
The Company has a highly experienced management team led by Executive Chairman
Nick Alexander and continues to grow its market share within the traditional
mobile gaming sector, distributing over 30 games annually to carriers in five
continents. Connect2 Media has a limited presence in the smartphone market,
having chosen not to compete in what is a highly fragmented, competitive but
fast growing sector.
The Company has started the current financial year in line with full year
forecasts and recently agreed a two year licence for the mobile rights to Jaws
Worldwide, excluding iOS/iPhone. Reflecting tighter control of costs, the
company is currently operating around breakeven EBITDA.
Financial summary ( GBP000's)
Year ended 31 December 2010
=---------------------------------------------
Turnover 5,382
=---------------------------------------------
Gross profit 2,343
=---------------------------------------------
EBITDA (532)
=---------------------------------------------
EBIT (499)
=---------------------------------------------
Net assets/(liabilities) 1,783
=---------------------------------------------
Investment summary ( GBP000's)
Foresight 5 Acuity 3 Total
=------------------------------------------------------------
% of fully diluted equity 19% 14% 33%
=------------------------------------------------------------
Investment since 30/09/10 - - -
=------------------------------------------------------------
Total investment cost 2,602 2,250 4,852
=------------------------------------------------------------
=------------------------------------------------------------
Valuation at 30/09/10 2,750 2,450 5,200
=------------------------------------------------------------
Valuation at 31/03/11 1,153 1,049 2,202
=------------------------------------------------------------
DEFAQTO GROUP
Defaqto is an independent financial research company specialising in rating,
comparing and analysing financial products. Since 1994, Defaqto has built the
largest, whole of market, retail financial product database and become one of
the leading providers of financial product data in the UK covering over 30,000
products across banking, life, pensions, investments and general insurance.
The company analyses the level of cover or benefits offered within a financial
product and awards a Star Rating from 1 to 5. Defaqto Star Ratings help
consumers and advisers decide which product suits their specific needs, rather
than comparing purely on price. Providers also use the ratings to ensure they
offer products to meet differing consumer demands.
The company sells access to this data to government agencies, financial product
providers, financial intermediaries and data aggregators through a number of
subscription-based online software products and data feeds.
The company has been making a substantial investment in product development over
the past two years.
Financial summary ( GBP000's)
Year ended 31 March 2010
=-------------------------------------------------
Sales 8,745
=-------------------------------------------------
EBITDA 913
=-------------------------------------------------
Profit/(loss) before tax (607)
=-------------------------------------------------
Net assets/(liabilities) (8,908)
=-------------------------------------------------
Investment summary ( GBP000's)
Foresight 5 Acuity 3 Total
=-------------------------------------------------------------
% of equity / voting rights 25.4% 8.1% 33.5%
=-------------------------------------------------------------
Investment since 30/09/10 - - -
=-------------------------------------------------------------
Total investment cost 3,852 1,285 5,137
=-------------------------------------------------------------
=-------------------------------------------------------------
Valuation at 30/09/10 5,171 1,765 6,936
=-------------------------------------------------------------
Valuation at 31/03/11 3,213 1,057 4,270
=-------------------------------------------------------------
FUTURE NOISE
Formed in January 2009 out of the administration of Acrobat Music Group, Future
Noise Music is a small music publishing company with three labels:
· Fantastic Voyage: focuses on re-releasing recordings from the twenties through
to the seventies, across a broad range of genres including blues, rockabilly and
soundtracks. This label releases around 3 to 4 compilations a month.
· Year Zero: a label focused on the 1980's onwards, across genres. 5 to 6
releases were made in 2010. Much of this output is in-licensed from third
parties.
· Future Noise Music: focuses on releasing newly recorded tracks. The first
release on this label will be the Generation Indigo album by Poly Styrene, a
comeback album for the 1980's punk artist. This was launched in the UK at the
end of March 2011. Sadly in April 2011 Poly Styrene passed away.
While management accounts for 2010 show some top line growth the company has
remained small scale and loss making. The outlook is challenging. The company is
reviewing various strategic options, including attempting to raise funds from
various sources. Having reviewed the investment case Foresight has decided not
to support the company with any further investment.
Financial summary ( GBP000's)
Period 1 December 2008 to 31 December 2009
=---------------------------------------------------------------
Sales 473
=---------------------------------------------------------------
Gross profit 230
=---------------------------------------------------------------
Operating profit/(loss) (426)
=---------------------------------------------------------------
Profit/(loss) before tax (426)
=---------------------------------------------------------------
Net assets/(liabilities) 222
=---------------------------------------------------------------
Investment summary ( GBP000's)
Foresight 5 Acuity 3 Total
=------------------------------------------------------------
% of equity/voting rights 38% 37% 75%
=------------------------------------------------------------
Investment since 30/09/10* 150 150 300
=------------------------------------------------------------
Total investment cost 1,342 1,398 2,740
=------------------------------------------------------------
=------------------------------------------------------------
Valuation at 30/09/10 407 684 1,090
=------------------------------------------------------------
Valuation at 31/03/11 - - -
=------------------------------------------------------------
Note:
*Investments made prior to transfer of management contract to Foresight
FACTORY MEDIA
Factory Media was formed in 2006 by the merger of three extreme sports
publishers and since then the company has bolted on a number of further titles
to its platform, most recently acquiring RoadCyclingUK.com, BikeMagic.com and
BMXTalk.com in early 2011, following various German acquisitions and the
purchase of Boardseeker and MotoX in the UK. Factory is now Europe's largest
action sports media owner, publishing 19 magazines (sold through news stands,
subscriptions and mobile devices such as the iPhone and iPad) and 25 websites.
Its titles cover all major cycling sectors, as well as major board sports,
skiing and motocross markets. Factory's online reach is particularly attractive
to brands and retailers as the online action sports market across Europe is
worth c. GBP3.5bn annually (Source: management calculation from industry data).
Factory has developed its own video and community network, MPORA, which reaches
around 2 million unique users monthly. Having successfully exploited content
generation through its media titles, the company is now looking to further
monetize its reach further, launching a lead generation operation in summer
2011.
Profitability has grown significantly, driven particularly by growth of high-
margin digital revenues, and further profitable growth is planned in 2011
through a number of avenues, in addition to developing lead generation revenues.
Financial summary ( GBP000's)
Year ended 31 December 2010*
=------------------------------------------------------
Sales 9,199
=------------------------------------------------------
Gross profit 3,145
=------------------------------------------------------
EBITDA 1,008
=------------------------------------------------------
Profit/(loss) before tax 73
=------------------------------------------------------
Net assets/(liabilities) 2,089**
=------------------------------------------------------
*Draft audited accounts;
**Note: during 2010 a partial balance sheet restructuring took place, in which
Acuity 3 and Foresight 5 converted GBP1m of institutional loan notes, together
with accrued interest and redemption premia, into C Ordinary Shares.
Investment summary ( GBP000's)
Foresight 5 Acuity 3 Total
=-------------------------------------------------------------
% of equity / voting rights 25% 25% 50%
=-------------------------------------------------------------
Investment since 30/09/10 - - -
=-------------------------------------------------------------
Total investment cost 1,925 1,925 3,850
=-------------------------------------------------------------
=-------------------------------------------------------------
Valuation at 30/09/10 3,663 3,663 7,326
=-------------------------------------------------------------
Valuation at 31/03/11 2,507 2,507 5,013
=-------------------------------------------------------------
THE FIN MACHINE COMPANY
Acuity backed the management buy in buyout of The Fin Machine Company ("Fin") in
November 2007, investing GBP5.5m alongside investment from the management team and
banking facilities from Clydesdale.
Fin designs, manufactures and distributes special purpose capital equipment that
is used to manufacture heat exchangers such as radiators, heaters, intercoolers,
evaporators and condensers, primarily for the automotive sector, although Fin
has also now entered the air conditioning market. Fin supplies a broad range of
blue chip OEMs globally, which in turn supply many of the automotive industry
majors. Fin operates manufacturing facilities in Seaham, County Durham and
Tianjin, China, as well as an assembly and service centre in Indiana, USA.
The global recession, and specifically the well publicised collapse in the
automotive industry during 2009/10, negatively impacted the company. The
downturn in trading, combined with the costs of opening a major facility in
China and entering the air conditioning market, in addition to significant
senior debt repayments, put severe strain on the company's working capital. The
company experienced liquidity problems which necessitated significant further
investment by shareholders, principally Acuity 3 and Foresight 5, during 2010
and early 2011.
The company has a number of remaining internal issues to work through, but the
automotive market has returned to growth, particularly in Asia, and Fin's order
book has been growing strongly since late 2010. The management team has recently
been strengthened by the appointment of Keith Jordan as Chairman. Keith has
extensive experience in the engineering sector and has worked successfully with
a number of private equity backed businesses. The company's management accounts
show c. GBP14m of sales and an operating loss for the 12 months ended 31 December
2010, but with the Company's position improving, it is projecting a return to
profits in 2011.
Financial summary ( GBP000's)
Year ended 30 September 2009
=-----------------------------------------------------
Sales 21,211
=-----------------------------------------------------
Gross profit 6,743
=-----------------------------------------------------
EBIT (1,257)
=-----------------------------------------------------
Profit before tax (2,147)
=-----------------------------------------------------
Net assets/(liabilities) (606)
=-----------------------------------------------------
Note:
During 2010 Fin altered its year ended 31 December in line with its Chinese
subsidiary (all Chinese businesses have a 31 December year end)
Investment summary ( GBP000's)
Foresight 5 Acuity 3 Total
=-------------------------------------------------------------
% of equity 33.5% 21.5% 55%
=-------------------------------------------------------------
Investment since 30/09/10* 1,250 750 2,000
=-------------------------------------------------------------
Total investment cost 7,006 4,010 11,016
=-------------------------------------------------------------
=-------------------------------------------------------------
Valuation at 30/09/10 2,986 2,794 5,780
=-------------------------------------------------------------
Valuation at 31/03/11 820 532 1,352
=-------------------------------------------------------------
Note:
*Excludes additional GBP250k from each of Foresight 5 and Acuity 3 invested in
early April 2011
LOSELEY DAIRY
Loseley Dairy was a UK ice cream producer supplying own label and branded ice
cream products to many of the leading supermarkets and high street retailers as
well as theatres, pub chains, leisure centres, sporting venues, airlines and
smaller outlets. Customers included Hard Rock Cafe, Morrisons and Iceland,
amongst others. The company had a manufacturing facility in Cwmbran Wales which
was commissioned in February 2004 and included a production area of 90,000 sq
ft.
Formerly AIM listed under the name Hill Station, the assets and brands were
bought out of administration in October 2008 by an MBI team supported by Acuity.
The company was re-named Loseley Dairy and owned the perpetual licences to 5
separate ice cream brands: Loseley, Hill Station, Yorkshire Dales, Thayers and
Granelli. However, 85% of the company's revenues were derived not from its
brands but from the sale of low margin own label ice cream products to UK
supermarkets.
The company had an immediate funding requirement of GBP2.2m to meet overheads and
pay overdue creditors, with further funds likely to be required over the medium
term. Following the collapse in discussions with two parties regarding a
potential sale of the business, administrators were appointed in mid April.
Financial summary ( GBP000's)
Year ended 31 March 2010
=--------------------------------------------------
Turnover 8,723
=--------------------------------------------------
Gross profit 1,078
=--------------------------------------------------
EBITDA (3,886)
=--------------------------------------------------
EBIT (4,135)
=--------------------------------------------------
Net assets/(liabilities) (3,605)
=--------------------------------------------------
Investment summary ( GBP000's)
Foresight 5 Acuity 3 Total
=----------------------------------------------------------------------------
% of fully diluted equity 60% 38% 98%
=----------------------------------------------------------------------------
Investment since 30/09/10* 950 650 1,600
=----------------------------------------------------------------------------
Total investment cost 4,859 2,548 7,406
=----------------------------------------------------------------------------
=----------------------------------------------------------------------------
Valuation at 30/09/10 1,992 1,424 3,416
=----------------------------------------------------------------------------
Valuation at 31/03/11 - - -
=----------------------------------------------------------------------------
Note:
* Investment made prior to transfer of investment management contract to
Foresight
MUNRO GLOBAL
Munro Global ("Munro") was originally backed by Acuity to execute a buy and
build in the fragmented market research sector. Since 2007, Acuity supported
this strategy with the investment of GBP3.8m ( GBP1.9m from each of Foresight 5 and
Acuity VCT 3). The financial crisis in 2008/9 had an adverse impact on Munro,
which was forced to sell or shut down all but two divisions. FDS, one of the two
remaining divisions, is a provider of data collection, market research and
statistical analysis, primarily to a number of UK Government bodies and utility
companies. FDS was materially impacted by the British Government's austerity
measures and in October 2010 its research call centre in Newcastle, which
directly employed c.120 people, was shut down. Acuity helped to fund the cost of
this closure with an investment of GBP500k in October 2010 and a further GBP100k in
January 2011. Maven, the second remaining division, is a provider of data
collection, market research, value add IT portals and interfaces to automotive
groups, a number of UK police forces and other blue chip clients. Maven employs
45 people in its office in High Wycombe. This business generates approximately
GBP3m of revenue annually on a standalone basis.
Significant further capital would have been required to implement a
restructuring. Following careful consideration of the strategic options for the
company, the principal trading subsidiary of Munro Global was sold to SPA Future
Thinking, a market research firm, for a nominal sum. Munro Global is,
subsequently, being liquidated.
Financial summary ( GBP000's)
Year ended 31 July 2009
=--------------------------------------------------
Sales 9,443
=--------------------------------------------------
EBIT 192
=--------------------------------------------------
Profit / (loss) before tax (178)
=--------------------------------------------------
Net assets/(liabilities) 545
=--------------------------------------------------
Investment summary ( GBP000's)
Foresight 5 Acuity 3 Total
=-------------------------------------------------------------
% of equity / voting rights 24.7% 24.7% 49.4%
=-------------------------------------------------------------
Investment since 30/09/10* 300 300 600
=-------------------------------------------------------------
Total investment cost 1,915 1,915 3,830
=-------------------------------------------------------------
=-------------------------------------------------------------
Valuation at 30/09/10 883 883 1,766
=-------------------------------------------------------------
Valuation at 31/03/11 - - -
=-------------------------------------------------------------
Note:
* Investments made prior to transfer of investment management contract to
Foresight
RED REEF MEDIA
Red Reef Media was established in February 2008 to implement a buy and build
strategy by acquiring publishing assets with the aim of exploiting them through
the use of expertise in digital media. TNT Magazine was the company's first and
only material acquisition to date, though today Red Reef also runs a number of
TNT branded events and publishes other smaller magazines including South Africa
Magazine. TNT is a free magazine targeted at young international travellers
which generates its revenue from advertising. Following the acquisition of TNT
by Red Reef in 2008, a fall in advertising, particularly associated with
recruitment, significantly impacted both revenue and profits. The business was
highly leveraged and struggling to service all of its debt. Over the course of
2010 and early 2011, Red Reef was successfully turned around. The top management
team was replaced, the operations and strategy refocused, and the balance sheet
restructured. All of the Foresight 5 and Acuity VCT 3 loan stock was converted
into equity, which currently ranks behind approximately GBP2.3m of bank debt on
the balance sheet. The business is now generating operating profits and cash.
For the financial year to March 2011 Red Reef expects to achieve approximately
GBP500k of EBITDA on approximately GBP4m of revenue. The company is now making
progress and has the potential to grow revenue and profits while paying down
debt.
Financial summary ( GBP000's)
Year ended 31 March 2010
=-------------------------------------------------
Sales 3,661
=-------------------------------------------------
EBIT (152)
=-------------------------------------------------
Profit/(loss) before tax (911)
=-------------------------------------------------
Net assets/(liabilities) (1,488)
=-------------------------------------------------
Investment summary ( GBP000's)
Foresight 5 Acuity 3 Total
=-------------------------------------------------------------
% of equity / voting rights 40.9% 40.9% 81.8%
=-------------------------------------------------------------
Investment since 30/09/10* 350 350 700
=-------------------------------------------------------------
Total investment cost 1,777 1,838 3,615
=-------------------------------------------------------------
=-------------------------------------------------------------
Valuation at 30/09/10 1,235 1,248 2,482
=-------------------------------------------------------------
Valuation at 31/03/11 61 61 123
=-------------------------------------------------------------
Note:
*Investments made prior to transfer of management contract to Foresight
Unaudited Half-Yearly Results and Responsibility Statements
Principal Risks and Uncertainties
The principal risks faced by the Company are as follows:
* Performance;
* Regulatory;
* Operational; and
* Financial.
The Board reported on the principal risks and uncertainties faced by the Company
in the Annual Report and Accounts for the year ended 30 September 2010 ('the
Annual Report'). A detailed explanation can be found on pages 15 to 16 of the
Annual Report which is available on www.foresightgroup.eu or by writing to
Foresight Group at ECA Court, South Park, Sevenoaks, Kent, TN13 1DU.
In the view of the Board, there have not been any changes to the fundamental
nature of these risks since the previous report and these principal risks and
uncertainties are equally applicable to the remaining six months of the
financial year as they were to the six months under review.
Directors' Responsibility Statement:
The Disclosure and Transparency Rules ('DTR') of the UK Listing Authority
require the Directors to confirm their responsibilities in relation to the
preparation and publication of the Interim Report and financial statements.
The Directors confirm to the best of their knowledge that:
(a) the summarised set of financial statements has been prepared in accordance
with the pronouncement on interim reporting issued by the Accounting Standards
Board;
(b) the interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year);
(c) the summarised set of financial statements gives a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company as
required by DTR 4.2.4R; and
(d) the interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transactions and changes
therein).
Going Concern
The Company's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Business
Review of the Annual Report. The financial position of the Company, its cash
flows, liquidity position and borrowing facilities are described in the
Chairman's Statement, Business Review and Notes to the Accounts of the Annual
Report. In addition, the Annual Report includes the Company's objectives,
policies and processes for managing its capital; its financial risk management
objectives; details of its financial instruments and hedging activities; and its
exposures to credit risk and liquidity risk.
The Company has financial resources together with investments and income
generated therefrom across a variety of industries and sectors. As a
consequence, the Directors believe that the Company is able to manage its
business risks successfully despite the current uncertain economic outlook.
The Directors have reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable future. Thus
they continue to adopt the going concern basis of accounting in preparing the
annual financial statements.
The half-yearly Financial Report has not been audited or reviewed by the
auditors.
By order of the Board
Stuart Stradling
Chairman
1 June 2011
Unaudited Income Statement
for the six months ended 31 March 2011
Six months ended Six months ended Year ended
31 March 2011 31 March 2010 30 September 2010
(Unaudited) (Unaudited) (Audited)
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
Realised
gains/(losses) - 633 633 - 26 26 - (1,328) (1,328)
on investments
Investment
holding - (14,041) (14,041) - 1,464 1,464 - (6,111) (6,111)
(losses)/gains
(Provision for
accrued (1,233) - (1,233) 103 - 103 130 - 130
income)/income
Investment
management (75) (226) (301) (93) (280) (373) (133) (398) (531)
fees
Other expenses (172) 220 48 (126) - (126) (344) 141 (203)
-------------------------------------------------------------------------
(Loss)/return
on ordinary
activities (1,480) (13,414) (14,894) (116) 1,210 1,094 (347) (7,696) (8,043)
before
taxation
Taxation - - - - - - -
-------------------------------------------------------------------------
(Loss)/return
on ordinary (1,480) (13,414) (14,894) (116) 1,210 1,094 (347) (7,696) (8,043)
activities
after taxation
-------------------------------------------------------------------------
(Loss)/return
per Ordinary (4.3)p (39.1)p (43.4)p (0.3)p 3.5p 3.2p (1.0)p (22.2)p (23.2)p
Share
-------------------------------------------------------------------------
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.
Unaudited Balance Sheet
at 31 March 2011
As at As at As at
31 March 2011 31 March 2010 30 September 2010
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Non-current assets
Investments held at fair value 6,101 28,845 19,428
through profit or loss
----------------------------------------------
Current assets
Debtors 8 1,262 1,494
Cash 459 953 781
----------------------------------------------
467 2,215 2,275
Creditors
Amounts falling due within one (80) (87) (114)
year
----------------------------------------------
Net current assets 387 2,128 2,161
----------------------------------------------
Creditors
Amounts falling due in more than (118) (454) (324)
one year
----------------------------------------------
Net assets 6,370 30,519 21,265
----------------------------------------------
Capital and reserves
Called-up share capital 343 344 344
Share premium account 89 - 89
Capital redemption reserve 7 - 7
Special reserve 31,160 31,723 31,160
Capital reserve (24,063) (1,744) (10,649)
Revenue reserve (1,166) 196 314
----------------------------------------------
Equity shareholders' funds 6,370 30,519 21,265
----------------------------------------------
Net asset value per Ordinary Share 18.6 p 88.7 p 61.9 p
----------------------------------------------
Unaudited Reconciliation of Movements in Shareholders' Funds
for the six months ended 31 March 2011
Called- Share Capital
up share premium redemption Special Capital Revenue
capital account reserve reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 344 89 7 31,160 (10,649) 314 21,265
October 2010
Share capital
adjustment (1) - - - - - (1)
from prior
period
Net realised
gain on - - - - 633 - 633
disposal of
investments
Investment
holding - - - - (14,041) - (14,041)
losses
Management
fees charged - - - - (226) - (226)
to capital
Re-estimation
of trail
commission - - - - 220 - 220
creditor
charged
Revenue
return for - - - - - (1,480) (1,480)
the period
-------------------------------------------------------------------
As at 31 343 89 7 31,160 (24,063) (1,166) 6,370
March 2011
-------------------------------------------------------------------
Unaudited Cash Flow Statement
for the six months ended 31 March 2011
Six months ended Six months ended Year ended
31 March 2011 31 March 2010 30 September 2010
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Cash flow from operating
activities
Investment income received - 12 29
Deposit and similar interest - - 1
received
Investment management fees (287) (541) (711)
paid
Other cash payments (147) (181) (371)
----------------------------------------------------
Net cash outflow from
operating activities and (434) (710) (1,052)
returns on investment
Taxation - - -
----------------------------------------------------
Returns on investment and
servicing of finance
Purchase of investments (2,125) (1,488) (3,573)
Net proceeds on sale of 2,244 1,864 4,437
investments
Repayment of loan stock to (7) - -
investors
Cash held in escrow pending - - (200)
investment
----------------------------------------------------
Net capital inflow from 112 376 664
financial investment
Equity dividends paid - (350) (350)
----------------------------------------------------
Financing
Proceeds of fund raising - - 90
Repurchase of own shares - (190) (397)
----------------------------------------------------
- (190) (307)
----------------------------------------------------
Decrease in cash (322) (874) (1,045)
----------------------------------------------------
Notes to the Unaudited Half-Yearly Financial Report
1. The unaudited half-yearly results have been prepared on the basis of
accounting policies set out in the statutory accounts of the Company for the
year ended 30 September 2010. Unquoted investments have been valued in
accordance with IPEVC guidelines. Quoted investments are stated at bid
prices in accordance with UK Generally Accepted Accounting Practice.
2. These are not statutory accounts in accordance with S434 of the Companies
Act 2006 and the financial information for the six months ended 31 March
2011 and 31 March 2010 has been neither audited nor reviewed. Statutory
accounts in respect of the period to 30 September 2010 have been audited and
reported on by the Company's auditors and delivered to the Registrar of
Companies and included the report of the auditors which was unqualified and
did not contain a statement under S498(2) or S498(3) of the Companies Act
2006. No statutory accounts in respect of any period after 30 September
2010 have been reported on by the Company's auditors or delivered to the
Registrar of Companies.
3. Copies of the Half-Yearly Financial Report have been sent to shareholders
and are available for inspection at the Registered Office of the Company at
ECA Court, South Park, Sevenoaks, Kent, TN13 1DU.
Copies of the Half-Yearly Financial Report are also available electronically
atwww.foresightgroup.eu.
4. Net asset value per share
The net asset value per share is based on net assets at the end of the period
and on the number of Ordinary Shares in issue at that date.
Net Assets Number of Shares
GBP'000 in Issue
31 March 2011 6,370 34,337,164
31 March 2010 30,519 34,402,374
30 September 2010 21,265 34,337,164
--------------------------------
.
5. Return per share
Six months ended Six months ended Year ended
31 March 2011 31 March 2010 30 September 2010
GBP'000 GBP'000 GBP'000
Total (loss)/return after (14,894) 1,094 (8,043)
taxation
Basic (loss)/return per (43.4)p 3.2p (23.2)p
share (note a)
----------------------------------------------------
Revenue loss from ordinary (1,480) (116) (347)
activities after taxation
Revenue loss per share (note (4.3)p (0.3)p (1.0)p
b)
----------------------------------------------------
Capital (loss)/return from
ordinary shares after (13,414) 1,210 (7,696)
taxation
Capital (loss)/return per (39.1)p 3.5p (22.2)p
share (note c)
----------------------------------------------------
Weighted average number of
shares in issue in the 34,337,164 34,630,023 34,614,246
period
.
Notes:
a. Total return per Ordinary Share is total return after taxation divided by
the weighted average number of shares in issue during the period.
b. Revenue return per Ordinary Share is revenue return after taxation divided
by the weighted average number of shares in issue during the period.
c. Capital return per Ordinary Share is capital return after taxation divided
by the weighted average number of shares in issue during the period.
6. Income
Six months ended Six months ended Year ended
31 March 2011 31 March 2010 30 September 2010
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Deposit interest - - 1
Venture capital investments (1,233) 103 129
----------------------------------------------------
(1,233) 103 130
----------------------------------------------------
* As a result of a number of portfolio companies being put into administration
and the poor performance of a number of other portfolio companies, the
previously accrued loan stock interest has been fully provided against.
7. Investments held at fair value through profit or loss
Quoted Unquoted Total
GBP'000 GBP'000 GBP'000
Book cost as at 1 October 2010 4,135 17,369 21,504
Investment holding losses (1,863) (213) (2,076)
--------------------------------
Valuation at 1 October 2010 2,272 17,156 19,428
Movements in the period:
Purchases at cost - 2,325 2,325
Disposal proceeds (1,331) (913) (2,244)
Realised gains 220 413 633
Investment holding losses (86) (13,955) (14,041)
--------------------------------
Valuation at 31 March 2011 1,075 5,026 6,101
--------------------------------
Book cost at 31 March 2011 3,024 19,194 22,218
Investment holding losses (1,949) (14,168) (16,117)
--------------------------------
Valuation at 31 March 2011 1,075 5,026 6,101
--------------------------------
--------------------------------
8. Related Parties
Acuity Capital Management Limited ('Acuity Capital'), as Investment Manager and
Secretary of the Company at the period end, is considered to be a related party
by virtue of its management contract with the Company. During the period,
services of a total value of GBP352,466 (31 March 2010: GBP406,000; 30 September
2010: GBP778,000) were purchased by the Company from Acuity Capital. At 31 March
2011, the amount due to Acuity Capital, excluding termination payment, was GBPnil.
With effect from 1 April 2011, Foresight Group CI Limited ('Foresight Group')
has been appointed as the investment manager in place of Acuity Capital. In
addition, Foresight Fund Managers Limited has been appointed as the company
secretary in place of Acuity Capital.
Under the previous management agreement, the Board was required to give one
year's notice to Acuity Capital to terminate the agreement. The Board entered
into a termination agreement with Acuity Capital on 1 April 2011 (the
'Termination Agreement') pursuant to which the Company has agreed to pay Acuity
Capital GBP280,500 in phased payments and GBP11,656 per quarter for three quarters
for its work to ensure a smooth handover to Foresight Group and has agreed to
redeem the GBP51,150 of outstanding loan notes issued to Acuity Capital's
employees.
The terms of the investment management agreement with Foresight Group (the 'New
Management Agreement') are substantially similar to the Company's previous
arrangements with Acuity Capital (the 'Previous Management Agreement').
Foresight Group has agreed to waive its management and administration fees for a
period of 12 months from 7 March 2011 and thereafter will receive an annual
management fee of 2.5% of the net asset value of the Company payable quarterly
based on the last announced net asset value of the Company. Additionally it will
receive an administration fee of GBP69,937 per annum, which will rise in line with
RPI. At 31 March 2011, the amount due to Foresight Group was GBPnil.
No Director has, or during the period had, a contract of service with the
Company. No Director was party to, or had an interest in, any contract or
arrangement (with the exception of Directors' fees) with the Company at any time
during the period under review or as at the date of this report.
END
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Acuity VCT 3 PLC via Thomson Reuters ONE
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