TIDMFTD
FORESIGHT 3 VCT PLC
Summary
-- Net asset value per Ordinary Share for the six month period ended 30
September 2013 increased by 2.4%, represented by a net asset value of
77.0p compared to a net asset value of 75.2p at 31 March 2013.
-- Funding totalling GBP1.5 million was provided to eight companies.
-- Realisation proceeds and loan repayments totalling GBP0.35 million were
received from four portfolio companies.
-- The Company raised gross proceeds of GBP0.34 million in the period and
GBP0.82 million in the prior year in accordance with the terms of the
offer for subscription dated 3 December 2012.
Six months Year ended
ended
30 31 March
September 2013
2013
Net asset value per Ordinary Share 77.0p 75.2p
Net asset value per Ordinary Share (including all 131.8p 130.0p
dividends paid)
Share price per Ordinary Share 53.5p 65.5p
Share price total return per Ordinary Share (including 108.3p 120.3p
all dividends paid)
Chairman's Statement
Performance
The six months under review has seen an improvement in the wider UK
economic climate and general business confidence. These positive signs
have been matched by a considerable increase in activity in the Mergers
& Acquisitions market, which we hope will result in realisations from
the current portfolio. Although stock markets in both the UK and US are
trading near record levels and the IPO market has seen the largest
number of new issues for several years, significant economic
uncertainties remain, such as unresolved issues in the Eurozone and the
overall level of Government debt.
The private equity portfolio benefited from the recent economic upturn
both in the UK and in traditional export markets, resulting in a small
but encouraging increase in net asset value per Ordinary share as at 30
September 2013 of 2.4% to 77.0p (31 March 2013: 75.2p).
The Ordinary Share portfolio benefited from the good performance of
several investments, most notably Datapath Group Holdings and TFC Europe,
both of which again achieved record sales and profits, as well as Alaric
Systems and Ixaris Systems. Together these four companies generated a
valuation increase of GBP3.3 million. Closed Loop Recycling also made
progress, which was in contrast to the more difficult trading conditions
experienced by Evance Wind Turbines and Autologic Diagnostics Group.
Encouragingly, some of the recent investments, such as Aerospace Tooling
Corporation, Flowrite Refrigeration Holdings and Procam Television
Holdings are already showing considerable promise. All of these
investments are traditional private equity investments and are
representative of the Board and Foresight Group's objective of focussing
on private equity investments to drive future performance gains.
Full details of the portfolio and valuation changes are given in the
Investment Manager's report.
Share issues and share buy-backs
The Company launched a small top-up offer on 3 December 2012. During the
six month period ended 30 September 2013, 429,636 Ordinary Shares were
allotted based on net asset values ranging from 76.0p to 83.0p per share,
raising GBP0.34 million.
Valuation policy
Investments held by the Company have been valued in accordance with the
International Private Equity and Venture Capital Valuation ("IPEVCV")
guidelines (December 2012) 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 30
September 2013. The portfolio valuations are prepared by Foresight Group,
reviewed and approved by the Board quarterly and subject to review by
the auditors annually.
Outlook
The Board remains cautious about the general outlook, although it is
encouraged by the recent signs of improvement in the UK economy, and the
NAV improvement of the Company underpinned by the performance of the
private equity portfolio.
The Company has limited cash resources at present, which reflects the
reduced liquidity of the Company's existing assets. The first priority
for that cash is to support the existing portfolio where prospects
justify it, whilst awaiting the opportunity to realise gains from the
disposal of successful investments. Our Managers are confident that in
due course realisations can be achieved which will enable the Company to
resume the payment of dividends, as well as making new investments. This
in turn should improve the liquidity of the Company's shares, and reduce
their discount to net asset value, which is currently at an unacceptable
level.
Graham Ross Russell
Chairman
29 November 2013
Investment Manager's Report
Manager's commentary
Based on signs of generally improving trading conditions across the
portfolio in recent months, Foresight Group believes that the economic
climate and business confidence in the UK should continue to improve for
the time being, as evidenced by the Stock Market trading at or near
record levels and considerable activity in the Mergers & Acquisitions
market. Significant economic uncertainties remain, however, such as
unresolved issues in the Eurozone, the overall level of Government debt
and eventual reversal of Quantitative Easing, any one of which could
easily reverse this gradual improvement in sentiment. This improvement
is now being generally reflected in the trading of a number of companies
across the portfolio.
The overall performance of the portfolio during the six month period
ended 30 September 2013 is in contrast to the performance of the
portfolio for the full year to 31 March 2013. The net asset value per
Ordinary Share increased by 2.4% to 77.0p from 75.2p per Ordinary Share
as at 31 March 2013. Several investments continued to perform or trade
well, most notably Datapath Group Holdings and TFC Europe, both of which
again achieved record sales and profits. Alaric Systems and Ixaris
Systems also performed well. Together these four companies generated an
increase in valuation of GBP3.3 million. Encouragingly, some of the
recent investments, such as Aerospace Tooling Corporation, Flowrite
Refrigeration Holdings and Procam Television Holdings are already
showing considerable promise as is Closed Loop Recycling. In contrast
more difficult trading conditions were experienced by Evance Wind
Turbines and Autologic Diagnostics Group. Following the termination of
on-going sale and merger discussions, 2K Manufacturing was placed into
administration on 18 November 2013. A full provision of GBP2,002,057 has
been made against the cost of this investment.
While working to increase net asset and shareholder value, Foresight
Group is also, where appropriate, endeavouring to realise existing
investments to generate cash for shareholder distributions and new
investments. Portfolio company highlights are summarised below.
Portfolio review
1. Follow-on funding
Company
2K Manufacturing GBP500,000
The Bunker Secure Hosting
GBP104,161
Biofortuna
GBP99,066
Autologic Diagnostics Group (Capitalised Interest)
GBP52,225
Flowrite Refrigeration Holdings (Capitalised Interest)
GBP4,534
Total
GBP759,986
2. New investments
Company
Aerospace Tooling Corporation GBP500,000
Procam Television Holdings
GBP250,000
Total
GBP750,000
3. Exits
The entire holding of 612,158 ordinary shares in AiM listed Corero
Network Services was sold during the period,realising GBP74,298.
4.Realisations
In May 2013, GBP140,187 was received from Alaric Systems, comprising a
redemption premium (GBP105,140) and repayment of loan principal
(GBP35,047).
In May 2013, Meridian Technique effected a capital reorganisation
(subsequently being renamed Orthoview Holdings), following which
GBP283,304 of accrued preference share dividends was received along with
GBP43,900 by way of ordinary share and loan stock repayments of capital.
A further GBP157,255 was received in October after the period end,
comprising repayment of loan principal (GBP150,794) and interest
(GBP6,461).
A total of 237,500 ordinary shares in AiM listed Probability were sold
during the period, realising proceeds of GBP92,125. A further 297,500
such shares were sold after the period end, realising a further
GBP139,363.
After the period end, the investment of GBP233,250 6% Unsecured
Convertible Redeemable Loan notes in AiM listed Zoo Digital Group was
sold for GBP177,313 plus interest of GBP5,831.
5. Material provisions to a level below cost
Company
2K Manufacturing
GBP2,002,057
Evance Wind Turbines
GBP153,609
Total
GBP2,155,666
Performance summary
During the six month period ended 30 September 2013, several investments
continued to perform or trade well, most notably Datapath Group Holdings
and TFC Europe, both of which again achieved record sales and profits,
as well as Alaric Systems and Ixaris Systems, all of which together
generated an increase in valuation of GBP3.3 million. Encouragingly,
some of the recent investments, such as Aerospace Tooling Corporation,
Flowrite Refrigeration Holdings and Procam Television Holdings are
already showing considerable promise. Closed Loop Recycling also made
good progress, which was in contrast to the more difficult trading
conditions experienced by Evance Wind Turbines and Autologic Diagnostics
Group.
During the period, three follow on investments totalling GBP703,227 were
made, in 2K Manufacturing (GBP500,000), The Bunker Secure Hosting
(GBP104,161) and Biofortuna (GBP99,066). Two new investments totalling
GBP750,000 were made during the period in Aerospace Tooling Corporation
and Procam Television Holdings. In June, GBP500,000 was invested
alongside other Foresight VCTs in a shareholder recapitalisation of
Dundee based Aerospace Tooling Corporation. This company is a well
established specialist engineering business providing repair,
refurbishment and remanufacturing services to large international
companies for components in high specification aerospace and turbine
engines. A number of recent orders have underpinned growth and
profitability for the current financial year. In April, GBP250,000 was
invested alongside other Foresight VCTs in a management buy-out of
Battersea based Procam Television Holdings. Procam Television Holdings
is one of the UK's leading broadcast hire companies, supplying equipment
and crews for location TV production. In September, Procam Television
Holdings acquired one of its competitors, Hammerhead with facilities in
London, Manchester, Edinburgh and Glasgow. This strategic acquisition
will not only broaden the customer base and provide national coverage
but also give synergistic and profitability benefits.
Other investments made good progress, including Closed Loop Recycling,
Flowrite Refrigeration Holdings and Ixaris Systems. In February 2013,
Closed Loop Recycling raised loans totalling GBP12.8 million which will
enable it to double its production capacity to meet demand from
customers under long term supply contracts. New sorting and production
equipment has now been commissioned and full scale production utilising
this additional capacity commenced in November, which is expected to
substantially increase sales and profits. The investment in Flowrite
Refrigeration Holdings was made in May 2012 and the company is now
trading at twice its budgeted level, having won a number of significant
orders nationally for its refrigeration maintenance services. Ixaris
Systems, which provides a range of pre-paid electronic payment services
integrated with the VISA network, continues to trade ahead of budget,
reflecting the recent launch of its Opn platform and customer
diversification away from the gaming sector. O-Gen Acme Trek has
recently put in a full planning application to redevelop its Stoke site
as an 8MW power plant.
Although making substantial profits, sales growth slowed during the
period at The Bunker Secure Hosting, which provides ultra secure managed
hosting services from two data centres, reflecting increased
competition. Further shares were acquired during the period from two
minority shareholders for GBP104,161. Evance Wind Turbines, which
designs and manufactures small wind turbines, has performed poorly,
reflecting the reduction in the small wind Feed in Tariff in late 2012.
Consequently, a further provision of GBP153,609 was made against the
cost of this investment.
As explained below, 2K Manufacturing experienced difficulties in raising
capital to expand production facilities and with ongoing sale and merger
discussions. On 18 November 2013, these discussions ended, resulting in
an administrator then being appointed. A full provision of GBP2,002,057
has been made against the cost of this investment. Where provisions have
been made against the value of underlying investments, we have also
provided against the income due from such investments.
Outlook
Foresight Group believes that the gradual improvement in business
confidence is now being reflected in the trading of a number of
companies across the portfolio and considers that the portfolio is now
well positioned to generate growth.
Although Foresight Group is seeing a number of high quality investment
opportunities, the Company has limited cash resources at present with
which to make new investments. Foresight Group is endeavouring to
realise existing investments, where appropriate, to generate cash for
shareholder distributions and funds for such new investments.
Portfolio company highlights
In June 2013, the Company invested GBP500,000 alongside other Foresight
VCTs in a GBP3.5 million shareholder recapitalisation of Dundee based
Aerospace Tooling Corporation, a well established specialist engineering
company providing repair, refurbishment and remanufacturing services to
large international companies for components in high-specification
aerospace and turbine engines. The company was founded in 2007 by the
former CEO, John Seaton, who, following the transaction, has assumed the
role of Executive Chairman. John Green, formerly General Manager of the
Dundee facility, became Operations Director, alongside a newly appointed
Finance Director and Business Development Director. With a heavy focus
on quality assurance, the company enjoys high quality relationships with
companies serving the aerospace, military, marine and industrial
markets. A number of recent orders have underpinned growth and
profitability in the current financial year with profits anticipated to
show a strong increase.
Alaric Systems, which develops and sells credit card authorisation and
credit card antifraud software to major financial institutions and
retailers worldwide, achieved an audited PBIT of GBP1.3 million on sales
of GBP9.8 million for the year to 31 March 2013 (PBIT of GBP1.5 million
on sales of GBP8.7 million in 2012). A number of significant orders have
been won recently while a number of large contracts are also in prospect
which supports achievement of the demanding budget for the current year.
Capacity to satisfy these orders and further develop the product range
is being met through continuing expansion of offices in Kuala Lumpur,
Rome and London. In May 2013, GBP140,187 was received from the company,
comprising a redemption premium (GBP105,140) and repayment of loan
principal (GBP35,047).
AtFutsal Group provides facilities in three arenas 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. The business has evolved so that its core focus is now
running education programmes for 16 to 18 year olds in conjunction with
Football League clubs, educational establishments and training
organisations. It has also developed its own education software platform
so that it can provide a number of educational services previously
outsourced. For the current student year, which commenced in September
2013, the company had registered 1,200 students on its futsal related
courses, nearly double the number of students in the previous student
year. The Birmingham and Swindon arenas achieved targeted trading levels
while the Leeds arena, which opened in August 2012, continues to
underperform. Management are focused on developing new strategies for
improving utilisation of the arenas to ensure that all are operating at
cash break even or better.
Following the GBP48 million secondary buy-out by ISIS Private Equity in
January 2012, investments in equity and loan stock valued at GBP1.98
million were retained in Autologic Diagnostics Group. Autologic
Diagnostics Group continues to generate strong profits and for the year
to December 2012 generated an EBITDA of GBP5.9 million on revenues of
GBP17.2 million. As at 30 September 2013, the company had a healthy cash
balance of more than GBP6 million. In recent months, Autologic
Diagnostics Group has strengthened its management team. John Conoley has
replaced Peter Toland as CEO and has been joined by new Operations and
Marketing directors. The company is underperforming budget for 2013,
however, in large part reflecting a slowing in the sales of one-off
hardware into the UK and European markets. The UK market is maturing and
Europe has suffered from a relative lack of sales focus. The USA
continues to perform well, largely driven by a well-structured sales
effort. The new management team believes long term value creation will
be driven by transitioning to a subscription based business model with a
greater proportion of recurring revenues. Such a move would likely see
revenues and earnings dip before growth recovers. In the long term the
quality of earnings should improve, helping to drive value. In September
2013, interest of GBP52,225 deferred under the terms of the loan
agreement with Autologic Diagnostics Group was capitalised.
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 wide. 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. In August
2013, GBP99,066 was invested as part of a GBP1.3 million funding round
to fund capital expenditure and working capital. The company is
progressing in a number of areas, including broadening its product range,
increasing manufacturing capacity and improving internal processes.
Following the success of FDA trials for its SSPGo product range, needed
to make sales in the USA, Biofortuna is now making progress in obtaining
FDA approval in the USA for this genetic testing product range. A recent
manufacturing issue is being successfully addressed but has delayed
output. The freeze-dried kit manufacturing service shows promise, with
paid for feasibility studies and contract discussions occuring with a
number of parties.
In February 2013, Closed Loop Recycling concluded a major new supply
contract and new customer contracts worth GBP17 million per annum. A
total of GBP12.8 million in loan finance (of which GBP6 million was
provided by the Foresight Environmental Fund), will be used to double
production capacity at the Dagenham plant. In consequence, annual
revenues are expected to double, principally through long-term supply
contracts, and future profits are expected to increase substantially.
Facilities provided by Allied Irish Bank, the incumbent bank, were
placed onto a term basis. The new facility and production equipment has
now been commissioned and full scale production utilising this
additional capacity commenced in November. Management are examining a
number of avenues to improve profitability further.
Derby based Datapath Group Holdings is a world leading innovator in the
field of computer graphics and video-wall display technology utilised in
a number of international markets. The company is increasing its market
share in control rooms, betting shops and signage and is entering new
markets. For the year ended 31 March 2013, an unaudited record operating
profit of GBP5.1 million was achieved on sales of GBP14.1 million
(GBP4.5 million on sales of GBP12.1 million in 2012). The company is
continuing its strong growth in the current year to 31 March 2014, with
record profits and sales being achieved to date, supporting an increase
in valuation of GBP2.3 million during the period.
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. Both sales and
profits grew well in the year to 31 March 2013, the company delivering
its 1,500th machine and achieving an operating profit of GBP354,000 on
sales of GBP8.6 million (GBP222,000 on sales of GBP7.25 million in 2012,
over three times the level of sales in the previous year). The reduction
in the Feed in Tariff, however, from 1 October 2012, combined with a
noticeable tightening and lengthening of the planning permission process
nationally, has adversely affected orders and sales, such that the
company is currently making significant losses. To redress this, costs
have been reduced substantially with sales efforts now focused overseas
and in the UK corporate market.
In May 2012, GBP200,000 was invested in Flowrite Refrigeration Holdings
alongside other Foresight VCTs to finance the GBP3.2 million management
buyout of Kent based Flowrite Services Limited, which provides
refrigeration and air conditioning maintenance services nationally,
principally to leisure and commercial businesses such as hotels, clubs,
pubs and restaurants. For the year to 31 October 2012, the company
achieved an operating profit of GBP852,000 on sales of GBP7.9 million.
Management has accelerated sales efforts, won a number of significant
new contracts and customers and also reviewed several potential
acquisitions with the aim of broadening its national coverage. In the
year to 31 October 2013, reflecting a particularly busy summer, the
company traded well ahead of budget and has already repaid much of the
buyout debt finance.
Ixaris Systems has developed and operates Entropay, a global prepaid
payment service using the VISA network, as well as offering its new Opn
product on a 'Platform as a Service' basis that enables enterprises to
develop their own customised global applications for payments over
various payment networks. Sales of Opn are strong with a growing
pipeline, Ixaris Systems charging a small percentage of each transaction
on the platform, thereby reducing reliance on the gaming sector. This
platform is being used by companies in the affiliate marketing and
travel sectors and sales efforts are being focussed on the international
e-commerce and financial services sectors. In the year to 31 December
2012, an operating loss of GBP293,000 was incurred on sales of GBP8.4
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 appointments of a new Chief
Operating Officer, Marketing Director and Sales Director.
Meridian Technique (renamed Orthoview Holdings), which develops and
supplies surgery planning software to hospitals and surgeries
principally in the UK and USA, completed a capital reorganisation in May
2013, following which GBP283,304 of accrued preference share dividends
was received along with GBP43,900 by way of Ordinary Share and loan
stock repayments of capital. Having achieved an EBITDA of GBP0.6 million
on sales of GBP3.0 million for the year to 31 March 2013, the company is
enjoying stronger trading in the current year and continues to be highly
cash generative. A further GBP157,255 was received in October after the
period end, comprising repayment of loan principal (GBP150,794) and
interest (GBP6,461). New partnerships have been established in Asia,
further enhancing prospects.
In order to focus on its technology division, Mplsystems (previously
named The Message Pad) sold its call centre outsourcing division in June
2013. The sale proceeds will be used to further develop the technology
division, which offers contact centre and customer service software on a
SaaS (Software as a Service) basis to improve the efficiency of its
customers' call centres and customers' experience. For the year to 30
June 2013, a small operating profit of GBP85,000 was achieved on sales
of GBP5.86 million. Following the above disposal, the company is
incurring small losses but the sales pipeline remains strong and, as a
result of new contracts, the level of contracted recurring SaaS revenues
is growing. The company was recently accredited within the G Cloud
framework enabling it to provide contact centre services over the Cloud
to all government departments and the wider public sector.
Following a detailed strategic review in December 2011, the decision was
made to mothball O-Gen Acme Trek's advanced gasification 3MW waste wood
to energy plant in Stoke until the similar 3.8MW plant in Plymouth built
by MITIE had 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 through a partnership with the selected
technology provider and a major EPC contractor. Discussions are being
held with potential funders. A full planning application was made to the
Local Authority in October 2013 for this new plant. As a consequence,
the 3MW plant has been decommissioned.
O-Gen UK is a leading developer of waste wood gasification facilities in
the UK and is near to financial close on the development of a GBP45
million project in Birmingham, having received planning permission and
signed the relevant project documents. The company has developed a
growing pipeline of similar opportunities at various stages of maturity,
including three projects forecast during 2014 (including O-Gen Acme
Trek's Stoke plant above). The company continues to develop
relationships with a number of technology providers and major EPC
contractors. O-Gen UK will not finance the construction of these plants
but will benefit from project management fees, equity shareholdings and
fuel, operation and maintenance contracts.
A total of 237,500 ordinary shares in AiM listed Probability were sold
during the period, realising proceeds of GBP92,125. A further 297,500
such shares were sold after the period end, realising a further
GBP139,363.
In April 2013, the Company invested GBP250,000 alongside other Foresight
VCTs in a GBP1.8 million round to finance a management buy-out of Procam
Television Holdings. Procam Television Holdings is one of the UK's
leading broadcast hire companies, supplying equipment and crews for UK
location TV production to broadcasters, production companies and
corporates for over 20 years. Headquartered in Battersea, London, with
additional facilities in Manchester, Procam Television Holdings employs
70 people and has supported shows including Made in Chelsea, ITV's
Splash, Watch's The Incredible Mr Goodwin, BBC2's The Great British
Sewing Bee, Derren Brown and The Great British Bake Off. It is a
preferred supplier to BSkyB and an approved supplier for BBC and ITV.
Over the last four years revenues have doubled, following the
introduction of new camera formats. The management buy-out team was led
by current Managing Director John Brennan. The former CEO of Carlton
Television, Clive Jones, has been appointed as Chairman. The company
plans to gain greater market share by launching new facilities and
services in the coming months. In September 2013, Procam Television
Holdings acquired one of its competitors, Hammerhead, with facilities in
London, Manchester, Edinburgh and Glasgow. This strategic acquisition
will not only broaden the customer base and national coverage but also
realise various synergistic benefits, and is expected to improve profits
substantially.
TFC Europe, a leading distributor of technical fasteners in the UK and
Germany, performed well during the year to 31 March 2013, achieving
record operating profits of GBP2.45 million on sales of GBP18.1 million
(an operating profit of GBP2.35 million on sales of GBP16.6 million in
2012). Trading to date in the current year continues to be strong, ahead
of budget. In September, a small Scottish distribution business was
acquired, thereby improving national coverage. A new warehouse has been
established near Dusseldorf which is expected to result in increased
sales and improved service to customers in Germany. Further possible
acquisition opportunities are also being evaluated to complement the
existing business.
Although The Bunker Secure Hosting, which operates two ultra secure data
centres, continues to win new orders and generate substantial profits,
sales growth has slowed, reflecting increased competition and higher
than expected contract attrition rates. For the year to 31 December
2012, an EBITDA of GBP1.77 million was achieved on sales of GBP8.5
million, at which date recurring annual revenues were running at GBP8.8
million. In the current year, a slightly better performance is expected.
To strengthen sales efforts, a number of new Cloud based services have
recently been launched and the sales and marketing strategy is being
reassessed. Investment continues in upgrading the existing
infrastructure. In April 2013, further shares were purchased from two
minority shareholders for GBP104,161.
From its fully automated Luton factory, 2K Manufacturing produced high
quality Ecosheet boards made from recycled waste plastic. Despite orders
and a sales pipeline, limited production capacity constrained output and
losses continued to be incurred. To meet working capital requirements, a
further GBP500,000 was invested in loans during the period. Up to GBP10
million had been sought for some time to increase production capacity
but efforts proved to be unsuccessful, as did protracted sale and merger
discussions. On 18 November 2013, these discussions ended, resulting in
an administrator then being appointed. A full provision of GBP2,002,057
has accordingly been made against the cost of this investment.
Post the period end, on 31 October, the investment of GBP233,250 6%
Unsecured Convertible Redeemable Loan note in AiM listed Zoo Digital
Group was sold for GBP177,313 plus interest of GBP5,831.
David Hughes
Foresight Group
Chief Investment Officer
29 November 2013
Unaudited Half-Yearly Financial Report and Responsibility Statements
Principal Risks and uncertainties
The principal risks faced by the Company can be divided into various
areas as follows:
-- Performance;
-- Regulatory;
-- Operational; and
-- Financial.
The Board reported on the principal risks and uncertainties faced by the
Company in the Annual Report and Accounts for the year ended 31 March
2013. A detailed explanation can be on found on page 21 of the Annual
Report and Accounts which is available at www.foresightgroup.eu or by
writing to Foresight Group at ECA Court, 24-26 South Park, Sevenoaks,
Kent, TN13 1DU.
In the view of the Board, there have been no changes to the fundamental
nature of these risks since the previous report and these principal
risks and uncertainties are equally applicable to the remaining six
months of the financial year as they were to the six months under
review.
Directors' responsibility statement
The Disclosure and Transparency Rules ('DTR') of the UK Listing
Authority require the Directors to confirm their responsibilities in
relation to the preparation and publication of the Unaudited Half-Yearly
Financial Report for the six month period ended 30 September 2013.
The Directors confirm to the best of their knowledge that:
(a) the summarised set of financial statements has been prepared in
accordance with the pronouncement on interim reporting issued by the
Accounting Standards Board;
(b) the Unaudited Half-Yearly Financial Report for the six month period
ended 30 September 2013 includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the six
months of the year and a description of principal risks and
uncertainties that the Company faces for the remaining six months of the
year);
(c) the summarised set of financial statements give a true and fair view
of the assets, liabilities, financial position and profit or loss of the
Company as required by DTR 4.2.4R; and
(d) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
Going concern
The Company's business activities, together with the factors likely to
affect its future development, performance and position are set out in
the Business Review on page 20 of the 31 March 2013 Annual Report and
Accounts. The financial position of the Company, its cash flows,
liquidity position and borrowing facilities are described in the
Chairman's Statement, Business Review and Notes to the Accounts of the
31 March 2013 Annual Report and Accounts. In addition, the Annual Report
and Accounts includes the Company's objectives, policies and processes
for managing its capital; its financial risk management
objectives; details of its financial instruments and hedging activities;
and its exposures to credit risk and liquidity risk.
The Company has considerable 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 well placed to manage its business risks successfully despite
the current uncertain economic outlook.
The Directors have reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable
future. Thus they continue to adopt the going concern basis of
accounting in preparing the annual financial statements.
The Half-Yearly Financial Report for the six month period ended 30
September 2013 has not been audited or reviewed by the auditors.
On behalf of the Board
Graham Ross Russell
Chairman
29 November 2013
Unaudited Income Statement
for the six month period ended 30 September 2013
Six months ended Six months ended Year ended
30 September 2013 30 September 2012 31 March 2013
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Realised losses
on investments - (3,660) (3,660) - (401) (401) - (2,536) (2,536)
Investment
holding gains - 4,847 4,847 - 1,467 1,467 - 2,377 2,377
Income/(interest
expense) 498 - 498 (183) - (183) 445 - 445
Investment
management fees (123) (368) (491) (122) (365) (487) (246) (737) (983)
Other expenses (207) - (207) (240) - (240) (437) - (437)
Return/(loss) on
ordinary
activities
before taxation 168 819 987 (545) 701 156 (238) (896) (1,134)
Taxation - - - - - - - - -
Return/(loss) on
ordinary
activities after
taxation 168 819 987 (545) 701 156 (238) (896) (1,134)
Return/(loss) per
Ordinary Share 0.3p 1.6p 1.9p (1.1)p 1.4p 0.3p (0.5)p (1.8)p (2.3)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 period.
The Company has no recognised gains or losses other than those shown
above, therefore no separate statement of total recognised gains and
losses has been presented.
Unaudited Balance Sheet
at 30 September 2013
Registered Number: 03121772
As at As at As at
31 March
30 September 2013 30 September 2012 2013
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Fixed assets
Investments held at fair
value through profit or
loss 37,794 36,092 35,447
37,794 36,092 35,447
Current assets
Debtors 1,321 1,673 2,122
Money market securities and
other deposits 476 1,368 475
Cash 456 554 739
2,253 3,595 3,336
Creditors
Amounts falling due within
one year (66) (291) (78)
Net current assets 2,187 3,304 3,258
Net assets 39,981 39,396 38,705
Capital and reserves
Called-up share capital 519 506 515
Share premium account 8,934 7,925 8,649
Capital redemption reserve 1,965 1,964 1,965
Profit and loss account 28,563 29,001 27,576
Equity shareholders' funds 39,981 39,396 38,705
Net asset value per Ordinary 77.0p 77.8 p 75.2p
Share
Unaudited Reconciliation of Movements in Shareholders' Funds
for the six month period ended 30 September 2013
Called-up Share Capital Profit and
share premium redemption loss
capital account reserve account Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 April
2013 515 8,649 1,965 27,576 38,705
Share issues
in the
period 4 331 - - 335
Expenses in
relation to
share
issues - (46) - - (46)
Return for
the period - - - 987 987
As at 30
September
2013 519 8,934 1,965 28,563 39,981
Unaudited Cash Flow Statement
for the six month period ended 30 September 2013
Six months Six months Year
ended ended ended
30 30
September September 31 March
2013 2012 2013
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Investment income received 94 63 171
Deposit and similar interest received 1 - 9
Investment management fees paid (466) (605) (993)
Secretarial fees paid (62) (71) (121)
Other cash payments (112) (135) (449)
Net cash outflow from operating activities and returns
on investment (545) (748) (1,383)
Taxation - - -
Returns on investment and servicing of finance
Purchase of unquoted investments and investments quoted
on AIM (1,453) (1,419) (2,163)
Net proceeds on sale of unquoted investments 184 96 847
Net proceeds on sale of quoted investments 166 147 159
Investment dividends received 283 - -
Net capital outflow from financial investment (820) (1,176) (1,157)
Equity dividends paid - - -
Management of liquid resources
Movement in money market funds (1) 1,418 2,311
Financing
Proceeds of fund raising 1,154 845 1,348
Expenses of fund raising (70) (165) (125)
Net movement from share issues and share buybacks (1) 149 (486)
1,083 829 737
(Decrease)/increase in cash (283) 323 508
Reconciliation of net cash flow to movement in net
cash
(Decrease)/increase in cash for the period (283) 323 508
Net cash at start of the period 739 231 231
Net cash at end of period 456 554 739
At 1 April 2013 Cash flow As at 30 September 2013
GBP'000 GBP'000 GBP'000
Analysis of changes in
net cash
Cash 739 (283) 456
Money market securities
and other deposits 475 1 476
Cash and cash equivalents 1,214 (282) 932
Notes to the Unaudited Half-Yearly Financial Report
for the six month period ended 30 September 2013
1. The Unaudited Half-Yearly results have been prepared on the basis of
accounting policies set out in the statutory accounts of the Company for
the year ended 31 March 2013. Unquoted investments have been valued in
accordance with IPEVC guidelines. Quoted investments are stated at bid
prices in accordance with IPEVC guidelines and UK Generally Accepted
Accounting Practice.
1. These are not statutory accounts in accordance with S436 of the Companies
Act 2006 and the Unaudited Half-Yearly Financial Reports for the six
months ended 30 September 2013 and 30 September 2012 have been neither
audited nor reviewed. Statutory accounts in respect of the period to 31
March 2013 have been audited and reported on by the Company's auditors
and delivered to the Registrar of Companies and included the report of
the auditors which was unqualified and did not contain a statement under
S498(2) or S498(3) of the Companies Act 2006. No statutory accounts in
respect of any period after 31 March 2013 have been reported on by the
Company's auditors or delivered to the Registrar of Companies.
1. Copies of the Unaudited Half-Yearly Financial Report for the six month
period ended 30 September 2013 have been sent to shareholders and are
available for inspection at the Registered Office of the Company at ECA
Court, 24-26 South Park, Sevenoaks, Kent TN13 1DU.
Copies of the Unaudited Half-Yearly Financial Report for the sixth month
period ended 30 September 2013 are also available electronically at
www.foresightgroup.eu.
1. Net asset value per Ordinary Share
The net asset value per share is based on net assets at the end of the
period and on the number of Ordinary Shares in issue at the date.
Number of
Ordinary
Net Assets Shares
GBP'000 in issue
30 September 2013 39,981 51,901,401
30 September 2012 39,396 50,644,166
31 March 2013 38,705 51,471,765
1. Return/(loss) per Ordinary Share
Six months Six months
ended ended Year ended
30 30
September September 31 March
2013 2012 2013
GBP'000 GBP'000 GBP'000
Total return/(loss) after taxation 987 156 (1,134)
Basic return/(loss) per Ordinary Share (note a) 1.9p 0.3p (2.3)p
Revenue return/(loss) from ordinary activities after
taxation 168 (545) (238)
Revenue return/(loss) per Ordinary Share (note b) 0.3p (1.1)p (0.5)p
Capital return/(loss) from ordinary activities after
taxation 819 701 (896)
Capital return/(loss) per Ordinary Share (note c) 1.6p 1.4p (1.8)p
Weighted average number of Ordinary Shares in issue
in the period 51,816,919 50,976,060 50,804,645
Notes:
a) Total return per Ordinary Share is total return
after taxation divided by the weighted average number
of Ordinary Shares in issue during the period.
b) Revenue return per Ordinary Share is revenue return
after taxation divided by the weighted average number
of Ordinary Shares in issue during the period.
c) Capital return per Ordinary Share is capital return
after taxation divided by the weighted average number
of Ordinary Shares in issue during the period.
1. Income/(interest expense)
Six months ended Six months ended Year ended
30 September 2013 30 September 2012 31 March 2013
GBP'000 GBP'000 GBP'000
Investment dividend
received 283 - -
Loan stock interest 214 *(189) 438
Overseas based Open Ended
Investment Companies
('OEICs') 1 6 7
498 (183) 445
*The interest expense for the six month period ended 30 September 2012
arose because of provisions made against loan stock interest receivable
from investee companies.
1. Investments held at fair value through profit or loss
Quoted Unquoted Total
GBP'000 GBP'000 GBP'000
Book cost as at 1 April 2013 3,668 40,514 44,182
Investment holding losses (2,570) (6,165) (8,735)
Valuation at 1 April 2013 1,098 34,349 35,447
Movements in the period:
Purchases at cost - *1,510 1,510
Disposal proceeds (166) (184) (350)
Realised (losses)/gains (317) (3,343) (3,660)
Investment holding gains 166 4,681 4,847
Valuation at 30 September 2013 781 37,013 37,794
Book cost at 30 September 2013 3,185 38,497 41,682
Investment holding losses (2,404) (1,484) (3,888)
Valuation at 30 September 2013 781 37,013 37,794
*Capitalised interest of GBP57,000 was recognized in the period and is
included within purchases at cost.
1. Transactions with the manager
Foresight Group, acting as investment manager to the Company in respect
of its venture capital investments, earned fees of GBP491,000 during the
period (30 September 2012: GBP487,000; 31 March 2013: GBP983,000). Fees
excluding VAT of GBP62,000 (30 September 2012: GBP60,000; 31 March 2013:
GBP123,000) were received during the period for company secretarial,
administrative and custodian services to the Company.
At the balance sheet date, there was GBPnil due to or from Foresight
Group (30 September 2012: GBPnil; 31 March 2013: GBP25,000 ) and GBPnil
due to Foresight Fund Managers Limited (30 September 2012: GBPnil; 31
March 2013: GBPnil). No amounts have been written off in the period in
respect of debts due to or from the related parties.
END
This announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Foresight 3 VCT PLC via Globenewswire
HUG#1746751
http://www.foresightgroup.eu/
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