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Foresight Solar & Technology VCT Plc - Half-year report

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Foresight Solar & Technology VCT plc
·38 min read
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FORESIGHT SOLAR & TECHNOLOGY VCT PLC

Financial Highlights

  • Ordinary Shares Net Assets as at 30 September 2020: £24.9m

  • Ordinary Shares Net Asset Value per share as at 30 September 2020: 70.2p

  • Foresight Williams Technology Shares Net Assets as at 30 September 2020: £3.7m

Ordinary Shares Fund

  • Total net assets £24.9 million.

  • After payment of 2.0p in dividends, Net Asset Value per Ordinary Share at 30 September 2020 was 70.2p (31 March 2020: 72.7p).

  • At 30 September 2020, the fund held positions in 12 UK assets, with a total installed capacity of 74.7MW. During the period the portfolio generated 53 gigawatt hours of clean energy, sufficient to power approximately 18,000 UK homes for a year.

  • At 30 September 2020, the fund also held a position in one Italian solar asset with a total installed capacity of 0.4MW.

  • Post period end, in December 2020, the fund’s portfolio companies completed the sales of Littlewood and Telecomponenti.

Foresight Williams Technology Shares Fund

  • At 30 September 2020, under the FWT Shares Offer, the Company had raised £3.8m, and was yet to make an investment.

  • Post period end, the FWT Shares made investments totalling £1.1m in three companies: Additive Manufacturing Technologies Limited, Audioscenic Limited and Refeyn Limited.

  • Since the end of the reporting period, a further £1.7m has been raised, bringing the total raised to £5.5m.

Dividend History

Ordinary Shares

Dividend per share

25 September 2020

2.0p

22 November 2019

3.0p

26 April 2019

3.0p

23 November 2018

3.0p

27 April 2018

3.0p

24 November 2017

3.0p

7 April 2017

3.0p

18 November 2016

3.0p

8 April 2016

3.0p

13 November 2015

3.0p

10 April 2015

3.0p

14 November 2014

3.0p

4 April 2014

3.0p

25 October 2013

3.0p

12 April 2013

2.5p

31 October 2012

2.5p

Cumulative

46.0p



Chairman's Statement

On behalf of the Board, I am pleased to present the Unaudited Half-Yearly Financial Report for Foresight Solar & Technology VCT Plc for the six months ended 30 September 2020 and to provide you with an update on the developments affecting the Company.

ORDINARY SHARES

Performance and portfolio activity

The Net Asset Value per Ordinary Share decreased by 0.5p to 70.2p at 30 September 2020, compared to 72.7p per share at 31 March 2020, after deducting the 2.0p per Ordinary Share dividend that was paid on 25 September 2020. The decrease in NAV is driven by the usual running expenses of the fund, with steady valuations in the portfolio for the period. As reported in the Company’s Annual Report and Accounts released in July, the effects of COVID-19 on the existing investment portfolio remain reasonably limited given the nature of the underlying investments.

There were no new acquisitions in the UK portfolio during the period. As reported in the Annual Report, final terms were agreed for the sale of the small Italian rooftop asset, Telecomponenti, which completed post period end in December 2020, delivering a return of 1.2x to the Company.

The Board are also pleased to announce the sale of Littlewood completed post period end in December 2020. A sale of Greenersite, the smallest UK asset, is also being pursued.

Following the award of the Spanish claim (equivalent to £2m-£2.5m, or 5.6-7.0p per Ordinary Share), consistent with July’s annual report, there continues to remain significant challenges with respect to collectability. The Company continues to follow up this claim in the courts and as such, the Board has not assigned any current value to the claim in the net asset value reported.

The Board was also pleased that the Investment Manager was able to complete the refinancing of the investment portfolio in June 2020, reducing finance costs across the portfolio. With a portfolio solely situated in the UK, the Board consider the Ordinary Shares fund to be optimally invested and well placed to maximise future returns for Shareholders.

Dividends

During the period, an interim dividend of 2.0p per Ordinary Share was paid on 25 September 2020. This brought the total dividends paid since launch to 46.0p per Ordinary Share, and a total return of 116.2p per Ordinary Share since launch (compared with 116.7p per Ordinary Share as at 31 March 2020 and 133.6p per Ordinary Share as at 30 September 2019).

As reported in July’s annual report, following the completion of the Company’s tender offer in March 2020 and a subsequent review of the dividend policy, the Board will endeavour to pay out dividends derived from the income generated by the underlying portfolio, rather than a fixed pence per share.

Management fees

The annual management fee of the Ordinary Shares fund is calculated as 1.5% of Net Assets and equated to £189,000 during the period.

FWT SHARES

The Foresight Williams Technology VCT share class (the ‘FWT Shares’) was launched in December 2019, and represents an exciting investment opportunity made possible by the collaboration between Foresight Group and Williams Advanced Engineering (‘WAE’), a technology and engineering services business, originally spun out of the Williams Formula 1 business.

The share class provides investors with the opportunity to invest in a portfolio of early-stage companies with high growth-potential, developing innovative and occasionally transformational technologies across a range of different sectors. It builds on the successful relationship that Foresight and WAE have enjoyed from their launch of the Foresight Williams Technology EIS Fund (the ‘EIS fund’) in November 2016, which has raised approximately £50 million to date and has made over twenty investments across a range of different sectors so far.

Fundraising and share issues

The Offer for subscription is up to £20 million (with an overallotment facility for up to an additional £10 million) through the issue of FWT Shares. During the period, 2.7 million FWT Shares were allotted, raising a further £2.7m, bringing the total funds raised to over £3.8m.

Post period end in November and December 2020, a further 1.7 million FWT Shares were allotted, increasing the total funds raised to £5.5m.

The Offer is now closed for investment, however the Board and I are pleased to announce that a second offer for subscription will be published shortly, allowing for investors to continue to participate in the future fundraising of the FWT share class.

Portfolio and deal activity

As at 30 September 2020, the FWT shares had yet to begin investing, however the Board and I are pleased to announce that post period end, in October and November 2020, the FWT Shares made investments totalling £1.1m in three exciting companies: Additive Manufacturing Technologies Limited, Audioscenic Limited and Refeyn Limited. Further details of these deals are included in the Investment Manager’s review.

Management fees

The annual management fee of the FWT Shares fund is calculated as 2.0% of Net Assets and equated to £25,000 during the period.

Auditor

The Board regularly reviews the Company’s ongoing costs and launched a tender for its audit contract following the signing of the 2020 Annual Report and Accounts. A competitive tender process is in progress and due to conclude soon, and I look forward to announcing its outcome in the near future.

Outlook

As noted in the Annual Report, following the successful refinancing of the underlying portfolio, the Company will continue to seek to optimise the performance of the existing Ordinary Shares portfolio including fixing power price agreements (PPAs) when they are deemed attractive, and pay dividends through a combination of income earned and realised gains. The Board and the Investment Manager continue to monitor the ongoing impact of the COVID-19 pandemic which has, so far, been limited.

Over the medium to long term, once all Ordinary Shareholders have reached their minimum 5-year qualifying holding period, the Board and the Investment Manager will, if appropriate, begin a managed process of returning the value of the Ordinary Shares fund to its Shareholders.

The Company will also continue to raise new funds in the FWT Shares fund and seek appropriate qualifying investments for this share class.

Ernie Richardson
Chairman
22 December 2020


Investment Manager’s Review

ORDINARY SHARES

Portfolio summary and performance

During the period the Investment Manager remained focused on delivering a positive operational performance from the portfolio of assets. The disposal of three smaller assets was progressed, while the debt refinancing completed during the period improving the return potential of the Company.

The UK assets in the portfolio achieved a strong performance during the period 1 April 2020 to 30 September 2020 with total electricity production 4.3% above expectations. The assets generated a total of 53GWh, enough clean electricity to power over 18,000 UK homes. This positive performance reflects higher than average irradiation levels and good availability of the solar plants. Further details on performance of the individual assets are included on pages 12 to 18 of the Half Yearly report. The operation of the assets has not been affected by national or regional COVID-19 lockdowns.

As anticipated, in June 2020 a new cross-portfolio debt facility was agreed with the existing lender, refinancing all project-level debt for the UK solar assets. The term of the new facility runs until 31 December 2023. By working with the existing lender which is familiar with the whole portfolio, the Investment Manager was able to secure preferable terms on the loans.

There were no acquisitions during the period.

Disposals

Following a decision to refocus the portfolio and to provide liquidity for the fund, the Investment Manager has been working to complete the sale of three small assets.

In May, final terms were agreed for the sale of a small Italian rooftop asset, Telecomponenti – the fund’s sole remaining foreign asset. The completion of the sale process was delayed by COVID-19 but completed post period end in December 2020.

Also post period end, in December 2020, the Littlewood asset was sold. A sale of Greenersite, the smallest UK asset, is also being pursued.

Market update

COVID-19

As the Government imposed lockdown restrictions on the UK in order to limit the spread of COVID-19, the energy industry saw a sharp contraction in demand with industrial and commercial businesses shutting down overnight. This drop in demand resulted in wholesale energy prices reaching historic lows. Following an overall fall in electricity demand of 20%, demand slowly recovered as lockdown restrictions eased, the holiday period came to an end, and as businesses and schools began to reopen.

The Company’s solar plants typically operate with minimal human involvement and have been able to carry on operating unaffected by either national or regional lockdowns. As electricity generators, the solar plants provide an essential service and are therefore classified as a ‘Critical Sector’, with all those responsible for maintaining them deemed ‘Key Workers’. The solar projects continue to generate electricity and receive payments for the green energy that they produce, which is essential in keeping the country running.

Nonetheless, the Investment Manager conducted a full review of all key service providers and looked at the risks within the supply chain for spare parts. We are confident in the resilience of the business continuity plans in place for the solar sites’ operations.

Green Investment

In the wake of the pandemic, Governments and supranational organisations such as the EU are constructing substantial economic recovery packages, and clean energy is likely to play a key role in such plans. Over the last five years renewable power has emerged as the most cost‑effective energy source in many countries around the globe; two thirds of the world’s population now live in areas where the cheapest form of energy is electricity generated from wind and solar. This is important because it implies there is no longer a trade-off between stimulating economic recovery and financing green growth.

The UK has also announced a £3 billion Green Recovery Package which should accelerate progress towards the 2050 net carbon neutral goal. The renewables sector is likely to be a beneficiary in terms of job creation and benign future energy policy.

Brexit

Current EU rules on trade and business continue to apply as we draw towards the end of the transition period in January 2021. For example, the EU Emissions Trading System (EU ETS), which sets a cap on the total amount of greenhouse gases that can be emitted by installations, will continue until April 2021. In a bid to boost the UK’s environmental credentials post-Brexit, Chancellor Rishi Sunak has outlined the country’s updated green finance strategy ahead of the 26th UN Climate Change Conference of the Parties (COP 26) scheduled for November 2021 in Glasgow. Sunak announced the intention to set a green “taxonomy” which replicates the European Union’s approach, with a common methodology for determining which activities can be defined as environmentally sustainable. The UK taxonomy will take the scientific metrics in the EU taxonomy as its basis and a UK Green Technical Advisory Group will be established.

Foresight’s view has not changed from that set out previously; the energy market in the UK is closely aligned with European markets and this is not expected to change over the long term. The exit from the EU has yet to cause significant volatility in the energy markets in the short term. Longer term impacts such as weaker economic demand and the availability of unskilled labour are not deemed material to the future operations of the portfolio. Foresight remains of the view that Brexit is unlikely to have a significant impact on the financial and operational performance of the assets.

Revenues

During the period, approximately two thirds of revenue from the UK portfolio investments came from subsidies (predominantly under the ROC scheme) and other green benefits. These revenues are directly and explicitly linked to inflation for 20 years from the accreditation date under the ROC regime and subject to Retail Price Index (“RPI”) inflationary increases applied by Ofgem in April of each year. The remaining revenues derive from electricity sales by our UK portfolio companies, which are subject to wholesale electricity price movements.

The average power price achieved during the period 1 April 2020 to 30 September 2020 was £38.66 per MWh, representing a decrease on the price achieved in the 12 months to 31 March 2020 (£44.45 per MWh). Although power prices declined early in the period as the COVID-19 lockdown dramatically suppressed demand, as restrictions were lifted, wholesale power prices recovered. However, there remains volatility and uncertainty about market factors affecting prices in the short to medium term. The Investment Manager continues to monitor these in order to seek the best opportunities to enter into short term price fixing arrangements when they arise.

During the period 1 April 2020 to 30 September 2020 there was a 3.76% decrease in long term power price forecasts from 31 March 2020. This was driven by a major reduction in short term forecast electricity demand as a result of COVID-19 induced economic restrictions. The Investment Manager uses these forward-looking power price assumptions to assess the likely future income of the portfolio investments for valuation purposes.

The Company’s assumptions are formed from a blended average of the forecasts provided by third party consultants and are updated on a quarterly basis. The forecasts anticipate a small increase in prices over 2020-2030 and then remain broadly stable over the longer term.

This decrease from the March 2020 figure is largely driven by global factors including the pandemic, fluctuating exchange rates, weather events and the impact of gas prices on power prices. The various lockdown measures announced across Europe over Winter 2020 will continue to incite volatility in power prices, with near-term contracts falling following strong gas supply to Europe.

Power Purchase Agreements (“PPAs”) are entered into between each portfolio company and regulated retail energy suppliers in the UK electricity supply market. Under the PPAs, each portfolio company will sell the entirety of the generated electricity and ROCs. Electricity can be sold at a fixed price for an agreed duration, or at a variable rate, as agreed from time to time.

The PPA strategy adopted by our portfolio companies seeks to optimise their revenues from the power generated, while keeping the flexibility to manage their solar assets appropriately. The Boards of our portfolio companies, with assistance from Foresight, constantly assess conditions in the electricity market and set their pricing strategy on the basis of likely future movements.

The Company’s strategy is to maintain c.30% of the portfolio under fixed pricing agreements, with the remainder selling electricity at a variable market rate. The assets with fixed arrangements currently account for 34% of capacity. The average UK power price achieved across the portfolio for the period was £38.66MWh, compared to a wholesale market average of £30.68MWh demonstrating the effectiveness of the strategy in place.

Sustainable investing

Sustainability lies at the heart of the Manager’s approach, and the Manager believes that investing responsibly, seeking to make a positive social and environmental impact, is critical to its long-term success. These factors have been integrated into the investment process, and are actively supported by all involved, regardless of seniority.

Foresight continues to refine its sustainability tracking to further improve its investment processes, enhance the sustainability performance of existing assets and demonstrate more comprehensively the environmental benefits and social contribution of the Company’s activities, implementing Foresight Group’s Sustainable Investing in Infrastructure Strategy. This strategy focuses on ensuring all assets are evaluated prior to acquisition and throughout their ownership, in accordance with Foresight Group’s Sustainability Evaluation Criteria.

There are five central themes to the Criteria, which cover the key areas of sustainability.

The five criteria are:

  1. Sustainable Development Contribution: The development of affordable and clean energy as well as improved resource and energy efficiency.

  2. Environmental Footprint: Assessing potential environmental impact such as emissions to air, land and water, effects on biodiversity and noise and light pollution

  3. Social Engagement: Engagement and consultation with local stakeholders. Ensuring a positive local economic and social impact, community engagement and the health and wellbeing of stakeholders.

  4. Governance: Compliance with relevant laws and regulations and ensuring best practice is followed.

  5. Third Party Interactions: Third party due diligence is conducted on key counterparties to ensure adherence to the aforementioned criteria where relevant.

Land management

Compliance audits have been carried out on all UK sites held by portfolio companies, confirming that they are in line with government permits and conditions. Foresight Group remains a working partner of the Solar Trade Association’s Large Scale Asset Management Working Group. Foresight is a signatory to the Solar Farm Land Management Charter and seeks to ensure that the solar farms operated by all of our portfolio companies are managed in a manner that maximises the agricultural, landscaping, biodiversity and wildlife potential, which can also contribute to lowering maintenance costs and enhancing security. As such, Foresight Group regularly inspects sites and advises portfolio companies to develop site specific land management and biodiversity enhancement plans to secure long term gains for wildlife and ensure that the land and environment are maintained to a high standard.

This includes:

  • Management of grassland areas within the security fencing to promote wildflower meadows and sustainable sheep grazing;

  • Planting and management of hedgerows and associated hedge banks;

  • Management of field boundaries between security fencing and hedgerows;

  • Sustainable land drainage and pond restoration;

  • Installation of insect hotels and reptile hibernacula;

  • Installation of boxes for bats, owls and kestrels;

  • Installation of beehives by local beekeepers.

Most solar parks are designed to enable sheep grazing and the remaining plants are investigated for alterations to ensure that the farmland on which the solar assets are located can remain useful in agricultural production, which is a frequent desire of local communities.

Examples of sustainable land management activities across the portfolio include:

  • Free-range chickens grazing at the New Kaine site

  • The grounds of Turweston and Littlewood solar farms continue to be managed as wildflower meadow

  • Beehives are on site at Turweston

  • Bird and bat boxes have been installed at Basin Bridge

  • At Turweston additional gates with sufficient gaps at the lower edge were installed to allow for safe wildlife passage across the site

  • Trees and hedgerows have been planted, and hedge infill work undertaken, at Dove View, Hurcott and Littlewood.

O&M Provider Sustainability Agreement

As detailed in previous reports the Investment Manager has been working closely with its major suppliers and counterparties to encourage the adoption of ESG and sustainability policies where such policies either did not exist or were not as robust as that of the Investment Manager’s own.

Foresight has established an O&M Provider Sustainability Agreement, which has been signed by the main providers of Operations and Maintenance services to the assets. We are pleased that these key O&M providers have agreed to align their approach with that of our own in placing sustainability at the heart of their operations.

This ground-breaking agreement stipulates where Foresight believes positive environmental and social outcomes can be achieved within supplier activity. Foresight also believes that adherence can offer long-term cost benefit and business opportunities through more efficient use of resources and intelligent forward planning.

In the long-term, Foresight will expect its O&M providers to track their own performance in these areas and report this through annual questionnaires. Foresight also expects its O&M providers to communicate these requirements and standards within their supply chain. In order to review the performance of our O&M providers, the Investment Manager will meet with them once a year and discuss how these principles worked in practice, as well as working together to update the principles, if necessary. Foresight plans to integrate these principles into future O&M contracts.

The principles that underpin the obligations of the agreements incorporate elements of both the United Nations Sustainable Development Goals and the Principles for Responsible Investment (“PRI”) international frameworks.

Social and Community Engagement

Foresight Group actively seeks to engage with the local communities around the solar assets operated by our portfolio companies and regularly attends parish meetings to encourage community engagement and promote the benefits of their solar assets.

Due to COVID-19, there were no site visits during the period and the Investment Manager was unable to attend parish meetings. However, the Investment Manager has continued to make annual community payments for Marchington, which have been extended to reflect the site’s 40-year consent.

Health and safety

There were no reportable health and safety incidents during the period.

In May 2020 there was a fire close to the Stables farm asset. Although outside of the boundaries of the site, the event was recorded and investigated as a Near Miss in order to identify and eliminate any fire hazards from the premises.

Safety, Health, Environment and Quality (“SHEQ”) performance and risk management are a top priority at all levels for Foresight Group. To further improve the management of SHEQ risks, reinforce best practice and ensure non-compliance with regulations is avoided, Foresight Group continues to work with independent health and safety consultants who regularly visit the assets operated by our portfolio companies to ensure they not only meet, but exceed, industry and legal standards. The consultants have confirmed that all sites are in compliance with applicable regulations.

Recommendations have been investigated with follow-up actions agreed to help raise standards further. During the period, improvements to method statements have been made relating to the safe isolation of central inverters. The health and safety advisor provided additional recommendations to plan movement around the sites. The advisor noted that wet weather conditions make traversing the sites difficult in some places, especially when completing manual handling of heavy parts. Recommendations included a warning regarding driving off-road, which will be implemented for applicable sites by the Operation and Maintenance companies.

Outlook

Despite a fall in the external power prices negatively impacting the portfolio valuation, it has otherwise been another positive period for the Company with good performance from the assets. The Company will continue to focus on delivering strong operational performance across the portfolio. During the period, the Investment Manager successfully concluded the negotiation of new debt terms with the existing lender to refinance the majority of the UK solar assets, with pricing materially less than the previous arrangements.

Long-term renewable energy projects typically have inflation-linked income streams, often with a high degree of Government backing through subsidies, which will be unaffected by a slowdown in economic growth. We believe this offers a degree of protection for investors from the inevitable economic impact of the coronavirus pandemic.

More broadly, investor demand for renewable energy assets continues to rise with solar generation becoming an established mature investment sector. Coupled with reduced interest rates, valuations have proven to be resilient, notwithstanding the falls in power prices and power price projections. With prices and forecasts both more stable, we are cautiously optimistic that asset values will trade up over the next couple of years before the next exit can be considered.

FORESIGHT WILLIAMS TECHNOLOGY SHARES

Investment Manager’s Review

Summary

Between the launch of the Foresight Williams Technology Shares (“the FWT fund”) on 20 December 2019 and the end of the reporting period, £3.8m was raised. The Offer provides investors with the opportunity to invest in a portfolio of early-stage companies with high growth-potential, developing innovative and occasionally transformational technologies across a range of different sectors.

As at 30 September 2020, the FWT fund had yet to begin investing, however, subsequently the fund has acquired investments totalling £1.1m in three exciting companies. Audioscenic and Refeyn are detailed below as well as AMT in a case study on page 11 of the Half Yearly report.

Post period acquisitions

AUDIOSCENIC

The FWT fund’s investment into Audioscenic, a developer of immersive 3D audio software, was completed in October. The company is a spin-out from the Institute of Sound and Vibrational Research (“ISVR”) at the University of Southampton. By integrating computer vision into a soundbar, its speaker technology can monitor the location of a listener’s head, beaming separate sound waves to their left and right ears. An immersive 3D audio experience can be created from a single, compact soundbar. An experience that is normally available to consumers only through headphones. The investment will support the commercialisation of the company’s products and team expansion.

REFEYN

In November, the FWT fund invested into Refeyn, a life sciences instrumentation company that span-out from the University of Oxford. The company is commercialising a disruptive technology (“Mass Photometry”) that uses light to measure the mass of molecules (such as proteins). Identifying and characterising protein molecules through mass measurement is an integral part of life sciences research, particularly in the development of new medicines. Refeyn’s instruments are easier to use, significantly faster and lower cost than existing techniques.

Please refer to page 11 of the Half Yearly report for the case study on AMT.

Fundraising

The offer, made possible through an innovative collaboration between Foresight Group and Williams Advanced Engineering Ltd, the engineering consulting company that spun-out of Williams F1, continues to build positive momentum in the market. Since the end of the reporting period a further £1.7m has been raised, bringing the total raised to £5.5m.

Pipeline

The onset of the coronavirus pandemic and the strict lockdown measures introduced in March triggered a slowdown in investment activity in the market targeted by the FWT fund. Encouragingly, the Investment Manager started to see a recovery in the demand for growth capital towards the end of the summer, supporting the development of a healthy pipeline of opportunities as the fund began to invest. The Investment Manager expects this to increase as the economy recovers from the pandemic. At the time of writing, three further deals had passed the Investment Manager’s Initial Investment Committee stage and were progressing to detailed due diligence.

Foresight Group LLP
Investment Manager
22 December 2020

Unaudited Half-Yearly Results and Responsibilities Statements

Principal Risks and Uncertainties

The principal risks faced by the Company are 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 nine months ended 31 March 2020. A detailed explanation can be found on page 31 of the Annual Report and Accounts which is available on Foresight Group’s website www.foresightgroup.eu or by writing to Foresight Group at The Shard, 32 London Bridge Street, London, SE1 9SG.

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 Half-Yearly Financial Report and financial statements.

The Directors confirm to the best of their knowledge that:

  1. the summarised set of financial statements has been prepared in accordance with FRS 104;

  2. the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year);

  3. the summarised set of financial statements gives 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

  4. 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 Strategic Report of the Annual Report. The financial position of the Company, its cash flows, liquidity position and borrowing facilities are described in the Chairman’s Statement, Strategic Report and Notes to the Accounts of the 31 March 2020 Annual Report. In addition, the Annual Report includes the Company’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments; and its exposures to credit risk and liquidity risk.

The Company has considerable financial resources together with investments and income generated therefrom, which benefit from Renewable Obligation Certificates guaranteed by the UK Government. As a consequence, the Directors believe that the Company is well placed to manage its business risks successfully.

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 has not been audited nor reviewed by the auditors.

On behalf of the Board

Ernie Richardson
Chairman
22 December 2020


Unaudited Non-Statutory Analysis of the Share Classes

Income Statement

for the six months ended 30 September 2020

Ordinary Shares Fund

FWT Shares Fund

Revenue

Capital

Total

Revenue

Capital

Total

£'000

£'000

£'000

£'000

£'000

£'000

Investment holding losses

(17,183)

(17,183)

Income

16,275

16,275

Foreign exchange gains

2

2

Investment management fees

(47)

(142)

(189)

(6)

(19)

(25)

Interest payable

1,109

1,109

Other expenses

(176)

(176)

(76)

(76)

Profit/(loss) before taxation

17,161

(17,323)

(162)

(82)

(19)

(101)

Taxation

Profit/(loss) after taxation

17,161

(17,323)

(162)

(82)

(19)

(101)

Profit/(loss) per share

48.4p

(48.9)p

(0.5)p

(3.2)p

(0.7)p

(3.9)p




Balance Sheet

at 30 September 2020

Ordinary Shares Fund

FWT Shares Fund

£'000

£'000

Fixed assets

Investments held at fair value through profit or loss

24,499

Current assets

Debtors

449

50

Cash and cash equivalents

131

3,819

580

3,869

Creditors

Amounts falling due within one year

(161)

Net current assets

410

3,708

Net assets

24,909

3,708

Capital and reserves

Called-up share capital

354

38

Share premium

1,377

Capital redemption reserve

200

Distributable reserve

36,265

2,313

Capital reserve

(12,366)

(20)

Revaluation reserve

456

Equity shareholders' funds

24,909

3,708

Number of shares in issue

35,460,961

3,818,311

Net asset value per share

70.2p

97.1p

At 30 September 2020 there was an inter-share debtor/creditor of £121,000 which has been eliminated on aggregation.


Unaudited Non-Statutory Analysis of the Share Classes

Reconciliations of Movements in Shareholders’ Funds

for the six months ended 30 September 2020

Ordinary Shares Fund

Called-up share capital

Share premium account

Capital redemption reserve

Distributable reserve

Capital reserve

Revaluation reserve

Total

£'000

£'000

£'000

£'000

£'000

£'000

£'000

As at 1 April 2020

354

6,967

200

12,853

(12,226)

17,639

25,787

Expenses in relation to prior year share issues
Cancellation of share premium


(7)
(6,960)



6,960



(7)

Investment holding losses

(17,183)

(17,183)

Foreign exchange gains

2

2

Dividends paid

(709)

(709)

Management fees charged to capital
Revenue profit for the period





17,161

(142)


(142)
17,161

As at 30 September 2020

354

200

36,265

(12,366)

456

24,909


FWT Shares Fund

Called-up share capital

Share premium account

Capital redemption reserve

Distributable reserve

Capital reserve

Revaluation reserve

Total

£'000

£'000

£'000

£'000

£'000

£'000

£'000

As at 1 April 2020

11

1,134

(8)

(1)

1,136

Share issues in the period

27

2,721

2,748

Expenses in relation to share issues
Cancellation of share premium


(75)
(2,403)



2,403



(75)

Management fees charged to capital
Revenue loss for the period





(82)

(19)


(19)
(82)

As at 30 September 2020

38

1,377

2,313

(20)

3,708



Unaudited Income Statement for the six months ended 30 September 2020

Six months ended

30 September 2020

(unaudited)

Six months ended

30 September 2019

(unaudited)

Year ended

31 March 2020

(audited)

Revenue

Capital

Total

Revenue

Capital

Total

Revenue

Capital

Total

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

Investment holding
(losses)/gains

(17,183)

(17,183)

36

36

(7,881)

(7,881)

Realised losses on
investments

(941)

(941)

Income

16,275

16,275

341

341

3,385

3,385

Foreign exchange gains

2

2

Investment management fees

(53)

(161)

(214)

(76)

(228)

(304)

(147)

(440)

(587)

Interest payable

1,109

1,109

(200)

(200)

(397)

(397)

Other expenses

(252)

(252)

(221)

(221)

(449)

(449)

Profit/(loss) before taxation

17,079

(17,342)

(263)

(156)

(192)

(348)

2,392

(9,262)

(6,870)

Taxation

Profit/(loss) after taxation

17,079

(17,342)

(263)

(156)

(192)

(348)

2,392

(9,262)

(6,870)

Profit/(loss) per share:

Ordinary Share

48.4p

(48.9)p

(0.5)p

(0.4)p

(0.4)p

(0.8)p

5.6p

(21.6)p

(16.0)p

FWT Share

(3.2)p

(0.7)p

(3.9)p

n/a

n/a

n/a

(0.7)p

(0.1)p

(0.8)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 2020

Registered Number: 07289280

As at

30 September 2020 (unaudited)

As at

30 September 2019 (unaudited)

As at

31 March 2020 (audited)

£’000

£’000

£’000

Fixed assets

Investments held at fair value through profit or loss

24,499

54,023

42,170

Current assets

Debtors

378

221

293

Cash

3,950

3,358

1,802

4,328

3,579

2,095

Creditors

Amounts falling due within one year

(210)

(17,837)

(17,342)

Net current assets/(liabilities)

4,118

(14,258)

(15,247)

Net assets

28,617

39,765

26,923

Capital and reserves

Called-up share capital

392

430

365

Share premium

1,377

7,026

8,101

Capital redemption reserve

200

124

200

Distributable reserve

38,578

17,703

12,845

Capital reserve

(12,386)

(11,074)

(12,227)

Revaluation reserve

456

25,556

17,639

Equity shareholders' funds

28,617

39,765

26,923

Net asset value per share

Ordinary Share

70.2p

92.6p

72.7p

FWT Share

97.1p

n/a

99.1p

Unaudited Reconciliation of Movements in Shareholders' Funds for the six months ended 30 September 2020

Called-up share capital

Share premium account

Capital redemption reserve



Distributable reserve*



Capital reserve*

Revaluation reserve

Total

£'000

£'000

£'000

£'000

£'000

£'000

£'000

As at 1 April 2020

365

8,101

200

12,845

(12,227)

17,639

26,923

Share issues in the period

27

2,721

2,748

Expenses in relation to share issues

(75)

(75)

Expenses in relation to prior year share issues

(7)

(7)

Cancellation of share premium

(9,363)

9,363

Investment holding losses

(17,183)

(17,183)

Foreign exchange gains

2

2

Dividends paid

(709)

(709)

Management fees charged to capital

(161)

(161)

Revenue profit for the period

17,079

17,079

As at 30 September 2020

392

1,377

200

38,578

(12,386)

456

28,617

*Total distributable reserves at 30 September 2020 were £26,192,000 (31 March 2020: £618,000).

Unaudited Cash Flow Statement for the six months ended 30 September 2020

Six months ended
30 September 2020 (unaudited) £’000

Six months ended
30 September 2019 (unaudited) £’000

Year
ended
31 March
2020
(audited)
£’000

Cash flow from operating activities

Deposit and similar interest received

4

11

Investment management fees paid

(216)

(311)

(600)

Secretarial fees paid

(87)

(64)

(128)

Other cash payments

(267)

(356)

(387)

Net cash outflow from operating activities

(570)

(727)

(1,104)

Cash flow from investing activities

Net proceeds on sale of investments

488

2,780

5,280

Investment income received

274

544

3,129

Net cash inflow from investing activities

762

3,324

8,409

Cash flow from financing activities

Proceeds of fund raising

2,714

1,162

Expenses of fund raising

(49)

(6)

(26)

Repurchase of own shares

(273)

(6,390)

Equity dividends paid

(709)

(1,294)

(2,583)

Net cash inflow/(outflow) from financing activities

1,956

(1,573)

(7,837)

Net inflow/(outflow) of cash in the period

2,148

1,024

(532)

Reconciliation of net cash flow to movement in net funds

Increase/(decrease) in cash for the period

2,148

1,024

(532)

Net cash at start of period

1,802

2,334

2,334

Net cash at end of period

3,950

3,358

1,802

At 1
April
2020
£’000



Cash Flow
£’000

At 30
September
2020
£’000

Cash and cash equivalents

1,802

2,148

3,950


Notes to the Unaudited Half-Yearly Results for the six months ended 30 September 2020

  1. The Unaudited Half-Yearly Financial Report has been prepared on the basis of the accounting policies set out in the statutory accounts of the Company for the nine months ended 31 March 2020. Unquoted investments have been valued in accordance with International Private Equity and Venture Capital Valuation Guidelines.

  2. These are not statutory accounts in accordance with S436 of the Companies Act 2006 and the financial information 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 nine months ended 31 March 2020 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 2020 have been reported on by the Company’s auditors or delivered to the Registrar of Companies.

  3. Copies of the Unaudited Half-Yearly Financial Report for the six months ended 30 September 2020 have been sent to shareholders and are available for inspection at the Registered Office of the Company at The Shard, 32 London Bridge Street, London, SE1 9SG. Copies are also available electronically at www.foresightgroup.eu.

4 Net asset value per share

The net asset value per share is based on net assets at the end of the period and on the number of shares in issue at that date.

Ordinary Shares

FWT Shares

Net assets £’000

Number of Shares in issue

Net assets £’000

Number of Shares in issue

30 September 2020

24,909

35,460,961

3,708

3,818,311

30 September 2019

39,765

42,953,814

n/a

n/a

31 March 2020

25,787

35,460,961

1,136

1,145,927

5 Return per share

The weighted average number of shares used to calculate the respective returns are shown in the table below:

Ordinary Shares

FWT Shares

Number of Shares

Number of Shares

30 September 2020

35,460,961

2,536,809

30 September 2019

43,116,781

n/a

31 March 2020

42,897,610

1,145,927

6 Income

Six months ended 30 September 2020 (unaudited)

£’000

Six months ended 30 September 2019 (unaudited)

£’000

Year ended 31 March 2020 (audited)

£’000

Loan stock interest

230

337

609

Dividends received

234

2,765

Bank interest

4

11

Other income*

15,811

16,275

341

3,385

*Other income in the year relates to the release of the Company’s liability from its wholly owned subsidiary, Youtan Limited. The release had an equal and opposite effect on the carrying value of Investments, resulting in a nil impact for the NAV of the Company.

7 Investments held at fair value through profit or loss

Ordinary Shares
£’000

FWT Shares
£’000

Company

£’000

Book cost as at 1 April 2020

24,531

24,531

Investment holding gains

17,639

17,639

Valuation at 1 April 2020

42,170

42,170

Movements in the period:

Purchases at cost

Disposal proceeds*

(488)

(488)

Realised losses

Investment holding gains

(17,183)

(17,183)

Valuation at 30 September 2020

24,499

24,499

Book cost at 30 September 2020

24,043

24,043

Investment holding gains

456

456

Valuation at 30 September 2020

24,499

24,499

*Disposal proceeds relate to the repayment of shareholder loans from the Company’s portfolio companies.

8 Transactions with the manager

Details of arrangements with Foresight Group LLP and Foresight Group CI Limited are given in the Annual Report and Accounts for year ended 31 March 2020, in the Directors’ Report and Notes 3 and 13. All arrangements and transactions were on an arms length basis.

Foresight Group CI Limited, which acted as investment manager to the Company until 27 January 2020 when Foresight Group LLP was appointed as Investment Manager, earned fees of £nil in the six months ended 30 September 2020 (six months ended 30 September 2019: £304,000; year ended 31 March 2020: £491,000). Foresight Group LLP, which was appointed as Investment Manager on 27 January 2020 earned fees of £214,000 in the six months ended 30 September 2020 (six months ended 30 September 2019: £nil; year ended 31 March 2020: £96,000).

Foresight Group LLP, to whom the Manager delegated the function of Company Secretary, earned fees amounting to £84,000 in the six months ended 30 September 2020 (six months ended 30 September 2019: £64,000; year ended 31 March 2020: £131,000).

At the balance sheet date there was £nil (30 September 2019: £8,000; 31 March 2020: £112,000) due from Foresight Group CI Limited and £73,000 (30 September 2019: £nil; 31 March 2020: £86,000) due from Foresight Group LLP. No amounts have been written off in the year in respect of debts due to or from related parties.

9 Related party transactions

There were no related party transactions in the period.

10 Post balance sheet event

In October and November 2020, the FWT Shares purchased investments in Additive Manufacturing Technologies Limited, Audioscenic Limited and Refeyn Limited totalling £1.1m.

In November and December 2020, under the offer for subscription to raise up to £20 million FWT shares (with an overallotment facility to raise up to a further £10 million), the Company issued a total of 1,667,810 shares based on a price of 100.0p.

In December 2020, the Ordinary Shares' portfolio companies completed the sales of the Littlewood and Telecomponenti assets.

END