FORESIGHT 2 VCT PLC 
By
Chairman's Statement
Summary
The net asset value per Ordinary Share as at 30 September 2009 was 76.7p
compared with 86.2p as at 30 September 2008. The net asset value per C Share as
at 30 September 2009 was 102.5p compared with 104.6p at 30 September 2008.
* Final dividends of 1.0p per Ordinary Share and 3.0p per C Share will be paid
on 9 April 2010.
* Six new investments were made in the Ordinary Shares fund during the period
totalling £1,555,000: 2K Manufacturing Limited (£500,000), @Futsal Limited
(£250,000), Diagnos Holdings Limited (£250,000), ICA Group Limited
(£250,000), Crumb Rubber Limited (£250,000) and Land Energy Limited
(£55,000).
* The Ordinary Shares fund provided follow-on funding totalling £1,169,867 for
six portfolio companies: Iskra Wind Turbines (£287,500), Aigis Blast
Protection (£238,760), SkillsMarket (£196,974), TFC Europe (£175,000),
Silvigen (£171,633) and Lynwood Group Holdings (£100,000).
* Seven new investments totalling £5,530,007 were made in the C Shares fund
during the period: Vertal Limited (£1,000,000), 2K Manufacturing
(£1,000,000), ICA Group (£750,000), Diagnos Holdings (£750,000), @Futsal
(£750,000), Crumb Rubber (£750,000) and O-Gen UK Limited (£530,007).
* Eight follow-on investments were made in the C Shares fund during the period
totalling £2,181,140: Closed Loop Recycling (£1,000,000), Land Energy
(£440,000), O-Gen Acme Trek (£182,467), Silvigen (£171,633), TFC Europe
(£125,000), Heritage House Media (£92,456), Iskra Wind Turbines (£86,250),
and Lynwood Group Holdings (£83,334).
* As a result of the Top-up Offer, launched in October 2008, the Foresight 2
Ordinary Shares fund had raised gross proceeds of £1,349,488 as at 31 May
2009, when the Offer closed.
* The Foresight 2 C Shares fund raised gross proceeds of £2,110,900 from its
offer for subscription between launch on 12 February 2009 and closed, fully
subscribed, on 30 April 2009.
Introduction
During the last six months of the year under review, stock markets stabilised as
a result of the belief that the worst of the banking crisis may be over and the
positive effects of Governmental stimulus packages around the world which have
started to filter through the economy. Although stock market sentiment is
improving, trading and credit conditions remain difficult in many sectors of the
economy. Against this background the net asset value total return (including
dividends paid) of the Ordinary Shares fund fell by 8.2% from 91.8p per share at
30 September 2008 to 84.3p per share at 30 September 2009 and the net asset
value total return of the C Shares fund increased by 0.9% from 104.6p per share
at 30 September 2008 to 105.5p per C share at 30 September 2009.
Reflecting recent investment gains and income generated from loan stock, a final
dividend of 1.0p per Ordinary Share for the year ended 30 September 2009 will be
paid to the Ordinary shareholders on 9 April 2010 and a final dividend of 3.0p
per C Share for the year ended 30 September 2009 will be paid to the C
shareholders on the same day. These dividends will have an ex-date of 10 March
2010 and a record date of 12 March 2010. The Company's policy is to maximise the
level of tax-free dividends, either generated from income or from capital
profits realised on the sale of investments.
The Company has two classes of shares, Ordinary Shares and C Shares, and each
class of share has its own portfolio of investments.
Portfolio Review - Ordinary Shares
A combination of difficult economic and trading conditions and the impact of
tougher credit conditions has affected a number of Ordinary Share portfolio
companies and, in general, performance has been mixed.
Closed Loop Recycling is raising a further £6 million to enable the company to
refinance short-term debt, purchase new capital equipment and provide additional
working capital required due to delays in full commissioning resulting from
longer than expected timescales in customer product audits. These product audits
are expected to be completed successfully over the next few months.
Reflecting poorer first half trading, a provision of £375,000 (70% in total) has
been made against the previous carrying value of Aigis Blast Protection.
Management has taken rapid action to reduce its cost base through redundancies,
senior management pay cuts as well as other cost-cutting measures in order to
see the company through to break-even. The Company invested £238,760 in Aigis
Blast Protection during the year.
Demand from recruitment companies for SkillsMarket's products and services
suffered as a consequence of general trading conditions within the recruitment
industry. Net proceeds of £1.5 million were raised from existing and new
shareholders in August 2009, in which Foresight 2 VCT invested £196,974, to
provide ongoing working capital. We continue to carefully monitor the progress
of this investment in which a number of management changes have been made and a
provision has been made against this investment of £569,987 (79%).
Despite difficult trading conditions, the performance of a number of other
portfolio companies continued to improve, reflecting growing demand and strong
sales pipelines, most notably Diagnos Holdings, Trilogy Communications and
Ixaris Systems.
The investment in Diagnos Holdings was made in February this year and the
company is trading well in terms of both revenues and profitability. Diagnos
Holdings develops and sells sophisticated automotive diagnostic software and
hardware to independent mechanics and garages to allow them to service and
repair vehicles. As cars become increasingly sophisticated, they also become
more reliant on the electronic systems to run functions such as fuel injection
and engine management systems. This means that to fix any fault a mechanic needs
a diagnostic tool such as those produced by Diagnos to be able to 'talk' to the
computer running the process or system. The company is currently working on a
new range of automotive diagnostic products for the garage market, as well as
introducing its existing products in France and Germany.
Trilogy Communications is continuing to build partnerships with large
international defence companies and the pipeline of sales opportunities has
continued to grow. In recognition of the company's progress in foreign markets,
Trilogy Communications was recently awarded the Queen's Award for Enterprise in
the International Trade category.
Ixaris Systems is increasingly focusing on providing payment solutions to
affiliate networks, which need fast and efficient settlement for commission
payments. The EntroPay platform enables these affiliate networks to make
payments all over the world, saving money for both the networks and their
members.
Six new investments were made in the Ordinary Shares fund during the year
totalling £1,555,000. These were: 2K Manufacturing (£500,000), @Futsal
(£250,000), Diagnos Holdings (£250,000), ICA Group (£250,000), Crumb Rubber
(£250,000) and Land Energy (£55,000).
2K Manufacturing is a business that has been established to manufacture a
plastic board to replace plywood in many applications including hoarding and
concrete shuttering, where the company has strategic partners and significant
demand. The fully recyclable board is made using novel but proven technology.
The boarding product is differentiated by the fact that it can be easily
manufactured from waste plastic material, giving cost benefits and in that it is
a composite product moulded in one operation creating a board that is tough,
weatherproof and does not delaminate. It can also be made with a wide range of
surface coatings or finishes as required.
@Futsal has been established by the founding team of Covion Holdings (the
successful Foresight investment sold to Balfour Beatty in 2007 for £33 million
at a multiple of over four times cost) to roll out a chain of indoor football
centres. Futsal is the fastest growing indoor sport in the world with 30 million
people currently playing internationally. The sport has not yet developed in the
UK but, as the only form of small sided football supported by the FA, UEFA and
FIFA and with the support of major sports brands, it is rapidly gaining
momentum.
Established in 1993 the ICA Group has developed into a leading document
management solutions provider servicing SMEs in the South East of England. Its
core business is reselling and maintaining Ricoh and Toshiba office printing
equipment, predominantly to the commercial, public and education sectors.
Crumb Rubber is a rubber recycling facility, capable of producing 20,000 tonnes
of recycled rubber per annum, in Plymouth. The company processes shredded tyre
material into various grades of rubber particles suitable for displacing virgin
rubbers and plastics in a wide range of product applications.
Land Energy is a new investment in the Ordinary Share fund (but is an existing
investment of the C Share fund). It was set up to generate renewable power from
virgin wood and to exploit the growing demand for wood pellets as a renewable
fuel, through a series of plants.
During the period under review, £1,169,867 was invested in follow-on funding
rounds in six portfolio companies: Iskra Wind Turbines (£287,500), Aigis Blast
Protection (£238,760), SkillsMarket (£196,974), TFC Europe (£175,000), Silvigen
(£171,633) and Lynwood Group Holdings (£100,000).
Iskra Wind Turbines required further capital ascommercialisation of its
tree-sized wind turbines took longer than expected, resulting in a shortfall in
working capital. Encouragingly, unit sales of turbines have increased over the
last six months. A further funding round is likely in the near future.
Silvigen has positioned itself to supply the biomass fuel needs of the UK power
generation sector and the developing industrial heat sector, both of which are
driven by a number of regulatory incentives. Silvigen raised £1.2 million in
June 2009, of which Foresight 2 VCT invested £171,633, to provide ongoing
working capital for the business required as a result of operational delays. The
company is now in the process of commissioning its wood pelleting plant with
first production achieved in October 2009.
The investment in Lynwood Group Holdings of £100,000 was used to fund an
increase in capacity for i-plas, to satisfy a growing sales pipeline in an area
of plastics recycling which has significant growth potential.
The investment of £175,000 into TFC Europe during April and May 2009 was
required due to a downturn in activity levels in its core fastener markets as a
result of recessionary pressures and exchange losses on its purchasing of
products from the US for distribution in the UK and elsewhere.
Across all of the portfolio companies, in light of the current trading climate
we have ensured management are focused on cash conservation and cost management.
These actions taken over the last few months should better place the majority of
companies to ride out the current downturn and benefit from an improvement in
trading conditions in due course.
Portfolio Review - C Shares
Within the C Shares fund Datapath achieved operating profits in excess of £3.0
million for the year ended 31 March 2009. This holding was valued at £3.3
million at 30 September 2009 on the basis of a discounted price earnings
multiple. Following this underlying improvement in its results, Datapath repaid
£205,000 of Foresight 2's loan stock investment.
The C Share fund continues to progress well and seven new investments were made
during the year under review: Vertal (£1,000,000), 2K Manufacturing
(£1,000,000), ICA Group (£750,000), Diagnos Holdings (£750,000), @Futsal
(£750,000), Crumb Rubber (£750,000) and O-Gen UK (£530,007).
2K Manufacturing, ICA Group, Diagnos Holdings, @Futsal and Crumb Rubber are
co-investments with the Ordinary Shares fund and details are set out earlier.
Vertal is a business established to exploit the significant gap in the UK market
for processing food waste into a fertilizer material which can be used as a
direct replacement by farmers. Vertal secured planning permission for a first
site in South East London and has built a facility which is operational but
still in the commissioning phase. At full capacity the facility will process
70,000 tonnes of food waste per annum.
In May 2007 Foresight 2 invested in O-Gen a constructor and operator of plants
that convert organic matter into combined heat and power. The first plant has
been built and should be fully operational in the near future. To facilitate
expansion, the company underwent a reorganisation in December 2008, and demerged
into two new companies, O-Gen Acme Trek, where Foresight 2's existing investment
is held, and O-Gen UK, a new company. Foresight 2 made a follow-on investment of
£182,467 in O-Gen Acme Trek to provide further capital as the plant progresses
to full operation. O-Gen UK will develop three new sites which have already
received planning consent and Foresight 2 invested £530,007 in the company in
December 2008 as part of the planned roll-out of these biomass facilities.
Eight follow-on investments totalling £2,181,140 were made during the period:
Closed Loop Recycling (£1,000,000), Land Energy (£440,000), O-Gen Acme Trek
(£182,467), Silvigen (£171,633), TFC Europe (£125,000), Heritage House Media
(£92,456), Iskra Wind Turbines (£86,250) and Lynwood Group Holdings (£83,334).
A short-term loan of £1,000,000 was provided to Closed Loop Recycling as the
company works through commissioning delays and progresses with its £6 million
further fund-raising.
This second tranche investment into Land Energy was always planned to be in two
stages to support the business in establishing multi site operations, with which
the company is now progressing.
An investment of £92,456 was made in Heritage House Media to provide additional
working capital and to complete the integration of its guide book publishing
divisions. Trading through 2009 has been impacted by the recession. The company
recently launched a new range of guides for the disabled community.
Valuation policy
Investments held bythe Company have been valued in accordance with the
International Private Equity and Venture Capital (IPEVC) valuation guidelines
(September 2009) 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 PLUS (formerly OFEX) are valued at the bid price as at 30 September
2009. The portfolio valuations are prepared by Foresight Group and are subject
to approval by the Board.
Performance Incentive
As a result of the 3.0p dividend payment per C Share in April 2009 and the total
return of the C Shares fund remaining in excess of 100p per share, Foresight
Group received a performance fee of 15% of the dividend paid out to
shareholders, equivalent to £107,030. The performance agreement states that such
a payment should be made in C Shares but in this instance, at the request of the
manager, the payment was made in cash. The cost to C shareholders was identical.
The payment was reviewed and approved by the Financial Services Authority as is
required in such circumstances.
Share Issues and Share Buy-backs
Combined Top-up Offers
The Ordinary Share fund raised gross proceeds of £1,349,488 from its offer for
subscription, launched in October 2008, through the issue of 1,574,643 shares at
prices ranging from 86.0p to 91.0p per share
A further 92,446 Ordinary Shares were issued under the Dividend Investment
Scheme at a price of 81.3p per share.
C Share Offer
The C Share fund raised gross proceeds of £2,110,900 from its offer for
subscription, launched in February 2009, through the issue of 1,948,455 shares
at prices ranging from 108.0p to 111.0p per share.
A further 83,593 C Shares were issued under the Dividend Investment Scheme at a
price of 101.2p per share and 5,500 shares were issued via a placing at 100.0p
per share.
All of these share issues were under the new VCT provisions that commenced on 6
April 2006, namely: 30% upfront income tax relief which can be retained by
qualifying investors if the shares are held for the minimum five year holding
period.
The new funds raised by both the Ordinary and C Share offers will be invested to
take advantage of the strong deal flow being generated by Foresight Group, the
Company's Manager.
It continues to be the Company'spolicy to consider repurchasing shares 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 463,635
Ordinary Shares for cancellation at a cost of £328,257, and 10,875 C Shares for
cancellation at a cost of £9,380.
Annual General Meeting
The Company's Annual General Meeting will take place on 23 February 2010. I look
forward to welcoming you to the meeting, which will be held in Sevenoaks.
Outlook
The volatility and poor sentiment of the financial markets as well as the
increasing difficulty in raising debt finance have proved a double edged sword
for the Company. On the one hand Foresight Group's deal flow of companies
seeking investment, particularly in the environmental infrastructure sector
where it is an established leader, is stronger than ever. In particular,
potential investee companies are finding financial institutions currently less
inclined to invest than in the recent past. This is evidenced by the number of
new and follow-on investments made during the year. On the other hand, generally
and within the portfolio there is evidence of trade sales within the portfolio
being delayed or terminated as a result of the lack of finance available to
potential acquirers. There were no realisations in the period although several
companies within the portfolio are in discussions which may or may not lead to
trade sales in the year ahead.
The Board and Foresight Group are conscious that we are in a period of economic
slowdown and tight credit conditions and all investee companies have been and
will continue to be encouraged to keep a tight control on costs and conserve
cash.
Despite the uncertain economic outlook your management believes that the
portfolio contains a number of well positioned, growing companies. They are also
optimistic that some of the more recent investments in the environmental
infrastructure field may prove to be less affected by general economic
conditions.
Peter Dicks
Chairman
26 January 2010
For further information please contact:
Gary Fraser, Foresight Fund Managers Limited Tel: 01732 471800
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 regulatory environment
The Board believes that 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.
* 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 Acts, 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 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.
* Market risk - investment in AIM traded, PLUS 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 may be difficult to realise. The
fact that a share is traded on AIM does not guarantee its liquidity.
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 'Turnbull' guidance.
Statement of Directors' Responsibilities
The Directors are responsible forpreparing the Directors' Report and the
financial statements in accordance with applicable law and regulations.
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; and
- state whether applicable accounting standards have been followed, subject to
any material departures disclosed and explained in the financial statements.
The Directors are responsible for keeping proper 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 are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention and detection
of 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. Legislation in the
UK governing the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
The Financial Statements are published on www.foresightgroup.eu a website
maintained by Foresight Group. The maintenance and integrity of the website is,
so far as it relates to the Company, the responsibility of Foresight Group. The
work carried out by the auditors does not involve consideration of the
maintenance and integrity of this website and, accordingly, the auditors accept
no responsibility for any changes that have occurred to the accounts since they
were initially presented on the website. Visitors to the website need to be
aware that legislation in the United Kingdom governing the preparation and
dissemination of the accounts may differ from legislation in other
jurisdictions.
Responsibility Statement of the Directors in respect of the Annual Financial
Report
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 issuer together with a
description of the principal risks and uncertainties that they face.
Unaudited Non-Statutory Analysis of the Ordinary Shares and C Shares Funds
Profit and Loss Accounts
Ordinary Shares Fund C Shares Fund
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Realised gains on - 110 110 - - -
investments
Investment holding (1,589) (1,589) - 223 223
(losses)/gains
Income 435 - 435 923 - 923
Investment management fees (89) (266) (355) (128) (491) (619)
Other expenses (155) - (155) (241) - (241)
------------------------- -----------------------
Return/(loss) on ordinary 191 (1,745) (1,554) 554 (268) 286
activities before taxation
Taxation (54) 72 18 (155) 137 (18)
------------------------- -----------------------
Return/(loss) on ordinary 137 (1,673) (1,536) 399 (131) 268
activities after taxation
------------------------- -----------------------
Transfer to/(from) reserves 137 (1,673) (1,536) 399 (131) 268
------------------------- -----------------------
Return per share 0.6p (7.8)p (7.2)p 1.7p (0.6)p 1.1p
------------------------- -----------------------
Reconciliation of Movements in Shareholders' Funds
Capital
Capital reserve -
Called-up Share reserve investment Capital
share premium - holding Distributable redemption
capital account realised losses reserve reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Ordinary
Shares
As at 1
October 205 2,106 2,895 (4,154) 16,587 11 17,650
2008
Share
issues in 17 1,439 - - - - 1,456
the period
Expenses in
relation to - (196) - - - - (196)
share
issues
Repurchase (5) - - - (333) 5 (333)
of shares
Net
realised
gain on - - 110 - - - 110
disposal of
investments
Investment
holding - - - (1,589) - - (1,589)
losses
Dividends - - - - (421) - (421)
Management
fees - - (266) - - - (266)
charged to
capital
Tax
credited to - - 72 - - - 72
capital
Revenue
return for - - - - 137 - 137
the period
------------------------------------------------------------------------
As at 30
September 217 3,349 2,811 (5,743) 15,970 16 16,620
2009
------------------------------------------------------------------------
Capital
Capital reserve -
Called-up Share reserve investment Capital
share premium - holding Distributable redemption
capital account realised gains reserve reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
C Shares
As at 1 223 20,814 (282) 1,926 602 - 23,283
October 2008
Share issues
in the 20 2,221 - - - - 2,241
period
Expenses in
relation to - (192) - - - - (192)
share issues
Repurchase - - - - (9) - (9)
of shares
Cancellation
of share - (22,859) - - 22,859 - -
premium
Investment
holding - - - 223 - - 223
gains
Dividends - - - - (713) - (713)
Management
fees charged - - (491) - - - (491)
to capital
Tax credited - - 137 - - 137
to capital
Revenue
return for - - - - 399 - 399
the period
------------------------------------------------------------------------
As at 30
September 243 (16) (636) 2,149 23,138 - 24,878
2009
------------------------------------------------------------------------
Balance Sheets
Ordinary Shares
Fund C Shares Fund
£'000 £'000 £'000 £'000
Non-current assets
Assets held at fair value through 12,143 14,391
profit and loss - investments
-------------- ------------
Current assets
Debtors 950 800
Money marketsecurities 3,834 9,755
and other deposits
Cash 140 145
------- -------
4,924 10,700
Creditors
Amounts falling due (447) (213)
within one year
-------------- ------------
Net current assets 4,477 10,487
-------------- ------------
Net assets 16,620 24,878
-------------- ------------
Capital and reserves
Called-up share capital 217 243
Share premium account 3,349 (16)
Capital reserve - 2,811 (636)
realised
Capital reserve-
investment holding (5,743) 2,149
(losses)/gains
Distributable reserve 15,970 23,138
Capital redemption 16 -
reserve
-------------- ------------
Equity shareholders' 16,620 24,878
funds
-------------- ------------
Number of shares in issue 21,682,500 24,279,288
Net asset value per share 76.7p 102.5p
-------------- ------------
Audited Profit and Loss Account
for the year ended 30 September 2009
Year to Year to
30 September 2009 30 September 2008
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Realised gains on - 110 110 - 3,767 3,767
investments
Investment holding losses - (1,366) (1,366) - (5,138) (5,138)
Income 1,358 - 1,358 1,543 - 1,543
Investment management fees (217) (757) (974) (145) (435) (580)
Other expenses (396) - (396) (341) - (341)
------------------------- -------------------------
Return/(loss) on ordinary 745 (2,013) (1,268) 1,057 (1,806) (749)
activities before taxation
Taxation (209) 209 - (298) 264 (34)
------------------------- -------------------------
Return/(loss) on ordinary 536 (1,804) (1,268) 759 (1,542) (783)
activities after taxation
------------------------- -------------------------
Transfer to/(from) reserves 536 (1,804) (1,268) 759 (1,542) (783)
------------------------- -------------------------
Return per share
Ordinary Shares 0.6p (7.8)p (7.2)p 1.3p (16.4)p (15.1)p
------------------------- -------------------------
C Shares 1.7p (0.6)p 1.1p 2.6p 9.8p 12.4p
------------------------- -------------------------
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 Profit and Loss Account 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 recognized gains and losses has been
presented.
Audited Reconciliation of Movement in Shareholders' Funds
for the year ended 30 September 2009
Capital
Capital reserve -
Called-up Share reserve investment Capital
share premium - holding Distributable redemption
capital account realised losses reserve reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 428 22,920 2,613 (2,228) 17,189 11 40,933
October 2008
Share issues
in the 37 3,660 - - - - 3,697
period
Expenses in
relation to - (388) - - - - (388)
share issues
Repurchase (5) - - - (342) 5 (342)
of shares
Cancellation
of share - (22,859) - 22,859 - -
premium
Net realised
gain on - - 110 - - - 110
disposal of
investments
Investment
holding - - - (1,366) - - (1,366)
losses
Dividends - - - - (1,134) - (1,134)
Management
fees charged - - (757) - - - (757)
to capital
Tax credited - - 209 - - - 209
to capital
Revenue
return for - - - - 536 - 536
the period
-------------------------------------------------------------------------
As at 30
September 460 3,333 2,175 (3,594) 39,108 16 41,498
2009
-------------------------------------------------------------------------
Audited Balance Sheet
at 30 September 2009
As at As at
30 September 2009 30 September 2008
£'000 £'000
Non-current assets
Assets held at fair value through profit 26,534 17,608
and loss - investments
------------------- -------------------
Current assets
Debtors 1,703 1,151
Money market securities and other 13,589 22,004
deposits
Cash 285 576
------------------- -------------------
15,577 23,731
Creditors
Amounts falling due within one year (613) (406)
------------------- -------------------
Net current assets 14,964 23,325
------------------- -------------------
Net assets 41,498 40,933
------------------- -------------------
Capital and reserves
Called-up share capital 460 428
Share premium account 3,333 22,920
Capital reserve - realised 2,175 2,613
Capital reserve - investment holding (3,594) (2,228)
losses
Distributable reserves 39,108 17,189
Capital redemption reserve 16 11
------------------- -------------------
Equity shareholders' funds 41,498 40,933
------------------- -------------------
Net asset value per share of 1p each:
Ordinary Shares 76.7 p 86.2 p
------------------- -------------------
C Shares 102.5 p 104.6 p
------------------- -------------------
Audited Cash Flow Statement
for the year ended 30 September 2009
Year to Year to
30 September 2009 30 September 2008
£'000 £'000
Cash flow from operating activities
Investment income received 260 345
Deposit and similar interest received 456 886
Investment management fees paid (678) (875)
Secretarial fees paid (171) (117)
Other cash payments (169) (194)
------------------- -------------------
Net cash (outflow)/inflow from operating (302) 45
activities and returns on investment
Taxation - -
------------------- -------------------
Returns on investment and servicing of
finance
Purchase of unquoted investments and (10,437) (4,186)
investments quoted on AIM
Net proceeds on sale of unquoted 205 5,561
investments
Net proceeds from deferred consideration 110 -
------------------- -------------------
Net capital (outflow)/inflow from (10,122) 1,375
financial investment
Equity dividends paid (1,134) (1,027)
------------------- -------------------
Management of liquid resources
Movement in money market 8,415 (9,003)
------------------- -------------------
8,415 (9,003)
Financing
Proceeds of fund raising 3,356 9,417
Expenses of fund raising (322) (387)
Dividends reinvested 160 198
Repurchase of own shares (342) (659)
------------------- -------------------
2,852 8,569
------------------- -------------------
Decrease in cash (291) (41)
------------------- -------------------
Reconciliation of net cash flow to
movement in net funds
Decrease in cash for the period (291) (41)
Net cash at start of period 576 617
------------------- -------------------
Net cash at end of period 285 576
------------------- -------------------
Reconciliation of net income to net cash
flow from operating activites
Total loss before taxation (1,268) (749)
Investment holding losses 1,366 5,138
Realised gains on investments (110) (3,767)
Increase in debtors (503) (608)
Increase in creditors 213 31
------------------- -------------------
Net cash (outflow)/inflow from operating (302) 45
activities
------------------- -------------------
Analysis of changes in net
debt At 1 October 2008 Cashflow At 31 September 2009
£'000 £'000 £'000
Cash and cash equivalents 576 (291) 285
-------------------------------------------------
Notes
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 30 September 2009. 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 30 September 2009, 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 30 September 2009 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,
South Park, Sevenoaks, Kent TN13 1DU and can be accessed on the following
website:www.foresightgroup.eu <http://www.foresightgroup.eu/>
4. Net asset value per ordinary share
Net asset value per Ordinary Share is based on net assets at the year end of
£16,620,000 (2008: £17,650,000), and on 21,682,500 (2008: 20,479,046) 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
£24,878,000 (2008: £23,283,000), and on 24,279,288 (2008: 22,252,615) C Shares,
being the number of C Shares in issue at that date.
5. Return per share
Year to Year to
30 September 2009 30 September 2008
Ordinary Share C Share Ordinary Share C Share
£'000 £'000 £'000 £'000
Total return after
taxation (1,536) 268 (3,071) 2,288
Basic return per share
(note a) (7.2)p 1.1p (15.1)p 12.4p
-----------------------------------------------------
Revenue return from
ordinary activities after
taxation 137 399 275 484
Revenue return per share
(note b) 0.6p 1.7p 1.3p 2.6p
-----------------------------------------------------
Capital return from
ordinary shares after
taxation (1,673) (131) (3,346) 1,804
Capital return per share
(note c) (7.8)p (0.6)p (16.4)p 9.8p
-----------------------------------------------------
Weighted average number of
shares in issue in the
period 21,214,203 23,350,051 20,349,804 18,383,750
The totalloss of the Ordinary Shares (£1,536,000) and total return of the C
Shares (£268,000) combine to form the loss of (£1,268,000) in the profit and
loss account.
Notes:
a) Total return per share is total return after taxation divided by the weighted
average number of shares in issue during the period.
b) Revenue return per share is net revenue after taxation divided by the
weighted average number of shares in issue during the period.
c) Capital return per share is total 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 2.00pm on 23 February 2010 at
ECA Court, 24-26 South Park, Sevenoaks, Kent, TN13 1DU.
7. Income
2009 2008
£'000 £'000
Other income:
Deposit interest 19 98
Venture capital investments 1,339 1,445
-----------------
1,358 1,543
-----------------
8. Investments
2009 2008
£'000 £'000
Listed investments at market valuation:
Investments traded on the Alternative Investment Market (AIM) 876 1,016
Unlisted investments at directors' valuation:
Unquoted investments 25,658 16,592
---------------
26,534 17,608
---------------
Quoted on AIM Unquoted Total
Company £'000 £'000 £'000
Book cost as at 1 October 2008 2,598 17,298 19,896
Investment holding losses (1,582) (706) (2,288)
--------------------------------
Valuation at 1 October 2008 1,016 16,592 17,608
Movements in the period:
Quoted to unquoted transfer - cost (1,181) 1,181 -
Quoted to unquoted transfer - investment 852 (852) -
holding loss
Purchases at cost - 10,437 10,437
Disposal proceeds - (205) (205)
Investment holding gains/(losses) 189 (1,495) (1,306)
--------------------------------
Valuation at 30 September 2009 876 25,658 26,534
--------------------------------
Book cost at 30 September 2009 1,417 28,711 30,128
Investment holding losses (541) (3,053) (3,594)
--------------------------------
Valuation at 30 September 2009 876 25,658 26,534
--------------------------------
Quoted on AIM Unquoted Total
Ordinary Shares £'000 £'000 £'000
Book cost as at 1 October 2008 2,598 12,563 15,161
Investment holding losses (1,582) (2,632) (4,214)
--------------------------------
Valuation at 1 October 2008 1,016 9,931 10,947
Movements in the period:
Quoted to unquoted transfer - cost (1,181) 1,181 -
Quoted to unquoted transfer - investment 852 (852) -
holding loss
Purchases at cost - 2,725 2,725
Investment holding gains/(losses) 189 (1,718) (1,529)
--------------------------------
Valuation at 30 September 2009 876 11,267 12,143
--------------------------------
Book cost at 30 September 2009 1,417 16,469 17,886
Investment holding losses (541) (5,202) (5,743)
--------------------------------
Valuation at 30 September 2009 876 11,267 12,143
--------------------------------
Quoted on AIM Unquoted Total
C Shares £'000 £'000 £'000
Book cost as at 1 October 2008 - 4,735 4,735
Investment holding gains - 1,926 1,926
--------------------------------
Valuation at 1 October 2008 - 6,661 6,661
Movements in the period:
Purchases at cost - 7,712 7,712
Disposal proceeds - (205) (205)
Realised gains - - -
Investment holding gains - 223 223
--------------------------------
Valuation at 30 September 2009 - 14,391 14,391
--------------------------------
Book cost at 30 September 2009 - 12,242 12,242
Investment holding gains - 2,149 2,149
--------------------------------
Valuation at 30 September 2009 - 14,391 14,391
--------------------------------
9. Related party transactions
Foresight Group and Foresight Fund Managers Ltd are considered to be Related
Parties of the Company. £973,165 was due to Foresight Group during the year for
management fees and carried interest and £210,000 was outstanding at the period
end. Foresight Fund Managers Ltd was due £112,676 in its role as Company
Secretary during the year and £32,394 was outstanding at the year end. No
amounts have been written off in the year in respect of debts due to or from the
related parties. All amounts are, where applicable, stated net of Value Added
Tax.
END
[HUG#1377438]
FORESIGHT 2 VCT : Annual Financial Report
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