Foresight 4 VCT PLC : Annual Financial Report
FORESIGHT 4 VCT PLC
Financial Highlights
Ordinary Share Fund
Net asset value per Ordinary Share as at 31 March 2013 decreased by 9.9%to 87.3p compared to 96.9p as at 31 March 2012.
An interim dividend of 4.0p per Ordinary Share was paid on 26 April 2013.
The Ordinary Share Fund made twelve follow-on investments totalling £777,047 and one new investment totalling £200,000.
The Ordinary Share Fund realised £2,428,115 from the sale of two investee companies and proceeds from three other investee companies.
C Share Fund
Net asset value per C Share as at 31 March 2013 increased by 1.5% to 95.8p from 94.4p as at 31 March 2012.
The C Share Fund made one follow-on investment totalling £2,003,145 and three new investments totalling £3,492,500.
The C Share Find realised £1,065,815 from three investee companies.
Chairman's Statement
Roger Brooke
The board of Foresight 4 VCT plc was saddened by the death of Director, Roger Brooke in December 2012. The Board and Foresight Group would like to posthumously thank Roger for all of his wise counsel over the 14 years he was a Director of the Company.
Performance
The year under review continued to be overshadowed by the poor state of government finances in many parts of the World. In the UK, economic activity was patchy, giving rise to concerns about a triple dip recession (which ultimately was narrowly avoided) and bank lending to smaller businesses continued to be restricted. The US economy showed better performance but US Government spending remains constrained by the impact of the sequester cuts. This contributed to a delay in orders from the US for some portfolio companies.
The economic environment affected portfolio companies in a variety of ways. Some companies with longer established businesses were able to find growth opportunities in export markets. Others that needed to maintain or increase their borrowing to pursue development projects or to expand their activities had difficulty in doing so. This was particularly so for companies in the environmental sector.
Against this background, I can report that the net asset value of the Ordinary Share portfolio as at 31 March 2013, decreased by 9.9% to 87.3p (31 March 2012: 96.9p). The C Share portfolio net asset value as at 31 March 2013 increased by 1.5% to 95.8p (31 March 2012: 94.4p).
The Ordinary Share portfolio benefited from the good performance of investments in Datapath and Ixaris, both of which are traditional private equity investments and saw increases in valuation. There was also positive performances from Autologic Diagnostics and TFC Europe. Amongst other valuation adjustments, however, additional substantial provisions have been made in the case of O-Gen Acme Trek, O-Gen UK, Silvigen, i-Plas and Abacuswood all of which are in the environmental portfolio. Closed Loop Recycling, which is also part of the environmental portfolio, recently raised £12.8 million for a major plant expansion and is making good progress to achieving sustainable profitability.
Overall, valuation decreases outweighed portfolio gains despite a robust performance from the private equity portfolio companies. This has been largely because of the continued poor performance of the environmental investments in the portfolio. The disappointing performance has been caused in most cases by the difficulty in implementing technology and the much greater cost of bringing the businesses to the point where they are self sustaining. Where therequired additional funding has not been available from outside sources this has led to the need for the Investment Manager ("Foresight Group") to make difficult judgements about whether to continue to support companies or to let them close. The Board and Foresight Group have concluded in the light of the experience in this sector that no new investments will be made in it, and that to the extent that funds for new investment become available they should be focused on more mature and established private equity businesses.
During the period, £2,168,058 was received from the sale of Adeptra (£1,546,648) and Infrared Integrated Systems (£621,410) by the Ordinary Shares fund. A further £259,210 was received from Crumb Rubber (£25,000) and i-plas (£234,210). A disposal in Autologic Diagnostics Group generated £847 of proceeds.
The performance of the C Share fund during the year has been encouraging, with the legacy portfolio investments performing relatively well and the new investments performing strongly.
The C Shares fund received £450,970 from Factory Media and Hallmarq repaid their remaining loans, including redemption premium, totalling £600,000. Loseley, in administration, repaid £14,845.
Despite the setbacks in the environmental sector, Foresight Group remains positive about the prospects for a number of the remaining investments in the portfolios.
An interim dividend of 4.0p per Ordinary Share was paid on 26 April 2013.
Share Issues and Share Buy-backs
The Company launched a top-up offer on 3 December 2012. During the period ended 31 March 2013, 850,432 Ordinary Shares were allotted based on a net asset value of 92.6p per share and raising £0.8 million. The company also issued 193,264 C Shares raising gross proceeds of £0.2 million.
The previous top-up offer, which was launched on 29 March 2012 alongside its enhanced buyback offer to Shareholders was open between 1 April 2012 until 30 September 2012. 634,876 Ordinary Shares were allotted at prices ranging from 99.9p to 105.2p raising £0.6 million during that period.
It continues to be the Board's policy to consider repurchasing shares, at a discount, when they become available in order to provide a degree of liquidity for the sellers of the Company's shares. During the period, the Company repurchased 692,486 Ordinary Shares for cancellation at a cost of £590,340.
To provide additional resources to support existing C Share investments, most notably The Fin Machine, and also invest in new investment opportunities from the strong deal flow currently being generated by Foresight, the Investment Manager and the board are actively considering raising funds from C Shareholders. Details of any fund-raising proposals will be sent to shareholders for approval in due course.
Enhanced Buyback
I am pleased to report that the take up by shareholders of the enhanced buyback offer to shareholders was significant with shareholders representing 5,587,587 Ordinary Shares and 4,847,443 C Shares taking up the offers between April 2012 and March 2013. During March 2013, Enhanced Buybacks were mentioned in the Chancellor's budget as an area that was not necessarily in the spirit of the VCT legislation and we expect a consultation paper to be published by HM Treasury during summer 2013. The outcome of this consultation will help shape the Boards' position with regards to the Company's ability to offer enhanced buybacks in the future.
Valuation Policy
Investments held by the Company have been valued in accordance with the International Private Equity and Venture Capital (IPEVC) valuation guidelines (August 2010) 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. Quoted investments and investments traded on AIM and ISDX Growth Market (formerly PLUS) are valued at the bid price as at 31 March 2013. The portfolio valuations are prepared by Foresight Group, reviewed and approved by the Board quarterly and subject to annual review by the auditors.
Annual General Meeting
The Company's Annual General Meeting will take place on 26 September 2013. I look forward to welcoming you to the Meeting, which will be held in London, details of which can be found on page 57 of the annual report and accounts.
Outlook
The Board remains cautious about the general outlook but is pleased by the strong performance of the C Share portfolio. The first priority is to support the existing portfolio where prospects justify further investment in order to optimise the potential for realisation at attractive prices. Over the medium term we are optimistic that realisations can be achieved at attractive prices and that this will facilitate distributions to shareholders. These realisations are likely to be achieved through trade sales as many large companies have significant cash resources available to them. Foresight Group recognises the Company's holding period for its portfolio companies is longer than originally anticipated, which has impacted distributions to shareholders, but we expect this to change as economic conditions improve.
Philip Stephens
Chairman
16 July 2013
Investment Manager's Report
The performances of both the "O" Share fund and "C" Share fund portfolios during the year to 31 March 2013 have been impacted by both positive and negative factors, resulting in a 9.9% decrease overall in the net asset value of the "O" Share fund and a 1.5% increase in the net asset value of the "C" Shares fund. Both investment portfolios experienced mixed trading conditions during the year, with generally weak economic activity in the UK and Europe, restrictions on bank lending to UK SMEs and concerns about government finances across Europe. These factors affected portfolio companies in a variety of ways. Some more established businesses were able to expand and grow successfully, particularly those addressing overseas markets, while others pursuing development projects or expanding their activities had real difficulty in raising the necessary finance.
During the year, the private equity portfolio performed robustly overall in marked contrast to the environmental infrastructure portfolio, where most investee companies struggled in difficult market conditions. The private equity portfolio benefited from the strong performances of several investments, in particular Datapath Group, Autologic Diagnostics Group and TFC Europe, which all achieved record sales and profits, resulting in substantial increases in valuation. A total of £1,546,648 was received from the realisation of Adeptra in September 2012 with up to a further £280,000 due in December 2013. The sale of the investment in Infrared Integrated Systems in May 2012 generated up to £900,000 for the Company, of which £621,410 was paid on completion and the balance is to be paid over the period to May 2014 subject to future performance. This compares to an original cost of £250,005. Overall, we expect the private equity investments to drive net asset value (NAV) performance and generate liquidity through realisations over the coming months.
The performance of the "C" Share fund during the year has been encouraging, with the legacy portfolio investments performing relatively well and the new investments performing strongly.
Foresight has carefully assessed and reviewed the environmental portfolio investments, all of which are in the "O" Share fund, to identify those with potential and so merit further support by the VCTs and those struggling to make progress. In consequence, decisions were made during the year not to continue to finance a number of such environmental investments, namely Abacuswood, i-plas Group and Silvigen, which have since been placed into administration. As the above conditions are expected to continue for some time, the Board and Investment Manager have agreed that no further environmental investments will be made, other than for possible small follow on investments where necessary to support those environmental investments considered to have potential. Reflecting the better risk adjusted returns from private equity investments, the Investment Manager will in future focus solely on making private equity investments where Foresight Group is currently experiencing a strong deal flow. The four remaining environmental investments now represent less than 21% of the net assets of the "O" Share fund.
The valuations of several of the portfolio companies have been impacted by applying lower multiples to earnings despite reasonably good trading performances and the Manager expects these valuations to reverse if underlying trading continues to be strong.
Foresight remains positive about the prospects for the portfolios overall and is focussed on achieving realisations from the existing investments to increase net asset value, facilitate shareholder distributions and provide additional funding for new investments. Although generally cautious about the economic outlook, Foresight is now seeing an increasing number of high quality private equity investment opportunities. Portfolio company highlights are summarised below.
Annual Portfolio Review: Ordinary Shares
Follow-on funding (excluding capitalised interest)
| Company | £ |
| Abacuswood | £150,000 |
| AlwaysON | £100,100 |
| Amberfin | £13,669 |
| AtFutsal | £196,346 |
| Crumb Rubber | £35,000 |
| i-plas | £66,666 |
| Ixaris | £131,663 |
| Silvigen | £8,334 |
| Snell Corporation | £3,847 |
| The Bunker | £52,229 |
| Vertal | £13,190 |
| Zoo Digital | £6,033 |
| Total | £777,047 |
New Investments
| Company | £ |
| Flowrite Refigeration | £200,000 |
| Total | £200,000 |
Exits
| Company | £ |
| Adeptra | £1,546,648 |
| Infrared Integrated Systems | £621,410 |
| Total | £2,168,058 |
Realisations
| Company | £ |
| Autologic Diagnostics Group | £847 |
| Crumb Rubber | £25,000 |
| i-plas | £234,210 |
| Total | £260,057 |
Material Provisions to a level below cost
| Company | £ |
| Abacuswood | £874,134 |
| AtFutsal | £233,767 |
| Global Immersion | £418,438 |
| i-plas | £112,758 |
| O-Gen Acme Trek | £2,485,588 |
| O-Gen UK | £144,678 |
| Silvigen | £200,691 |
| Trilogy | £1,069,615 |
| Total | £5,539,669 |
Performance Summary
A number of companies in the "O" Shares fund portfolio continued to perform well during the year, most notably Datapath, Autologic Diagnostics and TFC which all achieved record sales and profits. resulting in substantial increases in valuation totalling over £3 million. The Bunker also performed well, as did the new investment completed in May 2012 in Flowrite, a well established Kent based company offering refrigeration and air conditioning maintenance and services to leisure and commercial businesses nationally which is already trading well ahead of budget. A total of £1,546,648 million was received from the realisation of Adeptra in September 2012 with up to a further £280,000 due in December 2013, and £621,410 from the sale of the investment in Infrared Integrated Systems in May 2012 with up to a further £280,000 due in May 2014. In February 2013, Closed Loop Recycling raised loans totalling £12.8 million to double its production capacity and good progress is now being made in installing new sorting and production equipment. Once this is fully installed and commissioned, the company's profitability is expected to be enhanced substantially.
As explained below and summarised in Table 5 above, material provisions were made against seven investments. As a result of delays at O-Gen Acme Trek in progressing alternative plans to redevelop the site as an 8MW power plant (nearly three times the output of the original plant), it was felt necessary to make a further provision against the cost of this investment. Despite good orders for its broadcast equipment, trading at Trilogy remained weaker than expected during 2012/2013 due to lower than expected US defence related sales which has necessitated further cost cuts and a further substantial downwards revaluation. Where provisions have been made against the value of underlying investments, we have also provided against the income due from such investments.
The present mixed trading conditions are expected to continue for some time while the general economic climate remains uncertain and a prolonged period of slow growth is considered likely.
Annual Portfolio Review: "C" Shares
Follow-on funding (excluding capitalised interest)
| Company | £ |
| The Fin Machine | £2,003,145 |
| Total | £2,003,145 |
New Investments
| Company | £ |
| Blackstar Amplification | £1,000,000 |
| Flowrite Refrigeration | £492,500 |
| Leisure Efficiency III | £2,000,000 |
| Total | £3,492,500 |
Exits
No exits were made by the "C" Share fund during the period
Realisations
| Company | £ |
| Factory Media | £450,970 |
| Hallmarq | £600,000 |
| Loseley Diary | £14,845 |
| Total | £1,065,815 |
Material Provisions to a level below cost
| Company | £ |
| Connect2Media | £106,260 |
| The Fin Machine Company | £666,137 |
| Total | £772,397 |
Performance Summary
In February 2012, Acuity Growth VCT and Acuity VCT 3 (which had substantially common portfolios) were merged into a new separate "C" Share fund within the Company. The "C" Shares fund will be managed separately to the existing "O" Share fund for approximately a further two years, at which point it is anticipated that the "C" Share fund will be merged with the "O" Share fund on a relative net asset value basis using the audited net asset values of each fund as at 31 March 2015. The NAV of the "C" Share fund increased 1.5% to 95.8p as at 31 March 2013, reflecting valuation increases in Blackstar (£290,000) and Defaqto (£285,613), offset by decreases in The Fin Machine (£666,137) and Connect2 Media (£106,260).
Overall, the performance of the 'C" Share fund has been encouraging. The four legacy portfolio companies are now largely stabilised and showing promise while the new investments are trading particularly well.
During the year to 31 March 2013, follow-on investments totalling £2.0 million were made into The Fin Machine and three new investments were made totalling £3.5 million, namely Flowrite Refrigeration Holdings Limited (£492,500 in May 2012), Blackstar Amplification Holdings Limited (£1 million in July 2012) and a further acquisition vehicle preparing to trade, Leisure Efficiency III Limited (£2 million). The challenging turnaround at The Fin Machine has continued to progress, although more slowly than anticipated, and further senior management changes have been made. Both Flowrite and Blackstar are already performing well. The "C" Share portfolio is now becoming more diversified and now comprised of ten investments, with only four legacy Acuity investments remaining, namely Connect 2 Media, Defaqto, Hallmarq and The Fin Machine. Post the year end of 31 March 2013, the "C" Share fund invested £400,000 alongside other Foresight VCTs in a management buy-out of Battersea based Procam, one of the UK's leading broadcast hire companies, supplying equipment and crew for location TV production while a further £650,000 was invested in Connect2 Media as part of a funding round to support the new management team's change in strategy described below.
Portfolio Outlook
Weak UK economic conditions are expected to continue for the foreseeable future, resulting at best in a period of low growth. However, the private equity portfolios in the 'O' Share fund and 'C' Share fund are well positioned and are expected to continue to perform robustly overall, driving increased NAV and liquidity, whereas the environmental infrastructure portfolio in the 'O' Share fund is expected to face continuing difficult market conditions. As stated above, no further environmental investments will be made, other than for possible small follow on investments where considered necessary to support those environmental investments considered to have potential and the Investment Manager will focus solely in future on making private equity investments where Foresight Group is currently experiencing a strong deal flow.
Foresight remains positive about the prospects for the portfolios overall and is focussed on achieving realisations from the existing investments. Although generally cautious about the economic outlook, Foresight is now seeing an increasing number of high quality private equity investment opportunities.
The "C" Share portfolio comprises six investments made by Foresight and four legacy investments with a positive value, each of which is considered to have the potential to create value for shareholders in excess of its present carrying value. Of the legacy investments, Hallmarq continues to trade well and is expected to generate further shareholder value over time. Connect2 Media's strategy and business model is being changed to a recurring revenue model. Defaqto's trading is continuing to improve, thereby enabling an exit strategy to be considered at the appropriate time. The potential main value driver for the "C" Share fund continues to be achieving a turnaround of The Fin Machine, followed by a successful trade sale. Progress has been slower than anticipated but while considerable risks remain, particularly with regard to the volatility of cash flows, and there is still much to do before the turnaround is complete, the company continues to make progress. Although early days, developments and trading at Biofortuna, Flowrite and Blackstar give grounds for optimism.
In each case, Foresight is actively working to create and realise shareholder value.
Foresight is actively seeking suitable investment opportunities for the "C" Share fund in order to generate income and capital appreciation and broaden the portfolio while diversifying risk. Foresight is now seeing an increasing number of high quality private equity investment opportunities. However, as a small fund with finite cash resources, the "C" Share fund will soon have insufficient funds to pursue further investments actively alongside other Foresight funds. To provide additional resources to support existing investments, most notably The Fin Machine, and also invest in new investment opportunities from the strong deal flow currently being generated by Foresight, the Investment Manager and the Board are actively considering further fund-raising.
Portfolio Company Highlights
Abacuswood continued to incur small monthly EBITDA losses at the Bridgend plant during the year. Following a small fire in Autumn 2012, production was interrupted for several weeks but the resultant costs and business interruption were covered by insurance. Although demand for the plant's high quality wood pellets continued to exceed supply, overcapacity in the UK wood pellet market impacted on selling prices, with consequent pressure on margins. The new, highly experienced CEO who joined in April 2012 introduced various operational improvements and formulated a strategy with Foresight to develop the business by raising £5.5 million to double the production capacity at Bridgend and install a large biomass boiler to dry the waste wood before processing, thereby reducing energy costs substantially. To meet working capital requirements, short term loans totalling £150,000 were advanced in May and July 2012. Despite discussions with a number of potential funders over many months, no funding round could be concluded and Foresight decided not to provide further support to the company, which was placed into liquidation on 17th May 2013, necessitating a full provision of £874,134 being made against the cost of the investment. Held in Ordinary Share fund.
In September 2012, Adeptra was acquired by one of its longstanding US partners, the NYSE listed business analytics group, FICO, for £72 million. The Company received a total of £1.84 million for its investment, comprising an initial £1.55 million while a further £280,000 is held in escrow until December 2013. This compared with a valuation of £1,354,235 and original cost of £1,304,718. Held in Ordinary Share fund.
Following a change of management at alwaysON, the turnaround of this data VPN/VOIP service provider has continued to gather pace, such that for the year to 30 June 2012, the company achieved a breakeven operating profit on sales of £2.7 million. To meet working capital requirements, a loan of £100,100 was advanced in July 2012. Reflecting continuing investment in new systems and networks, a small operating loss is budgeted for the current year. A significant contract extension with a major customer and a growing sales pipeline are expected to underpin future profitability. The company is a Microsoft partner and one of the few focussing on their unified communications product, Lync. Held in Ordinary Share fund.
Amberfin, based in Basingstoke, is an internet content repurposing business (converting video for transmission over the internet), which has invested heavily in opening offices overseas and developing a diverse global customer base. As the final part of a £3 million round agreed in November 2010, the Company advanced £13,669 in September 2012 as the last tranche of a loan facility to finance the company's continuing strong growth. Held in Ordinary Share fund.
AtFutsal Group provides facilities for futsal, a fast growing type of indoor football with 30 million participants worldwide and the only type of indoor football recognised by the Football Association. Sales have built up steadily in the flagship super arena in Birmingham and the second super arena in Leeds which opened in August 2012 has made a promising start. The company has recently reached cash break even on a monthly basis. As part of a £762,500 funding round to finance the opening of the new super arena in Leeds, £196,346 was invested in equity and loans in April 2012. Educational activities are increasingly important with some 700 students now taking sports related courses with AtFutsal and a number of partnerships have been created with educational establishments, football clubs and training organisations. This number is lower than budgeted although nearly 2,000 students are planned to be recruited for the forthcoming academic year starting in September 2013 which is expected then to take the company into consistent EBITDA profitability. Held in Ordinary Share fund.
Following the successful £48 million secondary buy-out by ISIS Private Equity in January 2012, the "O" Share fund retained investments in equity and loan stock valued at £1.98 million in Autologic Diagnostics Group. For the year ended 31 December 2012, unaudited results show an operating profit of £6.0 million (pre exceptional deal costs) was achieved on sales of £17.2 million (£5.2 million on sales of £12.2 million in 2011). Autologic is continuing to grow sales and profits further, particularly in the USA. In March 2013, interest of £151,337 deferred under the terms of the loan agreement with Autologic was capitalised. In addition to this, a disposal also took place generating £847 of proceeds. Held in Ordinary Share fund.
Biofortuna, a molecular diagnostics business based in the Wirral, has developed unique expertise in the important area of enzyme stabilisation, effectively hi-tech freeze drying. Its first range of products, SSPGo, is a series of genetic compatibility tests for organ transplant recipients, although the breadth of application of the technology is extremely broad. Because of the company's stabilisation and freeze-drying technology, its products can be transported easily (in the post if needed) and stored at room temperature for up to two years. The company is making progress in a number of areas, including expanding into adjacent premises, broadening its product range, increasing manufacturing capacity and improving internal processes. FDA trials for its SSPGo product range, needed to make sales in the USA, were notably successful. The SSPGo product range continues to see repeat orders from Abbott. The freeze-dried kit manufacturing service shows promise, with contract discussions with a number of parties. Held in the Ordinary Share and "C" Share fund.
In July 2012, the "C" Share fund invested £1.0 million in Blackstar Amplification Holdings alongside £2.5 million from Foresight VCT to finance a management buy-out of and provide growth capital to Blackstar Amplification Limited, founded in 2004 by four senior members of the new product development team at Marshall Amplification to design and manufacture a range of innovative guitar amplifiers. Following commercial launch in 2007, sales grew rapidly, reflecting new product launches and entry into new markets, and a global brand was soon established. As a result of supply chain issues in 2011/12, UK and international demand could not be met fully and so terms were agreed with new suppliers to facilitate multiple sourcing. Based in Northampton, the company achieved strong sales and profit growth in the year to 30 April 2013, driven by new product launches (such as the ID: Series, a new entry level digital amplifier which has been particularly well received in the market) and increased penetration in key markets, most notably the US. New staff have been recruited and a series of new products are planned. Held in "C" Share fund.
In February 2013, Closed Loop Recycling successfully raised £12.8m of loans to double the capacity of its Dagenham plant by investing in additional plastic sorting facilities and production lines. Following completion of this expansion in late 2013, annual sales are expected to double and profitability is expected to increase substantially. In April 2013, the first part of this new capacity came on stream, resulting in record monthly turnover. Although demand for the company's recycled PET and HDPE exceeds its current capacity, weak current PET prices and raw material quality issues (resulting in below target but now improving yields) have resulted in trading losses being incurred over the last few months. The company's main raw material supplier opened a new plastic sorting facility in late 2012 which experienced temporary quality issues which have now been substantially addressed. Performance is expected to improve further over the coming months with record monthly turnover being achieved in April, and the major focus for the management team is to improve yield while maintaining/ increasing production volumes. Held in Ordinary Share fund.
Connect2 Holdings, based in Manchester and trading as Connect2Media, develops and publishes digital media entertainment on a range of devices including mobile phones, portable games consoles, Blackberrys, PCs and interactive TVs. Against a difficult economic backdrop, the new management team appointed during 2012 are now moving the business model away from the structurally declining feature phone market, which has been adversely affected by the rapid growth of smartphones and the advent of 'Freemium' games (i.e. free to play with paid for upgrades). For the year to 31 December 2012, an unaudited small EBITDA loss was incurred on sales of £3.1 million despite further cost reductions. In May 2012, a new CEO was appointed whose experience includes founding and ultimately exiting two US software companies and migrating from a B2C to a B2B business model.
To generate recurring revenues, the new business model leverages the company's assets and skills base by developing a Cloud based game development and publishing technology platform to provide small and medium sized game developers with software tools that support their development, distribution and discovery requirements. These Cloud based tools will be provided as a highly scalable Platform as a Service (PaaS) with developers paying monthly subscriptions for access to infrastructure and services, thereby generating recurring revenues. In April 2013, post the year end, as part of a £1 million funding round to support the new management team's change in strategy, the "C" Share fund invested a further £650,000 in Connect2 Media. Held in "C" Share fund.
During the year, £35,000 was invested in Crumb Rubber to meet its urgent working capital requirements. However, extended customer decision making, lengthy sales cycles and much slower than expected growth in sales the company continued to incur losses and the decision was reluctantly made not to provide further funding. The investment was sold to the other shareholders in November 2012 in return for £25,000 of loans being repaid. Held in Ordinary Share fund.
Datapath Group is a world leading innovator in the field of computer graphics and video-wall display technology. For the year ended 31 March 2012, the combined unaudited pre and post re-capitalisation group company achieved an operating profit of £4.5 million on sales of £12.1 million (£3.1 million operating profit on sales of £10.3 million in 2011). The company continued its strong growth in the current year to 31 March 2013 with record profits and sales being achieved, supporting an increase in valuation of £2.65 million during the year. Held in Ordinary Share fund.
For the year to 31 March 2013, Defaqto returned to substantial profitability, achieving an unaudited EBITDA of over £750,000 on sales of £7.2 million, which contrasts with the previous year to 31 March 2012, when an operating loss of £937,000 was incurred on sales of £8.3 million, after heavy investment in new product development. In the current year, further growth in sales and profits is expected. A new Chairman has recently been appointed. Similarly, the new CEO has already improved operational efficiency by focussing on tangible and financial metrics. Engage v4 was launched in September 2012 and is hoped to reverse the long trend of declining revenues from financial intermediaries. Held in "C" Share fund.
Evance Wind Turbines, which manufactures 5kW tree sized (up to 50 feet) wind turbines, enjoyed strong sales growth during 2012, driven primarily by the introduction of the UK Feed in Tariff regime. For the year to 31 March 2012, the company achieved its first operating profit on sales of £7.25 million (over three times the level of sales in the previous year). Both sales and profits grew well in the year to 31 March 2013, with the company delivering its 1,500th machine. However the reduction in the Feed in Tariff from 1 October 2012, combined with a noticeable tightening and lengthening of the planning permission process nationally, has since adversely affected orders and sales. The company is increasing its sales efforts overseas and in the developing corporate market where it has won some initial orders. Held in Ordinary Share fund.
In May 2012, the "O" Share fund and the "C" Share fund invested £200,000 and £492,500 respectively in Flowrite Refrigeration Holdings alongside other Foresight VCTs to finance the £3.2 million management buyout of Flowrite Services Limited, a long established Kent based company which provides refrigeration and air conditioning maintenance and related services nationally, principally to leisure and commercial businesses, such as hotels, clubs, pubs and restaurants. The management team has accelerated sales efforts, already winning a number of significant new customers and contracts, and a number of possible acquisitions are being considered to broaden the national coverage. Trading since May has been markedly ahead of budget. Held in the Ordinary Shares and "C" Shares fund.
Global Immersion, which designed, built and maintained visualisation systems for immersive theatres and planetariums worldwide, won several major orders in 2010 which led to a record operating profit of £0.5 million being achieved on sales of £8.0 million in the year to 30 June 2011. Reflecting prevailing difficult economic conditions, market demand subsequently fell materially with lengthening sales cycles and strong margin pressure, resulting in substantial trading losses being incurred. Administrators were appointed in December 2012 and so a full provision of £418,438 was made against this investment. Held in Ordinary Share fund.
Following a cost cutting programme, management reorganisation and price rises for its recycled plastic building products in late 2011, i-plas Group's trading improved in Spring 2012, break even EBITDA effectively being achieved in April 2012. To fund working capital, the Company invested a further £66,666 in May and June 2012. However, during Summer 2012, the company experienced a marked fall in demand from its customers in the construction industries and also significant margin pressure, resulting in growing losses. With little prospect of a sustained recovery in its markets, the decision was reluctantly made not to provide further funding, and an administrator was appointed in October. This necessitated a further provision of £112,758 being made against the original cost of investment to reduce it to nil. £234,210 was subsequently recovered from asset sales by the administrator. Held in Ordinary Share fund.
Guildford based Hallmarq Veterinary Imaging is the only manufacturer of MRI systems for the standing equine market, with over 50 MRI scanners in use at equine practices throughout the world. For the year ended 31 August 2012, the company achieved an EBITDA of £1.2 million on sales of £3.3 million, well ahead of budget and trading in the previous year. In the current year to 31 August 2013, sales growth continues to be strong but continuing investment in the PetVet scanner (an MRI scanner for the companion animal market (i.e. cats and dogs)) is expected to hold back EBITDA growth. Following the first PetVet sales, the company is now building a growing sales pipeline for this new scanner which addresses much larger worldwide markets than the company's equine scanner. On 31 August 2012, the Company repaid £745,784 to the "C" Share fund following the expiry of a five year loan, comprising a loan of £300,000, together with a redemption premium (£300,000) and interest (£145,784). Held in "C" Sharefund.
Infrared Integrated Systems was acquired in June 2012 by a major US corporation, generating up to £900,000 for Foresight 4, of which £621,410 was paid on completion and the balance is to be paid over two years subject to future performance. This compares to an original cost of £250,005. Sold.
An investment of £131,633 was made in April 2012 in Ixaris Systems as part of a £1.35 million fund raising to finance the continuing development of its Opn platform. Ixaris, which develops and operates Entropay, a prepaid payment service using the VISA network, has also continued to develop and increase sales of Opn, its platform that enables enterprises to develop custom applications for payments. This platform is being used by companies in the affiliate marketing and travel sectors. In the year to 31 December 2012, an unaudited operating loss of some £0.4 million was incurred on sales of £8.4 million, reflecting continuing investment in software and systems. Trading in the current year to date is ahead of budget and the management team has been strengthened by the appointment of a new Chief Operating Officer. Held in Ordinary Share fund.
Leisure Efficiency II and III are acquisition vehicles preparing to trade. Held in "C" Share fund.
£14,845 was received from the administrators of Loseley Dairy following the sale of certain assets during the year, an investment previously written off. Sold.
O-Gen Acme Trek Following a detailed strategic review in December 2011 and in the light of the likely expenditure required to bring the advanced gasification 3MW waste wood to energy plant in Stoke into full production, the decision was made to mothball the plant until the similar 3.8MW plant in Plymouth built by MITIE validated this technology. Following a change in the ROC subsidy regime, O-Gen UK is currently working to redevelop the Stoke facility into an 8MW plant using alternative, well established standard gasification technology and discussions are taking place with the technology provider, a major EPC contractor and potential funders. A further provision of £2,485,588 was made against the cost of the investment, reflecting delays in progressing these plans. Held in Ordinary Share fund.
O-Gen UK is a leading developer of waste wood gasification facilities in the UK and is currently in advanced stages of developing a £40m project in Birmingham, for which planning permission has been obtained, and also developing a growing pipeline of opportunities at various stages of maturity. The company continues to develop relationships with a number of technology providers and major EPC contractors. The company has a partnership with MITIE, the major UK FTSE 250 outsourcing group, which has built a 3.8MW plant in Plymouth which is now being commissioned, with operations expected to commence in summer 2013. O-Gen UK will not finance the construction of these plants but will benefit from project management fees, equity shareholdings and fuel and operation and maintenance contracts. A provision of £144,678 was made against the cost of this investment. Held in Ordinary Share fund.
A further £8,334 was invested during the year in Silvigen to fund urgently needed working capital. Reflecting much slower than expected growth in sales and continuing losses, the decision was made not to provide further funding, resulting in the company going into administration in September 2012. A full provision of £200,691 was made against the cost of this investment. Held in Ordinary Share fund.
TFC Europe, a leading distributor of technical fasteners in the UK and Germany, continued to enjoy strong growth during the year to 31 March 2013, achieving record sales and profits, having reported an operating profit of £1.6 million on sales of £16.6 million for the year ended 31 March 2012. Trading continues to remain strong in the current year to date with a growing order book. Held in Ordinary Share fund.
The Bunker Secure Hosting, which operates two ultra secure data centres, continues to win new orders, grow its annual revenues and generate substantial profits. For the year to 31 December 2012, unaudited results show an EBITDA of £1.77 million was achieved on sales of £8.5 million, at which date recurring annual revenues were running at £8.8 million. To strengthen sales efforts, additional sales resource has been recruited and a series of new Cloud based services is currently being launched. Growth has continued in the current year whilst investment in upgrading the existing infrastructure continues. In October 2012, the "O" Share fund purchased a small number of share from a minority shareholder at a cost of £52,229. Held in Ordinary Share fund.
The Fin Machine ('Fin') designs, manufactures and distributes special purpose capital equipment that is used to manufacture heat exchangers for the automotive and air conditioning markets. Fin's global customer base includes a broad range of blue chip OEMs, automotive industry majors and Asian air conditioning companies. Fin has manufacturing facilities in Seaham, Co. Durham and in Tianjin, China, as well as an assembly/service centre in Indiana, USA.
In the year to 31 December 2011, the company incurred an EBITDA loss of £2.4 million on revenues of £16.4 million, but continued to enjoy strong order intake. The changed management team developed a comprehensive plan to restructure the business and improve profitability and working capital dynamics during 2012.
After a promising first quarter to 31 March 2012, a number of machine deliveries were subsequently delayed, which incurred significant additional costs, reducing overall gross margins. Improving machine gross margins and manufacturing efficiency are key to the turnaround succeeding. In March 2012, the CEO was removed, the Chairman assumed an executive role and the long serving, experienced Sales Director temporarily took the role of UK General Manager. Four senior managers were recruited immediately below board level, including a new Head of Operations. To provide much needed working capital and finance a cost reduction programme which reduced the UK workforce by 25%, the "C" Share fund advanced further loans totalling £1.5 million in July 2012 while Clydesdale Bank provided an additional £300,000 in loans and extended their repayment dates into 2013. A further loan of £500,000 was advanced in October 2012. Although projecting significant EBITDA profits for the final quarter to 31 December 2012, machine deliveries were yet again delayed due to operational inefficiencies. In consequence, following a review by the new CFO in early 2013, an unaudited EBITDA loss of £1.2m was reported on sales of £26.2 million for the year to 31 December 2012, after charging exceptional costs of £2.3 million. New orders on more favourable cash payment terms have been negotiated with customers, giving good visibility on sales in 2013.
Break even EBITDA was achieved during the first quarter to 31 March 2013. Further management changes were made during the quarter with senior manager departures and the appointments of a new CEO and CFO. Post the year end, further loans totalling £750,000 were advanced to the company in April and May 2013. Foresight and the management team continue to work hard on the turnaround, which is making slower than anticipated progress particularly with regards to improving working capital volatility. Held in "C" Share fund.
Trilogy Communications achieved strong trading results in the two years to 29 February 2012, following a number of contract wins in the defence sector with partners such as Northrop Grumman and Raytheon. Trading in the year to 28 February 2013, however, was adversely affected by the deferral of certain expected orders under long-term defence programmes, particularly from the US, reflecting uncertainties about reductions in US defence spending. Specified annual reductions in such spending are now in place (the so called 'Sequester'). These factors have resulted in Trilogy continuing to incur substantial trading losses and further major cost reductions have been made, although the broadcast division has continued to trade satisfactorily. Although there is some evidence that these deferred programme orders are recommencing, the valuation has been reduced by £1,069,615 to reflect these lower sales and losses. Held in Ordinary Share fund.
A total of £13,190 was invested in Vertal during the year to fund working capital requirements. As previously noted in the last Annual Report, reflecting various technical plant issues and much higher than expected disposal costs which resulted in substantial trading losses, Vertal went into administration on 21 June 2012. Held in Ordinary Share fund.
David Hughes
Foresight Group
Chief Investment Officer
16 July 2013
The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority require certain disclosures in relation to the annual financial report, as follows:
Principal risks, risk management and regulatoryenvironment
The Board believes the principal risks faced by the Company are:
Economic risk - events such as an economic recession and movement in interest rates could affect smaller companies' performance and valuations.
Loss of approval as a Venture Capital Trust - the Company must comply with Section 274 of the Income Tax Act 2007 which allows it to be exempted from capital gains tax on investment gains. Any breach of these rules may lead to: the Company losing its approval as a VCT; qualifying shareholders who have not held their shares for the designated holding period having to repay the income tax relief they obtained; and future dividends paid by the Company becoming subject to tax. The Company would also lose its exemption from corporation tax on capital gains.
Investment and strategic - inappropriate strategy, poor asset allocation or consistent weak stock selection might lead to under performance and poor returns to shareholders.
Regulatory - the Company is required to comply with the Companies Act 2006, the rules of the UK Listing Authority and United Kingdom Accounting Standards. Breach of any of these might lead to suspension of the Company's Stock Exchange listing, financial penalties or a qualified audit report.
Reputational - inadequate or failed controls might result in breaches of regulations or loss of shareholder trust.
Operational - failure of the Manager's or Company Secretary's accounting systems or disruption to its business might lead to an inability to provide accurate reporting and monitoring.
Financial - inadequate controls might lead to misappropriation of assets. Inappropriate accounting policies might lead to misreporting or breaches of regulations. Additional financial risks, including interest rate, credit, market price and currency, are detailed in note 15 to the Annual Report and Accounts.
Market risk - investment in AIM traded, ISDX Growth Market traded and unquoted companies by its nature involves a higher degree of risk than investment in companies traded on the main market. In particular, smaller companies often have limited product lines, markets or financial resources and may be dependent for their management on a smaller number of key individuals. In addition, the market for stock in smaller companies is often less liquid than that for stock in larger companies, bringing with it potential difficulties in acquiring, valuing and disposing of such stock.
Liquidity risk - the Company's investments, both unquoted and quoted, may be difficult to realise. Furthermore, the fact that a share is traded on AIM or ISDX Growth Market does not guarantee its liquidity. The spread between the buying and selling price of such shares may be wide and thus the price used for valuation may not be achievable.
The Board seeks to mitigate the internal risks by setting policy, regular review of performance, enforcement of contractual obligations and monitoring progress and compliance. In the mitigation and management of these risks, the Board applies the principles detailed in the UK Corporate Governance Code. Details of the Company's internal controls are contained in the Corporate Governance and Internal Control sections of the Annual Report and Accounts.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Directors' Report and the financial statements, in accordance with applicable United Kingdom law and United Kingdom Generally Accepted Accounting Practice.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report (including Business Review), Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website, www.foresightgroup.eu. Visitors to the website should be aware that legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
We confirm that to the best of our knowledge:
the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
the Directors' Report includes a fair review of the development and performance of the business and the position of the Company together with a description of the principal risks and uncertainties that it faces.
On behalf of the Board
Philip Stephens
Chairman
16 July 2013
Unaudited Non-Statutory Analysis between the Ordinary Shares and C Shares Funds
| Income Statements | ||||||||||
| for the year ended 31 March 2013 | ||||||||||
| Ordinary Shares Fund | C Shares Fund | |||||||||
| Revenue | Capital | Total | Revenue | Capital | Total | |||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |||||
| Investment holding losses | - | (859) | (859) | - | (248) | (248) | ||||
| Realised (losses)/gains on investments | - | (1,439) | (1,439) | - | 765 | 765 | ||||
| Income | 16 | - | 16 | 202 | - | 202 | ||||
| Investment management fees | (239) | (717) | (956) | (85) | (253) | (338) | ||||
| Other expenses | (379) | - | (379) | (176) | - | (176) | ||||
| (Loss)/Profit on ordinary activities before taxation | (602) | (3,015) | (3,617) | (59) | 264 | 205 | ||||
| Taxation | - | - | - | - | - | - | ||||
| (Loss)/Profit on ordinary activities after taxation | (602) | (3,015) | (3,617) | (59) | 264 | 205 | ||||
| Return per share | (1.6)p | (7.9)p | (9.5)p | (0.3)p | 1.4p | 1.1p | ||||
| Balance Sheets | |||||||
| at 31 March 2013 | |||||||
| Ordinary Shares Fund | C Shares Fund | ||||||
| £'000 | £'000 | ||||||
| Fixed Assets | |||||||
| Investments held at fair value through profit or loss | 27,684 | 16,843 | |||||
| Current assets | |||||||
| Debtors | 2,283 | 499 | |||||
| Money market securities and other deposits | 536 | - | |||||
| Cash | 3,160 | 835 | |||||
| 5,979 | 1,334 | ||||||
| Creditors: Amounts falling due within one year | (158) | (213) | |||||
| Net current assets | 5,821 | 1,121 | |||||
| Net assets | 33,505 | 17,964 | |||||
| Capital and reserves | |||||||
| Called-up share capital | 384 | 187 | |||||
| Share premium account | 8,076 | 23,442 | |||||
| Capital redemption reserve | 1,914 | 49 | |||||
| Profit and loss account | 23,131 | (5,714) | |||||
| Equity shareholders' funds | 33,505 | 17,964 | |||||
| Number of shares in issue | 38,384,591 | 18,744,740 | |||||
| Net asset value per share | 87.3p | 95.8p |
At 31 March 2013 there was an inter-share debtor/creditor of £36,000 which has been eliminated on aggregation.
Unaudited Non-Statutory Analysis between the Ordinary Shares and C Shares Funds
Reconciliations of Movements in Shareholders' Funds
for the year ended 31 March 2013
| Called-up share capital | Share premium account | Capital redemption reserve | Profit and loss account | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | |
| Ordinary Shares | |||||
| As at 1 April 2012 | 378 | 1,417 | 1,851 | 32,921 | 36,567 |
| Share issues in the year | 69 | 7,085 | - | - | 7,154 |
| Expenses in relation to share issues | - | (426) | - | - | (426) |
| Repurchase of shares | (63) | - | 63 | (6,173) | (6,173) |
| Loss for the year | - | - | - | (3,617) | (3,617) |
| As at 31 March 2013 | 384 | 8,076 | 1,914 | 23,131 | 33,505 |
| Called-up share capital | Share premium account | Capital redemption reserve | Profit and loss account | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | |
| C Shares | |||||
| As at 1 April 2012 | 187 | 18,532 | - | (1,064) | 17,655 |
| Share issues in the year | 49 | 4,864 | - | - | 4,913 |
| Expenses in relation to share issues | - | 46 | - | - | 46 |
| Repurchase of shares | (49) | - | 49 | (4,855) | (4,855) |
| Loss for the year | - | - | - | 205 | 205 |
| As at 31 March 2013 | 187 | 23,442 | 49 | (5,714) | 17,964 |
Audited Income Statement
for the year ended 31 March 2013
| Year ended | Year ended | ||||||
| 31 March 2013 | 31 March 2012 | ||||||
| Revenue | Capital | Total | Revenue | Capital | Total | ||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
| Investment holding losses | - | (1,107) | (1,107) | - | (8,888) | (8,888) | |
| Realised (losses)/gains on investments | - | (674) | (674) | - | 5,617 | 5,617 | |
| Income | 218 | - | 218 | 222 | - | 222 | |
| Investment management fees | (324) | (970) | (1,294) | (211) | (917) | (1.128) | |
| Other expenses | (555) | - | (555) | (436) | - | (436) | |
| Loss on ordinary activities before taxation | (661) | (2,751) | (3,412) | (425) | (4,188) | (4,613) | |
| Taxation | - | - | - | - | - | - | |
| Loss on ordinary activities after taxation | (661) | (2,751) | (3,412) | (425) | (4,188) | (4,613) | |
| Return per share: | |||||||
| Ordinary Share | (1.6)p | (7.9)p | (9.5)p | (1.0)p | (8.7)p | (9.7)p | |
| C Share | (0.3)p | 1.4p | 1.1p | (0.3)p | (5.4)p | (5.7)p | |
The total column of this statement is the profit and loss account of the Company and the revenue and capital columns represent supplementary information.
All revenue and capital items in the above Income Statement are derived from continuing operations. No operations were acquired or discontinued in the year.
The Company has no recognised gains or losses other than those shown above, therefore no separate statement of total recognised gains and losses has been presented.
Audited Reconciliation of Movements in Shareholders' Funds
| Company | Called-up share capital | Share premium account | Capital redemption reserve | Profit and loss account | Total |
| Year period ended 31 March 2012 | £'000 | £'000 | £'000 | £'000 | £'000 |
| As at 1 April 2011 | 359 | 25,137 | 1,844 | 12,823 | 40,163 |
| Share issues in the year | 213 | 21,345 | - | - | 21,558 |
| Expenses in relation to share issues | - | (274) | - | - | (274) |
| Repurchase of shares | (7) | - | 7 | (711) | (711) |
| Cancellation of share premium* | - | (26,259) | - | 26,259 | - |
| Dividends | - | - | - | (1,901) | (1,901) |
| Loss for the year | - | - | - | (4,613) | (4,613) |
| As at 31 March 2012 | 565 | 19,949 | 1,851 | 31,857 | 54,222 |
* The share premium of the Company was cancelled by order of the High Court of Justice, Chancery Division, on 23 November 2011 and registered at Companies House on 23 November 2011. This enabled the Company to increase its distributable reserve to which, amongst other things, losses can be written off, providing the Company greater flexibility when considering dividend payments to shareholders and from which share buybacks can be financed.
| Company | Called-up share capital | Share premium account | Capital redemption reserve | Profit and loss account | Total |
| Year ended 31 March 2013 | £'000 | £'000 | £'000 | £'000 | £'000 |
| As at 1 April 2012 | 565 | 19,949 | 1,851 | 31,857 | 54,222 |
| Share issues in the year | 118 | 11,949 | - | - | 12,067 |
| Expenses in relation to share issues | - | (380) | - | - | (380) |
| Repurchase of shares | (112) | - | 112 | (11,028) | (11,028) |
| Loss for the year | - | - | - | (3,412) | (3,412) |
| As at 31 March 2013 | 571 | 31,518 | 1,963 | 17,417 | 51,469 |
Audited Balance Sheet
at 31 March 2013
| Registered Number: 03506579 | |||||
| As at | As at | ||||
| 31 March 2013 | 31 March 2012 | ||||
| £'000 | £'000 | ||||
| Fixed assets | |||||
| Investments held at fair value through profit or loss | 44,527 | 43,083 | |||
| Current assets | |||||
| Debtors | 2,746 | 3,525 | |||
| Money market securities and other deposits | 536 | 1,539 | |||
| Cash | 3,995 | 7,774 | |||
| 7,277 | 12,838 | ||||
| Creditors | |||||
| Amounts falling due within one year | (335) | (1,699) | |||
| Net current assets | 6,942 | 11,139 | |||
| Net assets | 51,469 | 54,222 | |||
| Capital and reserves | |||||
| Called-up share capital | 571 | 565 | |||
| Share premium account | 31,518 | 19,949 | |||
| Capital redemption reserve | 1,963 | 1,851 | |||
| Profit and loss account | 17,417 | 31,857 | |||
| Equity shareholders' funds | 51,469 | 54,222 | |||
| Net asset value per share: | |||||
| Ordinary Share | 87.3p | 96.9p | |||
| C Share | 95.8p | 94.4p | |||
Audited Cash Flow Statement
for the year ended 31 March 2013
| Year ended | Year ended | |
| 31 March 2013 | 31 March 2012 | |
| £'000 | £'000 | |
| Cash flow from operating activities | ||
| Investment income received | 311 | 245 |
| Deposit and similar interest received | 7 | 23 |
| Investment management fees paid | (1,674) | (1,217) |
| Secretarial fees paid | (155) | (82) |
| Other cash payments | 65 | (394) |
| Net cash outflow from operating activities and returns on investment | (1,446) | (1,425) |
| Taxation | - | - |
| Investing activities | ||
| Purchase of unquoted investments and investments quoted on AIM | (6,673) | (9,158) |
| Net proceeds on sale of unquoted investments | 3,040 | 4,589 |
| Net proceeds on deferred consideration | 451 | 592 |
| Net capital outflow from investing activities | (3,182) | (3,977) |
| Equity dividends paid | - | (1,901) |
| Net cash outflow before financing and liquid resource management | (4,628) | (7,303) |
| Management of liquid resources | ||
| Movement in money market funds | 1,003 | 1,829 |
| 1,003 | 1,829 | |
| Financing | ||
| Proceeds of fund-raising | 836 | 179 |
| Acquisition issue shares | - | 10,956 |
| Expenses of fund-raising | (114) | (155) |
| Repurchase of own shares | (876) | (1,133) |
| Net cash (outflow)/inflow from financing activities | (154) | 9,847 |
| (Decrease)/Increase in cash | (3,779) | 4,373 |
| Reconciliation of net cash flow to movement in net funds | ||
| (Decrease)/increase in cash for the year | (3,779) | 4,373 |
| Net cash at start of year | 7,774 | 3,401 |
| Net cash at end of year | 3,995 | 7,774 |
| Analysis of changes in net debt | |||||
| At 1 April 2012 | Cash flow | At 31 March 2013 | |||
| £'000 | £'000 | £'000 | |||
| Cash and cash equivalents | 7,774 | (3,779) | 3,995 | ||
Notes to the accounts
1. The audited Annual Financial Report has been prepared on the basis of accounting policies set out in the statutory accounts of the Company for the year ended 31 March 2013. All investments held by the Company are classified as 'fair value through the profit and loss'. Unquoted investments have been valued in accordance with IPEVC guidelines. Quoted investments are stated at bid prices in accordance with the IPEVC guidelines and Generally Accepted Accounting Practice.
2. These are not statutory accounts in accordance with S436 of the Companies Act 2006. The full audited accounts for the year ended 31 March 2013, which were unqualified and did not contain and statements under S498(2) of Companies Act 2006 or S498(3) of Companies Act 2006, will be lodged with the Registrar of Companies. Statutory accounts for the year ended 31 March 2013 including an unqualified audit report and containing no statements under the Companies Act 2006 will be delivered to the Registrar of Companies in due course.
3. Copies of the Annual Report will be sent to shareholders and will be available for inspection at the Registered Office of the Company at ECA Court, 24-26 South Park, Sevenoaks, Kent TN13 1DU and can be accessed on the following website: www.foresightgroup.eu
4. Net asset value per share
Net asset value per Ordinary Share is based on net assets at the year end of £33,505,000 (2012: £36,567,000) and on 38,384,591 (2012: 37,756,345) Ordinary Shares, being the number of Ordinary Shares in issue at that date.
Net asset value per C Share is based on net assets at the year end of £17,964,000 (2012: £17,655,000) and on 18,744,740 (2012: 18,693,098) C Shares, being the number of C Shares in issue at that date.
5. Return per share
| Year ended 31 March 2013 | Year ended 31 March 2012 | |||
| Ordinary Shares | C Shares | Ordinary Shares | C Shares | |
| £'000 | £'000 | £'000 | £'000 | |
| Total (loss)/return after taxation | (3,617) | 205 | (3,549) | (1,064) |
| Total (loss)/return per share (note a) | (9.5)p | 1.1p | (9.7)p | (5.7)p |
| Revenue (loss)/return from ordinary activities after taxation | (602) | (59) | (365) | (60) |
| Revenue (loss)/return per share (note b) | (1.6)p | (0.3)p | (1.0)p | (0.3)p |
| Capital (loss)/return from ordinary activities after taxation | (3,015) | 264 | (3,184) | (1,004) |
| Capital (loss)/return per share (note c) | (7.9)p | 1.4p | (8.7)p | (5.4)p |
| Weighted average number of shares in issue in the period | 37,965,547 | 18,730,684 | 36,604,335 | 18,693,098 |
Notes:
a) Total (loss)/return per share is total return after taxation divided by the weighted average number of shares in issue during the period.
b) Revenue (loss)/return per share is revenue return after taxation divided by the weighted average number of shares in issue during the period.
c) Capital (loss)/return per share is capital return after taxation divided by the weighted average number of shares in issue during the period.
6. The Annual General Meeting will be held at 1.00pm on 26 September 2013 at the offices of SGH Martineau LLP, One America Square, Crosswall, London EC3N 2SG.
7. Income
| Year ended 31 March | Year ended 31 March | ||
| 2013 | 2012 | ||
| £'000 | £'000 | ||
| Loan stock interest | 216 | 199 | |
| Overseas based Open Ended Investment Companies ("OEICS") | 2 | 21 | |
| Bank deposits | - | 2 | |
| 218 | 222 | ||
8. Investments held at fair value through profit or loss
| 2013 | 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| £'000 | £'000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quoted investments | 981 | 1,087 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unquoted investments | 43,546 | 41,996 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 44,527 | 43,083 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9. Transactions with the manager
Foresight Group LLP, Foresight Fund Managers Limited and Foresight Group CI Limited are considered to be related parties of the Company. Details of arrangements with these parties are given in the Directors' Report and note 3 within the Annual Report and Accounts.
Foresight Group, which acts as investment manager to the Company in respect of its venture capital investments earned fees of £1,294,000 during the year (2012: £1,128,000), including a performance incentive of £nil (2012:£285,000).
Foresight Fund Managers Limited is the Secretary of the Company and received fees of £154,562 (2012: £116,731) during the year. The annual secretarial fee (which is payable together with any applicable VAT) is adjusted annually in line with the UK Retail Prices Index.
Foresight Group, received from investee companies arrangement fees of £126,429 (2012: £226,487) and Directors' fees of £222,349 (2012: £166,557).
At the balance sheet date there was £5,432 (2012: £110,000) due from Foresight Group and £nil (2012: £35,000) due to Foresight Fund Managers Limited. No amounts have been written off in the year in respect of debts due to or from the related parties.
Foresight Group are 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, Foresight Group retain the right to charge arrangement and syndication fees and Directors' or monitoring fees ('deal fees') to companies in which the Company invests.
Foresight Group is also a party to the performance incentive agreement described in note 13 within the Annual Report and Accounts.
END
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.
Source: Foresight 4 VCT PLC via Thomson Reuters ONE
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