Annual Report • Dec 31, 2018
Annual Report
Open in ViewerOpens in native device viewer
ANNUAL REPORT AND ACCOUNTS 31 DECEMBER 2018
Foresight Group is always keen to hear from investors. If you have any feedback about the service you receive or any queries relating to Foresight VCT plc, please contact the Investor Relations team:
InvestorRelations@ foresightgroup.eu
The Manager is legally required to provide shareholders with a copy of this Report. Annual and Half-Yearly Reports, as well as quarterly Factsheets and information on new investments, can be viewed online.
As part of the Manager's investor communications policy, investor forums are held throughout the year. Shareholders can also arrange a mutually convenient time to meet the Company's investment management team at Foresight Group. Please contact Investor Relations if you are interested.
We respect your privacy and are committed to protecting your personal data. If you would like to find out more about the measures the Manager takes in processing your personal information, please refer to the privacy policy, which can be found at http://www. foresightgroup.eu/privacycookies/
| Annual General Meeting 2019 | May 2019 |
|---|---|
| Interim Results to 30 June 2019 | August 2019 |
| Annual Results to 31 December 2019 | April 2020 |
The Company now has one class of share, Ordinary Shares, following the removal of the Planned Exit Shares and Infrastructure Shares in January 2018.
Shareholders who wish to have dividends paid directly into their bank account rather than by cheque to their registered address can complete a Mandate Form for this purpose. Mandates can be obtained by contacting the Company's registrar, Computershare Investor Services plc.
Changes to the terms and conditions of the Dividend Reinvestment Scheme took effect on 8 April 2019. Details of the new terms were sent to participants of the Scheme and are available online.
Investors can manage their shareholding online using Investor Centre, Computershare's secure website. Shareholders just require their Shareholder Reference Number (SRN), which can be found on any communications previously received from Computershare, to access the following:
Holding Enquiry Balances l Values History l Payments l Reinvestments
Payments Enquiry Dividends l Other payment types
Address Change Change registered address to which all communications are sent
Bank Details Update Choose to receive dividend payments directly into your bank account instead of by cheque
Outstanding Payments Reissue payments using our online replacement service
Downloadable Forms Dividend mandates l Stock transfer l Dividend reinvestment Change of address
The Company's shares are listed on the London Stock Exchange. Share price information is available on Foresight Group's website and can also be obtained from many financial websites.
The Company's shares can be bought and sold in the same way as any other quoted company on the London Stock Exchange via a stockbroker. The primary market maker for Foresight VCT plc is Panmure Gordon & Co.
Investment in VCTs should be seen as a long-term investment and shareholders selling their shares within five years of original subscription may lose any tax reliefs claimed. Investors who are in any doubt about selling their shares should consult their independent financial adviser.
Please contact Foresight Group if you or your adviser have any questions about this process.
| FINANCIAL HIGHLIGHTS | 2 |
|---|---|
| Key Metrics | 2 |
| CHAIRMAN'S STATEMENT | 4 |
| MANAGER'S REVIEW | |
| Portfolio Summary | 6 |
| Top Ten Investments | 12 |
| Portfolio Overview | 18 |
| About the Manager | 20 |
| STRATEGIC REPORT | 24 |
| GOVERNANCE | |
| Board of Directors | 30 |
| Directors' Report | 32 |
| Corporate Governance | 36 |
| Audit Committee Report | 40 |
| Directors' Remuneration Report | 41 |
| Statement of Directors' Responsibilities | 45 |
| Independent Auditor's Report | 46 |
| FINANCIAL STATEMENTS | |
| Income Statement | 50 |
| Reconciliation of Movements | |
| in Shareholders' Funds | 51 |
| Balance Sheet | 52 |
| Cash Flow Statement Notes to the Accounts |
53 54 |
| NOTICE OF ANNUAL GENERAL MEETING | 70 |
| C SHARES DIVIDEND HISTORY AND | 74 |
| NAV TOTAL RETURN | |
| GLOSSARY OF TERMS | 75 |
| FCA Information | 76 |
| CORPORATE INFORMATION | 77 |
| 1 year | 5 years | 10 years | |
|---|---|---|---|
| NAV Total Return as at 31 December 2018 (%)^ | 3.9% | 14.0% | 75.5% |
| 31 December 2018 |
31 December 2017 |
|
|---|---|---|
| Total net assets | £136.7m | £140.4m |
| Net asset value per share | 78.1p | 80.0p |
| Movement in net asset value total return during the year^ | 3.9% | 6.5% |
| Share price | 68.5p | 72.0p |
| Share price total return*^ | 216.2p | 215.7p |
| Dividends paid in the year^ | 5.0p | 9.0p |
| Dividend yield | 7.3% | 12.5% |
| Shares in issue | 175,051,026 | 175,601,977 |
*Based on an original 100.0p invested in Ordinay Shares at launch in 1997.
| 2018 | 2017 | |
|---|---|---|
| Discount to NAV at 31 December^ | 12.3% | 10.0% |
| Average discount on buybacks | 10.1% | 10.1% |
| Shares bought back during the year under review | 2,622,352 | 1,995,263 |
| Shares issued under the dividend reinvestment scheme | 2,071,401 | 3,423,851 |
| Ongoing charges ratio (based on net assets at 31 December) | 2.1% | 2.2% |
^Definitions of these Alternative Performance Measures (APMs) can be found in the Glossary on page 75.
Dividends Paid and NAV Total Return (pence)
| Dividends & NAV total return 8 8 |
* 140 200 |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 240 | 120 | ||||||||||
| Dividends paid Dividends paid Dividends paid 6 6 Dividends & NAV total return |
NAV Total Return NAV Total Return NAV Total Return 100 180 |
||||||||||
| 4 4 |
220 | 80 160 60 |
|||||||||
| 240 | 40 | ||||||||||
| 2 2 |
200 | 140 20 |
|||||||||
| 0 0 |
220 31/12/08 31/12/09 01/01/08 01/01/09 01/01/08 01/01/09 |
31/12/10 01/01/10 01/01/10 |
31/12/11 01/01/11 01/01/11 |
31/12/12 01/01/12 01/01/12 180 |
NAV Total Return 31/12/13 01/01/13 01/01/13 Year ended Year ended |
Ordinary shares Divs 31/12/14 01/01/14 01/01/14 |
31/12/15 01/01/15 |
31/12/16 01/01/16 01/01/15 |
31/12/17 01/01/17 01/01/16 |
31/12/17 31/12/18 01/01/18 01/01/17 |
0 120 |
| 200 | Dividends Ordinary shares Divs |
NAV Total Return Ordinary shares NAV TR |
|||||||||
| *Based on an initial investment on 1 January 2009. 180 |
NAV Total Return | 160 | |||||||||
| Ordinary shares NAV TR | 140 | Dividend per | Dividend per | ||||||||
| 160 | share | share (rebased)† | |||||||||
| 4 May 2018 01/01/13 01/01/14 |
01/01/15 140 |
01/01/16 | 01/01/17 | 120 | 5.0p | 1.9p | |||||
| 29 September 2017 | 4.0p | 1.5p | |||||||||
| 3 April 2017 120 |
5.0p | 1.9p | |||||||||
| 01/01/15 01/01/16 |
1 April 2016 01/01/17 |
7.0p | 2.7p | ||||||||
| 13 March 2015 | 6.0p | 2.3p | |||||||||
| 14 March 2014 | 10.0p | 3.8p | |||||||||
| 14 June 2013 | 5.0p | 1.9p 2.9p |
|||||||||
| 23 March 2012 17 June 2011 |
7.5p 5.0p |
||||||||||
| 29 May 2009 | 1.0p | 1.9p 0.7p |
|||||||||
| 7 March 2008 | 5.0p | 3.4p | |||||||||
| 26 May 2006 | 0.5p | 0.5p | |||||||||
| 5 July 2004 | 52.0p | 52.0p | |||||||||
| 22 September 2003 | 8.0p | 8.0p | |||||||||
| 30 June 2003 | 0.5p | 0.5p | |||||||||
| 8 May 2000 | 100.0p | 100.0p | |||||||||
| 6 August 1999 | 1.0p | 1.0p | |||||||||
| 29 January 1999 | 3.2p | 3.2p | |||||||||
| Total Ordinary Share dividends paid | 190.1p | ||||||||||
| NAV per share based on 100.0p invested at launch | 29.8p | ||||||||||
| NAV total return per share based on 100.0p invested at launch | 219.9p |
In addition to the details above, original holders of C Shares which became Ordinary Shares in January 2007
John Gregory Chairman of Foresight VCT plc
I am pleased to present the Company's Audited Annual Report and Accounts for the year ended 31 December 2018. In last year's Annual Report, I provided shareholders with detailed information on the wind-down of both the Planned Exit and Infrastructure Share classes, which were removed in January 2018. As a consequence, the issued share capital now consists solely of Ordinary Shares.
The Directors, together with the Manager, have been pursuing a long-term strategy for the Company which includes the following four key objectives:
The Directors and the Manager believe that these key objectives remain appropriate and the Company's performance in relation to each of them over the past year is reviewed more fully below.
During the year ended 31 December 2018 the NAV per share rose by 3.1p, an increase of 3.9%. However, following the payment of a 5.0p per share dividend on 4 May 2018, which came to a total of £8.7 million, including shares allotted under the dividend reinvestment scheme, the NAV
of the Company decreased from £140.4m at 31 December 2017 to £136.7 million as at 31 December 2018. The Directors believe that it would be beneficial to increase the Company's net assets over the coming years but with some £33.2 million of funds available for investment at the time of writing, it is not the Board's present intention to seek new money by way of an offer for subscription.
The interim dividend of 5.0p per share was paid on 4 May 2018 based on an ex-dividend date of 19 April 2018, with a record date of 20 April 2018. This is in line with the Board's objective on dividend payments.
The Company has achieved or exceeded its target of paying an annual dividend of at least 5.0p per share for each of the past eight years.
If you had invested five years ago, your NAV total return per share would have increased by 14.0%. It is the combined achievement of dividend payments and the maintenance or increase in NAV per share which is now at the centre of the Company's current and future portfolio management.
The Board has declared an interim dividend relating to the year ended 31 December 2018 of 5.0p per share, to be paid on 3 May 2019 based on an ex-dividend date of 11 April 2019, with a record date of 12 April 2019.
A detailed analysis of the investment portfolio performance over the period is given in the Manager's Review.
Before the payment of dividends, the Company's NAV increased last year by £5.0 million. The Board believes that this reflects the benefit of the enlarged and diversified portfolio of qualifying investments which the Manager has built up over the past few
years. The Company started the current year with nearly 72% of its available resources invested in a range of unquoted growth capital investments; the Board and Manager believe that, in aggregate, these investments will continue to mature and should help improve the future rate of growth in NAV.
During the year under review the Manager completed seven new investments amounting to £13.2 million and two new investments totalling £3.7 million have been made since the end of the year. Details of each of these new portfolio companies can be found in the Manager's Review.
The Manager expects that the current pipeline of opportunities should support completion of a significantly increased number of new investments during the current year.
The complexity surrounding qualification for VCT investment inevitably limits the opportunity for the Company to make new investments and the Manager's ongoing ability to source new deals is pivotal to the Company's future performance. As a consequence, investments made under the new VCT rules will change the risk profile of the portfolio because the rules now incline us towards investments in earlier stage businesses.
The Board is aware that Foresight 4 VCT plc ('Foresight 4') has over the past two years raised a considerable amount of new money, much of which needs to be invested in the near future. The Company and Foresight 4 have the same Manager and share similar investment policies. The Board closely monitors the extent and nature of the pipeline of investment opportunities and is reassured by the Manager's confidence in being able to increase the level of new investments without compromising quality during
2019 and beyond, so as to be in a position to satisfy the needs of both the Company and Foresight 4.
During the year the Company repurchased 2.6 million shares for cancellation at an average discount of 10.1%. The Board and the Manager consider that the ability to offer to buy back shares at a target discount of approximately 10% is fair to both continuing and selling shareholders and is an appropriate way to help underpin the discount to NAV at which the shares trade.
The annual management fee is an amount equal to 2.0% of net assets, excluding cash balances above £20 million, which are charged at a reduced rate of 1.0%. This has resulted in ongoing charges for the year ended 31 December 2018 being 2.1% of net assets, which is at the lower end of the range when compared to competitor VCTs.
Since March 2017, co-investments made by the Manager and individual members of Foresight Group's private equity team have totalled £0.5 million alongside the Company's investments of £32.4 million. Currently the 'Total NAV Return Hurdle', as detailed in note 14 to the accounts, has not been achieved and no performance incentive payment is due.
As announced in last year's Annual Report, Peter Dicks, a founder member of the Board and a past chairman retired at the Annual General Meeting held in May 2018.
The Board continues regularly to review its own performance and undertakes succession planning to maintain an appropriate level of independence, experience, diversity and skills in order to be in a position to discharge all its responsibilities.
Economic uncertainty is, in general, not good for UK businesses and Brexit has and will continue to cause economic uncertainty for some time. Notwithstanding this, the Manager and the Directors are confident in the ability of the current portfolio companies to produce good returns.
The Board and the Manager believe that the value of investments currently held within the portfolio should grow further during the current year and that the pipeline of new investment opportunities will provide worthwhile new investments in the months ahead. In these circumstances the Board believes that the Company is well positioned to work towards meeting its key objectives and in particular to provide shareholders with regular dividends alongside maintained growth in NAV per share.
As part of its commitment to high quality investor relations, Foresight Group continues to host its popular investor forums. In addition to an annual event in London, several regional investor forums have been or will be held around the country. Details of regional events will be sent to shareholders resident in the locality as and when they are organised.
The Company's Annual General Meeting will take place on 23 May 2019 at 1.00pm. 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 70.
Chairman Telephone: 01296 682751 Email: [email protected] 10 April 2019
The Company has appointed Foresight Group CI Limited as its manager ("The Manager") to provide investment management and administration services. Foresight Group CI Limited has appointed Foresight Group LLP to be its investment adviser. The Manager has also delegated secretarial, accounting and other administration services to Foresight Group LLP.
References to "the Manager" throughout this report refer to the activities of Foresight Group CI Limited and include the activities of Foresight Group LLP when acting as the Manager's investment adviser and administrative delegate.
As at 31 December 2018 the Company's portfolio comprised 33 actively managed investments with a total cost of £80.5 million and a valuation of £99.1 million. The portfolio is diversified by sector, transaction type and maturity profile. Details of the ten largest investments by valuation, including an update on their performance, are provided on pages 12 to 16.
The Company invested a total of £13.2 million in seven new portfolio companies during 2018: Luminet Networks, a provider of fixed wireless internet access, Mologic, a health diagnostics company, The Naked Deli, a Newcastle-based group of 'clean eating' restaurants, Codeplay, a software developer and consultancy specialising in Artificial Intelligence, Accrosoft, a software provider with a focus on HR and education, Fertility Focus, an ovulation monitoring company and most recently Spektrix, a performing arts software business. Post-year end, the Company completed a £1.3 million investment into sports management software company, ClubSpark and a £2.4 million investment into Steamforged Games, a developer and retailer of tabletop games.
In April, the Company committed £2.4 million to a Foresight Group-led £3.0 million development capital investment into Luminet Networks, an award-winning provider of connectivity and managed IT services to businesses. Founded in 2005, Luminet was one of the first companies to offer commercial wireless broadband solutions to businesses and has grown its client base to more than 550.
Also in April, the Company committed £2.4 million to a Foresight Group-led £4.0 million growth capital investment round in Bedford-based Mologic. The business is a Point of Care diagnostics company that provides contract research and manufacturing services, as well as developing proprietary diagnostics.
In May, the Company completed a £1.7 million growth capital investment in The Naked Deli, a Newcastlebased group of 'clean eating' restaurants offering eatin casual dining and grab-and-go options. Established in 2014, The Naked Deli serves a tasty range of healthy gluten and dairy-free, vegan and paleo dishes. The group uses unprocessed whole and natural state foods, with a clear pathway from origin to plate. Since investment, management have continued to extend the pipeline of new potential sites and in December 2018, opened a fifth site in Newcastle city centre.
In July, the Company invested £0.7 million in Codeplay, a software developer specialising in Artificial Intelligence. Building on its proven expertise in the fields of games and mobile phones, Codeplay has developed a new technology which supports the deployment of Artificial Intelligence applications into mass produced devices, with an initial focus on the automotive sector and, specifically, Advanced Driver Assistance Systems ("ADAS") and autonomous vehicles.
In August, the Company completed a new investment totalling £1.7 million in Accrosoft. Based in Loughborough, Accrosoft offers two Software as a Service ("SaaS") products, Vacancy Filler, an Applicant Tracking System which improves the recruitment process for organisations and Weduc, an engagement tool to enable parent-teacher communication. The business will use the investment to drive continued growth across both products through new hires and initiatives.
In December, the Company invested £0.9 million in Fertility Focus, a leading fertility monitoring technology company that has developed OvuSense, a registered medical device that enables women to predict ovulation. Fertility Focus was established in 2005 to commercialise the intellectual property developed by a team from Bristol University that identified the ability to determine and predict ovulation. The growth capital investment will be primarily used to invest in sales and marketing and will also fund a clinical trial to further prove the benefits of OvuSense as a tool to diagnose ovulatory issues.
Also in December, the Company invested £3.4 million in Spektrix, the UK's leading provider of cloud-based ticketing, marketing and fundraising software for the arts sector. Founded in 2007, Spektrix was an early pioneer in bringing cloud technology to the arts. The investment will be used to accelerate product development and support Spektrix's international expansion, particularly in North America where it is already working with nearly 100 arts organisations.
Post-year end the Company made a £1.3 million investment into Sportlabs Technology Limited, trading as ClubSpark, a specialist software company providing sports management software to sports clubs, venues, coaches and participants. ClubSpark was founded in 2012 by two ex-Lawn Tennis Association employees who spotted an opportunity to develop a platform to manage operations for the LTA member clubs. The investment will be used to establish an international presence, enhance the platform and expand into new sports markets.
In March 2019 the Company invested £2.4 million in Steamforged Games, a developer and retailer of tabletop games with a portfolio of miniature role playing, board and card games. Founded in 2014, Steamforged Games has successfully carved out a niche in the market developing tabletop games based on popular video game titles, as well as their own original content. The investment will be used to fund growth through product development and international expansion.
Follow-on investments totalling £4.5 million were also made in five existing portfolio companies throughout the year. Further details of each of these are provided below.
Portfolio company Ollie Quinn, a branded retailer of prescription glasses and sunglasses which the Company first committed to in March 2017, received four follow-on funding rounds from the Company throughout 2018, totalling £2.7 million. This supported Ollie Quinn's working capital needs and site optimisation strategy, which focuses on increasing the footprint in Canada. Management restructured towards the end of 2018 putting the business in a stronger position to improve overall site performance and develop its product range across the stores.
During the year the Company made a £0.1 million follow-on investment in data analysis software platform, Idio, as part of a larger funding round. This additional investment enabled Idio to invest in new technologies and provided support for further growth.
In August, molecular diagnostics business, Biofortuna, drew down the second tranche of the 2017 round of
Foresight Group continues to see a strong pipeline of potential investments and has started the year with a number of opportunities under exclusivity or in due diligence. Our investment team currently consists of 24 experienced private equity professionals operating from five offices in the UK, due to be expanded to six in 2019. During 2018 we reviewed nearly 1,500 business plans of potential investee companies, with an increasing number of prospects originated directly
investment, with the Company providing £0.2 million of capital. This investment round was focused on supporting the growth of a differentiated contract services business, under new management, and maximising value from the potential product collaboration with a global diagnostics company.
Also in August, the Company provided 200 Degrees, an artisan coffee chain headquartered in Nottingham, with c. £0.5 million of capital. This was the second tranche of committed capital from the original investment, approved in November 2017. This additional investment will support the targeted retail store expansion in the UK and associated growth in the company's B2B wholesale and B2C subscription offerings. Since investment, the business has opened two new stores with a pipeline of new sites to come.
In September, the Company made a follow-on investment of £0.9 million into Online Poundshop. This funding followed a management restructuring in May and enabled Online Poundshop to continue to fund growth, increase its product lines and stock and make several key hires with a stronger team in place.
by our investment team, which will continue to be at the core of our investment sourcing strategy. The Company focuses on SME's in all sectors across the UK, seeking funding of £1-5 million.
At the time of writing, the Company has cash balances of £33.2 million, which will be used to fund new and follow-on investments, buybacks and running expenses.
After five years of hard work our rapid rise has pleasantly surprised us. We now have numerous opportunities that we need to grab. The Foresight Group investment allows us to keep 200 Degrees independent but open more of our shops, do great things with online subscription and of fer excellent support to our wholesale customers.
Rob Darby, CEO of 200 Degrees
Foresight VCT plc Annual report and accounts 31 December 2018 9
During the year, total proceeds of £3.4 million were generated from the disposal of three investments.
In February, ICA, which provides document management solutions to businesses in London and the South East, was acquired by Automated Systems Ltd, a large independent print solution business. ICA became part of the Company's portfolio through the merger with Foresight 2 VCT plc in December 2015, at a holding value of £0.9 million following an original investment of £1 million made in 2009. Overall, including returns pre-merger, the ICA investment generated a 2.4x return.
In May, the Company completed the successful sale of facilities management provider Thermotech to Servest Group, a global facilities management group headquartered in South Africa, generating a return of 2.3x original investment of £1.5 million. Thermotech, in which the Company invested in August 2013, provides customised air conditioning and fire sprinkler systems
for retail, commercial and residential properties, with clients including M&S, John Lewis and Selfridges & Co. Under the Company's ownership Thermotech was able to expand its high-quality customer base and develop further recurring maintenance revenue streams, as well as complete a strategic acquisition.
In December, the Company disposed of CoGen, a developer of Waste to Energy plants in the UK. CoGen, largely financed to date by loans from other shareholders, carries significant costs and overheads as plants are developed and built and had been operating at a loss. Further funding would have been required from other shareholders to continue to develop the pipeline of new opportunities. In these circumstances, to avoid further dilution, the investment was realised. The Company received £0.2 million for its holding against a cost of £1.6 million.
Foresight Group continues to engage with a range of potential acquirers of several portfolio companies, with demand for the high growth businesses demonstrated by both private equity and trade buyers.
| Accounting Cost at Date of Disposal |
Proceeds | Realised (Loss)/gain |
Valuation at 31 December 2017 |
||
|---|---|---|---|---|---|
| Company | Detail | (£) | (£) | (£) | (£) |
| CoGen Limited | Full disposal | 1,603,491 | 199,832 | (1,403,659) | 550,734 |
| ICA Group Limited | Full disposal | 885,232 | 1,200,088* | 314,856 | 1,290,701 |
| Thermotech Solutions Limited |
Full disposal | 300,000 | 1,980,206^ | 1,680,206 | 1,915,331 |
| Total disposals | 2,788,723 | 3,380,126 | 591,403 | 3,756,766 |
*In addition £158,411 of shareholder loan interest was received on completion and £1,029,671 had been received by Foresight 2 VCT plc pre-merger.
^£1,452,828 had also been received by way of interest and loan payments in prior years.
Deferred consideration of £257,846 was also received by the Company from the sale of Simulity Labs and £51,547 from the sale of O-Gen Acme Trek.
Final administration proceeds totalling £20,320 were received in relation to the liquidation of Evance Wind Turbines, Closed Loop Recycling and Global Immersion.
Overall, the value of investments held rose to £99.1 million, driven by a deployment of £17.7 million and an increase in value of the portfolio by £6.8 million
including realisations. Material changes in valuation, defined as increasing or decreasing by £1 million or more since 31 December 2017, are detailed below.
| Company | Valuation Methodology | Valuation Change (£) |
|---|---|---|
| Itad Limited | Discounted earnings multiple | 1,362,619 |
| Fresh Relevance Limited | Discounted revenue multiple | 1,281,686 |
| Dhalia Limited | Net assets | 1,251,150 |
| TFC Europe Limited | Discounted earnings multiple | 1,246,184 |
| Specac International Limited | Discounted earnings multiple | 1,212,768 |
| FFX Group Limited | Discounted earnings multiple | 1,037,397 |
| Powerlinks Media Limited | Discounted revenue multiple | (1,168,336) |
Whilst UK inflation fell to a two-year low, the jobs market remained robust as the UK reached record levels of employment. The demand for labour continued to bolster wage growth, as real wages climbed at their strongest pace since 2016. However, the backdrop of Brexit means that consumer and business confidence is weakening in the UK amid ongoing uncertainty over the UK's future trading position with Europe, and indeed the rest of the world.
At the time of writing, parliament had yet to reach a consensus on how the UK's departure from the EU is to be realised. Although the majority of MPs oppose a 'hard Brexit' this remains a near-term possibility, as does the Government's proposed deal. However, the lack of progress towards an agreed Brexit route is increasing the likelihood of a general election and a further delay to Brexit, thereby prolonging and exacerbating the current uncertainty. We will therefore continue to support portfolio management teams in planning for a variety of Brexit scenarios.
Whilst the direct impact of a 'hard' or 'soft' Brexit would vary across the portfolio, some potentially heavily impacted, some potentially benefitting, a wider recession would inevitably cause broader issues and there is likely to be a period of volatility ahead.
Nonetheless, we remain positive about the prospects for the existing portfolio and continues to see encouraging levels of activity from smaller UK companies seeking growth capital, as well as from potential acquirers of portfolio companies. We remain focused on targeting companies in markets with sound fundamentals, with attractive growth attributes and strong management teams. We will continue to monitor and adapt to market and regulatory changes to ensure the Company's portfolio is well-placed to deliver returns to its investors.
Russell Healey Head of Private Equity Foresight Group LLP 10 April 2019
By value as at 31 December 2018. Company results are taken from the most recent publicly available financial statements.
Datapath is a UK manufacturer of PC-based multiscreen computer graphics cards and video capture hardware, specialising in video wall and data wall technology.
Datapath continues to generate material profits and build its cash position, although trading was more challenging in the second half of 2018. The company continues to invest heavily in new product development and to increase its sales channels through Original Equipment Manufacturer customers, as well as through distributors and direct sales. Gross margin levels remain ahead of prior year, this is primarily driven by the increased proportion of software in the revenue mix, which should increase as functionality is further improved.
*The amount and date of initial investment by Foresight 2 VCT plc ("F2").
**The accounting cost reflects the valuation of F2's investment in Datapath at the point it was transferred to the Company as part of the merger in December 2015.
***Returned to F2 pre-merger.
| Initial Investment* | September 2007 |
|---|---|
| Amount invested (£)* | 1,000,000 |
| Accounting cost (£)** | 7,563,365 |
| Valuation (£) | 8,809,944 |
| Basis of valuation | Discounted earnings multiple |
| Equity held (%) | 12.9% |
| Income received in the year (£) | — |
| Cash returned up to 31 December 2018 (£)*** |
3,981,822 |
| £000 | Year ended 31 March 2018 |
Year ended 31 March 2017 |
|---|---|---|
| Sales | 28,076 | 25,443 |
| Profit before tax |
4,789 | 5,646 |
| Retained profit |
4,360 | 4,974 |
| Net assets | 25,728 | 21,366 |
SECTOR: CONSUMER & LEISURE
Ollie Quinn is a branded retailer of prescription glasses, sunglasses and non-prescription polarised sunglasses based in the UK and Canada.
Ollie Quinn's trading position has continued to improve following an initially challenging start to the year. Sales have grown by c.25% for the twelve months to December 2018 and gross margins are ahead of forecast. Considerable progress has also been made to drive operational efficiencies which has led to the closure of two underperforming sites in the UK. The management team has been strengthened following the promotion of the Operations Director to CEO and the appointment of a new Finance Director. They have delivered strong like-for-like sales growth in recent months, particularly in Canada.
| $\overline{u}$ $\alpha$ $\alpha$ $\overline{u}$ | |
|---|---|
| Initial Investment | March 2017 |
|---|---|
| Amount invested (£) | 5,693,917 |
| Accounting cost (£) | 5,693,917 |
| Valuation (£) | 5,168,522 |
| Basis of valuation | Cost less impairment |
| Equity held (%) | 64.7% |
| Income received in the year (£) | 4,164 |
| Cash returned up to 31 December 2018 (£) | 4,164 |
| £000 | Year ended 30 June 2018 |
Year ended 30 June 2017 |
|---|---|---|
| Sales | 6,723 | 5,004 |
| Loss before tax |
(2,955) | (1,116) |
| Retained loss |
(2,955) | (1,116) |
| Net assets | 707 | 2,151 |
TFC Europe is one of Europe's leading technically focused suppliers of fixing and fastening products to customers across a wide range of industries, including aerospace, automotive, oil & gas and mechanical engineering.
TFC continues to perform well, with the valuation increasing by £1.2 million over the year. The company is seeing good EBITDA growth driven through a combination of continued revenue growth in both the UK and Germany and improvements in operational efficiencies across the company. Management remain focused on their new three-year plan for organic growth across all sites and have made material progress on strengthening the balance sheet.
*The amount and date of initial investment by F2.
**The accounting cost reflects the valuation of F2's investment in TFC at the point it was transferred to the Company as part of the merger in December 2015.
***Returned to F2 pre-merger.
| Initial Investment* | March 2007 |
|---|---|
| Amount invested (£)* | 939,092 |
| Accounting cost (£)** | 3,614,612 |
| Valuation (£) | 5,089,131 |
| Basis of valuation | Discounted earnings multiple |
| Equity held (%) | 26.7% |
| Income received in the year (£) | — |
| Cash returned up to 31 December 2018 (£)*** |
1,281,684 |
| £000 | Year ended 31 March 2018 |
Year ended 31 March 2017 |
|---|---|---|
| Sales | 22,579 | 20,281 |
| Profit before tax |
1,464 | 900 |
| Retained profit |
1,047 | 640 |
| Net assets | 4,601 | 3,520 |
BUSINESS SERVICES
SECTOR:
FFX is a multi-channel supplier of high-quality hand tools, power tools and accessories, fixings, fasteners and general building products.
FFX has maintained positive momentum, showing a pleasing increase in revenues and EBITDA, which supports the uplift in valuation. Online and wholesale channels delivered double digit revenue growth, with the marketing team successfully running a series of promotions in November supporting a strong Black Friday. The new Marketing Manager who joined mid-year has made a positive impact. The direct sales team is also generating material revenue and margin growth. The roll-out of a back-office IT system continues to be developed with adoption anticipated by June 2019.
*Including the initial investment by F2.
**The accounting cost includes the value at which F2's holding was transferred to the Company as part of the merger in December 2015.
| Initial Investment | September 2015 |
|---|---|
| Amount invested (£)* | 2,676,426 |
| Accounting cost (£)** | 2,676,426 |
| Valuation (£) | 5,087,597 |
| Basis of valuation | Discounted earnings multiple |
| Equity held (%) | 33.1% |
| Income received in the year (£) | — |
| Cash returned up to 31 December 2018 (£) |
139,477 |
| £000 | Year ended 30 September 2018 |
Year ended 30 September 2017 |
|---|---|---|
| Sales | 48,991 | 38,594 |
| Profit/(loss) before tax |
449 | (967) |
| Retained profit/(loss) |
249 | (910) |
| Net assets | 3,488 | 3,239 |
SPECAC INTERNATIONAL LIMITED www.specac.com KENT
Specac International is a leading manufacturer of high specification sample analysis and sample preparation equipment used in testing and research laboratories worldwide.
Specac continues to trade strongly, delivering another record month for sales in December. Overall, the business achieved sales and EBITDA ahead of budget for 2018 and was recognised for its growth in overseas sales after winning a Queen's Award for International Trade. This positive performance has been driven by increased sales activity, particularly in the US and Asia. The company remains focused on further product development to address target markets and a planned office move later this year.
SECTOR: INDUSTRIALS & MANUFACTURING
| Initial Investment | April 2015 |
|---|---|
| Amount invested (£) | 1,345,000 |
| Accounting cost (£) | 1,300,000 |
| Valuation (£) | 5,047,321 |
| Basis of valuation | Discounted earnings multiple |
| Equity held (%) | 37.9% |
| Income received in the year (£) | 175,660 |
| Cash returned up to 31 December 2018 (£) |
483,287 |
| £000 | Year ended 31 March 2018 |
Year ended 31 March 2017 |
|---|---|---|
| Sales | 10,777 | 9,511 |
| Profit before tax |
695 | 1,016 |
| Retained profit |
621 | 789 |
| Net assets | 2,319 | 1,784 |
SECTOR: TMT
Protean develops and sells field service management software for organisations involved in the supply, installation, maintenance and hire of equipment.
Protean continues to generate revenues and profits ahead of budget and up on prior year. Protean is advancing product development with multi-currency support added and various other modules including time-zone support and mobile payment integration in planning. Headcount has been increased across the support and technology teams with the opening of a Polish development centre and to service the high demand for installations. From a marketing perspective, the business is bringing together its offerings onto one website as well as amending its digital marketing strategy which has demonstrated a much greater click through rate.
*Including the initial investment by F2.
**The accounting cost includes the value at which F2's holding was transferred to the Company as part of the merger in December 2015.
***Including £1,553 returned to F2 pre-merger.
| Initial Investment | July 2015 |
|---|---|
| Amount invested (£)* | 2,500,000 |
| Accounting cost (£)** | 2,500,000 |
| Valuation (£) | 5,005,118 |
| Basis of valuation | Discounted revenue multiple |
| Equity held (%) | 39.7% |
| Income received in the year (£) | — |
| Cash returned up to 31 December 2018 (£)*** |
150,904 |
| £000 | Year ended 31 March 2018 |
Year ended 31 March 2017 |
|---|---|---|
| Sales | 3,910 | 3,978 |
| Loss before tax |
(626) | (236) |
| Retained loss |
(428) | (89) |
| Net assets | 3,320 | 3,748 |
Ixaris is a payments platform enabling efficient global payments, targeted in particular at the travel sector.
Ixaris has continued to build traction in the travel sector, and is now entirely focused on the payments platform business, which grew by over 70% during 2018 and processed over \$2bn of payments during the year. The company has established a number of key relationships and partnerships and expects to continue to grow at a high pace in the year ahead. Following new regulations issued by Visa, Ixaris is winding down EntroPay, the B2C virtual card programme, to focus on the more scalable opportunities with the payments platform.
*The amount and date of initial investment by F2.
**The accounting cost reflects the valuation of F2's investment in Ixaris at the point it was transferred to the Company as part of the merger in December 2015.
LEISURE
| Initial Investment* | March 2006 |
|---|---|
| Amount invested (£)* | 822,858 |
| Accounting cost (£)** | 2,266,036 |
| Valuation (£) | 4,563,390 |
| Basis of valuation | Discounted revenue multiple |
| Equity held (%) | 5.6% |
| Income received in the year (£) | — |
| Cash returned up to 31 December 2018 (£) | — |
| £000 | Year ended 31 December 2017 |
Year ended 31 December 2016 |
|---|---|---|
| Sales | 22,486 | 13,204 |
| Profit/(loss) before tax |
2,429 | (2,062) |
| Retained profit/(loss) |
3,027 | (1,631) |
| Net assets | 7,572 | 4,357 |
Itad, established in 1984, is a consulting firm focused on monitoring and evaluating the impact of international development money and aid on behalf of governments, NGOS, foundations and charities in the UK and overseas. The company advises on the impact of aid programmes throughout the world, largely in developing countries.
Itad continues to make strong progress, with revenue and EBITDA materially ahead of prior year, which is reflected in the increase in valuation. Over the last twelve months the company has made progress on improving the average size of contracts won whilst maintaining the win rate. Diversification remains the company's key challenge. The team will likely open a US office over the next twelve months with the aim of cementing relationships with US philanthropic funds and other NGOs and increasing the amount of work sourced from existing customers such as the Bill and Melinda Gates Foundation and the Rockefeller Foundation.
**The accounting cost includes the value at which F2's holding was transferred to the Company as part of the merger in December 2015.
SECTOR: BUSINESS SERVICES
| Initial Investment | October 2015 |
|---|---|
| Amount invested (£)* | 2,750,000 |
| Accounting cost (£)** | 2,750,000 |
| Valuation (£) | 4,322,121 |
| Basis of valuation | Discounted earnings multiple |
| Equity held (%) | 24.1% |
| Income received in the year (£) | 223,278 |
| Cash returned up to 31 December 2018 (£) |
640,887 |
| £000 | Year ended 31 January 2018 |
Year ended 31 January 2017 |
|---|---|---|
| Sales | 13,985 | 12,304 |
| Loss before tax |
(1,028) | (613) |
| Retained loss |
(1,146) | (858) |
| Net assets | 441 | 1,712 |
*Including the initial investment by F2.
Industrial Efficiency II focuses on the provision of large scale energy efficiency and energy cost reduction improvements to commercial customers. The funding provided has enabled the company to provide energy efficiency fuel switching services through the installation of gas and electricity delivery equipment at nine industrial sites across the UK.
During the period, Industrial Efficiency II's sites have operated well with no downtime. Revenues were ahead of budget in the period owing primarily to increased energy usage. The cash position continues to grow strongly, and the business is exploring alternative opportunities for investing in asset classes with a similar risk-return profile, with a large potential investment identified. This opportunity will be assessed to establish whether it is suitable for investment during 2019.
Hospital Services Group Limited distributes, installs and maintains high quality healthcare equipment from global partners such as Hologic, Fujifilm and Shimadzu, as well as providing associated consumables.
HSL maintained high levels of revenue and is investing in various parts of the business to support growth in 2019. In order to drive improved sales performance, the business recruited a sales manager who has increased the focus on activity-based reporting, making a positive impact on the business. HSL won a number of mammography installations in Ireland during the year. HSL also won a position on the framework for mobile X-ray systems in Ireland and the Ergo Viewing subsidiary is trading strongly.
*Including the initial investment by F2.
**The accounting cost includes the value at which F2's holding was transferred to the Company as part of the merger in December 2015.
SECTOR: BUSINESS SERVICES
| Initial Investment | July 2014 |
|---|---|
| Amount invested (£) | 2,603,260 |
| Accounting cost (£) | 2,603,260 |
| Valuation (£) | 3,939,206 |
| Basis of valuation | Discounted cash flow |
| Equity held (%) | 18.8% |
| Income received in the year (£) | — |
| Cash returned up to 31 December 2018 (£) |
219,275 |
| Year ended 30 June 2018 |
Year ended 30 June 2017 |
|---|---|
| 1,631 | 1,409 |
| 156 | (75) |
| 156 | (75) |
| (84) | (240) |
| Initial Investment | September 2015 |
|---|---|
| Amount invested (£)* | 3,320,000 |
| Accounting cost (£)** | 3,320,000 |
| Valuation (£) | 3,789,657 |
| Basis of valuation | Discounted earnings multiple |
| Equity held (%) | 45.2% |
| Income received in the year (£) | — |
| Cash returned up to 31 December 2018 (£) |
— |
| £000 | Year ended 31 March 2018 |
Year ended 31 March 2017 |
|---|---|---|
| Sales | 12,310 | 10,140 |
| Profit before tax |
459 | 222 |
| Retained profit |
389 | 208 |
| Net assets | 4,574 | 4,723 |
Our continued growth, despite an unsettled economy, demonstrates that FFX is providing the right customer service at the right price for the tools market.
Mark Skinner, Operations Director, FFX
Foresight VCT plc Annual report and accounts 31 December 2018 17
| 31 December 2018 | ||||
|---|---|---|---|---|
| Date of First | Accounting cost | Valuation | ||
| Investment (by value) | Investment | Sector | £ | £ |
| Datapath Group Limited* | 2007 | TMT | 7,563,365 | 8,809,944 |
| Ollie Quinn Limited* | 2017 | Consumer & Leisure | 5,693,917 | 5,168,522 |
| TFC Europe Limited* | 2007 | Industrials & Manufacturing | 3,614,612 | 5,089,131 |
| FFX Group Limited* | 2015 | Business Services | 2,676,426 | 5,087,597 |
| Specac International Limited* | 2015 | Industrials & Manufacturing | 1,300,000 | 5,047,321 |
| Protean Software Limited* | 2015 | TMT | 2,500,000 | 5,005,118 |
| Ixaris Systems Limited* | 2006 | Consumer & Leisure | 2,266,036 | 4,563,390 |
| Itad Limited* | 2015 | Business Services | 2,750,000 | 4,322,121 |
| Industrial Efficiency II Limited* | 2014 | Business Services | 2,603,260 | 3,939,206 |
| Hospital Services Group Limited* | 2015 | Healthcare | 3,320,000 | 3,789,657 |
| ABL Investments Limited | 2015 | Business Services | 2,750,000 | 3,567,320 |
| Aquasium Technology Limited | 2001 | Industrials & Manufacturing | 333,333 | 3,544,404 |
| Spektrix Limited | 2018 | TMT | 3,448,276 | 3,448,276 |
| Nano Interactive Group Limited | 2017 | TMT | 3,448,969 | 3,406,761 |
| Fresh Relevance Limited | 2017 | TMT | 2,117,750 | 3,399,436 |
| The Business Advisory Limited | 2015 | Business Services | 1,650,000 | 2,444,703 |
| Mologic Ltd | 2018 | Healthcare | 2,434,483 | 2,434,483 |
| Luminet Networks Limited | 2018 | TMT | 2,364,532 | 2,364,532 |
| Cinelabs International Limited | 2017 | TMT | 2,216,250 | 2,224,046 |
| Procam Television Holdings Limited | 2013 | TMT | 1,664,893 | 2,118,078 |
| 200 Degrees Holdings Limited | 2017 | Consumer & Leisure | 1,477,832 | 2,114,037 |
| Mowgli Street Food Limited | 2017 | Consumer & Leisure | 1,526,750 | 2,021,403 |
| Online Poundshop Limited | 2017 | Consumer & Leisure | 2,610,000 | 1,974,586 |
| The Naked Deli Ltd | 2018 | Consumer & Leisure | 1,724,139 | 1,724,139 |
| Accrosoft Limited | 2018 | TMT | 1,724,138 | 1,724,138 |
| Aerospace Tooling Holdings Limited | 2013 | Industrials & Manufacturing | 150,000 | 1,683,538 |
| Powerlinks Media Limited | 2017 | TMT | 2,709,360 | 1,541,024 |
| Positive Response Communications Limited |
2014 | Business Services | 1,000,000 | 1,311,234 |
| Dhalia Limited | 2015 | General | 100 | 1,251,250 |
| Fertility Focus Limited | 2018 | Healthcare | 862,080 | 862,080 |
| Biofortuna Limited | 2012 | Healthcare | 1,072,519 | 754,370 |
| Idio Limited | 2016 | TMT | 920,313 | 695,435 |
| Codeplay Software Limited | 2018 | TMT | 689,656 | 689,656 |
| Whitchurch PE 1 Limited | 2014 | General | 100,000 | 291,511 |
| Cole Henry PE 2 Limited | 2014 | General | 100,000 | 218,091 |
| Flowrite Refrigeration Limited | 2012 | Business Services | 209,801 | 194,783 |
| Kingsclere PE 3 Limited | 2014 | General | 100,000 | 178,443 |
| Sindicatum Carbon Capital Limited | 2007 | Environmental | 246,075 | 61,519 |
| Mitgjorn Limited | 2015 | General | 100 | — |
| Oxonica plc | 2002 | TMT | 2,804,473 | — |
| Autologic Diagnostics Group Limited | 2009 | TMT | 3,782,272 | — |
| CoGen Limited | 2008 | Environmental | — | — |
| ICA Group Limited | 2009 | Business Services | — | — |
| Thermotech Solutions Limited | 2013 | Business Services | — | — |
| 80,525,710 | 99,065,283 |
18 Foresight VCT plc Annual report and accounts 31 December 2018 * Top ten investments by value shown on pages 12 to 16.
| 31 December 2017 | |||||
|---|---|---|---|---|---|
| Accounting cost | Valuation | Additions | Disposal proceeds | Net valuation movement | |
| Valuation Methodology | £ | £ | £ | £ | |
| 8,809,944 Discounted earnings multiple |
7,563,365 | 9,475,569 | — | — | (665,625) |
| 5,168,522 Cost less impairment |
2,955,000 | 2,216,250 | 2,738,917 | — | 213,355 |
| 5,089,131 Discounted earnings multiple |
3,614,612 | 3,842,947 | — | — | 1,246,184 |
| 5,087,597 Discounted earnings multiple |
2,676,426 | 4,050,200 | — | — | 1,037,397 |
| Discounted earnings multiple | 1,300,000 | 3,834,553 | — | — | 1,212,768 419,435 |
| 5,005,118 Discounted revenue multiple Discounted revenue multiple |
2,500,000 2,266,036 |
4,585,683 4,574,743 |
— — |
— — |
|
| 4,322,121 Discounted earnings multiple |
2,750,000 | 2,959,502 | — | — | 1,362,619 |
| 3,939,206 Discounted cash flow |
2,603,260 | 3,895,075 | — | — | |
| Discounted earnings multiple 3,567,320 Discounted earnings multiple |
3,320,000 2,750,000 |
2,880,204 3,313,766 |
— — |
— — |
|
| 3,544,404 Discounted earnings multiple |
333,333 | 4,044,103 | — | — | |
| 3,448,276 Cost |
— | — | 3,448,276 | — | |
| Discounted revenue multiple | 3,448,969 | 3,448,969 | — | — | |
| 3,399,436 Discounted revenue multiple |
2,117,750 | 2,117,750 | — | — | |
| 2,444,703 Discounted earnings multiple |
1,650,000 | 1,781,794 | — | — | |
| 2,434,483 Cost |
— | — | 2,434,483 | — | |
| 2,364,532 Cost |
— | — | 2,364,532 | — | |
| 2,224,046 Discounted earnings multiple |
2,216,250 | 2,216,250 | — | — | |
| 2,118,078 Discounted earnings multiple |
1,664,893 | 2,315,637 | — | — | |
| Discounted earnings multiple | 935,960 | 935,960 | 541,872 | — | |
| 2,021,403 Discounted earnings multiple |
1,526,750 | 1,526,750 | — | — | |
| Discounted revenue multiple | 1,700,000 | 1,700,000 | 910,000 | — | |
| 1,724,139 Cost |
— | — | 1,724,139 | — | |
| 1,724,138 Cost |
— | — | 1,724,138 | — | |
| 1,683,538 Discounted earnings multiple |
150,000 | 1,491,410 | — | — | |
| 1,541,024 Discounted revenue multiple |
2,709,360 | 2,709,360 | — | — | |
| 1,311,234 Discounted revenue multiple |
1,000,000 | 1,259,486 | — | — | |
| Net assets | 100 | 100 | — | — | |
| 862,080 Cost |
— | — | 862,080 | — | |
| Discounted revenue multiple | 909,755 | 909,755 | 162,764 | — | |
| 695,435 Discounted revenue multiple |
816,659 | 830,847 | 103,654 | — | |
| 689,656 Cost |
— | — | 689,656 | — | |
| 291,511 Net assets |
100,000 | 100,000 | — | — | |
| 218,091 Net assets |
100,000 | 100,000 | — | — | |
| 194,783 Discounted earnings multiple |
209,801 | 574,817 | — | — | |
| 178,443 Net assets |
100,000 | 100,000 | — | ||
| 61,519 Cost less impairment |
246,075 | 61,519 | — | — | |
| — Nil value |
100 | 353,501 | — | — | |
| — Nil value |
2,804,473 | — | — | — | |
| — Nil value |
3,782,272 | — | — | — | |
| Sold | 1,603,491 | 550,734 | — | (199,832) | |
| — Sold |
885,232 | 1,290,701 | — | (1,200,088) | |
| — Sold |
300,000 | 1,915,331 | — | (1,980,206) | |
| 65,609,922 | 77,963,266 | 17,704,511 | (3,380,126) |
The Manager has appointed Foresight Group LLP as its investment adviser, which has won a number of awards recognising its accomplishments in this area. Foresight Group was also voted "Best VCT Investment Manager" at the 2017 Growth Investor Awards, having previously been awarded "VCT House of the Year" at the 2016 Unquote British Private Equity awards. Most recently, Foresight Group won "Best Generalist VCT" at the Investment Week Tax Efficiency Awards 2018/19.
Led by Russell Healey, Foresight Group's growing private equity investment team of 24 is pro-active and hands-on, and focused on investing typically up to £5 million in UK growth companies across a broad range of sectors.
The team currently operates out of offices in London, Manchester, Nottingham, Milton Keynes and Leicester, investing nationwide.
The team combines executives from varying backgrounds across corporate finance, consulting, accounting, private equity and industry. Between them, they have experience of more than 500 private equity and corporate finance transactions and have
managed more than 200 investments, the majority of these during their time at Foresight Group.
This team has c. 300 years' worth of collective investment experience and combines investors' capital and its own hands-on expertise with the intention of creating long-term shareholder value and generating attractive returns for shareholders. Foresight Group takes a particularly active, hands-on approach to portfolio management and as a matter of policy, on its unquoted investments, seeks board representation and the ability to appoint a senior industry expert as chairman. Foresight Group works particularly closely with the investee companies in the following areas:
To deliver sustainable growth and long-term success, Foresight Group believes it is critical to incorporate Environmental, Social and Governance factors ("ESG") into its investment processes and asset management procedures. Often referred to as Responsible Investment, these principles provide not only a key platform to generate attractive returns for investors, but also to help build better quality businesses in the UK, creating jobs and making a positive contribution to society.
ESG values form an integral part of our day-to-day decision making and investment management, which was formalised during 2018 through an update of Foresight Group's ESG Policy. Central to its investment approach are five ESG Principles which are used to evaluate investee companies throughout the life cycle of an investment. The evaluation is both about the company's existing position and its potential to improve and develop with support. Noting the wide range of its investments, Foresight Group believes its approach covers the key areas that should be used to assess a company's ESG performance, throughout the life cycle of an investment:
Does the business demonstrate a good awareness of corporate social responsibility? Is this reflected in its processes and management structure?
Does the company follow good practice for limiting or mitigating its environmental impact, in the context of its industry?
How does it encourage the responsible use of the world's resources?
What impact does the company have on its employees, customers and society as a whole? Is it taking steps to improve the lives of others, either directly, such as through job creation, or indirectly?
Does the company and its leadership team demonstrate integrity? Are the correct policies and structures in place to ensure it meets its legislative and regulatory requirements?
Is the principle of corporate responsibility evidenced in the company's supply chain and customers? How does it promote ESG values and share best practice? Foresight's Five ESG Principles
The evaluation of investee companies against each principle and their improvements are supported by quantitative and qualitative data, starting at the initial review of an opportunity through to exit. This process helps identify both the risks and the opportunities that exist within the portfolio and aims to ensure that investments support positive environmental and social outcomes. Foresight's Five ESG Principles
Foresight Group has been a member of the UK Sustainable Investment and Finance Association since 2009 and a signatory to the Principles for Responsible Investing ("PRI") since 2013.
Foresight Group is an accredited Living Wage Employer and a signatory of the HM Treasury Women in Finance Charter, committing the group to implement recommendations to improve gender diversity in financial services. Portfolio companies are encouraged to pursue similar objectives. Interac>ons Social Governance Awareness Environmental Third Party Interac>ons Social Governance Awareness Environmental Third Party Interac>ons Social Governance
Awareness Environmental Third Party
An example of how ESG is measured is demonstrated below through the investment in Mowgli Street Food, a growing chain of fast casual Indian street food restaurants.
Founder, Nisha Katona, drives Mowgli's focus on healthy, Indian dishes that differentiate it from traditional Indian restaurants. Her purpose for Mowgli is "to enrich lives in the cities that we inhabit. This
means providing fulfilling, purposeful and enriching careers and trying to add social capital to high streets for our guests".
The business has reduced food waste volumes by offering a daily special "tiffin roulette" concept at lunchtime. As far as possible, food is locally sourced.
Mowgli has more than doubled its number of employees since investment, increasing to 255 from 120. This follows the opening of three new sites in
Birmingham, Oxford and Nottingham. There are also new recruits in the recently formed head office function.
Nisha has a hands-on approach to training and career progression, resulting in low staff turnover and high employee engagement. There is a culture of appropriately rewarding high-performing individuals and the staff receive all tips.
Since investment a strong Board has been recruited including a new Chairwoman and Finance Director, improving oversight and management reporting. Formal policies including Health & Safety
have been implemented.
The business adds a discretionary £1 charity donation to each table's bill, which in 2018 led to a total of more than £322k being donated to charities local to its restaurants including children's hospice,
Claire House, the Clatterbridge Cancer Charity and Maggie's Manchester.
I'm thrilled to be working with Foresight Group to continue the growth of Mowgli. I feel passionately about of fering healthy, authentic Indian street food to market. Foresight Group's expertise in growing businesses, alongside our recently appointed new recruits, will allow us to expand into new
Nisha Katona, Founder,
Russell is head of the Private Equity team at Foresight Group with overall responsibility for fund raising, new investments and the portfolio, and is a member of the Foresight Group Executive Committee. He has over 15 years' experience in fund management and venture capital investing. Prior to joining Foresight Group, he worked at Parkmead Group, a merchant bank, and spent ten years as CTO of a financial information company that was subsequently sold to Thomson Reuters. Russell holds a BA in Classics from the University of Exeter and an MBA with distinction from London Business School.
James joined Foresight Group in 2007 from Deloitte's Strategy Consulting team. James has 15 years of experience. At Foresight Group, he has led numerous successful transactions including growth and replacement capital transactions in a variety of sectors. James holds an MA in Natural Sciences and Management Studies from Cambridge University as well as the CIMA Advanced Diploma in Management Accounting.
Matt Smith PARTNER
Matt joined Foresight Group in 2010 and has 15 years' venture capital investment experience. Prior to joining, he spent six years at Rothschild, advising companies in a range of sectors on a variety of transaction types. Matt has a particular focus on Environmental, Social and Governance considerations when evaluating investments and he successfully negotiated sales of a number of difficult assets. Matt graduated from the University of Oxford with an undergraduate degree in Biological Sciences and a distinction in a postgraduate degree in Physiology.
This Strategic Report 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 VCT plc originally raised £10.9 million through an Ordinary Share issue in the 1997/98 tax year. At 31 December 2018, the Company had gross assets totalling £137.0 million, of which £37.4 million was available to make new investments. The number of Ordinary Shares in issue at 31 December 2018 was 175,051,026.
To provide private investors with regular dividends and maintained capital value from a portfolio of investments in fast-growing unquoted companies in the United Kingdom.
The Board expects the Manager to deliver a performance which meets the objectives of the Company. The KPIs covering these objectives are growth in net asset value per share and dividend payments, which, when combined, give an overall NAV per share or NAV total return. Net asset value total return per share allows performance comparisons to be made between VCTs. Additional key performance indicators reviewed by the Board include the discount of the share price relative to the net asset value, which shows the percentage by which the mid-market share price of the Company is lower than the net asset value per share, and total expenses as a proportion of shareholders' funds.
A record of some of these indicators is contained in the Key Metrics section on page 2. The ongoing charges ratio for the year was 2.1% of net assets. Share buy-backs were completed at discounts ranging from 10.0% to 10.2%. Further detail of the Company's KPIs can be found in the Glossary of Terms on page 75.
A review of the Company's performance during the financial year, the position of the Company at the year end and the outlook for the coming 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.
Investments in unquoted companies at an early stage of their development may disappoint. However, investing the Company's funds in companies with high growth characteristics with the potential to become strong performers within their respective fields creates an opportunity for attractive returns to shareholders.
The Company will target investments in UK unquoted companies which it believes will achieve the objective of producing attractive returns for shareholders.
The Company invests in a range of securities including, but not limited to, ordinary and preference shares, loan stock, convertible securities, fixed-interest securities and cash. Unquoted investments are usually structured as a combination of ordinary shares and loan stock, while AIM investments are primarily held in ordinary shares. Pending investment in unquoted and AIM listed securities, cash is primarily held in interest bearing accounts as well as in a range of permitted liquidity investments.
Investments are primarily made in companies which are substantially based in the UK, although many will trade overseas. The companies in which investments are made must satisfy a number of tests set out in Part 6 of the Income Tax Act 2007 to be classed as VCT qualifying holdings.
The Company aims to be significantly invested in growth businesses, subject always to the quality of investment opportunities and the timing of realisations. Any uninvested funds are held in cash and a range of permitted liquidity investments.
Risk is spread by investing in a number of different businesses within different industry sectors at different stages of development, using a mixture of securities. The maximum amount invested in any one company, including any guarantees to banks or third parties providing loans or other investment to such a company, is limited by VCT legislation to 15% of the Company's investments by VCT value at the time of investment.
Investments are selected in the expectation that value will be enhanced by the application of private equity disciplines, including an active management style for unquoted companies through the placement of an investor director on investee company boards.
The Company has a borrowing limit of an amount not exceeding an amount equal to the adjusted capital and reserves (being the aggregate of the amount paid up on the issued share capital of the Company and the amount standing to the credit of its reserves). Whilst the Company does not currently borrow, its articles allow it to do so.
The Company may invest alongside other funds managed or advised by the Manager. Where more than one fund is able to participate in an investment opportunity, allocations will generally be made in proportion to the net cash raised for each such fund, other than where a fund has a pre-existing investment where the incumbent fund will
have priority. Implementation of this policy will be subject to the availability of monies to make the investment and other portfolio considerations, such as the portfolio diversity and the need to maintain VCT status.
The investment policy is designed to ensure that the Company continues to qualify and is approved as a VCT by HMRC. Amongst other conditions, the Company may not invest more than 15% of its total investments and cash by VCT value, at the time of making the investment, in a single company and must have at least 70% by VCT value (80% for accounting periods beginning on or after 6 April 2019) of its investments and cash throughout the period in shares or securities in qualifying holdings. In addition, in aggregate, 70% of a VCT's qualifying investments (30% for investments made before 6 April 2018 from funds raised before 6 April 2011)by VCT value 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).
The Board has engaged Foresight Group CI Limited as its manager, which has appointed Foresight Group LLP as its investment adviser and to which it has delegated the company secretarial, accounting and administration services. References to 'the Manager' throughout this report refer to the activities of both Foresight Group CI Limited and Foresight Group LLP.
The Manager 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. In considering a prospective
investment in a company, particular regard will be paid to:
The Board recognises the requirement under Section 414 of the Companies Act 2006 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.
Please refer to the Manager's Review for more information on Foresight Group's Responsible Investment Principles.
The Board currently comprises one female and three male Directors. The Board is conscious of the need for diversity and will consider both male and female candidates when appointing new Directors.
Foresight Group has an equal opportunities policy and currently employs 139 men and 78 women.
| Foresight Foresight Foresight Inheritance Foresight Regional Williams Total Equity Foresight Foresight 4 Tax Nottingham Investment Technology Managed by VCT VCT Solutions Fund Fund EIS Fund Foresight |
|
|---|---|
| £ £ £ £ £ £ |
% |
| 200 Degrees Holdings Limited 1,477,832 — — 1,500,000 — — |
24.8 |
| ABL Investments Limited 2,750,000 1,494,075 — — — — |
57.3 |
| Accrosoft Limited 1,724,138 750,000 — — — — |
26.9 |
| Aerospace Tooling Holdings 150,000 415,255 — — — — Limited |
50.4 |
| Biofortuna Limited 1,072,519 3,217,535 — — — — |
11.5 |
| Codeplay Software Limited 689,656 300,000 — 1,000,000 — 1,050,000 |
23.3 |
| Cole Henry PE 2 Limited 100,000 200,000 — — — — |
49.9 |
| Datapath Group Limited 7,563,365 11,081,243 — — — — |
38.8 |
| Fertility Focus Limited 862,080 375,000 — — — — |
14.3 |
| FFX Group Limited 2,676,426 1,372,002 — — — — |
49.9 |
| Flowrite Refrigeration Limited 209,801 513,368 — — — — |
50.6 |
| Hospital Services Group 3,320,000 1,200,000 — — — — Limited |
61.6 |
| Idio Limited 920,313 — — 920,313 — — |
12.6 |
| Industrial Efficiency II Limited 2,603,260 — 1,131,498 — — — |
100.0 |
| Itad Limited 2,750,000 1,371,726 — — — — |
35.0 |
| Ixaris Systems Limited 2,266,036 3,479,188 — — — — |
17.9 |
| Kingsclere PE 3 Limited 100,000 100,000 — — — — |
49.9 |
| Luminet Networks Limited 2,364,532 600,000 — — — — |
37.5 |
| Mologic Limited 2,434,483 1,059,000 — — — — |
21.4 |
| Mowgli Street Food Limited 1,526,750 — — — 1,900,000 — |
22.7 |
| Positive Response 1,000,000 1,009,195 — — — — Communications Limited |
60.8 |
| Procam Television Holdings 1,664,893 2,162,929 1,000,000 — — — Limited |
57.4 |
| Protean Software Limited 2,500,000 1,795,229 — — — — |
63.5 |
| Sindicatum Carbon Capital 246,075 544,538 — — — — Limited |
1.0 |
| Specac International Limited 1,300,000 2,554,761 — — — — |
75.8 |
| Spektrix Limited 3,448,276 1,500,000 — — — — |
13.5 |
| TFC Europe Limited 3,614,612 2,149,307 — — — — |
66.7 |
| The Business Advisory Limited 1,650,000 1,938,046 — — — — |
27.8 |
| The Naked Deli Ltd 1,724,139 750,000 — — — — |
46.4 |
| Whitchurch PE 1 Limited 100,000 378,000 — — — — |
49.9 |
Companies valued at £nil have been excluded from the table above.
Where the Manager controls over 50% of an investment by virtue of its discretionary management of one or more funds under management, decisions either have to be taken by the individual boards of the VCTs in respect of their individual holdings or voting is limited to 50%.
The Manager provides investment management services or advice to Foresight 4 VCT plc, Foresight Solar & Infrastructure VCT plc, Foresight Nottingham Fund LP, Foresight Environmental Fund LP, Foresight Solar Fund Limited, Foresight European Solar Fund LP, Foresight Capri Energy Fund, Foresight Inheritance Tax Solutions, Foresight Sustainable UK Investment Fund, Foresight AD EIS, Foresight Energy Infrastructure EIS, Foresight Regional Investment LP, Foresight Williams Technology EIS Fund and MEIF ESEM Equity LP.
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.
A proportion of realised gains will normally be retained for reinvestment and to meet future costs. Subject to this, the Company will endeavour to maintain a flow of dividend payments of the order of 5p per share, although a greater or lesser sum may be paid in any year. It is the intention to maximise the Company's tax-free income from a combination of dividends and interest received on investments and the distribution of capital gains arising from trade sales or flotations.
The Board carries out regular reviews 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 and the valuation of investee companies and their ability to access adequate financial resources, as well as affecting the Company's own share price and discount to net asset value.
Mitigation: The Company invests in a diversified portfolio of investments spanning various industry sectors and maintains sufficient cash reserves to be able to provide additional funding to investee companies where appropriate and to repurchase its own shares.
Mitigation: Legal advice is taken for each transaction to ensure all investments are qualifying. Advance assurance, where appropriate, is sought from HMRC ahead of completion. 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 Shakespeare Martineau LLP to undertake an independent VCT status monitoring role.
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 Manager aims 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 and maintaining a spread of holdings in terms of industry sector. The Board reviews the investment portfolio with the Manager on a regular basis.
investments: Unquoted companies are unlisted and there is no
published market price for their shares. The value of the shares needs to be calculated based on other available information using estimates and judgements. As a result, the values calculated can be subjective.
Mitigation: Valuations are prepared in accordance with the IPEV Valuation Guidelines, as discussed in more detail in note 1 to the accounts. The Board reviews portfolio valuations quarterly and the external auditor performs an annual review, as noted in the auditor's report.
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 status.
Mitigation: The Board and the Manager monitor political developments and where appropriate seek to make representations either directly or through relevant trade bodies.
Company's assets could be at risk in the absence of an appropriate internal control regime. This could lead to theft, fraud, cybercrime and/or an inability to provide accurate reporting and monitoring.
Mitigation: The Board carries out regular reviews of the system of internal controls, both financial and non-financial, operated by the Manager and other service providers. 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 and at least annually by the external auditor.
Market risk: All investments are impacted by market risk. Many factors including terrorist activity and political developments can negatively impact stock markets worldwide. In times of adverse sentiment there can be very little, if any, market demand for shares in smaller companies.
Mitigation: The Board keeps the portfolio under regular review and the Manager ensures the portfolio is diversified.
Credit risk: The Company holds a number of financial instruments and cash deposits and is dependent on the counterparties discharging their commitment.
Mitigation: The Directors challenge and the Manager reviews the credit-worthiness of the counterparties to these instruments and cash deposits and seek to ensure there is no undue concentration of credit risk with any one party.
Brexit: The Board recognises that Brexit is a process that involves significant uncertainty and therefore the impact on the economy in general and the repercussions on individual businesses are difficult to anticipate.
Mitigation: The Board and the Manager follow Brexit developments closely with a view to identifying where changes could affect the areas of the market in which the Company specialises. Although hopefully this should be relatively limited as the majority of the businesses the Company invests in are largely UK focused, there will be an impact particularly where sales or purchases are outside the UK.
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 31 December 2021. 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 concentrated its efforts on the major factors that affect the economic, regulatory and political environment.
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 its investment process to take account of the more restrictive VCT investment rules that currently apply.
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 31 December 2021.
Shareholders approved a co-investment scheme and performance incentive arrangements at a General Meeting held on 8 March 2017, effective from 31 March 2017. Details can be found in note 14 to the accounts
Investments held by the Company have been valued in accordance with the International Private Equity and Venture Capital ("IPEV") Valuation 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 the Manager, reviewed and approved by the Board quarterly and subject to annual review by the auditors.
To obtain VCT tax reliefs on subscriptions up to £200,000 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:
The above tax reliefs will be forfeited by shareholders if the shares are not held for five years.
Foresight VCT plc has been granted approval as a Venture Capital Trust (VCT) under S274— S280A of the Income Tax Act 2007 for the year ended 31 December 2017. The next complete review will be carried out for the year ended 31 December 2018. It is intended that the business of the Company be carried on so as to maintain its VCT status.
The Directors and the Manager have managed, and continue to manage, the business in order to comply with the legislation applicable to VCTs. The Board has appointed Shakespeare Martineau LLP to monitor and provide continuing advice in respect of the Company's compliance with applicable VCT legislation and regulation. As at 31 December 2018 the Company had 87.7% (by VCT valuation) of its funds in such VCT qualifying holdings.
The Board and the Manager believe that the strategy of focusing on growth private equity investments is currently in the best interests of shareholders and the historical information reproduced in this report is evidence of positive recent performance in this area.
The Company's performance relative to its peer group will depend on the Manager's ability to allocate the Company's assets effectively, make successful investments and manage its liquidity appropriately.
John Gregory Chairman 10 April 2019
| Position Appointed |
Chairman of the Board 30 July 2010 |
|---|---|
| Experience | John is a chartered accountant with a broad experience of banking, corporate finance and fund management; he was an executive director of Noble Fund Managers Limited until 2004. His earlier career was in the City of London and included posts as an executive director of Singer & Friedlander Holdings Limited and, before that, managing director of Henry Ansbacher & Co Limited. |
| Other positions | Chairman of Social Impact VCT plc and a non executive director or Chairman of several private companies. |
| Beneficial Shareholding |
43,877 Ordinary Shares |
| Position | Chairman of the Audit and Nomination Committees, Non-Executive Director |
|---|---|
| Appointed | 20 February 2007 |
| Experience | Gordon has over 30 years' experience in financial services, particularly with regard to investment trusts. He was an investment director and the head of investment companies at Standard Life Investments. Prior to this he was joint head of investment trusts at F&C Asset Management. He was previously a director of R&H Fund Services Limited and was a member of the Institute of Chartered Accountants of Scotland Audit and Assurance Committee for the period 2005 to 2015. Gordon began his career with Deloitte Haskins & Sells (now PwC), where he qualified as a chartered accountant. He has an MA (Hons) in Economics and Accounting from the University of Edinburgh. |
| Other positions | Director of Maven Income and Growth VCT 5 plc and Trustee of the Cattanach Trust. |
| Beneficial | 16,252 Ordinary Shares |
| Position Appointed |
Non-Executive Director 18 December 2015 |
|---|---|
| Experience | Jocelin is a qualified solicitor and since 1986 has run Durrington Corporation, which provides finance and advice for small businesses. Before this he was a Director of private bank Rea Brothers for 13 years. He has personally invested in over 40 development stage companies over the last 35 years. |
| Other positions | Currently Chairman or Non-Executive Director of a number of companies in the UK and the USA. He is also a Director of Unicorn AIM VCT plc and a Governor of St Paul's Way Trust School in London. |
| Beneficial Shareholding |
59,583 Ordinary Shares |
| Position | Chairman of the Management Engagement & Remuneration Committee, Non-Executive Director |
|
|---|---|---|
| Appointed | 1 October 2017 | |
| Experience | Margaret has 19 years of experience in both commercial and investment banking, developing particular expertise in derivatives and in credit and market risk management. Between 2004 and 2006 she co-founded two start-up ventures, providing self-storage facilities to domestic and business customers in the Midlands and acted as Finance Director until the businesses were successfully sold in 2016. |
|
| Other positions | Margaret currently serves as Non-Executive Chairman of Henderson High Income Trust plc and as Non-Executive Director of JPMorgan Mid Cap Investment Trust plc and UK Commercial Property REIT Ltd. She is also a member of the Development Committee of Southern Housing Group. |
|
| Beneficial Shareholding |
Nil |
The Directors present their report and the financial statements of the Company for the year ended 31 December 2018.
The principal activity of the Company during the year was the making of investments in unquoted companies in the United Kingdom. The Company is not an investment company within the meaning of Section 833 of the Companies Act 2006. It has satisfied the requirements as a VCT under sections 274–280A of the Income Tax Act 2007. Confirmation of the Company's qualification as a VCT has been received up to 31 December 2017 and the Directors have managed and intend to continue to manage the Company's affairs in such a manner as to continue to comply with these regulations.
The total return attributable to shareholders for the year amounted to £5,384,000 (2017: £13,248,000). The Board declared an interim dividend of 5.0p per Ordinary Share which was paid on 4 May 2018.
During the year ended 31 December 2018 the Company's principal indicator of performance, NAV total return increased 3.9% (2017: 6.5%) from 80.0p per Ordinary Share to 83.1p per Ordinary Share.
The Company allotted 2,071,401 Ordinary Shares under the Company's Dividend Reinvestment Scheme at 75.0p per share.
At 31 December 2018 the Company had 175,051,026 Ordinary Shares in issue.
During the year, the Company repurchased 2,622,352 Ordinary Shares for cancellation at a cost of £1,817,000. No shares bought
back by the Company are held in treasury. Share buy-backs have been completed at discounts ranging from 10.0% to 10.2%.
The Company has no greenhouse gas emissions to report from the operations of the Company, nor does it have responsibility for any other emissions sources under the Companies Act 2006 (Strategic Report and Directors' Reports) regulations 2013.
A summary of the principal risks faced by the Company is set out in the Strategic Report on page 24.
Foresight Group CI Limited is the manager of the Company and has appointed Foresight Group LLP as its investment adviser and to which it has delegated the company secretarial, accounting and administration services.
Annually, the Management Engagement & Remuneration Committee reviews the appropriateness of the Manager's appointment. In carrying out its review, the Management Engagement & Remuneration Committee considers the investment performance of the Company and the ability of the Manager to produce satisfactory investment performance. It also considers the length of the notice period of the investment management contract and fees payable to the Manager, together with the standard of other services provided which include Company Secretarial services. It is the Directors' opinion that the continuing appointment of the Manager on the terms agreed is in the interests of shareholders as a whole. The last review was undertaken on 28 March 2019. The principal terms of the management agreement are set out in note 3 to the accounts. Following the launch of the offer
for subscription in January 2016 the Manager agreed to reduce the annual expenses cap to 2.4%, excluding performance incentive fees, making it one of the lower expenses caps of any VCT with total assets over £20 million.
No Director has an interest in any contract to which the Company is a party. Foresight Group CI Limited acts as manager to the Company in respect of its investments and earned fees of £2,379,000 (2017: £3,780,000 including a £863,000 performance incentive in relation to the Infrastructure Shares Fund). Foresight Group LLP indirectly received £117,000 (2017: £113,000) during the year in respect of secretarial, administrative and custodian services to the Company.
Foresight Group LLP also received from investee companies arrangement fees of £477,000 (2017: £536,000) and directors' fees of £616,000 (2017: £510,000).
| £'000 | |
|---|---|
| Management fee | 2,379 |
| Arrangement fees | 477 |
| Directors fees | 616 |
| Secretarial fee | 117 |
| 3,589 |
The Manager is also a party to the performance incentive agreements described in note 14 to the accounts. All amounts are stated, where applicable, net of Value Added Tax.
At the time of writing, staff of the Manager held a total of 1,907,222 Ordinary Shares in the Company.
The Company has retained Shakespeare Martineau LLP as legal advisers to advise on, inter alia, compliance with legislative requirements. The Directors monitor the Company's VCT status at meetings of the Board and the Manager monitors the status on a continuing basis.
So far as the Directors are aware, there were no individual shareholdings representing 3% or more of the Company's issued share capital at the date of this report.
Details of all financial instruments used by the Company during the year are given in note 15 to the accounts.
The Directors have the benefit of indemnities under the articles of association of the Company against, to the extent only as permitted by law, liabilities they may incur acting in their capacity as Directors of the Company.
An insurance policy is maintained by the Company which indemnifies the Directors of the Company against certain liabilities that may rise in the conduct of their duties. There is no cover against fraudulent or dishonest actions.
The Company does not subscribe to a particular code but follows a policy whereby suppliers are paid by the due date and investment purchases are settled in accordance with the stated terms. At the year end trade creditors represented an average credit period of 1 day (2017: 3 days).
The AIFMD came into force on 22 July 2013 and sets out the rules for the authorisation and on-going regulation of managers (AIFMs) that manage alternative investment funds (AIFs) in the EU. The Company qualifies as an AIF and so is required to comply, although additional cost and administration requirements are not expected to be material. The Company's approval was
confirmed in August 2014. This has not affected the current arrangements with the Manager, who continues to report to the Board and manage the Company's investments on a discretionary basis.
Pursuant to s418(2) of the Companies Act 2006, each of the Directors confirms that (a) so far as they are aware, there is no relevant audit information of which the Company's auditors are unaware; and (b) they have taken all steps they ought to have taken to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of such information.
The following disclosures are made in accordance with Statutory Instrument 2008/410 schedule 7 Part 6.
The Company's issued share capital as at 10 April 2019 was 175,051,026 Ordinary Shares.
The Company's Planned Exit Shares and Infrastructure Shares were removed in January 2018, following full realisation and distribution of these funds.
The Ordinary Shares represent 100% of the total share capital. Further information on the share capital of the Company is detailed in note 12 to the accounts.
Details of the voting rights in the Company's shares at the date of this report are given in note 5 in the Notice of Annual General Meeting on page 70.
At the date of this report no notifiable interests had been declared in the Company's voting rights.
Pursuant to S487(2) of the Companies Act 2006, the Directors have decided to propose the re-appointment of KPMG LLP as auditor and a resolution concerning this will be proposed at the Annual General Meeting.
In accordance with Schedule 7 of the Large and Medium Size Companies and Groups (Accounts and Reports) Regulations 2008, as amended, the Directors disclose the following information:
The Directors have declared any conflicts or potential conflicts of interest to the Board which has the authority to approve such conflicts. The Company Secretary maintains the Register of Directors' Conflicts of Interest which is reviewed quarterly by the Board and when changes are notified. The Directors advise the Company Secretary and Board as soon as they become aware of any conflicts of interest. Directors who have conflicts of interest do not take part in discussions concerning their own conflicts.
The Board has been informed that Foresight Group has arrangements in place in accordance with the UK Corporate Governance Code's recommendations by which staff may, in confidence, raise concerns within their respective organisations about possible improprieties in matters of financial reporting or other matters. On the basis of that information, adequate arrangements are in place for the proportionate and independent investigation of such matters and, where necessary, for appropriate follow-up action to be taken within their respective organisations.
The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report. The financial position of the Company, its cash flows, liquidity position and borrowing facilities are referred to in the Chairman's Statement, Strategic Report and Notes to the Accounts. In addition, the accounts include 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 sufficient 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.
Cash flow projections have been reviewed and show that the Company has sufficient funds to meet both its contracted expenditure and its discretionary cash outflows in the form of share buy backs and dividends. The Company has no external loan finance in place and therefore is not exposed to any gearing covenants, although its underlying investments may have external loan finance.
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 accounts.
Following changes to the Companies Act 2006, UK investment companies must comply with new regulations in relation to directors' remuneration. Directors' fees can only be paid in accordance with a remuneration policy which has been approved by shareholders. The company must also publish a Directors' Remuneration Report that complies with a new set of disclosure requirements. See page 41.
A formal notice convening the Annual General Meeting on 23 May 2019 can be found on pages 70 to 73. Resolutions 1 to 9 will be proposed as ordinary resolutions meaning that for each resolution to be passed more than half of the votes cast at the meeting must be in favour of the resolution. Resolutions 10 to 12 will be proposed as special
resolutions meaning that for each resolution to be passed at least 75% of the votes cast at the meeting must be in favour of the resolution. Resolutions 9 to 11 supplement and renew share issue and buyback authorities.
Resolution 9 will authorise the Directors to allot relevant securities generally, in accordance with Section 551 of the Companies Act 2006, up to an aggregate nominal amount of £400,000. This authority will be used for the purposes listed under the authority requested under Resolution 10. This includes authority to issue shares pursuant to the dividend reinvestment scheme, performance incentive fee arrangements with the Manager and relevant individuals of the Foresight Group LLP investment team and top-up offers for subscription to raise new funds for the Company if the Board believes this to be in the best interests of the Company. Any offer is intended to be at an offer price linked to NAV. This authority will expire (unless renewed, varied or revoked by the Company in a general meeting) on the fifth anniversary of the passing of the resolution and is in substitution for all existing authorities.
Resolution 10 will sanction, in a limited manner, the disapplication of pre-emption rights in respect of the allotment of equity securities (i) with an aggregate nominal amount of up to £200,000 pursuant to offer(s) for subscription, (ii) with an aggregate nominal value of up to 10% of the issued share capital pursuant to dividend reinvestment schemes at a subscription price per share which may be less than the net asset value per share, as may be prescribed by the scheme terms, (iii) with an aggregate nominal value of up to £100,000 pursuant to performance incentive
and relevant individuals of the Foresight Group LLP investment team and (iv) with an aggregate nominal value of up to 10% of the issued share capital for general purposes, in each case where the proceeds of such issue may be used in whole or part to purchase the Company's shares. This authority will expire (unless renewed, varied or revoked by the Company in a general meeting) at the conclusion of the Annual General Meeting to be held in 2020, or, if earlier on the date falling 15 months after the passing of the resolution, save that the Company shall be entitled to make offers or agreements before the expiry of such authority which would or might require equity securities to be allotted after such expiry and Directors shall be entitled to allot equity securities pursuant to any such offers or agreements as if the authority conferred hereby had not expired. This authority is in substitution for all existing authorities.
arrangements with the Manager
It is proposed by Resolution 11 that the Company be authorised to make market purchases of the Company's own shares. Under this authority the Directors may purchase up to 26,240,149 shares, (representing approximately 14.99% of the Company's shares in issue at the date of this Annual Report) or, if lower, such number of shares (rounded down to the nearest whole share) as shall equal 14.99% of the issued share capital at the date the resolution is passed. When buying shares, the Company cannot pay a price per share which is more than 105% of the average of the middle market quotation for a share taken from the London Stock Exchange daily official list on the five business days immediately before the day on which shares are purchased or, if greater, the amount stipulated by Buyback and Stabilisation Regulation 2003. This authority will expire (unless
renewed, varied or revoked by the Company in a general meeting) at the conclusion of the Annual General Meeting to be held in 2020, or, if earlier on the date falling 15 months after the passing of the resolution, save that the Company may purchase its shares after such date in pursuance of a contract or contracts made prior to the expiration of this authority. This authority is in substitution for all other existing authorities.
Whilst, generally, the Company does not expect that shareholders will want to sell their shares within five years of subscribing for them because this would lead to a loss of tax relief, the Directors anticipate that from time to time shareholders may need to sell shares within this period. Up front VCT income tax relief is only obtainable by an investor who makes an investment in new shares issued by the Company. This means that investors may be willing to pay more for new shares issued by the Company than they would pay to buy existing shares in the market. Therefore, in the interest of shareholders who may need to sell shares from time to time, the Company proposes to renew the authority to buy-in shares as it enables the Board, where possible, to maintain a degree of liquidity in the Company's shares. In making purchases the Company will deal only with member firms of the London Stock Exchange and at a discount to the then prevailing net asset value per share of the Company's shares to ensure that existing shareholders' interests are protected.
Resolution 12 seeks the authority from shareholders (as required under the Companies Act 2006) to reduce the share premium account of the Company by £21.6 million.
Cancelling share premium allows a company to create a special
reserve that can be used to write or set off losses, facilitate distributions and buybacks and for other corporate purposes. The Company has previously cancelled share premium for these purposes and has, over time, utilised the special reserves created from these cancellations.
The issue of shares pursuant to recent fundraisings has resulted in the creation of further share premium. The Board proposes to reduce the share premium account to create further special reserves.
Prior to confirming the reduction of the share premium account, the court will need to be satisfied that the reduction will not prejudice the interests of the Company's creditors. The Company will take such steps as are necessary to satisfy the court in this regard. The reduction of the share premium account will take effect once the court order confirming the reduction has been registered by the Registrar of Companies.
The amount to be cancelled is related to share premium created by the issue of shares on or before 31 December 2015 and is not, therefore, regarded under VCT legislation as restricted capital which should not be used to make, directly or indirectly, payments to shareholders.
By order of the Board
10 April 2019
The Directors of Foresight VCT plc confirm that the Company has taken the appropriate steps to enable it to comply with the Principles set out in Section 1 of the UK Corporate Governance Code on Corporate Governance ('UK Corporate Governance Code') issued by the Financial Reporting Council in April 2016, as appropriate for a VCT.
As a VCT, the Company's day-to-day responsibilities are delegated to third parties and the Directors are all Non-Executive. Thus not all the procedures of the UK Corporate Governance Code are directly applicable to the Company. Unless noted as an exception below, the requirements of the UK Corporate Governance Code were complied with throughout the year ended 31 December 2018. The Annual General Meeting for the year ended 31 December 2017 was convened on 20 business days' notice as recommended in the UK Corporate Governance Code.
The Board has also considered and observed the principles and recommendations of the 2016 AIC Code of Corporate Governance ("AIC Code"). The AIC Code addresses all the principles set out in the UK Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to the Company.
The Company has a Board of four Non-Executive Directors, all of whom are considered to be independent. The Board has not appointed a Senior Independent Director.
The Board is responsible to shareholders for the proper management of the Company and meets at least quarterly and on an ad hoc basis as required. It has formally adopted a schedule of matters that are required to be brought to it for decision, thus ensuring that it maintains full and effective control over appropriate strategic, financial, operational and compliance issues. A management agreement between the Company and its Manager sets out the matters over which the Manager has authority, including monitoring and managing the existing investment portfolio and the limits above which Board approval must be sought. All other matters are reserved for the approval of the Board of Directors. The Manager, in the absence of explicit instruction from the Board, is empowered to exercise discretion in the use of the Company's voting rights.
All shareholdings are voted, where practicable, in accordance with the Manager's own corporate governance policy, which is to seek to maximise shareholder value by constructive use of votes at company meetings and by endeavouring to use its influence as an investor with a principled approach to corporate governance.
Individual Directors may, at the expense of the Company, seek independent professional advice on any matter that concerns them in the furtherance of their duties. In view of its Non-Executive nature and the requirements of the Articles of Association that
Directors retire by rotation at the Annual General Meeting, the Board considers that it is not appropriate for the Directors to be appointed for a specific term as recommended by provision B.2.3 of the UK Corporate Governance Code. However, the Board has agreed that each Director will retire and, if appropriate, may seek re-election annually.
Full details of duties and obligations are provided at the time of appointment and are supplemented by further details as requirements change. Although there is no formal induction programme for the Directors as recommended by provision B.4.1, new Directors meet with the Manager for an initial briefing.
The Board has access to the officers of the Company Secretary who also attend Board Meetings. Representatives of the Manager attend all formal Board Meetings although the Directors may on occasion meet without representatives of the Manager being present. Informal meetings with the Manager are also held between Board Meetings as required.
Attendance by Directors at Board and Committee meetings is detailed in the table below.
| Board | Audit | Nomination | Management Engagement & Remuneration |
|
|---|---|---|---|---|
| John Gregory | 5/5 | 2/2 | 1/1 | 1/1 |
| Gordon Humphries | 5/5 | 2/2 | 1/1 | 1/1 |
| Jocelin Harris | 5/5 | 2/2 | 1/1 | 1/1 |
| Margaret Littlejohns | 5/5 | 2/2 | 1/1 | 1/1 |
| Peter Dicks* | 3/3 | 1/1 | 1/1 | 1/1 |
*Peter Dicks retired on 22 May 2018.
The Company Secretary provides full information on the Company's assets, liabilities and other relevant information to the Board in advance of each Board Meeting.
In addition to the above, three further meetings were held in relation to the publication of corporate documents and in relation to investments.
In light of the responsibilities retained by the Board and its committees and of the responsibilities delegated to the Manager and Shakespeare Martineau LLP, the Company has not appointed a chief executive officer, deputy Chairman or a senior independent non-executive Director as recommended by provision A.4.1 of the UK Corporate Governance Code. The provisions of the UK Corporate Governance Code which relate to the division of responsibilities between a chairman and a chief executive officer are, accordingly, not applicable to the Company.
The Board has adopted formal terms of reference, which are available to view by writing to the Company Secretary at the registered office, for three standing committees which make recommendations to the Board in specific areas.
The Audit Committee comprises Gordon Humphries (Chairman), John Gregory, Jocelin Harris and Margaret Littlejohns, all of whom are considered to have sufficient recent and relevant financial experience to discharge the role, and meets at least twice a year to consider, amongst other things, the following:
control and risk management systems;
The Audit Committee has performed an assessment of the audit process and the auditor's report in the Audit Committee Report.
The Directors have decided to recommend re-appointment of KPMG LLP as auditor and a resolution concerning this will be proposed at the Annual General Meeting. Cornel Partners Limited provides the Company's taxation services.
The Nomination Committee comprises Gordon Humphries (Chairman), John Gregory, Jocelin Harris and Margaret Littlejohns and meets at least annually to consider the composition and balance of skills, knowledge and experience of the Board and to make nominations to the Board in the event of a vacancy. New Directors are required to resign at the Annual General Meeting following appointment and then seek re-election thereafter.
The Board believes that, as a whole, it has an appropriate balance of skills, experience and knowledge. The Board also believes that diversity of experience and approach, including gender diversity, amongst Board members is important and it is the Company's policy to give careful consideration to issues of Board balance and diversity when making new appointments. The Nomination Committee makes recommendations to the Board on the Company's succession plans
and also considers the resolutions for the annual re-election of directors.
The Management Engagement & Remuneration Committee (which has responsibility for reviewing the remuneration of the Directors) comprises Margaret Littlejohns (Chairman), John Gregory, Jocelin Harris and Gordon Humphries and meets at least annually to consider the levels of remuneration of the Directors, specifically reflecting the time commitment and responsibilities of the role. The Management Engagement & Remuneration committee also undertakes external comparisons and reviews to ensure that the levels of remuneration paid are broadly in line with industry standards. The Management Engagement & Remuneration Committee also reviews the appointment and terms of engagement of the Manager.
The Board undertakes a formal annual evaluation of its own performance and that of its committees, as recommended by provision B.6 of the UK Corporate Governance Code. Initially, the evaluation takes the form of a questionnaire for the Board (and its committees). The Chairman then discusses the results with the Board (and its committees) and following completion of this stage of the evaluation, the Chairman will take appropriate action to address any issues arising from the process.
The Company communicates with shareholders and solicits their views where it considers it is appropriate to do so. Foresight Group hosts regular investor forums for shareholders and publishers quarterly fact sheets, as well as information on new investments, on its website.
Individual shareholders are welcomed to the Annual General Meeting where they have the
opportunity to ask questions of the Directors, including the Chairman, as well as the Chairman of the Audit, Nomination and Management Engagement & Remuneration Committees. The Board may from time to time seek feedback through shareholder questionnaires and an open invitation for shareholders to meet the Manager. The Company is not aware of any institutions owning shares in the Company.
The Directors of Foresight VCT plc have overall responsibility for the Company's system of internal control and for reviewing its effectiveness.
The internal controls system is designed to manage rather than eliminate the risks of failure to achieve the Company's business objectives. The system is designed to meet the particular needs of the Company and the risks to which it is exposed and by its nature can provide reasonable but not absolute assurance against misstatement or loss.
The Manager has delegated the financial administration of the Company to Foresight Group LLP, which has an established system of financial control, including internal financial controls, to ensure that proper accounting records are maintained and that financial information for use within the business and for reporting to shareholders is accurate and reliable and that the Company's assets are safeguarded.
Shakespeare Martineau LLP provides legal advice and assistance in relation to the maintenance of VCT tax status, the operation of the agreements entered into with the Manager and the application of the VCT legislation to the Company.
Foresight Group LLP was appointed as Company Secretary in 2017 with responsibilities relating to the administration of the non-financial systems of internal control. All Directors have access to the advice and services of the officers of the Company Secretary, who are responsible to the Board for ensuring that Board procedures and applicable rules and regulations are complied with.
Pursuant to the terms of its appointment, the Manager invests the Company's assets and Foresight Group LLP, in its capacity as administrator, has physical custody of documents of title relating to equity investments.
Following publication of Internal Control: Guidance for Directors on the UK Corporate Governance Code (the Turnbull guidance), the Board confirms that there is a continuous process for identifying, evaluating and managing the significant risks faced by the Company, that has been in place for the year under review and up to the date of approval of the annual report and accounts, and that this process is regularly reviewed by the Board and accords with the guidance. The process is based principally on the Manager's existing risk-based approach to internal control whereby a risk register is created that identifies the key functions carried out by the Manager and other service providers, the individual activities undertaken within those functions, the risks associated with each activity and the controls employed to minimise those risks. A residual risk rating is then applied.
The Board is provided with reports highlighting all changes to the risk ratings and confirming the action that has been, or is being, taken. This process covers consideration of the key business, operational, compliance and financial risks facing the Company and includes consideration of the risks
associated with the Company's arrangements with the Manager, Foresight Group LLP, Shakespeare Martineau LLP and other service providers.
The Audit Committee has carried out a robust review of the effectiveness of the system of internal control, together with a review of the operational and compliance controls and risk management, as it operated during the year and reported its conclusions to the Board which was satisfied with the outcome of the review.
Such review procedures have been in place throughout the full financial year and up to the date of approval of the accounts, and the Board is satisfied with their effectiveness. These procedures are designed to manage, rather than eliminate, risk and, by their nature, can only provide reasonable, but not absolute, assurance against material misstatement or loss. The Board monitors the investment performance of the Company against its objectives at each Board meeting.
The Board also reviews the Company's activities since the last Board meeting to ensure that the Manager adheres to the agreed investment policy and approved investment guidelines and, if necessary, approves changes to such policy and guidelines.
The Board has reviewed the need for an internal audit function. It has decided that the systems and procedures employed by the Manager, the Audit Committee and other third party advisers provide sufficient assurance that a sound system of internal control, which safeguards shareholders' investment and the Company's assets, is maintained. In addition, the Company's financial statements are audited by external auditors. The Board has therefore
concluded that it is not necessary to establish an internal audit function at present but this policy will be kept under review.
Directors are provided on a regular basis with key information on the Company's policies, regulatory and statutory requirements and internal controls.
Changes affecting Directors' responsibilities are advised to the Board as they arise. Directors also participate in industry seminars.
Foresight Group has endorsed the UK Stewardship Code published by the FRC. This sets out the responsibilities of institutional investors in relation to the companies in which they invest and a copy of this can be found at www.foresightgroup.eu.
The Company is committed to carrying out business fairly, honestly and openly. The Manager has established policies and procedures to prevent bribery within its organisation.
John Gregory Chairman 10 April 2019
The Audit Committee has identified and considered the following key areas of risk in relation to the business activities and financial statements of the company:
These issues were discussed with the Manager and the auditor at the conclusion of the audit of the financial statements, as explained below:
The Directors have met quarterly to assess the appropriateness of the estimates and judgements made by the Manager in the investment valuations. As a VCT the Company's investments are predominantly in unlisted securities, which are difficult to value and require the application of skill, knowledge and judgement by the Board and Audit Committee. During the valuation process the Manager follows the valuation methodologies for unlisted investments as set out in the International Private Equity and Venture Capital valuation guidelines and appropriate industry valuation benchmarks. These valuation policies are set out in Note 1 of the accounts. These were then further checked by the auditor and reviewed and challenged by the Audit Committee. The Manager confirmed to the Audit Committee that the investment valuations had been calculated consistently with prior periods and in accordance with published industry guidelines, taking account of the latest available information about investee companies and current market data.
For all investments made, both share certificates and loan stock documentation are held in the Company's own name and regular reconciliations are carried out by the Manager to ensure that valid documents of title are held.
Maintaining VCT status and adhering to the tax rules of section 274 of ITA 2007 is critical to both the Company and its shareholders for them to retain their VCT tax benefits.
The Manager confirmed to the Audit Committee that the conditions for maintaining the Company's status as an approved VCT had been met throughout the year. The Manager seeks HMRC approval, where appropriate, in advance for all qualifying investments and reviews the Company's qualifying status in advance of realisations being made and throughout the year. The Audit Committee is in regular contact with the Manager and any potential issues with VCT Status would be discussed at or between formal meetings. In addition, an external third party review of VCT Status is conducted by Shakespeare Martineau LLP on a quarterly basis and this is reported to both the Board, Audit Committee and the Manager.
The Manager and auditor confirmed to the Audit Committee that they were not aware of any material misstatements. Having reviewed the reports received from the Manager and auditor, the Audit Committee is satisfied that the key areas of risk and judgement have been addressed appropriately in the financial statements and that the significant assumptions used in determining the value of assets and liabilities have been properly appraised and are sufficiently robust. The Audit Committee considers that KPMG LLP has carried out its duties as auditor in a diligent and professional manner. During the year, the Audit Committee assessed the effectiveness of the
current external audit process by assessing and discussing specific audit documentation presented to it in accordance with guidance issued by the Auditing Practices Board. The audit director is rotated every five years ensuring that objectivity and independence is not impaired. The current audit director, Henry Todd, assumed responsibility for the audit in 2017. KPMG LLP was appointed as auditor in February 2011, with its first audit for the year ended 31 December 2010. No tender for the audit of the Company has been undertaken since this date, however, the Audit Committee intends to put the audit out to tender during the current financial year, with the incumbents invited to tender. As part of its review of the continuing appointment of the auditor, the Audit Committee considers the need to put the audit out to tender, its fees and independence from the Manager along with any matters raised during each audit. KPMG LLP is not engaged for non-audit services.
The Audit Committee considered the performance of the auditor during the year and agreed that KPMG LLP continued to provide a satisfactory level of service and maintained a good knowledge of the VCT market, making sure audit quality continued to be maintained.
The Audit Committee met in March 2018 to review the annual audited accounts and the Company's risk register and in August 2018 to review the interim report, the audit plan for December 2018 and the Company's risk register.
Audit Committee Chairman 10 April 2019
The Board has prepared this report, in accordance with the requirements of Schedule 8 of the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulations 2008. An ordinary resolution to approve this report will be put to the members at the forthcoming Annual General Meeting.
The law requires the Company's auditor, KPMG LLP, to audit certain areas of the disclosures provided. Where disclosures have been audited, they are indicated as such. The auditor's opinion is included in the 'Independent Auditor's Report.'
The Board, which is profiled on pages 30 to 31, consists solely of non-executive directors and considers at least annually the level of the Board's fees.
The Management Engagement & Remuneration Committee comprises four Directors: Margaret Littlejohns (Chairman), John Gregory, Jocelin Harris and Gordon Humphries.
The Management Engagement & Remuneration Committee has responsibility for reviewing the remuneration of the Directors, specifically reflecting the time commitment and responsibilities of the role, and meets at least annually.
The Management Engagement & Remuneration Committee also undertakes external comparisons and reviews to ensure that the levels of remuneration paid are broadly in line with industry standards and members have access to independent advice where they consider it appropriate. During the year neither the Board nor the Management Engagement & Remuneration Committee has been provided with external advice or services by any person, but has received industry comparison information from the Manager and industry research carried out by third parties in respect of Directors' remuneration.
The remuneration policy set by the Board is described below. Individual remuneration packages are determined by the Remuneration Committee within the framework of this policy.
Directors are not involved in deciding their own individual remuneration.
The Board's policy is that the remuneration of Non-Executive Directors should reflect time spent and the responsibilities borne by the Directors for the Company's affairs and should be sufficient to enable candidates of high calibre to be recruited. The levels of Directors' fees paid by the Company for the year ended 31 December 2018 were agreed during the year.
It is considered appropriate that no aspect of Directors' remuneration should be performance related in light of the Directors' Non-Executive status, and Directors are not eligible for bonuses or other benefits.
The Company's policy is to pay the Directors monthly in arrears, to the Directors personally (or to a third party if requested by any Director although no such request has been made).
None of the Directors has a service contract but, under letters of appointment dated 10 January 2018, they may resign at any time. There are no set minimum notice periods and no compensation is payable to Directors leaving office.
As the Directors are not appointed for a fixed length of time there is no unexpired term to their appointment but all Directors retire every year and may seek re-election.
It is the intention of the Board that the above remuneration policy will, subject to shareholder approval, come into effect immediately following the Annual General Meeting of the Company on 23 May 2019 and will continue for a period of three years unless renewed, varied or revoked in a general meeting.
Shareholders' views in respect of Directors' remuneration are communicated at the Company's Annual General Meeting and are taken into account in formulating the Directors' remuneration policy. At the last Annual General Meeting 95.9% of shareholders voted for the resolution approving the Directors' Remuneration Report, showing significant shareholder support.
All Directors offer themselves for re-election every year.
The emoluments in respect of qualifying services of each person who served as a Director during the year are shown on page 43. No Director has waived or agreed to waive any emoluments from the Company in either the current or previous year.
No other remuneration was paid or payable by the Company during the current or previous year nor were any expenses claimed by or paid to them other than for expenses incurred wholly, necessarily and exclusively in furtherance of their duties as Directors of the Company.
The Company's Articles of Association do not set an annual limit on the level of Directors' fees but fees must be considered within the wider Remuneration Policy noted above.
Directors' liability insurance is held by the Company in respect of the Directors.
The graph below charts the total shareholder return to 31 December 2018, on the hypothetical value of £100, invested on 1 January 2014. The return is compared to the total shareholder return on a notional investment of £100 in the FTSE AIM All-Share Index, which is considered an appropriate broad
index against which to measure the Company's performance given that the profiles of many AIM companies are similar to those held by the Company.
*Based on an initial investment on 1 January 2014.
The Directors who held office during the year and their interests in the issued shares of 1p each of the Company were as follows:
| 31 December 2018 Ordinary Shares |
31 December 2017 Ordinary Shares |
31 December 2017 Planned Exit Shares |
31 December 2017 Infrastructure Shares |
|
|---|---|---|---|---|
| John Gregory (Chairman) | 43,877 | 41,134 | — | — |
| Peter Dicks | — | 115,145 | — | — |
| Jocelin Harris | 59,583 | 55,859 | — | 10,362 |
| Gordon Humphries | 16,252 | 16,252 | — | — |
| Margaret Littlejohns | — | — | — | — |
All the Directors' share interests shown above were held beneficially.
In accordance with the Articles of Association and the requirements of the UK Corporate Governance Code and the Board's policy, Mr Gregory, Mr Humphries, Mr Harris and Ms Littlejohns retire annually and, being eligible, offer themselves for re-election. Biographical notes on the Directors are given on pages 30 to 31. The Board believes that Mr Gregory's, Mr Humphries', Mr Harris' and Ms Littlejohns' skills, experience and knowledge continue to complement each other and add value to the Company and recommends their re-election to the Board. None of the Directors has a contract of service with the Company.
The information below has been audited. See the Independent Auditor's Report on pages 46 to 49.
| Audited Directors' fees year ended 31 December 2018 (£) |
Audited Directors' taxable benefits^ year ended 31 December 2018 (£) |
Total year ended 31 December 2018 (£) |
Audited Directors' fees year ended 31 December 2017 (£) |
|
|---|---|---|---|---|
| John Gregory (Chairman) | 31,125 | 177 | 31,302 | 30,375 |
| Jocelin Harris | 23,325 | — | 23,325 | 22,775 |
| Gordon Humphries | 25,975 | 855 | 26,830 | 25,325 |
| Margaret Littlejohns | 23,325 | — | 23,325 | 5,763 |
| Peter Dicks (retired in May 2018) | 9,102 | — | 9,102 | 22,775 |
| Total | 112,852 | 1,032 | 113,884 | 107,013 |
^Relates to expenses incurred for attending meetings at the Company's principal place of business.
The Directors are not eligible for pension benefits, share options or long-term incentive schemes. Directors' fees are reviewed annually and fees were last increased on 1 July 2018 after consideration of fees paid to other VCT directors and available independent research.
Votes cast For and Against the Directors' Remuneration Report for the year ended 31 December 2017:
| Shares and Percentage of votes cast | Shares and Percentage of votes cast | Number of votes withheld |
|---|---|---|
| For | Against | |
| 95.9% | 4.1% | |
| 16,224,620 votes | 692,091 votes | 392,179 votes |
In accordance with Companies Act 2006 legislation the table below sets out the relative importance of spend on pay when compared to distributions to shareholders in the form of dividends and share buybacks.
| Year ended 31 December 2018 |
Year ended 31 December 2017 |
|
|---|---|---|
| Dividends | £8,720,000 | £48,650,000* |
| Share buybacks | £1,817,000 | £1,476,000 |
| Total shareholder distributions | £10,537,000 | £50,126,000 |
| Directors fees | £112,852 | £107,013 |
| Directors fees % of shareholder distributions | 1.1% | 0.2% |
*Includes final Planned Exit Share and Infrastructure Share dividends.
An ordinary resolution for the approval of this Directors' Remuneration Report will be put to shareholders at the forthcoming Annual General Meeting. In addition to this, Resolution 3, which is seeking shareholder approval for the Directors' Remuneration Policy, will, if approved, take effect from the AGM and will be valid for a period of three years unless renewed, varied or revoked by the Company at a general meeting.
This Directors' Remuneration Report was approved by the Board on 10 April 2019 and is signed on its behalf by Margaret Littlejohns (Director).
On behalf of the Board
Margaret Littlejohns Director 10 April 2019
The Directors are responsible for preparing the Annual Report and accounts in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law they are required to prepare the financial statements in accordance with UK Accounting Standards 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 its profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to:
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 are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and 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 Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies 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. 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:
We consider the annual report and accounts, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy.
On behalf of the Board
John Gregory Chairman 10 April 2019
We have audited the financial statements of Foresight VCT plc ("the Company") for the year ended 31 December 2018 which comprise the Income Statement, Reconciliation of Movements in Shareholders' Funds, Balance Sheet, Cash Flow Statement, and the related notes, including the accounting policies in note 1.
In our opinion the financial statements:
We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is consistent with our report to the audit committee.
We were first appointed as auditor by the directors in February 2011. The period of total uninterrupted engagement is for the nine financial years ended 31 December 2018. We have fulfilled our ethical responsibilities under, and we remain independent of the Company in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed public interest entities. No non-audit services prohibited by that standard were provided.
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. We summarise below the key audit matters, (noting first the change from 2017) in decreasing order of audit significance, in arriving at our audit opinion above, together with our key audit procedures to address those matters and, as required for public interest entities, our results from those procedures. These matters were addressed, and our results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on these matters.
European Union on our audit (new risk): Refer to page 11 (Manager's Review), page 28 (Strategic Report), and page 54 (Going Concern).
All audits assess and challenge the reasonableness of estimates, in particular as described in "Valuation of unquoted investments" below, and related disclosures and the appropriateness of the going concern basis of preparation of the financial statements (see below). All of these depend on assessments of the future economic environment and the Company's future prospects and performance.
In addition, we are required to consider the other information presented in the Annual Report including the principal risks disclosure and the viability statement and to consider the directors' statement that the annual report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.
Brexit is one of the most significant economic events for the UK and at the date of this report its effects are subject to unprecedented levels of uncertainty of outcomes, with the full range of possible effects unknown.
We developed a standardised firm-wide approach to the consideration of the uncertainties arising from Brexit in planning and performing our audits. Our procedures included:
As reported under Valuation of unquoted investments, we found the resulting estimates and related disclosures of the Valuation of unquoted investments and disclosures in relation to going concern to be acceptable. However, no audit should be expected to predict the unknowable factors or all possible future implications for a company and this is particularly the case in relation to Brexit.
2017: £78 million): Refer to page 6 (Manager's Review), page 28 (Valuation Policy), page 40 (Audit Committee Report) page 54 (Accounting Polices), and page 60 (financial disclosures).
72% of the Company's total assets (by value) are held in investments where no quoted market price is available. Unquoted investments are measured at fair value, which is established in accordance with the International Private Equity and Venture Capital Valuation Guidelines by using measurements of valuations such as prices of recent orderly transactions, earning multiples, discounted cash flow measurement, and net assets.
The effect of these matters is that, as part of our risk assessment, we determined that the valuation of unquoted investments has a high degree of estimation uncertainty, with a potential range of reasonable outcomes greater than our materiality for the financial statements as a whole, and possibly many times that amount. The financial statements (note 15) disclose the sensitivity estimated by the Company.
We found the Company's valuation of unquoted investments to be acceptable (2017: acceptable).
Materiality for the financial statements as a whole was set at £1.4m (2017: £1.4m), determined with reference to a benchmark of total assets, of £136.7m (2017: 140.9m), which it represents 1.0% (2017: 1.0%).
In addition, we applied materiality of £1 (2017: n/a) to directors' fees for which we believe misstatements of lesser amounts than materiality for the financial statements as a whole could reasonably be expected to influence the Company's members' assessment of the financial performance of the Company.
We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £67,900 (2017: £70,500), in addition to other identified misstatements that warranted reporting on qualitative grounds.
Our audit of the Company was undertaken to the materiality level specified above and was all performed at the investment manager's head office in London.
The Directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Company or to cease its operations, and as they have concluded that the Company's financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over its ability to continue as a going concern for at least a year from the date of approval of the financial statements ("the going concern period").
Our responsibility is to conclude on the appropriateness of the Directors' conclusions and, had there been a material uncertainty related to going concern, to make reference to that in this audit report. However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of reference to a material uncertainty in this auditor's report is not a guarantee that the Company will continue in operation.
In our evaluation of the Directors' conclusions, we considered the inherent risks to the Company's business model, including the impact of Brexit, and analysed how those risks might affect the Company's financial resources or ability to continue operations over the going concern period. The risks that we considered most likely to adversely affect the Company's available financial resources over this period were the impact of Brexit on the underlying investment company supply chains.
As these were risks that could potentially cast significant doubt on the Company's ability to continue as a going concern, we considered sensitivities over the level of available financial resources indicated by the Company's financial forecasts taking account of reasonably possible (but not unrealistic) adverse effects that could arise from these risks individually
and collectively and evaluated the achievability of the actions the Directors consider they would take to improve the position should the risks materialise. We also considered less predictable but realistic second order impacts, such as the impact of Brexit and the erosion of customer or supplier confidence, which could result in a rapid reduction of available financial resources.
Based on this work, we are required to report to you if:
We have nothing to report in these respects, and we did not identify going concern as a key audit matter.
The directors are responsible for the other information presented in the Annual Report together with the financial statements. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we have not identified material misstatements in the other information.
Based solely on our work on the other information:
In our opinion the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.
Based on the knowledge we acquired during our financial statements audit, we have nothing material to add or draw attention to in relation to:
• the directors' confirmation within the viability statement page 28 that they have carried out a robust assessment of the principal
risks facing the Company, including those that would threaten its business model, future performance, solvency and liquidity;
Under the Listing Rules we are required to review the viability statement. We have nothing to report in this respect.
Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit. As we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgments that were reasonable at the time they were made, the absence of anything to report on these statements is not a guarantee as to the Company's longer-term viability.
We are required to report to you if:
We are required to report to you if the Corporate Governance Statement does not properly disclose a departure from the eleven provisions of the UK Corporate Governance Code specified by the Listing Rules for our review.
We have nothing to report in these respects. Based solely on our work on the other information described above:
with relevant rules of the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority.
Under the Companies Act 2006, we are required to report to you if, in our opinion:
We have nothing to report in these respects.
As explained more fully in their statement set out on page 45, the directors are responsible for: the preparation of the financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or other irregularities (see below), or error, and to issue our opinion in an auditor's report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud, other irregularities or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC's website at www.frc.org.uk/ auditorsresponsibilities.
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, through discussion with the directors and other management (as required by auditing standards), and from inspection of the company's regulatory and legal correspondence and discussed with the directors and other management
the policies and procedures regarding compliance with laws and regulations. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit.
The potential effect of these laws and regulations on the financial statements varies considerably.
The company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related companies legislation), and its qualification as Venture Capital Trust under UK tax legislation, any breach of which could lead to the company losing various deductions and exemptions from UK corporation tax, and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
Whilst the company is subject to many other laws and regulations, we did not identify any others where the consequences of non-compliance alone could have a material effect on amounts or disclosures in the financial statements.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
Chartered Accountants 15 Canada Square, London E14 5GL 10 April 2019
FOR THE YEAR ENDED 31 DECEMBER 2018
| Year ended 31 December 2018 |
Year ended 31 December 2017^ |
||||||
|---|---|---|---|---|---|---|---|
| Revenue | Capital | Total | Revenue | Capital | Total | ||
| Notes | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Realised gains on investments |
— | 921 | 921 | — | 12,550 | 12,550 | |
| Investment holding gains | — | 5,916 | 5,916 | — | 4,107 | 4,107 | |
| Income | 2 | 1,398 | — | 1,398 | 1,570 | — | 1,570 |
| Investment management fees |
3 | (595) | (1,784) | (2,379) | (729) | (3,051)* | (3,780) |
| Other expenses | 4 | (472) | — | (472) | (1,199) | — | (1,199) |
| Return/(loss) on ordinary activities before taxation |
331 | 5,053 | 5,384 | (358) | 13,606 | 13,248 | |
| Taxation | 6 | (34) | 34 | — | — | — | — |
| Return/(loss) on ordinary activities after taxation |
297 | 5,087 | 5,384 | (358) | 13,606 | 13,248 | |
| Return/(loss) per share: | |||||||
| Ordinary Share | 8 | 0.2p | 2.9p | 3.1p | (0.3)p | 6.0p | 5.7p |
| Planned Exit Share | 8 | — | — | — | (0.4)p | 0.3p | (0.1)p |
| Infrastructure Share | 8 | — | — | — | 0.8p | 10.9p | 11.7p |
^Comparative includes Planned Exit Shares Fund and Infrastructure Shares Fund.
*Includes £863,000 performance incentive fee relating to the Infrastructure Shares Fund.
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 comprehensive income has been presented.
| Called-up share capital |
Share premium account |
Capital redemption reserve |
Distributable reserve |
Capital reserve |
Revaluation reserve |
Total | |
|---|---|---|---|---|---|---|---|
| Year ended 31 December 2018 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| As at 1 January 2018 | 2,194 | 97,687 | 455 | 23,169 | 4,251 | 12,673 | 140,429 |
| Share issues in the year* | 22 | 1,523 | — | — | — | — | 1,545 |
| Removal of shares | (439) | — | 439 | — | — | — | — |
| Expenses in relation to share issues** |
— | (95) | — | — | — | — | (95) |
| Repurchase of shares | (26) | — | 26 | (1,817) | — | — | (1,817) |
| Realised gains on disposal of investments |
— | — | — | — | 921 | — | 921 |
| Investment holding gains | — | — | — | — | — | 5,916 | 5,916 |
| Dividends paid | — | — | — | (8,720) | — | — | (8,720) |
| Management fees charged to capital |
— | — | — | — | (1,784) | — | (1,784) |
| Tax credited to capital | — | — | — | — | 34 | — | 34 |
| Revenue return for the year | — | — | — | 297 | — | — | 297 |
| As at 31 December 2018 | 1,751 | 99,115 | 920 | 12,929 | 3,422 | 18,589 | 136,726 |
*Relating to the dividend reinvestment scheme.
**Expenses in relation to share issues relate to trail commission for prior years fund raising.
Total distributable reserves at 31 December 2018 total £16,351,000 (2017: £27,420,000).
| Year ended 31 December 2017^ | Called-up share capital £'000 |
Share premium account £'000 |
Capital redemption reserve £'000 |
Distributable reserve £'000 |
Capital reserve £'000 |
Revaluation reserve £'000 |
Total £'000 |
|---|---|---|---|---|---|---|---|
| As at 1 January 2017 | 1,718 | 112,541 | 435 | 18,543 | (5,248) | 8,566 | 136,555 |
| Share issues in the year | 496 | 42,110 | — | — | — | — | 42,606 |
| Expenses in relation to share issues* |
— | (1,759) | — | (95) | — | — | (1,854) |
| Repurchase of shares | (20) | — | 20 | (1,476) | — | — | (1,476) |
| Cancellation of share premium | — | (55,205) | — | 55,205 | — | — | — |
| Realised gains on disposal of investments |
— | — | — | — | 12,550 | — | 12,550 |
| Investment holding gains | — | — | — | — | — | 4,107 | 4,107 |
| Dividends paid | — | — | — | (48,650) | — | — | (48,650) |
| Management fees charged to capital |
— | — | — | — | (3,051) | — | (3,051) |
| Revenue loss for the year | — | — | — | (358) | — | — | (358) |
| As at 31 December 2017 | 2,194 | 97,687 | 455 | 23,169 | 4,251 | 12,673 | 140,429 |
^Comparative includes Planned Exit Shares Fund and Infrastructures Share Fund.
*Expenses in relation to share issues include advisor fees (£686,000) and promoters fees (£958,000) for the 2017 Ordinary Shares Fund raise and trail commission for prior years fund raising (£115,000).
AT 31 DECEMBER 2018
Registered number: 03421340
| As at 31 December |
As at 31 December |
||
|---|---|---|---|
| Notes | 2018 £'000 |
2017 £'000 |
|
| Fixed assets | |||
| Investments held at fair value through profit or loss | 9 | 99,065 | 77,963 |
| Current assets | |||
| Debtors | 10 | 542 | 887 |
| Money market securities and other deposits | 34,723 | 60,482 | |
| Cash | 2,696 | 1,517 | |
| 37,961 | 62,886 | ||
| Creditors | |||
| Amounts falling due within one year | 11 | (300) | (420) |
| Net current assets | 37,661 | 62,466 | |
| Net assets | 136,726 | 140,429 | |
| Capital and reserves | |||
| Called-up share capital | 12 | 1,751 | 2,194 |
| Share premium account | 99,115 | 97,687 | |
| Capital redemption reserve | 920 | 455 | |
| Distributable reserve | 12,929 | 23,169 | |
| Capital reserve | 3,422 | 4,251 | |
| Revaluation reserve | 18,589 | 12,673 | |
| Equity Shareholders' funds | 136,726 | 140,429 | |
| Net asset value per share: | |||
| Ordinary Share | 13 | 78.1p | 80.0p |
The financial statements were approved by the Board of Directors and authorised for issue on 10 April 2019 and were signed on its behalf by:
Chairman
FOR THE YEAR ENDED 31 DECEMBER 2018
| Year ended 31 December |
Year ended 31 December |
|
|---|---|---|
| 2018 £'000 |
2017^ £'000 |
|
| Cash flow from operating activities | ||
| Investment income received | 1,180 | 2,457 |
| Deposit and similar interest received | 258 | 113 |
| Investment management fees paid | (2,379) | (3,797) |
| Secretarial fees paid | (115) | (113) |
| Other cash payments | (495) | (902) |
| Net cash outflow from operating activities | (1,551) | (2,242) |
| Cash flow from investing activities | ||
| Purchase of investments | (17,705) | (17,869) |
| Net proceeds on sale of investments | 3,380 | 48,394 |
| Net proceeds on deferred consideration | 310 | 561 |
| Net proceeds on liquidation of investments | 20 | — |
| Net cash (outflow)/inflow from investing activities | (13,995) | 31,086 |
| Cash flow from financing activities | ||
| Proceeds of fund raising | — | 39,384 |
| Expenses of fund raising | (95) | (1,247) |
| Repurchase of own shares | (1,763) | (1,336) |
| Equity dividends paid | (7,176) | (45,983) |
| Movement in money market funds | 25,759 | (29,506) |
| Net cash inflow/(outflow) from financing activities | 16,725 | (38,688) |
| Net inflow/(outflow) of cash in the year | 1,179 | (9,844) |
| Reconciliation of net cash flow to movement in net funds | ||
| Increase/(decrease) in cash and cash equivalents for the year | 1,179 | (9,844) |
| Net cash and cash equivalents at start of year | 1,517 | 11,361 |
| Net cash and cash equivalents at end of year | 2,696 | 1,517 |
^Comparative includes Planned Exit Shares Fund and Infrastructure Shares Fund.
| At | At | ||
|---|---|---|---|
| 1 January | 31 December | ||
| 2018 | Cash flow | 2018 | |
| £'000 | £'000 | £'000 | |
| Cash and cash equivalents | 1,517 | 1,179 | 2,696 |
FOR THE YEAR ENDED 31 DECEMBER 2018
A summary of the principal accounting policies, all of which have been applied consistently throughout the year, are set out below:
The financial statements have been prepared under the Companies Act 2006, and in accordance with United Kingdom Generally Accepted Accounting Practice (UK GAAP) including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Statement of Recommended Practice (SORP): Financial Statements of Investment Trust Companies and Venture Capital Trusts issued in November 2014 and updated in February 2018.
The Company presents its Income Statement in a three column format to give shareholders additional detail of the performance of the Company split between items of a revenue or capital nature.
As permitted by FRS 102, paragraph 14.4, investments are held as part of an investment portfolio, and their value to the Company is through their marketable value as part of a portfolio of investments, rather than as a medium through which the Company carries out its business. Therefore, the investments are not considered to be associated undertakings.
Where the Company's interest in an investment is greater than 50% of the investee company's total equity, specific clauses are included in the investee company's articles of association to prevent the Company from exercising control. Therefore, these investments are not considered to be subsidiary undertakings. The Company is exempt from preparing consolidated accounts under the investment entities exemption as permitted by FRS 102.
The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report. The financial position of the Company, its cash flows, liquidity position and borrowing facilities are referred to in the Chairman's Statement, Strategic Report and Notes to the Accounts. In addition, the financial statements include 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 sufficient 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.
Cash flow projections have been reviewed and show that the Company has sufficient funds to meet both its contracted expenditure and its discretionary cash outflows in the form of share buy backs and dividends. The Company has no loan finance in place and therefore is not exposed to any gearing covenants, although its underlying investments may have external loan finance.
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.
All investments held by the Company are classified as "fair value through profit or loss". The Directors value investments in accordance with the International Private Equity and Venture Capital ("IPEV") Valuation Guidelines, as updated in December 2015. This classification is followed as the Company's business is to invest in financial assets with a view to profiting from their total return in the form of capital growth and income.
For investments actively traded on organised financial markets, fair value is generally determined by reference to Stock Exchange market quoted bid prices at the close of business on the balance sheet date. Purchases and sales of quoted investments are recognised on the trade date where a contract of sale exists whose terms require delivery within a time frame determined by the relevant market. Purchases and sales of unlisted investments are recognised when the contract for acquisition or sale becomes unconditional.
Unquoted investments are stated at fair value by the Directors in accordance with the following rules, which are consistent with the IPEV Valuation Guidelines:
All investments are held at cost for an appropriate period where there is considered to have been no change in fair value. Where such a basis is no longer considered appropriate, the following factors will be considered:
Dividends receivable on unquoted equity shares are brought into account when the Company's rights to receive payment are established and there is no reasonable doubt that payment will be received. Other income such as interest is included on an accruals basis. Loan interest income is calculated using the effective interest method and recognised on an accruals basis.
All expenses (inclusive of VAT) are accounted for on an accruals basis. Expenses are charged through the revenue column of the Income Statement, with the exception that 75% of the fees payable to the Manager for management fees are allocated against the capital column of the Income Statement. The basis of the allocation of management fees is expected to reflect the revenue and capital split of long-term returns in the portfolio.
Performance incentive payments predominantly relate to the capital performance of the portfolio and are therefore charged 100% to capital. Performance fees are accrued and a liability is recognised when they are likely to be payable and can be reliably measured. From 31 March 2017, a new performance incentive arrangement was set up for the Ordinary Shares Fund. In light of the additional investment growth hurdle which must be met before the performance incentive is triggered (as detailed in note 14), the Board does not consider that the performance fees can be reliably measured and therefore, the Company will not accrue performance fees or recognise a liability until the exit of a relevant investment at the earliest.
Trade and other debtors are recognised initially at transaction price less attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost less any impairment losses. If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of instrument for a similar debt instrument.
FOR THE YEAR ENDED 31 DECEMBER 2018
Trade and other creditors are recognised initially at transaction price plus attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost. If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of instrument for a similar debt instrument.
Investments in preference and ordinary shares are measured initially at transaction price less attributable transaction costs. Subsequent to initial recognition investments that can be measured reliably are measured at fair value with changes recognised through profit or loss. Other investments are measured at cost less impairment in profit or loss.
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Company's cash management are included as a component of cash and cash equivalents for the purpose only of the cash flow statement.
Other financial instruments not meeting the definition of Basic Financial Instruments include non-current investments and money market funds and are recognised initially at fair value. Subsequent to initial recognition other financial instruments are measured at fair value with changes recognised in profit or loss except investments in equity instruments that are not publicly traded and whose fair value cannot otherwise be measured reliably shall be measured at cost less impairment.
Any tax relief obtained in respect of management fees allocated to capital is reflected in the capital column of the Income Statement and a corresponding amount is charged against the revenue column. The tax relief is the amount by which corporation tax payable is reduced as a result of these capital expenses.
Provision is made for corporation tax at the current rates on the excess of taxable income over allowable expenses. A provision is made on all material timing differences arising from the different treatment of items for accounting and tax purposes. A deferred tax asset is recognised only to the extent that there will be taxable profits in the future against which the asset can be offset. It is considered too uncertain that this will occur and, therefore, no deferred tax asset has been recognised.
The capital reserve is shown in aggregate and is made up of two elements:
The following are accounted for in this reserve:
(ii) Revaluation reserve (unrealised capital reserve) Increases and decreases in the valuation of investments held at the year-end are accounted for in this reserve, except to the extent that the diminution is deemed permanent.
In accordance with stating all investments at fair value through profit or loss, all such movements through both revaluation and realised capital reserves are shown within the Income Statement for the year.
Investments are recognised at the trade date, being the date that the risks and rewards of ownership are transferred to the Company. Upon initial recognition, investments are held at the fair value of the
consideration payable. Transaction costs in respect of acquisitions made are recognised directly in the Income Statement. Investments are derecognised when the risks and rewards of ownership are deemed to have transferred to a third party. Upon realisation, the gain or loss on disposal is recognised in the Income Statement.
The preparation of the financial statements requires the Board to make judgements and estimates that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The Board considers that the only area where the Manager makes critical estimates and assumptions that may have a significant effect on the financial statements relates to the fair valuation of unquoted investments. Actual results may differ from these estimates and the underlying assumptions are reviewed on an ongoing basis.
The Board considers that the fair value of investments not quoted in an active market involves critical accounting estimates and assumptions because they are determined by the Manager, using valuation methods and techniques generally recognised as standard within the industry. Valuations use observable data to the extent practicable. However, they also rely on significant unobservable inputs about the maintainable earnings; comparable multiples and discounts. Furthermore, changes in these inputs and assumptions could affect the reported fair value of unquoted investments. The determination of what constitutes 'observable' requires significant judgement by the Manager. The Manager considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. Both the Audit Committee and the Auditors review the Manager's valuations in detail.
| Year ended 31 December 2018 £'000 |
Year ended 31 December 2017^ £'000 |
|
|---|---|---|
| Loan stock interest | 985 | 820 |
| Dividends receivable | 155 | 637 |
| Overseas based Open Ended Investments Companies ("OEICs") | 241 | 113 |
| Bank interest received | 17 | — |
| 1,398 | 1,570 |
^Comparative includes Planned Exit Shares Fund and Infrastructure Shares Fund.
| Year ended | Year ended | |
|---|---|---|
| 31 December | 31 December | |
| 2018 | 2017^ | |
| £'000 | £'000 | |
| Investment management fees charged to the revenue account | 595 | 729 |
| Investment management fees charged to the capital account | 1,784 | 3,051* |
| 2,379 | 3,780 |
^Comparative includes Planned Exit Shares Fund and Infrastructure Shares Fund.
*Includes £863,000 performance incentive fee for the Infrastructure Shares Fund.
The Manager advises the Company on investments under an agreement dated 21 June 2012. The agreement may be terminated by not less than one year's notice in writing.
Following the launch of the most recent offer on 8 March 2017 the Manager agreed to lower its annual management fee for the Ordinary Shares Fund to 1% in respect of any cash above £20 million held within the Fund. This reduced rate is reviewed by the Board on an annual basis. The Manager has received an annual management fee of 2% of net assets (excluding cash above £20 million) in the year ended 31 December 2018.
Management fees are calculated on the most recently announced net assets and payable quarterly in advance. Supplemental management fees are paid in relation to funds raised during the quarter.
Details of the performance-related incentive fees are given in note 14.
FOR THE YEAR ENDED 31 DECEMBER 2018
| Year ended 31 December 2018 £'000 |
Year ended 31 December 2017^ £'000 |
|
|---|---|---|
| Accounting and secretarial services (excluding VAT) | 117 | 113 |
| Directors' remuneration including employer's National Insurance contributions | 120 | 113 |
| Auditor's remuneration (excluding VAT)1 | 40 | 33 |
| Taxation services | 2 | 2 |
| Other | 193 | 938* |
| 472 | 1,199 |
1 There were no non-audit fees paid to the Company's auditor during the year (2017: Nil)
^Comparative includes Planned Exit Shares Fund and Infrastructure Shares Fund.
* Includes £496,000 in relation to the sale of the infrastructure portfolio and wind-up of the Planned Exit Shares Fund and the Infrastructure Shares Fund.
The Manager 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 common practice, the Manager retains the right to charge arrangement and syndication fees and directors' or monitoring fees ('deal fees') to companies in which the Company invests.
Foresight Group LLP is the Company Secretary and indirectly received annual fees, paid quarterly in advance, for the services provided of £117,000 (2017: £113,000). The annual secretarial fee is adjusted annually in line with the UK Retail Prices Index.
The Company's expense cap is 2.4% of net assets.
| Year ended 31 December 2018 £'000 |
Year ended 31 December 2017 £'000 |
|
|---|---|---|
| John Gregory | 31 | 30 |
| Peter Dicks | 9 | 23 |
| Jocelin Harris | 23 | 23 |
| Gordon Humphries | 26 | 25 |
| Margaret Littlejohns | 23 | 6 |
| 112 | 107 | |
| Employers' NIC on above as appropriate | 8 | 6 |
| 120 | 113 |
No pension scheme contributions or retirement benefit contributions were paid. There are no share option contracts held by the Directors.
Further details of Directors' interests are given on page 43. The Company has no employees.
| Year ended 31 December 2018 | Year ended 31 December 2017 | |||||
|---|---|---|---|---|---|---|
| Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
|
| Current tax Corporation tax |
34 | (34) | — | — | — | — |
| Total current tax | 34 | (34) | — | — | — | — |
| Deferred tax | — | — | — | — | — | — |
| Total tax | 34 | (34) | — | — | — | — |
The tax assessed for the year is lower (2017: lower) than the standard rate of corporation tax in the UK of 19% (2017: 19.25%).
The differences are explained below:
| Year ended 31 December 2018 £'000 |
Year ended 31 December 2017 £'000 |
|
|---|---|---|
| Total return on ordinary activities before taxation | 5,384 | 13,248 |
| Corporation tax at 19% (2017: 19.25%) Effect of: |
1,023 | 2,550 |
| Capital realised gains not taxable | (175) | (2,416) |
| Capital unrealised gains not taxable | (1,124) | (790) |
| Movement in unutilised expenses | 305 | 779 |
| Dividends not taxable | (29) | (123) |
| Total tax charge for the year | — | — |
On 16 March 2016 the Chancellor announced further reductions to the UK Corporation tax rate from April 2020 to 17%.
No asset or liability has been recognised for deferred tax in relation to capital gains or losses on revaluing investments. The Company is exempt from such tax as a result of qualifying as a VCT.
No deferred tax asset has been recognised in the year for surplus management expenses. At present it is not envisaged that any tax will be recovered on these in the foreseeable future.
A deferred tax asset is recognised only to the extent that there will be taxable profits in the future against which the asset can be offset. It is considered too uncertain that this will occur and, therefore, no deferred tax asset has been recognised. There is an unrecognised deferred tax asset of approximately £1,640,000 (2017: £1,472,000).
| Year ended 31 December 2018 £'000 |
Year ended 31 December 2017 £'000 |
|
|---|---|---|
| Ordinary Shares Dividends — paid in the year |
8,720 | 15,481 |
| Planned Exit Shares Dividends — paid in the year |
— | 2,932 |
| Infrastructure Shares Dividends — paid in the year |
— | 30,237 |
The Board is not recommending a final dividend for the Ordinary Shares Fund for the year ended 31 December 2018 (2017: £nil).
As at 31 December 2018, reserves available for dividend distribution totalled £16,351,000 (2017: £27,420,000) comprising the capital and distributable reserves.
In accordance with S.259 of the Income Tax Act 2007, a VCT may not retain more than 15% of its qualifying income in any one accounting period. The payment of the dividends noted above satisfies this requirement.
FOR THE YEAR ENDED 31 DECEMBER 2018
| Year ended 31 December 2018 |
Year ended 31 December 2017 |
||||
|---|---|---|---|---|---|
| Ordinary Share £'000 |
Ordinary Share £'000 |
Planned Exit Share £'000 |
Infrastructure Share £'000 |
||
| Total return after taxation | 5,384 | 9,452 | (9) | 3,805 | |
| Total return per share (note a) | 3.1p | 5.7p | (0.1)p | 11.7p | |
| Revenue return from ordinary activities after taxation |
297 | (561) | (45) | 248 | |
| Revenue return per share (note b) | 0.2p | (0.3)p | (0.4)p | 0.8p | |
| Capital return from ordinary shares after taxation |
5,087 | 10,013 | 36 | 3,557 | |
| Capital return per share (note c) | 2.9p | 6.0p | 0.3p | 10.9p | |
| Weighted average number of shares in issue in the year |
175,834,593 | 165,748,167 | 11,404,314 | 32,495,246 |
Notes:
a) Total return per share is total return after taxation divided by the weighted average number of shares in issue during the year.
| 2018 £'000 |
2017 £'000 |
|
|---|---|---|
| Unquoted investments | 99,065 | 77,963 |
| Company | £'000 |
|---|---|
| Book cost as at 1 January 2018 | 65,611 |
| Investment holding gains | 12,352 |
| Valuation at 1 January 2018 | 77,963 |
| Movements in the year: | |
| Purchases at cost | 17,705 |
| Disposal proceeds | (3,380) |
| Realised gains* | 591 |
| Investment holding gains** | 6,186 |
| Valuation at 31 December 2018 | 99,065 |
| Book cost at 31 December 2018 | 80,527 |
| Investment holding gains | 18,538 |
| Valuation at 31 December 2018 | 99,065 |
*Realised gains in the income statement include deferred consideration received of £258,000 (Simulity) and £52,000 (O-Gen Acme Trek) as well as final administration proceeds of £10,000 (Evance Wind Turbines), £7,000 (Closed Loop Recycling) and £3,000 (Global Immersion) received in the year.
** Investment holding gains in the income statement have been reduced by the offset in the deferred consideration debtor of £258,000 (Simulity) and £19,000 (O-Gen Acme Trek) and have been increased by an adjustment to the deferred consideration debtor for Trilogy of £7,000.
| 2018 £'000 |
2017 £'000 |
|
|---|---|---|
| Accrued interest | 145 | 184 |
| Deferred consideration | 377 | 647 |
| Prepayments | 20 | 19 |
| Other debtors | — | 37 |
| 542 | 887 |
| 2018 £'000 |
2017 £'000 |
|
|---|---|---|
| Trade creditors | 11 | 40 |
| Accruals and other creditors | 289 | 380 |
| 300 | 420 |
| 2018 £'000 |
2017 £'000 |
|
|---|---|---|
| Allotted, called-up and fully paid: 175,051,026 Ordinary Shares of 1p each (2017: 175,601,977) |
1,751 | 1,756 |
| Nil Planned Exit Shares of 1p each (2017: 11,404,314) | — | 114 |
| Nil Infrastructure Shares of 1p each (2017: 32,495,246) | — | 324 |
On 24 January 2018 the Company's Planned Exit Shares and Infrastructure Shares were removed, following the realisation and distribution of these Funds during 2017.
On 8 May 2018 the Company allotted 2,071,401 Ordinary Shares under the Company's Dividend Reinvestment Scheme at 75.0p per share.
These share issues were under the VCT provisions that commenced on 6 April 2006, namely: 30% upfront income tax relief which can be retained by qualifying investors if the shares are held for the minimum five year holding period.
As part of the Company's buyback programme, during the year, 2,622,352 Ordinary Shares were purchased for cancellation at a cost of £1,817,000.
| Ordinary Shares No. |
Planned Exit Shares No. |
Infrastructure Shares No. |
|
|---|---|---|---|
| At 1 January 2018 | 175,601,977 | 11,404,314 | 32,495,246 |
| Removal of shares | — | (11,404,314) | (32,495,246) |
| Dividend reinvestment | 2,071,401 | — | — |
| Share buybacks | (2,622,352) | — | — |
| At 31 December 2018 | 175,051,026 | — | — |
FOR THE YEAR ENDED 31 DECEMBER 2018
The net asset value per share is based on net assets at the end of the year and on the number of shares in issue at that date.
| 31 December 2018 | 31 December 2017 | |||
|---|---|---|---|---|
| Ordinary Shares Fund |
Ordinary Shares Fund |
Planned Exit Shares Fund |
Infrastructure Shares Fund |
|
| Net assets | £136,726,000 | £140,429,000 | £nil | £nil |
| No. of shares at year end |
175,051,026 | 175,601,977 | 11,404,314 | 32,495,246 |
| Net asset value per share | 78.1p | 80.0p | 0.0p | 0.0p |
A new co-investment scheme and performance incentive fee arrangement in respect of the Ordinary Shares Fund was approved by shareholders at a general meeting held on 8 March 2017 and entered into by the Company on 31 March 2017. The terms of the co-investment scheme and performance incentive fee arrangement are summarised below.
In order to align the interests of the Manager and the individual members of Foresight Group LLP's private equity team ("advisory team") with those of the Ordinary Shareholders, the Manager and the advisory team will co-invest, alongside the Ordinary Shares Fund, for shares and loans in each new investee company at the same time and at the same price paid by the Company.
In respect of investments made from the Ordinary Shares Fund in new investee companies (including follow-ons) on or after 31 March 2017, the Manager and the advisory team will subscribe, in aggregate, for shares and loans equal to 1.5% of the total value being invested by the Company. This 1.5% allocation will be split as to 75% to the advisory team and 25% to the Manager itself. The co-investment will be in the lowest priority of securities that the Company is investing in, subject to not representing more than 5% of the amount the Company is investing in each security class.
The Directors believe that these arrangements will align the interests of the advisory team with the Company through their personal investment in each new company in which the Ordinary Shares Fund invests.
In order to incentivise the Manager to generate enhanced returns for Shareholders, the Manager will potentially be entitled to a performance incentive payment in respect of investments made from the Ordinary Shares Fund in new investee companies (including follow-ons) on or after 31 March 2017.
The Manager will be entitled to a performance incentive fee in respect of cash proceeds received by the Company in respect of a realisation of an investment subject to (i) an Investment Growth Hurdle and (ii) a Total NAV Return Hurdle.
The 'Investment Growth Hurdle' requires that the cash return received in respect of all investments in the relevant investee company is greater than the cost of those investments increased annually by 4% plus RPI (on a compound basis).
The 'Total NAV Return Hurdle' requires that the NAV total return per share (NAV plus dividends) of the Ordinary Shares across the three year period following the exit of the relevant investment must be at least 100p per Ordinary Share. This is measured (a) at the point of exit, (b) as an average across the three year period and (c) at the end of the three year period, and further taking into account any performance incentive fees to which the Manager may have become entitled (including the relevant fee payment) but which have not as yet been paid.
The starting point for the 'Total NAV Return Hurdle' was the date of the merger with Foresight 2 VCT plc, being 18 December 2015. At that date, NAV per share was 88.0p. As at 31 December 2018, Total NAV Return per share is 96.2p (being NAV per share at 31 December 2018 of 78.1p and dividends paid since 18 December 2015 totalling 18.1p). Dividends paid since 18 December 2015 have been rebased for the number of Ordinary Shares in issue at 31 December 2018.
Should both of the above hurdles be met, the Manager will receive a fee equal to 20% of the amount by which the cash proceeds received by the Company exceed the Investment Growth Hurdle. The Company may issue Ordinary Shares in place of making a cash payment.
The fee will only be paid after three years following the exit of a relevant investment, once the Total NAV Return Hurdle can be measured. In addition, the Total NAV Return Hurdle will be increased over time by amounts equal to any performance incentive fee payments made to the Manager.
No performance fees have been paid or were accrued as due for the Ordinary Shares Fund during the year (2017: Nil).
The performance incentive fee of the Planned Exit Shares Fund was conditional on distributions exceeding 110p per Planned Exit Share. Total returns for the Fund equalled 82.71p. Accordingly, no performance fee was due in December 2017 when the Fund was wound up.
The performance incentive fee of the Infrastructure Shares Fund was equivalent to 15% of distributions in excess of 100p per Infrastructure Share. Total returns for the Fund equalled 117.71p. Accordingly, a performance fee of £863,000 was paid to the Manager in December 2017, reducing the net return to 115.05p per Infrastructure Share.
The Company's financial instruments comprise:
The Company held the following categories of financial instruments at fair value as at 31 December 2018:
| 2018 £'000 |
2017 £'000 |
|
|---|---|---|
| Investment portfolio | 99,065 | 77,963 |
| Current asset investments (money market funds) | 34,723 | 60,482 |
| Cash at bank | 2,696 | 1,517 |
| Total | 136,484 | 139,962 |
The investment portfolio consists of unquoted investments. Unquoted investments consist of equity in and loans to investee companies and are valued at fair value through profit or loss. Current asset investments are money market funds, discussed under credit risk management below.
The main financial risks arising from the Company's financial instruments are market price risk, interest rate risk, credit risk and liquidity risk. The Board regularly reviews and agrees policies for managing each of these risks and they are summarised below.
FOR THE YEAR ENDED 31 DECEMBER 2018
Market price risk arises from uncertainty about the future prices of financial instruments held in accordance with the Company's investment objectives. It represents the potential loss that the Company might suffer through holding market positions in the face of market movements. The Board manages market price risk through the application of venture capital disciplines and investment structuring delegated to the Manager.
The investments in equity and loan stocks of unquoted companies are rarely traded and as such the prices are more difficult to determine than those of more widely traded securities. In addition, the ability of the Company to realise the investments at their carrying value will at times not be possible if there are no willing purchasers. The ability of the Company to purchase or sell investments is also constrained by the requirements set down for VCTs. The potential maximum exposure to market price risk, being the value of the investment portfolio as at 31 December of 2018 of £99,065,000 (31 December 2017: £77,963,000). Market price risk sensitivity analysis can be found on page 66.
The fair value of the Company's fixed rate securities and the net revenue generated from the Company's floating rate securities may be affected by interest rate movements. Investments are often in early stage businesses, which are relatively high risk investments sensitive to interest rate fluctuations. Due to the short time to maturity of some of the Company's fixed rate investments, it may not be possible to reinvest in assets which provide the same rates as those currently held. When making investments of an equity and debt nature, consideration is given during the structuring process to the potential implications of interest rate risk and the resulting investment is structured accordingly. The maximum exposure to interest rate risk was £61,953,000, being the total value of the loan stock investments, money market securities and cash as at 31 December 2018 (31 December 2017: £82,700,000).
| Weighted average Weighted average time Total portfolio interest rate for which rate is fixed |
||||||
|---|---|---|---|---|---|---|
| 31 December 2018 |
31 December 2017 |
31 December 2018 |
31 December 2017 |
31 December 2018 |
31 December 2017 |
|
| Company Portfolio | £'000 | £'000 | % | % | Days | Days |
| Short-term securities — exposed to fixed |
||||||
| interest rate risk | 34,723 | 60,482 | 0.6 | 0.3 | — | — |
| Loan stock — exposed to fixed interest rate risk |
24,534 | 20,202 | 10.6 | 10.9 | 882 | 995 |
| Loan stock —exposed to variable interest rate risk |
— | 499 | — | 10.0 | — | — |
| Cash | 2,696 | 1,517 | 0.8 | 0.5 | — | — |
| Total exposed to interest rate risk |
61,953 | 82,700 |
Credit risk is the risk of failure by counterparties to deliver securities or cash to which the Company is entitled. The Company has exposure to credit risk in respect of the loan stock investments it has made into investee companies, most of which have no security attached to them, and where they do, such security ranks beneath any bank debt that an investee company may owe. The Board manages credit risk in respect of the current asset investments and cash by ensuring a spread of such investments in separate money market funds and cash at bank such that none exceed 15% of the Company's total investment assets. These money market funds are investment grade funds, and so credit risk is considered to be low. The Manager receives management accounts from portfolio companies, and members of the investment management team often sit on the boards of unquoted portfolio companies; this enables the close identification, monitoring and management of investment-specific credit risk. The maximum exposure to credit risk at 31 December 2018 was £62,475,000 (31 December 2017: £83,568,000) based on cash, money market funds and other receivables (amounts due on investments, dividends and interest). As at 31 December 2018, the Company's assets are held in its own name in certificated form and therefore custodian default risk is negligible.
An analysis of the Company's assets exposed to credit risk is provided in the table below:
| 2018 £'000 |
2017 £'000 |
|
|---|---|---|
| Loan stock investments | 24,534 | 20,701 |
| Current asset investments (money market funds) | 34,723 | 60,482 |
| Cash at bank | 2,696 | 1,517 |
| Other debtors | 522 | 868 |
| Total | 62,475 | 83,568 |
The investments in equity and fixed interest stocks of unquoted companies that the Company holds are not traded and they are not readily realisable. The ability of the Company to realise the investments at their carrying value may at times not be possible if there are no willing purchasers. The Company's ability to sell investments may also be constrained by the requirements set down for VCTs. The maturity profile of the Company's loan stock investments disclosed below indicates that these assets are also not readily realisable until dates up to five years from the year-end.
To counter these risks to the Company's liquidity, the Manager maintains sufficient cash and money market funds to meet running costs and other commitments. The Company typically invests its surplus funds in money market funds which are all accessible on an immediate basis.
| Total portfolio | ||
|---|---|---|
| Maturity analysis: | 2018 £'000 |
2017 £'000 |
| — in one year or less | 41,076 | 64,526 |
| — in more than one year but no more than two years | 11,662 | 2,125 |
| — in more than two years but no more than three years | — | 11,662 |
| — in more than three years but no more than four years | 4,387 | — |
| — in more than four years but no more than five years | 4,828 | 4,387 |
| Total | 61,953 | 82,700 |
FOR THE YEAR ENDED 31 DECEMBER 2018
The Board believes the Company's assets are mainly exposed to equity price risk, as the Company holds 55% of its assets in the form of sterling denominated investments in small companies.
All of the investments made by the Manager in unquoted companies, irrespective of the instruments the Company actually holds (whether shares or loan stock), carry a full equity risk, even though some of the loan stocks may be secured on assets (as they will be behind any prior ranking bank debt in the investee company).
The Board considers that even the loan stocks are 'quasi-equity' in nature, as the value of the loan stocks is determined by reference to the enterprise value of the investee company. Such value is considered to be sensitive to changes in quoted share prices, in so far as such changes eventually affect the enterprise value of unquoted companies. The table below shows the impact on profit and net assets if there were to be a 15% (2017: 15%) movement in overall share prices, which might in part be caused by changes in interest rate levels, but it is not considered practical to evaluate separately the impact of changes in interest rates upon the value of the Company's portfolio of investments in unquoted companies.
The sensitivity analysis below assumes that each of these sub categories of investments (shares and loan stocks) held by the Company produces an overall movement of 15%, and that the actual portfolio of investments held by the Company is perfectly correlated to this overall movement in share prices. However, shareholders should note that this level of correlation would not be the case in reality. Movements may occur to the value of both quoted and unquoted companies and result from changes in the market or alternatively as a result of assumptions made when valuing the portfolio or a combination of the two.
| Company | 2018 Return and net assets |
2017 Return and net assets |
|---|---|---|
| If overall share prices fell by 15% (2017: 15%), with all other variables held constant — decrease (£'000) |
(14,860) | (11,694) |
| Decrease in net asset value per share (in pence) | (8.49)p | (6.66)p |
| 2018 Return and net assets |
2017 Return and net assets |
|
| If overall share prices increased by 15% (2017: 15%), with all other variables held constant — increase (£'000) |
14,860 | 11,694 |
| Increase in net asset value per share (in pence) | 8.49p | 6.66p |
The impact of a change of 15% has been selected as this is considered reasonable given the current level of volatility observed both on a historical basis and market expectations for future movement. The range in equity prices is considered reasonable given the historic changes that have been observed.
Although the Company holds investments in loan stocks that pay interest, the Board does not believe that the value of these instruments is interest rate sensitive. This is because all of the interest is fixed, so not at risk of interest rate movements (2017: if interest rates on variable loans were 1% higher/ lower, the impact would have been a £5,000 increase/decrease in earnings or a 0.00p increase/decrease in net asset value per share).
The following table shows financial instruments recognised at fair value, analysed between those whose fair value is based on:
| Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000s |
Total £'000 |
|
|---|---|---|---|---|
| Quoted investments | — | — | — | — |
| Unquoted investments | — | — | 99,065 | 99,065 |
| Current asset investments (money market funds) | 34,723 | — | — | 34,723 |
| Financial assets | 34,723 | — | 99,065 | 133,788 |
| Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000s |
Total £'000 |
|
|---|---|---|---|---|
| Quoted investments | — | — | — | — |
| Unquoted investments | — | — | 77,963 | 77,963 |
| Current asset investments (money market funds) | 60,482 | — | — | 60,482 |
| Financial assets | 60,482 | — | 77,963 | 138,445 |
| Level 3 £'000 |
|
|---|---|
| Valuation brought forward at 1 January 2018 | 77,963 |
| Purchases | 17,705 |
| Disposal proceeds | (3,380) |
| Realised gains | 591 |
| Investment holding gains | 6,186 |
| Valuation carried forward at 31 December 2018 | 99,065 |
During the year there were no transfers between levels 1, 2 or 3.
At 31 December 2018 the Company had a contingent asset of £94,000 (2017: £101,000) relating to deferred consideration on the sale of Trilogy, receipt of which is considered probable but not virtually certain.
There were no contingent liabilities as at 31 December 2018 (2017: £nil).
FOR THE YEAR ENDED 31 DECEMBER 2018
The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern, so that it can provide an adequate return to shareholders by allocating its capital to assets commensurately with the level of risk.
In accordance with VCT requirements the Company must have at least 70% (80% for accounting periods beginning on or after 6 April 2019) of its total investments (as measured under VCT legislation), in qualifying holdings (these being investments in a relatively high risk asset class of small UK companies meeting VCT requirements). Effective 6 April 2018, where new funds are raised, the Company must invest 30% of such funds in qualifying holdings within 12 months following the end of the accounting period in which that capital was subscribed, with the balance being invested within approximately three years of that capital being subscribed. The Company accordingly has limited scope to manage its capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets. Subject to this overall constraint upon changing the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets if so required to maintain a level of liquidity to remain a going concern.
Although, as the Investment Policy implies, the Board would consider borrowing, there are no current plans to do so. It regards the net assets of the Company as the Company's capital, as the level of liabilities is small and the management of them is not directly related to managing the return to shareholders. There has been no change in this approach from the previous year.
No Director has an interest in any contract to which the Company is a party other than their appointment as directors.
Foresight Group CI Limited acts as manager of the Company. During the year, services of a total cost of £2,379,000 (2017: £3,780,000 including an £863,000 performance incentive fee in relation to the Infrastructure Shares Fund) were purchased by the Company from Foresight Group CI Limited. At 31 December 2018, the amount due to Foresight Group CI Limited was £nil (2017: £nil).
During the year, services of a total cost of £117,000 (2017: £113,000) were indirectly delivered to the Company by Foresight Group LLP. At 31 December 2018, the amount due to Foresight Group LLP was £2,000 (2017: £nil).
No amounts have been written off in the year in respect of debts due to or from the Manager.
Under Section 409 of the Companies Act 2006, the Company is required to disclose specified details of all its related undertakings, including significant holdings which are undertakings where the Company's holding amounted to 20% or more of the nominal value of any class of shares as at 31 December 2018. These are listed below. The percentage holding does not necessarily reflect the percentage voting right in the Company as a whole.
| Name | Address | Direct/ indirect holding |
Class and percentage of shares held |
|---|---|---|---|
| ABL Investments Limited | 14 Fleming Close, Park Farm Industrial Estate, Wellingborough, NN8 6UF |
Direct | A Ordinary 65.1% |
| Accrosoft Limited | The Gables, Bishop Meadow Road, Loughborough, LE11 5RE |
Direct | A Ordinary 66.7% |
| Aerospace Tooling Corporation Limited |
Charles Lake House, Claire Causeway, Crossways Business Park, Dartford, Kent, DA2 6QA |
Direct | A Ordinary 42.9% |
| Aquasium Technology Limited | 43 Pembroke Avenue, Denny Industrial Estate, Waterbeach, Cambridge, CB25 9QX |
Direct | A Ordinary 66.7% |
| Biofortuna Limited | Bluebell House, Brian Johnson Way, Preston, PR2 5PE |
Direct | F Ordinary 24.8% D Ordinary 14.4% C Ordinary 13.5% |
| Name | Address | Direct/ indirect holding |
Class and percentage of shares held |
|---|---|---|---|
| Cinelabs International Limited | 715 Banbury Avenue, Slough, SL1 4LR | Direct | A Ordinary 97.0% |
| Cole Henry PE 2 Limited | The Shard, 32 London Bridge Street, London, SE1 9SG |
Direct | Ordinary 50.0% |
| Dhalia Limited | The Shard, 32 London Bridge Street, London, SE1 9SG |
Direct | A Ordinary 100.0% |
| Datapath Group Limited | Bemrose House, Bemrose Park, Wayzgoose Drive, Derby, DE21 6XQ |
Direct | A Ordinary 33.3% |
| Fertility Focus Limited | Unit 12b, Warwick Innovation Centre, Warwick Technology Park, Gallows Hill, Warwick, CV34 6UW |
Direct | C Ordinary 54.5% |
| FFX Group Limited | Dyna House, Lympne Industrial Estate, Lympne, Hythe, Kent, CT21 4LR |
Direct | A Ordinary 66.2% |
| Flowrite Refrigeration Limited | Riverside House, 40-46 High Street, Maidstone, Kent, ME14 1JH |
Direct | A Ordinary 35.6% |
| Fresh Relevance Limited | 5 Benham Rd, Southampton Science Park, Southampton, SO16 7QJ |
Direct | A Ordinary 95.0% |
| Hospital Services Group Limited | The Shard, 32 London Bridge Street, London, SE1 9SG |
Direct | A Ordinary 73.5% |
| Industrial Efficiency II Limited | The Shard, 32 London Bridge Street, London, SE1 9SG |
Direct | B Ordinary 75.2% |
| Itad (2015) Limited | Preece House, Davigdor Road, Hove, East Sussex, BN3 1RE |
Direct | A Ordinary 68.8% |
| Ixaris Systems Limited | 2 Stephen Street, London, W1T 1AN | Direct | A Ordinary 20.6% Ordinary 0.8% |
| Kingsclere PE 3 Limited | The Shard, 32 London Bridge Street, London, SE1 9SG |
Direct | Ordinary 50.0% |
| Luminet Networks Limited | 2 Angel Square, London, EC1V 1NY | Direct | A Ordinary 78.4% |
| Mologic Ltd | Building 109 Bedford Technology Park, Thurleigh, Bedford, MK44 2YA |
Direct | AA Ordinary 68.7% |
| Mitgjorn Limited | The Shard, 32 London Bridge Street, London, SE1 9SG |
Direct | A Ordinary 100.0% |
| Mowgli Street Food Group Limited |
69 Bold Street, Liverpool, L1 4EZ | Direct | A Ordinary 43.2% |
| Nano Interactive Group Limited | Charlotte Building, 17 Gresse Street, London, W1T 1QL |
Direct | A Ordinary 95.2% |
| Ollie Quinn Limited | 10 John Street, London, WC1N 2EB | Direct | AA Ordinary 98.3% A Ordinary 98.5% |
| Online Poundshop Limited | Unit 8 Parkway Industrial Estate, Pacific Avenue, Wednesbury, WS10 7WP |
Direct | A Ordinary 63.7% |
| Positive Response Corporation Limited |
The Shard, 32 London Bridge Street, London, SE1 9SG |
Direct | A Ordinary 50.0% |
| Powerlinks Media Limited | 80 Mosley Street, Manchester, M2 3FX | Direct | AA Ordinary 95.2% |
| Procam Television Holdings Limited |
Staple Court, 11 Staple Inn Buildings, London, WC1V 7QH |
Direct | A Ordinary 50.0% Z Ordinary 50.0% |
| Protean Software Limited | Units 1130-40 Elliott Court Herald Avenue, Coventry Business Park, Coventry, CV5 6UB |
Direct | A Ordinary 62.5% |
| Specac International Limited | River House, 97 Cray Avenue, Orpington, Kent, BR5 4HE |
Direct | Ordinary 50.0% |
| TFC Europe Limited | Hale House, Ghyll Industrial Estate, Heathfield, East Sussex, TN21 8AW |
Direct | AA Ordinary 40.0% A Ordinary 40.0% |
| The Business Advisory Limited | Experience House, 5 Port Hill, Hertford, SG14 1PJ | Direct | A Ordinary 49.2% |
| The Naked Deli Ltd | 231 Chillingham Road, Newcastle Upon Tyne, NE6 5LJ |
Direct | A Ordinary 66.7% |
| Whitchurch PE 1 Limited | The Shard, 32 London Bridge Street, London, SE1 9SG |
Direct | Ordinary 50.0% |
On 21 January 2019 the Company made a new investment into Sports Lab Technology Limited (ClubSpark) totalling £1.3 million and on 28 March 2019 the Company made a new investment into LPH Holdings Limited (Steamforged Games) totalling £2.4 million.
23 MAY 2019
| Order of Events | |
|---|---|
| 1.00pm | Manager presentation |
| Immediately following the Manager presentation | Formal business of the Annual General Meeting |
Notice is hereby given that the Annual General Meeting of Foresight VCT plc ("the Company") will be held on 23 May 2019 at 1.00pm at the offices of Foresight Group LLP, The Shard, 32 London Bridge Street, London, SE1 9SG for the purpose of considering and, if thought fit, passing the following resolutions, of which resolutions 1 to 9 will be proposed as ordinary resolutions and resolutions 10 to 12 will be proposed as special resolutions.
(b) the allotment of equity securities with an aggregate nominal amount of up to but not exceeding an amount equal to 10% of the issued share capital from time to time pursuant to dividend reinvestment schemes operated by the Company at a subscription price per Share which may be less than the net asset value per Share, as may be prescribed by the scheme terms;
(c) the allotment of equity securities with an aggregate nominal amount of up to but not exceeding £100,000 by way of an issue of Shares (which may be at a subscription price per Share which is less than the net asset value per Share) pursuant to performance incentive arrangements with Foresight Group CI Limited and relevant individuals of the Foresight Group LLP investment team; and
in each case where the proceeds may be used in whole or part to purchase shares in the capital of the Company, and shall expire (unless renewed, varied or revoked by the Company in a general meeting) on the conclusion of the annual general meeting of the Company to be held in the year 2020, or, if earlier, on the date falling 15 months after the passing of this resolution save that the Company shall be entitled to make offers or agreements before the expiry of such authority which would or might require equity securities to be allotted after such expiry and the directors shall be entitled to allot equity securities pursuant to any such offers or agreements as if the authority conferred hereby had not expired.
Resolution 12 That the share premium account of the Company be reduced by £21.6 million.
By order of the Board
Foresight Group LLP Company Secretary 10 April 2019
The Shard 32 London Bridge Street London SE1 9SG
The C Shares Fund was launched in 1999. To get an accurate NAV total return per C Share since inception, we have rebased dividends and NAV to account for the merger of the C Shares with the original ordinary shares class in January 2007 (conversion ratio of 1 Ordinary Share per every 1 C Share held). A reconstruction of the Ordinary Shares was subsequently completed in March 2011 (conversion ratio of 0.554417986).
| C Shares (converted into Ordinary Shares in January 2007): | Dividend per share (rebased)† |
|---|---|
| 4 May 2018 | 2.8p |
| 29 September 2017 | 2.2p |
| 3 April 2017 | 2.8p |
| 1 April 2016 | 3.9p |
| 13 March 2015 | 3.3p |
| 14 March 2014 | 5.5p |
| 14 June 2013 | 2.8p |
| 23 March 2012 | 4.15p |
| 17 June 2011 | 2.8p |
| 29 May 2009 | 1.0p |
| 7 March 2008 | 5.0p |
| 26 January 2007 | 2.0p |
| 27 May 2005 | 0.5p |
| 1 August 2004 | 0.5p |
| 22 September 2003 | 0.75p |
| 30 June 2003 | 0.75p |
| 24 March 2003 | 0.75p |
| 7 June 2002 | 1.0p |
| 11 March 2002 | 2.5p |
| 26 July 2001 | 2.0p |
| Total | 47.0p |
| NAV per C Share rebased* | 43.3p |
| NAV total return per C Share * | 90.3p |
*Based on an original 100.0p invested at launch.
For Ordinary Shares dividend history and NAV Total Return, please refer to the Financial Highlights section.
A Venture Capital Trust as defined in the Income Tax Act 2007.
The Net Asset Value (NAV) is the amount by which total assets exceed total liabilities, i.e. the difference between what the company owns and what it owes. It is equal to shareholders' equity, sometimes referred to as shareholders' funds.
Net Asset Value expressed as an amount per share.
The sum of the published NAV per share plus all dividends paid per share. This allows performance comparisons to be made between VCTs.
The sum of the current share price plus all dividends paid per share. This allows performance comparisons to be made between VCTs.
The sum of dividends paid during the year expressed as a percentage of the share price at the year end date.
A discount to NAV is the percentage by which the mid-market share price of the Company is lower than the net asset value per share.
The sum of expenditure incurred in the ordinary course of business expressed as a percentage of the Net Asset Value at the reporting date.
An investment which consists of shares or securities first issued to the VCT (and held by it ever since) by a Qualifying Company and satisfying certain conditions under the VCT provisions.
A company satisfying certain conditions under the VCT provisions. The conditions are detailed but include that the company must be unquoted (which includes AIM), have a permanent establishment in the UK, apply the money raised for the purposes of growth and development for a qualifying trade within a certain time period and not be controlled by another company. There are additional restrictions relating to the size and stage of the company to focus investment into earlier stage businesses, as well as maximum investment limits (certain of such restrictions and limits being more flexible for 'knowledge intensive' companies). VCT funds cannot be used by a Qualifying Company to acquire shares in another company or a trade.
The Company has appointed Foresight Group CI Limited as its manager ("The Manager") to provide investment management and administration services. Foresight Group CI Limited has appointed Foresight Group LLP to be its investment adviser. The Manager has also delegated secretarial, accounting and other administration services to Foresight Group LLP.
References to "the Manager" throughout this report refer to the activities of Foresight Group CI Limited and include the activities of Foresight Group LLP when acting as the Manager's investment adviser and administrative delegate.
Fraudsters use persuasive and high-pressure tactics to lure investors into scams.
They may offer to sell shares that turn out to be worthless or non-existent, or to buy shares at an inflated price in return for an upfront payment.
While high profits are promised, if you buy or sell shares in this way you will probably lose your money.
Consider that if you buy or sell shares from an unauthorised firm you will not have access to the Financial Ombudsman Service or Financial Services Compensation Scheme. 8
Think about getting independent financial and professional advice before you hand over any money. 9
5,000 people contact the Financial Conduct Authority about share fraud each year, with victims losing an average of £20,000
If you are approached by fraudsters please tell the FCA using the share fraud reporting form at www.fca.org.uk/scams, where you can find out more about investment scams.
You can also call the FCA Consumer Helpline on 0800 111 6768.
If you have already paid money to share fraudsters you should contact Action Fraud on 0300 123 2040.
03421340
John Gregory (Chairman) Jocelin Harris Gordon Humphries Margaret Littlejohns Peter Dicks (Retired 22/05/18)
Foresight Group LLP The Shard 32 London Bridge Street London SE1 9SG
Foresight Group CI Limited PO Box 156 Dorey Court St Peter Port Guernsey GY1 4EU
KPMG LLP 15 Canada Square London E14 5GL
Shakespeare Martineau LLP No. 1 Colmore Square Birmingham B4 6AA
and
60 Gracechurch Street London EC3V 0HR
Computershare Investor Services plc The Pavilions Bridgwater Road Bristol BS99 6ZZ
Panmure Gordon & Co One New Change London EC4M 9AF
Lloyds Bank plc 25 Gresham Street London EC2V 7HN
Foresight VCT plc currently conducts its affairs so that its shares can be recommended by IFAs to ordinary retail investors in accordance with the FCA's rules in relation to non-mainstream pooled investment products and intends to continue to do so for the foreseeable future.
The shares are excluded from the FCA's restrictions which apply to non-mainstream pooled investment products because they are shares in a VCT.
The Company has appointed the Manager, which is licensed by the Guernsey Financial Services Commission, to provide investment management services. The Manager has, as is permitted and as approved by the Board, appointed Foresight Group LLP to act as its investment adviser. Foresight Group LLP is a subsidiary undertaking of the Manager and is authorised and regulated by the Financial Conduct Authority.
The Company has appointed the Manager to provide services which include company secretarial, accounting and other administration services required in connection with the business and the operation of the Company. All of these services have been delegated to Foresight Group LLP, the company secretary.
Past performance is not necessarily a guide to future performance. Stock markets and currency movements may cause the value of investments and the income from them to fall as well as rise and investors may not get back the amount they originally invested. Where investments are made in unquoted securities and smaller companies, their potential volatility increases the risk to the value of, and the income from, the investment.
The Shard 32 London Bridge Street London SE1 9SG
Foresight VCT plc Annual report and accounts 31 December 2018 This publication is printed on paper sourced from certified sustainable forests.
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.