FORESIGHT 4 VCT PLC
• Complete internet property £111.9 million.
• Web asset worth per share elevated by 3.2% within the interval from 55.8p at 31 March 2020 to 57.6p. Together with the fee of a 2.8p dividend made on 28 August 2020, NAV complete return per share at 30 September 2020 was 60.4p, representing a constructive complete return of 8.2% within the interval.
• An interim dividend of two.8p per share was paid on 28 August 2020, costing £5.4 million.
• 1.1 million peculiar shares have been issued as a part of the Dividend Reinvestment Scheme on 28 August 2020.
• The portfolio has seen an uplift in valuation of £10.0 million within the final six months.
I’m happy to current the un-audited Half-Yearly Report for Foresight 4 VCT plc for the interval ended 30 September 2020.
Materials occasions throughout the interval
Earlier than offering different particulars, I want to draw consideration to a fabric occasion that occurred throughout the interval being the persevering with impression of Covid-19 on the Firm and its portfolio.
The Covid-19 virus has offered the Firm and the administration of each one in every of its portfolio firms with unprecedented challenges which it’s anticipated will persist for a substantial time to come back. The Supervisor has been working intently with the portfolio firms, in an effort to attempt to minimise any hostile impression of this virus, and it’s a nice credit score to the standard of the administration of the portfolio firms, that the fallout from the pandemic has not been much more vital. Till this virus is introduced below worldwide management, it’s inconceivable to evaluate its full impression. Nevertheless, it’s already clear that the worth of each enterprise within the Firm’s portfolio has been materially affected, a minority have benefitted however most haven’t.
On the finish of final 12 months the Firm held eight investments, representing some 16% by worth of its funding portfolio, in companies concerned within the journey, retail, leisure and foods and drinks sectors. Up to now these sectors are amongst these most laborious hit by the provisions of the lockdown imposed by the UK Authorities in response to the Covid-19 virus. I’m happy to report that for the reason that easing of the preliminary lockdown provisions all of the Firm’s investments in these sectors are persevering with to commerce and, with one potential exception, they’re already pursuing revised enterprise methods which maintain the potential for a return to business viability within the brief to medium time period. It can, nonetheless, be a while earlier than the worth of most of those companies is once more at or above their pre-Covid ranges.
The general impression of the Covid virus may very well be seen within the materials fall within the valuation of the Firm’s portfolio at 31 March 2020. On a constructive notice, I can say that for the reason that 12 months finish date the buying and selling place of many of those companies has improved leading to a modest improve in portfolio worth within the interval to 30 September 2020. On behalf of the Board I want to thank the Supervisor for the appreciable work it has executed and is continuous to do alongside the administration groups at every one of many firms throughout the portfolio.
Efficiency and portfolio exercise
In the course of the interval Web Asset Worth per share elevated by 3.2% from 55.8p at 31 March 2020 to 57.6p at 30 September 2020. Together with the fee of a 2.8p dividend made on 28 August 2020, NAV complete return per share at 30 September 2020 was 60.4p, representing a constructive complete return of 8.2% throughout the identical six month interval.
In the course of the interval below overview the Supervisor made no new investments, because it centered on supporting the present portfolio throughout the ongoing Covid-19 Coronavirus outbreak.
Foresight Group LLP, the Firm’s funding supervisor, continues to see a pipeline of potential investments sourced by way of its regional networks and well-developed relationships with advisors and the SME neighborhood, nonetheless, it’s also centered on supporting the prevailing portfolio by way of the Covid-19 pandemic. Following each the profitable fundraises launched in Could 2017 and June 2018, the Firm is able to totally help the portfolio, the place acceptable, and exploit potential enticing funding alternatives.
An interim dividend of two.8p per Share was declared on 6 August 2020 primarily based on an ex-dividend date of 13 August 2020 and a document date of 14 August 2020. The dividend was paid on 28 August 2020.
As famous within the Annual Report and Accounts and in mild of the change in portfolio in the direction of earlier stage, greater threat firms, as required by the brand new VCT guidelines, the Board felt it prudent to regulate the dividend coverage in the direction of a focused annual dividend yield of 5% of NAV each year. The Board and the Supervisor hope that this can be enhanced by further ‘particular’ dividends as and when significantly profitable portfolio exits are made. The impression of Covid-19 shall be considered when the Board considers dividends within the close to time period.
Because of the journey restrictions imposed attributable to Covid-19, the Supervisor’s well-liked investor boards have been briefly placed on maintain. As soon as it’s potential to take action, particulars of each a London occasion and regional occasions shall be despatched to shareholders resident within the locality as and when they’re organised. The Supervisor held an investor webinar on 25 August 2020, particulars of which had been beforehand communicated to traders. It’s the intention of the Supervisor to proceed to carry investor webinars while the investor boards are on maintain and particulars of any future occasions shall be communicated to traders.
The Board continues to overview its personal efficiency and undertakes succession planning to keep up an acceptable stage of independence, expertise, variety and abilities in an effort to be able to discharge all its obligations. As famous within the Annual Report and Accounts the Board and Nomination Committee have been looking for to nominate a brand new non-executive director. The Board are delighted to announce that Gaynor Coley was appointed to the Board on 10 September 2020 and as Chair of the Audit Committee on 19 November 2020.
The persisting uncertainty over the complete impression of Covid-19 and the negotiations in relation to Brexit create really distinctive challenges for each enterprise. The Firm invests primarily in growing firms which by their nature profit from basic financial development and the present surroundings locations appreciable calls for upon them and their administration groups. The Supervisor’s non-public fairness group is effectively conscious of the administration and enterprise wants of every of the businesses throughout the funding portfolio and is working intently with them to assist them progress throughout these testing occasions.
Till the pandemic is introduced below worldwide management there’ll inevitably be additional, primarily unhelpful, implications for a lot of UK primarily based companies. However this, the Board and the Supervisor have been impressed by the resilience proven by the numerous majority of the Firm’s investments and are optimistic that the prevailing portfolio has potential so as to add worth as soon as the virus has been efficiently contained.
4 December 2020
As at 30 September 2020 the Firm’s portfolio comprised 34 investments with a complete price of £52.5 million and a valuation of £76.2 million. The portfolio is diversified by sector, transaction sort and maturity profile. Particulars of the ten largest investments by valuation, together with an replace on their efficiency, are supplied on pages 10 to 14 of the Half Yearly Report.
The funding group stay centered on supporting an annual dividend to shareholders of not less than 5% of the NAV per share while retaining a secure NAV. The Firm is at present on track as while dividends have remained at 5%, NAV per share has additionally elevated by 3.2% within the interval.
In the course of the interval, the worth of unquoted investments elevated general by £10.0 million because the portfolio started to recuperate following the steep decline skilled within the quarter to March because the nation entered the primary peak of Covid-19. While the restoration has been combined throughout the portfolio relying on sector, in mixture the restoration is reflective of the portfolio’s skill to efficiently navigate the impacts of Covid-19 and the final uptick in financial exercise following the reopening of companies over the summer season. For the reason that finish of September, the nation has needed to face a second lockdown, which can carry additional volatility to buying and selling. However, the portfolio is effectively ready to climate this era of uncertainty with robust foundations laid throughout the first lockdown.
Given the challenges of finishing transactions throughout lockdown and the broader uncertainty throughout the interval, no new investments have been made within the six months to September. Smaller firms remained centered largely on survival reasonably than strategic development. As well as, the funding group have been primarily centered on managing and supporting the prevailing portfolio by way of these unprecedented occasions. The place potential, portfolio firms try to maximise any business alternatives arising from Covid-19, with some thriving within the present local weather.
With very energetic portfolio administration and use of the varied types of Authorities help, such because the furlough scheme and the Coronavirus Enterprise Interruption Mortgage Scheme, there have been no follow-on investments throughout the six months to 30 September 2020. Nevertheless, as these schemes unwind and the financial local weather stays depressed attributable to additional lockdowns, the Firm anticipates a number of necessities for follow-on funding within the coming months. As well as, the Firm
will search to make strategic follow-on investments into companies to help new development plans or alternatives which have stemmed from the brand new financial panorama.
EXITS AND REALISATIONS
While the M&A local weather has been difficult within the interval, with most commerce acquirers centered on survival and personal fairness traders centered on their present portfolios or on distressed acquisitions, the Funding Supervisor is seeing acquisition curiosity returning, significantly within the healthcare, expertise and E-commerce sectors.
At 30 September 2020, the Firm had money in hand of £34.9 million, which shall be used to fund new and follow-on investments, dividends, buybacks and operating bills. Foresight Group is seeing a restoration within the pipeline of potential investments and has a lot of alternatives below exclusivity or in due diligence. The Firm stays effectively positioned to proceed pursuing these potential funding alternatives.
The onset of Covid-19 and the ensuing financial downturn has resulted in decrease new funding exercise throughout the market within the first three quarters of 2020. Because the economic system recovers from the worst results of the virus, we anticipate firm valuations to be enticing and demand for funding to extend, driving some significantly fascinating alternatives for funding.
KEY PORTFOLIO DEVELOPMENTS
General, the worth of unquoted investments held elevated by £10.0 million to £76.2 million within the interval, pushed by a rise within the worth of present investments. A disciplined strategy to funding valuations has been maintained in mild of Covid-19. Within the quarter to March, the onset of the Covid-19 pandemic drove vital financial uncertainty and the portfolio noticed a considerable lower in worth of £20.6 million. Within the quarter to June, because the portfolio tailored to the brand new financial local weather, and began adapting their enterprise fashions honest values noticed a slight restoration in mixture, rising by £3.3 million. This upwards pattern has continued, with valuations rebounding an extra £6.7 million within the quarter to September. Materials adjustments in valuation, outlined as rising or reducing by £1.0 million or extra since 31 March 2020, are detailed beneath. Updates on these firms are included beneath, or within the Prime Ten Investments part on pages 10 to 14 of the Half Yearly Report.
KEY VALUATION CHANGES IN THE PERIOD
|Firm||Valuation (£)||Valuation Change (£)|
|Procam Tv Holdings Restricted||2,179,243||2,179,243|
|FFX Group Restricted||5,057,127||1,758,346|
|Hospital Providers Group Restricted||3,089,081||1,531,512|
|Specac Worldwide Restricted||7,011,068||1,232,162|
Procam is a broadcast rent firm, supplying tools and crew for location TV and movie manufacturing and likewise has a division (True Lens Providers) centered on the manufacture and upkeep of digicam lenses. Throughout Covid-19, Procam’s rental enterprise needed to largely shut as a result of halting of tv and movie manufacturing. Conversely, its True Lens Providers division continued to commerce positively, again to pre-Covid-19 ranges. As difficult buying and selling situations continued, Procam required a proper restructuring and the Firm supported a sale of the commerce and property of Procam’s rental division and spun out its True Lens Service division right into a separate firm, supporting a considerable restoration in worth.
In mild of quickly evolving Authorities steerage, we now face a second countrywide lockdown. Most companies had totally reopened by September, with the Supervisor supporting its portfolio by way of a transition to the ‘new regular’, working intently with them to implement secure working environments and resilient enterprise fashions. It’s now essential that we act rapidly and administer the identical instruments as the primary lockdown to help our portfolio firms. We are going to improve our dialogue with administration groups to intently monitor ongoing efficiency and money ranges. We have now additionally been working with firms to revise enterprise plans and budgets to handle creditor stretch and debt build-up, and to organize them for an eventual discount of Authorities help. We’re making certain that finance administrators on the portfolio firms proceed to tightly handle overheads, scale back capital expenditure and work by way of longer-term price discount plans given the unsure macro surroundings. It will be important that administration groups are effectively ready for a sustained interval of weaker client and enterprise demand. The Firm’s portfolio is diversified by sector and market, and the SME sector has traditionally confirmed to be resilient and nimble sufficient to climate durations of volatility.
The place potential, we try to maximise any business alternatives arising from the present state of affairs. For instance, there are additionally a lot of firms, significantly within the healthcare and life sciences sectors, which have traded strongly throughout this era as a result of elevated demand for the companies they provide. Examples of this embody Mologic, which obtained a grant of c.£1m to fund Covid-related diagnostic growth. Molecular diagnostics enterprise, Biofortuna moved rapidly on a lot of alternatives to assist manufacture 20 million Covid-19 take a look at kits and can discover additional business prospects within the area. One other of the portfolio firms, HSL, has had very appreciable success supplying PPE to Irish and Northern Irish hospitals and has additionally seen elevated demand for cell x-ray machines, as chest x-rays are a part of the therapy pathway for Covid-19. Different portfolio firms are benefitting from wider developments which have stemmed from the pandemic, resembling energy instruments and constructing supplies provider FFX, which has seen an upsurge in gross sales attributable to elevated DIY spend and a lift in E-commerce.
A proportion of the portfolio firms are significantly in danger as a result of sectors they function in, resembling journey, hospitality and leisure. Many of those companies will now be caught in a chronic interval of closures and uncertainty on when they are going to be allowed to reopen. The Supervisor is working extensively with these companies, paying specific consideration to managing collectors and money preservation. It is very important spotlight that a number of the Firm’s leisure investments demonstrated market main website metrics pre- Covid and may have the flexibility to climate this momentary interval of suppressed buying and selling. As soon as reopened, even with capability limitations, we anticipate a number of of our leisure companies to return to revenue and money era over time because of a loyal buyer base and beneficial buyer demographic.
However this backdrop, we proceed to see encouraging ranges of exercise from smaller UK firms looking for development capital and anticipate this to extend as firms start to recuperate from the impression of Covid-19 with necessities for everlasting funding to working capital. VCTs are nonetheless seen by many entrepreneurs as a lovely supply of capital that gives scale-up funding to companies at an early stage of their development, when different sources of funding will not be available or alongside different sources of funding, together with the Authorities measures for supporting companies throughout Covid-19. Regardless of the present challenges for Covid-19 within the medium and long run, the UK stays a superb place to start out, scale and promote a enterprise, with broad swimming pools of expertise and an entrepreneurial tradition.
Head of Non-public Fairness
4 December 2020
Unaudited Half-Yearly Outcomes and Duties Statements
Principal Dangers and Uncertainties
The principal dangers confronted by the Firm are as follows:
- Financial (exterior shocks);
- Operational; and
The Board reported on the principal dangers and uncertainties confronted by the Firm within the Annual Report and Accounts for the 12 months ended 31 March 2020. An in depth rationalization will be discovered on web page 25 of the Annual Report and Accounts which is on the market on Foresight 4 VCT’s web site: www.foresight4vct.com or by writing to Foresight Group at The Shard, 32 London Bridge Avenue, London, SE1 9SG.
Within the view of the Board, there have been no adjustments to the elemental nature of those dangers for the reason that earlier report and these principal dangers and uncertainties are equally relevant to the remaining six months of the monetary 12 months as they have been to the six months below overview.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Disclosure and Transparency Guidelines (‘DTR’) of the UK Itemizing Authority require the Administrators to verify their obligations in relation to the preparation and publication of the Half-Yearly Monetary Report and monetary statements.
The Administrators affirm to the very best of their information that:
- the summarised set of monetary statements has been ready in accordance with FRS 104;
- the interim administration report features a honest overview of the knowledge required by DTR 4.2.7R (indication of essential occasions throughout the first six months and outline of principal dangers and uncertainties for the remaining six months of the 12 months);
- the summarised set of monetary statements provides a real and honest view of the property, liabilities, monetary place and revenue or lack of the Firm as required by DTR 4.2.4R; and
- the interim administration report features a honest overview of the knowledge required by DTR 4.2.8R (disclosure of associated events’ transactions and adjustments therein).
The Firm’s enterprise actions, along with the elements more likely to have an effect on its future growth, efficiency and place, are set out within the Strategic Report of the Annual Report. The monetary place of the Firm, its money flows, liquidity place and borrowing services are described within the Chairman’s Assertion, Strategic Report and Notes to the Accounts of the 31 March 2020 Annual Report. As well as, the Annual Report consists of the Firm’s aims, insurance policies and processes for managing its capital; its monetary threat administration aims; particulars of its monetary devices; and its exposures to credit score threat and liquidity threat.
The Firm has appreciable monetary sources along with investments and revenue generated therefrom throughout quite a lot of industries and sectors. As a consequence, the Administrators consider that the Firm is effectively positioned to handle its enterprise dangers efficiently.
The Administrators have cheap expectation that the Firm has sufficient sources to proceed in operational existence for the foreseeable future. Thus they proceed to undertake the going concern foundation of accounting in getting ready the annual monetary statements.
The Half-Yearly Monetary Report has not been audited nor reviewed by the auditors.
On behalf of the Board
4 December 2020
Unaudited Revenue Assertion
for the six months ended 30 September 2020
|Six months ended 30 September 2020 (Unaudited)||Six months ended 30 September 2019 (Unaudited)||12 months ended 31 March 2020 (Audited)|
|Income £’000||Capital £’000||Complete £’000||Income £’000||Capital £’000||Complete £’000||Income £’000||Capital £’000||Complete £’000|
|Funding holding positive factors/ (losses)||–||9,990||9,990||–||7,900||7,900||–||(11,081)||(11,081)|
|Realised losses on investments||–||–||–||–||(3,623)||(3,623)||–||(5,251)||(5,251)|
|Funding administration charges||(295)||(884)||(1,179)||(330)||(991)||(1,321)||(545)||(1,633)||(2,178)|
|(Loss) /return on peculiar actions earlier than taxation||(241)||9,106||8,865||(225)||3,286||3,061||2,534||(17,965)||(15,431)|
|(Loss) /return on peculiar actions after taxation||(241)||9,106||8,865||(225)||3,286||3,061||2,534||(17,965)||(15,431)|
|(Loss) /return per share||(0.1)p||4.7p||4.6p||(0.1)p||1.7p||1.6p||1.3p||(9.2)p||(7.9)p|
The overall column of this assertion is the revenue and loss account of the Firm and the income and capital columns characterize supplementary info.
All income and capital objects within the above Revenue Assertion are derived from persevering with operations. No operations have been acquired or discontinued within the interval.
The Firm has no recognised positive factors or losses apart from these proven above, subsequently no separate assertion of complete recognised positive factors and losses has been offered.
Unaudited Steadiness Sheet
at 30 September 2020
Registered Quantity: 03506579
30 September 2020
30 September 2019
31 March 2020
|Investments held at honest worth by way of revenue or loss||76,196||82,488||66,206|
|Money and money equivalents||34,884||29,893||41,872|
|Quantities falling due inside one 12 months||(124)||(497)||(104)|
|Web present property||35,731||45,270||42,494|
|Capital and reserves|
|Referred to as-up share capital||1,944||1,957||1,948|
|Share premium account||80,002||79,466||79,443|
|Capital redemption reserve||518||494||503|
|Particular distributable reserve||56,678||60,911||63,127|
|Fairness shareholders’ funds||111,927||127,758||108,700|
|Web asset worth per share||57.6p||65.3p||55.8p|
Unaudited Reconciliation of Actions in Shareholders’ Funds
for the six months ended 30 September 2020
|Referred to as-up share capital
|Share premium account
|Capital redemption reserve
|As at 1 April 2020||1,948||79,443||503||63,127||(49,990)||13,669||108,700|
|Share points within the interval||11||578||–||–||–||–||589|
|Bills in relation to share points||–||(19)||–||–||–||–||(19)|
|Repurchase of shares||(15)||–||15||(795)||–||–||(795)|
|Funding holding positive factors||–||–||–||–||–||9,990||9,990|
|Administration charges charged to capital||–||–||–||–||(884)||–||(884)|
|Income loss for the interval||–||–||–||(241)||–||–||(241)|
|As at 30 September 2020||1,944||80,002||518||56,678||(50,874)||23,659||111,927|
*Reserve is on the market for distribution, complete distributable reserves at 30 September 2020 are £5,804,000 (31 March 2020: £13,137,000).
Unaudited Money Stream Assertion
for the six months ended 30 September 2020
|Six months ended 30 September 2020
|Six months ended 30 September 2019
|12 months ended 31 March 2020
|Money circulate from working actions|
|Mortgage curiosity obtained on investments||29||196||559|
|Dividends obtained from investments||–||28||2,835|
|Deposit and related curiosity obtained||26||111||238|
|Funding administration charges paid||(1,179)||(1,267)||(2,579)|
|Secretarial charges paid||(79)||(85)||(169)|
|Different money funds||(147)||(248)||(418)|
|Web money (outflow)/influx from working actions||(1,350)||(1,265)||466|
|Money circulate from investing actions|
|Buy of investments||–||(3,600)||(8,361)|
|Web proceeds on sale of investments||–||–||434|
|Web proceeds on deferred consideration||–||31||31|
|Web money outflow from investing actions||–||(3,569)||(7,896)|
|Money circulate from financing actions|
|Proceeds of fund elevating||–||10,021||25,586|
|Bills of fund elevating||(19)||(314)||(336)|
|Repurchase of personal shares||(795)||(1,098)||(2,067)|
|Fairness dividends paid||(4,824)||(7,067)||(7,066)|
|Web money (outflow)/influx from financing actions||(5,638)||1,542||16,117|
|Web (outflow)/influx in money within the interval||(6,988)||(3,292)||8,687|
Evaluation of adjustments in internet debt
|At 1 April 2020
|At 30 September 2020
|Money and money equivalents||41,872||(6,988)||34,884|
Notes to the Unaudited Half-Yearly Outcomes
- The Unaudited Half-Yearly Monetary Report has been ready on the idea of the accounting insurance policies set out within the statutory accounts of the Firm for the 12 months ended 31 March 2020. Unquoted investments have been valued in accordance with IPEV Valuation Tips.
- These usually are not statutory accounts in accordance with S436 of the Corporations Act 2006 and the monetary info for the six months ended 30 September 2020 and 30 September 2019 has been neither audited nor formally reviewed. Statutory accounts in respect of the 12 months ended 31 March 2020 have been audited and reported on by the Firm’s auditors and delivered to the Registrar of Corporations and included the report of the auditors which was unqualified and didn’t comprise a press release below S498(2) or S498(3) of the Corporations Act 2006. No statutory accounts in respect of any interval after 31 March 2020 have been reported on by the Firm’s auditors or delivered to the Registrar of Corporations.
- Copies of the Unaudited Half-Yearly Monetary Report shall be despatched to shareholders by way of their chosen technique and shall be out there for inspection on the Registered Workplace of the Firm at The Shard, 32 London Bridge Avenue, London, SE1 9SG.
- Web asset worth per share
The online asset worth per share relies on internet property on the finish of the interval and on the variety of shares in difficulty on the date.
|Shares in Situation|
|30 September 2020||£111,927,000||194,420,778|
|30 September 2019||£127,758,000||195,726,224|
|31 March 2020||£108,700,000||194,826,224|
- Return per share
The weighted common variety of shares used to calculate the respective returns are proven within the desk beneath.
|Six months ended 30 September 2020||194,054,492|
|Six months ended 30 September 2019||195,728,848|
|12 months ended 31 March 2020||195,581,908|
Earnings for the interval shouldn’t be taken as a information to the outcomes for the complete 12 months.
|Six months ended 30 September 2020
|Six months ended 30 September 2019
|12 months ended 31 March 2020
|Mortgage inventory curiosity||278||281||597|
|Deposit and related curiosity obtained||26||111||241|
7) Investments held at honest worth by way of revenue or loss
|Guide price as at 1 April 2020||52,537|
|Funding holding positive factors||13,669|
|Valuation at 1 April 2020||66,206|
|Actions within the interval:|
|Realised positive factors||–|
|Funding holding positive factors||9,990|
|Valuation at 30 September 2020||76,196|
|Guide price at 30 September 2020||52,537|
|Funding holding positive factors||23,659|
|Valuation at 30 September 2020||76,196|
8) Associated celebration transactions
No Director has an curiosity in any contract to which the Firm is a celebration apart from their appointment and fee as administrators.
9) Transactions with the Supervisor
Foresight Group LLP acts as supervisor to the Firm and was appointed on 27 January 2020. In the course of the interval, companies of a complete price of £1,179,000 (30 September 2019: £nil; 31 March 2020: £3,000) have been bought by the Firm from Foresight Group LLP. Foresight Group CI Restricted, which acted as Supervisor to the Firm till 27 January 2020 earned £nil within the interval (30 September 2019: £1,321,000, 31 March 2020: £2,175,000).
In the course of the interval, administration companies of a complete price of £79,000 (30 September 2019: £85,000; 31 March 2020: £169,000) have been delivered to the Firm by Foresight Group LLP, Firm Secretary.
At 30 September 2020, the quantity due from Foresight Group LLP was £452,000 (30 September 2019: £nil; 31 March 2020: £452,000) and the quantity attributable to Foresight Group CI Restricted was £nil (30 September 2019: £nil, 31 March 2020: £nil).
10) Publish-Steadiness sheet occasions
On 27 October 2020 the Firm bought 260,827 shares for cancellation primarily based on a NAV of fifty.32p per share.