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<strong>Foresight</strong> 2 VCT plc<br />
Unaudited Half-Yearly Financial Report<br />
for the six month period ended<br />
31 March 2008<br />
<strong>Foresight</strong> 2
2<br />
<strong>Foresight</strong> 2 VCT plc<br />
Objective<br />
To provide private investors with attractive returns from a portfolio of investments in fast-growing unquoted technologybased<br />
companies in the United Kingdom. It is the intention to maximise tax-free income available to investors from a<br />
combination of dividends and interest received on investments and the distribution of capital gains arising from trade<br />
sales or flotations.<br />
Summary<br />
2<br />
● The net asset value per Ordinary Share as at 31 March 2008 was 99.0p compared with 105.2p as at<br />
30 September 2007. The net asset value per C Share as at 31 March 2008 was 102.6p compared with 94.2p<br />
at 30 September 2007.<br />
● A final dividend of 5.0p per Ordinary Share was paid on 20 March 2008.<br />
● One new investment was made in the Ordinary Shares fund during the period: £300,000 in Lynwood <strong>Group</strong><br />
Holdings Limited.<br />
● The Ordinary Shares fund provided follow-on funding totalling £664,322 for six portfolio companies: £181,473 in<br />
Oxonica plc, £180,647 in Oled-T, £166,667 in Closed Loop London, £81,606 in The Bunker Secure Hosting,<br />
£37,500 in High Integrity Solutions and £16,429 in ClockWorx (formerly Auctioning4U).<br />
● Three new investments totalling £1,250,000 were made in the C Shares fund during the period: £250,000 in<br />
Lynwood <strong>Group</strong> Holdings Limited, £500,000 in Land Energy Limited and £500,000 in AWP Environmental Limited.<br />
● One follow-on investment was made in the C Shares fund during the period: £166,667 in Closed Loop London.<br />
● As a result of the Linked Offer, <strong>Foresight</strong> 2 Ordinary Shares fund had raised gross proceeds of £1,593,076 as at<br />
31 March 2008 increasing to £1,979,376 as at 30 April 2008 when the offer closed.<br />
● <strong>Foresight</strong> 2 C Share fund raised gross proceeds of £4,255,372 from its offer for subscription as at 31 March 2008<br />
increasing to £7,872,747 as at 30 April 2008 when the offer closed.<br />
Website: www.foresightvct.com<br />
Contents<br />
Summary and Chairman’s Statement 1<br />
Investment Summary 3<br />
Unaudited Interim Results and<br />
Responsibility Statements 8<br />
Non-Statutory Analysis between<br />
the Ordinary Shares and C Shares Funds 9<br />
Income Statement 11<br />
Balance Sheet 12<br />
Reconciliation of Movements in Shareholders’ Funds 12<br />
Statement of Cash Flows 13<br />
Notes to the Interim Report 14<br />
Shareholder Information 16
Chairman’s Statement<br />
I Introduction<br />
During the six months under review, stock markets<br />
experienced extreme volatility, primarily as a result of<br />
difficulties in the US sub-prime mortgage market and in<br />
the UK as a result of the problems surrounding the<br />
lending activities of Northern Rock. I am pleased to report<br />
that this market turmoil has not directly affected the<br />
unquoted holdings within our investments and that your<br />
Company has continued to build on recent progress<br />
during the period under review and is continuing with its<br />
active new investment programme as well as realising<br />
investments from within the portfolio. Reflecting recent<br />
investment gains, a final dividend for the year ended<br />
30 September 2007 of 5.0p per Ordinary Share was paid<br />
to Ordinary shareholders on 20 March 2008.<br />
The performance of a number of portfolio companies<br />
continued to improve, reflecting growing demand and<br />
strong sales pipelines, most notably Trilogy<br />
Communications, Probability plc and Ixaris Systems.<br />
Trilogy Communications is enjoying increasing demand<br />
for its Internet Protocol (‘IP’) based command and control<br />
communication system, Mercury, particularly from the<br />
defence and Homeland Security sectors in the US.<br />
Probability plc recently announced continued growth in<br />
both its gaming revenues and new customer registration<br />
as well as announcing several strategic relationships with<br />
groups such as The Sun, Rank and News International.<br />
Ixaris Systems’ sales progress has continued as a result<br />
of improved worldwide distribution for its virtual credit<br />
cards.<br />
Datapath continues to trade well and produced operating<br />
profits of £2.5 million in the year to 31 March 2008.<br />
Disappointingly, ClockWorx (formerly Auctioning4U) was<br />
placed into Administration on 31 January 2008 following<br />
a failure to secure funding commitments for its specialist<br />
online auction platforms and its ClockWorx workflow<br />
software suite. High Integrity Solutions was also placed<br />
into administration, on 3 April 2008, as a result of losing a<br />
major contract with BAE Systems. Full provisions were<br />
taken against the values of both companies at a<br />
combined cost of £1,165,929.<br />
I Offers for Subscription<br />
Linked Offer<br />
The linked offer for subscription between <strong>Foresight</strong> VCT,<br />
<strong>Foresight</strong> 2, <strong>Foresight</strong> 3 and <strong>Foresight</strong> 4 was successful<br />
and raised £7,917,503 when it closed on 30 April 2008.<br />
The proceeds of the offer were equally split with the<br />
<strong>Foresight</strong> 2 Ordinary Shares fund receiving total gross<br />
proceeds of £1,979,376.<br />
C Share Offer<br />
The C Share Offer raised £7,872,747 when it closed on<br />
30 April 2008.<br />
Peter Dicks<br />
Chairman<br />
Half-Yearly Financial Report for the six months ended 31 March 2008<br />
01<br />
The new funds raised by both offers will be invested to<br />
take advantage of the strong deal flow being generated<br />
by <strong>Foresight</strong> <strong>Group</strong>, the Company’s Manager.<br />
Administration costs are spread across both pools to the<br />
benefit of both sets of shareholders.<br />
I Results and Dividend<br />
The results for the six months from 1 October 2007 to<br />
31 March 2008 are set out below. The net asset value per<br />
Ordinary Share as at 31 March 2008 was 99.0p compared<br />
with 105.2p as at 30 September 2007, the reduction<br />
largely being due to the 5.0p Ordinary Share dividend.<br />
The net asset value per C Share as at 31 March 2008 was<br />
102.6p compared to 94.2p as at 30 September 2007.<br />
The Company’s policy is to maximise the level of<br />
dividends, free of tax for qualifying shareholders, either<br />
generated from income received or from capital profits<br />
realised on the sale of investments. Reflecting recent<br />
investment gains, a final dividend of 5.0p per Ordinary<br />
Share for the year ended 30 September 2007 was paid<br />
on 20 March 2008 to the Ordinary shareholders.<br />
I Ordinary Share Portfolio — Investment Activity<br />
Realisations<br />
<strong>Foresight</strong> 2 invested £1,000,000 in the management<br />
buyout of Covion Holdings in May 2005. This was one of<br />
the first investments by your Company following the<br />
launch of the Ordinary Shares fund in September 2004.<br />
In the period since the investment was made, Covion<br />
Holdings has grown its turnover from £10 million per<br />
annum to a current annualised rate in excess of £30<br />
million. Covion Holdings was sold to Balfour Beatty for<br />
total proceeds of £33 million, of which <strong>Foresight</strong> 2<br />
received some £4.3 million, over four times its original<br />
investment of £1 million.<br />
Furthermore, during March 2008 <strong>Foresight</strong> 2’s investment<br />
in Utarget, an investment made 15 months previously in<br />
December 2006, was sold to Fox International for<br />
proceeds of £1,318,140, a return of 1.95 times the<br />
original cost of £675,000.<br />
Purchases<br />
One new investment was made in the Ordinary Shares<br />
fund during the period: £300,000 in Lynwood <strong>Group</strong><br />
Holdings Limited.<br />
Lynwood is an established business in the plastic building<br />
products market in the UK and has made the transition to<br />
using waste plastic streams as its raw material. Lynwood<br />
has acquired a small business with specialist expertise in<br />
manufacturing wood profile and wood replacement<br />
products from waste plastic and it is now one of the best<br />
equipped recycling manufacturing operations in the UK.<br />
The company is well positioned in a growing market for<br />
recycled and sustainable products such as wood<br />
replacement which offer economic and environmental<br />
advantages.
2<br />
<strong>Foresight</strong> 2 VCT plc<br />
02<br />
Chairman’s Statement<br />
During the period, £664,322 was invested in follow-on<br />
funding rounds in six portfolio companies: Oxonica plc<br />
(£181,473), Oled-T (£180,647), Closed Loop London<br />
(£166,667), The Bunker Secure Hosting (£81,606), High<br />
Integrity Solutions (£37,500), and ClockWorx (£16,429).<br />
After suffering a contract setback for its fuel additive,<br />
Envirox, during the first half of 2007 which had a<br />
significant impact on the company’s operations as well as<br />
its share price, Oxonica recently reported performance<br />
validation for this additive and significant commercial<br />
progress in mainland Europe and Russia. In December<br />
the company announced that it had raised in excess of<br />
£4 million through a share placing to existing<br />
shareholders. New contract wins in the biodiagnostics<br />
and security divisions also helped sales.<br />
Closed Loop London is a business at the leading edge of<br />
plastics recycling in the UK. The company is initially<br />
focused on producing food grade recycled PET<br />
(polyethylene terephthalate) and HDPE (high density<br />
polyethylene). PET is the clear plastic used in over 50%<br />
of soft drinks bottles, with over 300,000 tonnes used per<br />
annum in the UK with none currently recycled for use as<br />
food grade plastic. HDPE is the white plastic used in milk<br />
bottles. Closed Loop London is nearing completion of its<br />
first recycling plant in Dagenham and has plans in place<br />
for a second facility in the North-West. Initial<br />
commissioning of the first plant will commence at the end<br />
of June with the whole plant coming on-stream within<br />
three months, starting with PET and then with the HDPE<br />
facilities.<br />
The Bunker Secure Hosting is experiencing strong<br />
demand for its ultra secure IT hosting services and is<br />
developing plans for a substantial increase in its capacity.<br />
I C Share Portfolio — Investment Activity<br />
The C Share fund continues to progress well and three<br />
new investments were made during the six months under<br />
review: Lynwood <strong>Group</strong> Holdings Limited (£250,000),<br />
AWP Environmental Limited (£500,000) and Land Energy<br />
Limited (£500,000).<br />
Lynwood is a co-investment with the Ordinary Shares<br />
fund and further details are included earlier in this<br />
statement.<br />
AWP plans to develop waste to energy power stations,<br />
geographically distributed across the country. The<br />
investment offers significant environmental benefits. It will<br />
divert waste from landfill, contributing to the reduction in<br />
landfill targeted by EU and UK legislation. It will also<br />
generate renewable electricity, contributing to government<br />
targets and earning Renewable Obligation Certificates.<br />
Land Energy has been set up to generate renewable<br />
power from virgin wood and to exploit the growing<br />
demand for wood pellets as a renewable fuel, through a<br />
series of plants countrywide. The plants will generate<br />
electricity for export to the grid and either use heat for<br />
pellet production or supply heat to a nearby user. The<br />
company will therefore be both a combined heat and<br />
power (CHP) generation operator and a pellet producer.<br />
The UK Government has identified CHP as a highly<br />
efficient form of energy use, which will be further<br />
incentivised from April 2009 by becoming eligible for<br />
double Renewable Obligations Certificates.<br />
A follow-on investment of £166,667 was also made from<br />
the C Shares fund during the period in Closed Loop<br />
London, which is described in more detail earlier.<br />
I Valuation policy<br />
Investments held by the Company have been valued in<br />
accordance with the International Private Equity and<br />
Venture Capital (IPEVC) guidelines developed by the<br />
British Venture Capital Association and other organisations<br />
under which investments are valued, as defined in the<br />
guidelines, at “fair value”. Ordinarily, unquoted investments<br />
will be valued at cost for the 12 months following the date<br />
of acquisition as the most suitable approximation of fair<br />
value unless there is an impairment or accretion in value<br />
during the period. Quoted investments and investments<br />
traded on AIM and PLUS (formerly OFEX) are valued at<br />
the bid price as at 31 March 2008. The portfolio valuations<br />
are prepared by <strong>Foresight</strong> <strong>Group</strong> and are subject to<br />
approval by the Board.<br />
I Share Issues and Share Buy-backs<br />
During the period, the Company issued 196,008 Ordinary<br />
Shares under the Dividend Investment Scheme at<br />
101.19p per share raising approximately £198,000 in<br />
aggregate. These shares were issued under the new VCT<br />
provisions that commenced on 6 April 2006, namely:<br />
30% upfront income tax relief which can be retained by<br />
qualifying investors if the shares are held for the minimum<br />
five year holding period.<br />
As a result of the linked offer for subscription, <strong>Foresight</strong> 2<br />
issued 1,493,309 Ordinary Shares during the period at<br />
prices ranging from 104.0p to 114.0p per share.<br />
It continues to be the Company’s policy to consider<br />
repurchasing shares when they become available in order<br />
to provide a degree of liquidity for the Company’s shares.<br />
During the period, the Company repurchased 252,435<br />
Ordinary Shares for cancellation at a cost of £222,588<br />
and at an approximate discount to Net Asset Value (NAV)<br />
of 10%.<br />
A total of 4,353,152 C Shares were issued under its offer<br />
for subscription at a cost of £1 per share during the<br />
period.<br />
I Manager Change of Name<br />
The Investment Manager changed its name from <strong>Foresight</strong><br />
Venture Partners to <strong>Foresight</strong> <strong>Group</strong> on 1 October 2007.<br />
I Outlook<br />
To date there has been no significant fallout from the<br />
current credit crunch on the levels of merger and<br />
acquisition activity at the smaller end of the market in<br />
which <strong>Foresight</strong> 2 VCT operates and of which the sale of<br />
Utarget and Covion Holdings are examples. Your<br />
Manager will continue to pursue potential realisations<br />
from within the portfolio.<br />
The market in which <strong>Foresight</strong> 2 VCT operates continues<br />
to be encouraging in terms of potential new investment<br />
opportunities, as evidenced by the current deal flow<br />
being reviewed by <strong>Foresight</strong> <strong>Group</strong>. <strong>Foresight</strong> 2 VCT will<br />
have access to this deal flow of new opportunities as it<br />
invests new funds raised as well as reinvesting some of<br />
the proceeds from successful realisations.<br />
Peter Dicks<br />
Chairman<br />
30 May 2008
Investment Summary<br />
Half-Yearly Financial Report for the six months ended 31 March 2008<br />
03<br />
I ORDINARY SHARE FUND<br />
31 March 2008 30 September 2007<br />
Amount Amount<br />
Investment Invested Valuation Valuation Methodology Invested Valuation<br />
£ £ £ £<br />
Trilogy Communications Limited 1,650,000 1,650,000 * Cost 1,650,000 1,650,000<br />
OLED-T Limited 1,180,647 1,489,308 * Discounted revenue multiple 1,000,000 1,445,719<br />
alwaysON <strong>Group</strong> Limited 1,050,350 1,050,350 * Cost 1,050,350 1,050,350<br />
Closed Loop London Limited 916,667 916,667 * Cost 750,000 750,000<br />
SkillsMarket Limited 519,999 902,220 * Price of recent funding round 519,999 789,443<br />
The Bunker Secure Hosting Limited 512,510 868,270 * Discounted revenue multiple 430,904 430,904<br />
Aigis Blast Protection Limited 1,000,000 750,000 * Discounted cost 1,000,000 1,000,000<br />
Infrared Integrated Systems Limited 749,985 749,985 * Cost 749,985 749,985<br />
Ixaris Systems Limited 700,000 700,000 * Cost 700,000 700,000<br />
Oxonica plc (AIM listed) 1,181,473 629,639 * Bid price 1,000,000 396,660<br />
ZOO Digital <strong>Group</strong> plc (AIM listed) 600,000 522,692 Bid price 600,000 591,923<br />
Iskra Wind Turbines Limited 500,000 500,000 Cost 500,000 500,000<br />
Nanotecture <strong>Group</strong> plc 500,000 500,000 Price of recent funding round 500,000 500,000<br />
TFC Europe Limited 350,000 350,000 Cost 350,000 350,000<br />
Sindicatum Carbon Capital Limited 125,006 328,100 Price of recent funding round 125,006 131,240<br />
Lynwood <strong>Group</strong> Holdings Limited 300,000 300,000 Cost — —<br />
Probability plc (AIM listed) 250,000 210,526 Bid price 250,000 164,474<br />
Sarantel <strong>Group</strong> plc (AIM listed) 468,000 45,366 Bid price 468,000 68,049<br />
ClockWorx (formerly Auctioning4U Limited) 728,429 — Nil value 712,000 712,000<br />
High Integrity Solutions Limited 437,500 — Nil value 400,000 400,000<br />
Covion Holdings Limited — — Sold 1,000,000 4,284,251<br />
Utarget Limited — — Sold 675,000 675,000<br />
13,720,566 12,463,123 14,431,244 17,339,998<br />
* Top ten investments by value shown on pages 4 to 5.<br />
I C SHARE FUND<br />
31 March 2008 30 September 2007<br />
Amount Amount<br />
Investment Invested Valuation Valuation Methodology Invested Valuation<br />
£ £ £ £<br />
Datapath Holdings Limited 1,000,000 2,459,661 Discounted price/earnings multiple 1,000,000 1,000,000<br />
AWP Environmental Limited 500,000 500,000 Cost — —<br />
Land Energy Limited 500,000 500,000 Cost — —<br />
Heritage House Media Limited 425,000 425,000 Cost 425,000 425,000<br />
O-Gen UK Limited 300,000 300,000 Cost 300,000 300,000<br />
Closed Loop London Limited 416,667 416,667 Cost 250,000 250,000<br />
Lynwood <strong>Group</strong> Holdings Limited 250,000 250,000 Cost — —<br />
TFC Europe Limited 250,000 250,000 Cost 250,000 250,000<br />
Global Immersion Limited 166,667 166,667 Cost 166,667 166,667<br />
Iskra Wind Turbines Limited 150,000 150,000 Cost 150,000 150,000<br />
3,958,334 5,417,995 2,541,667 2,541,667<br />
All investments shown on pages 6 to 7.
2<br />
<strong>Foresight</strong> 2 VCT plc<br />
04<br />
Investment Summary — Ordinary Share Portfolio<br />
Top ten investments by value as at 31 March 2008 are detailed below:<br />
Trilogy Communications Limited<br />
Is a world class supplier of audio communications and infrastructure equipment to the broadcast, defence, emergency management<br />
and commercial and industrial sectors. Trilogy has a reputation for innovative design, ease of operation and reliability. The company’s<br />
products and systems are used in more than 40 countries.<br />
OLED-T Limited<br />
Develops organic light-emitting display materials targeting the flat-screen display market. Its materials are well suited to small portable<br />
devices offering brighter, clearer colours, longer lifetimes and low power consumption. The company is working closely with key Far<br />
East product manufacturers which have given positive feedback. However, commercial revenues are some time away because of the<br />
lead time for building new manufacturing facilities. The $50 billion global display screen market offers strong licence revenue<br />
opportunities.<br />
alwaysON <strong>Group</strong> Limited<br />
A market leading provider of data VPNS voice over IP (VOIP) services to SMEs and public sector organisations. The company’s<br />
infrastructure is extremely secure and can be rolled out to customers quickly. Easynet and Ofsted are recent customer wins.<br />
Closed Loop London Limited<br />
Is the first plant in the UK to recycle waste PET plastic bottles into food grade packaging material. Following a £12 million private and<br />
public sector funding issue led by <strong>Foresight</strong> <strong>Group</strong>, the 35,000 tonne capacity plant also in Dagenham is expected to be fully<br />
operational by June 2008. Further funding is being provided to enable the Dagenham plant to also recycle HDPE.<br />
SkillsMarket Limited<br />
Manages CV data for recruitment agencies and operates online information exchanges. The service is highly automated, using a mix<br />
of proprietary and third-party software. The company holds data on 90% of all IT staff in the UK and its customers employ 20% of all<br />
recruitment consultants in the UK IT recruitment sector.
Half-Yearly Financial Report for the six months ended 31 March 2008<br />
05<br />
Investment Summary — Ordinary Share Portfolio<br />
The Bunker Secure Hosting Limited<br />
Is a high security IT data business which owns and leases 41,500 square feet of underground ex-military command centres at Ash,<br />
Greenham Common and Bawdsey. The Bunker builds, hosts and manages IT infrastructure platforms for top financial, telecoms and<br />
web-centric companies worried about terrorist and disaster threats, both physical and digital.<br />
Aigis Blast Protection Limited<br />
Produces blast protection materials. Applications include containers that can be used at airports for homeland security purposes, military<br />
vehicles and building cladding. The company is now selling products on an international basis.<br />
Infrared Integrated Systems Limited<br />
Manufactures infrared arrays and sells cameras and thermal imagers incorporating these arrays. The lead product is a people counter<br />
used by many large retail organisations and a range of hand-held thermal imaging cameras used in security and inspection applications.<br />
Ixaris Systems Limited<br />
Operates online bank accounts and a prepaid electronic payment service integrated with the VISA network. Consumers deposit funds<br />
by credit card, cash at Post Offices and similar payment points or via normal bank transfers.<br />
Oxonica plc (AIM listed)<br />
Develops products based on advanced nanomaterials which are then sold through agreements with commercial partners for end<br />
market adoption. The Company operates through two divisions, Oxonica Nanomaterials and Oxonica Diagnostics. The Nanomaterial<br />
division focuses on three product areas, namely (i) Envirox, a fuel borne additive for diesel which reduces fuel consumption and<br />
particulate emissions; (ii) cosmetic and industrial UV absorbers Optisol (used in sunscreens and anti-ageing consumer products) and<br />
Solacor (for use in industrial coatings such as paint and in plastics to prevent degradation by sunlight); and (iii) security applications<br />
using nanotechnology based marker systems for anticounterfeiting and brand protection. The Diagnostics division, using nanomaterial<br />
based tags, is developing individual tests and rapid test systems for use in detecting and quantifying diseases and other protein/DNA<br />
based biomaterials for a wide range of applications in the clinical diagnostics, life sciences, veterinary, food and bioterrorism markets.<br />
Despite the loss of a large order for Envirox in mid 2007, the Company has since made good progress with Envirox. Optisol continues<br />
to move forward and a number of good opportunities are emerging for the security technology and Solacor. The Diagnostics division<br />
made significant progress as evidenced by a further collaboration agreement with Becton Dickinson. Oxonica successfully raised £4.1<br />
million of equity through a placing in December 2007, in which your Company participated.
2<br />
<strong>Foresight</strong> 2 VCT plc<br />
06<br />
Investment Summary — C Share Portfolio<br />
Investment portfolio as at 31 March 2008 is detailed below:<br />
Datapath Holdings Limited<br />
Supplies graphics cards and other products, used mainly to control large screen displays known as ‘videowall’. The business has grown<br />
strongly in recent years, with annualised turnover approaching £10 million.<br />
AWP Environmental Limited<br />
Is a holding company set up to develop waste to energy power stations. In October 2007, AWP acquired an established waste handling<br />
business, BCB Environmental Management Ltd, which is profitable and secures access to part of the waste stream required for the<br />
first power station. The total <strong>Foresight</strong> investment of £6 million will fund the first power station, alongside £12 million of bank debt. The<br />
company’s vision is to establish 8 geographically-distributed plants in the UK.<br />
Land Energy Limited<br />
Has been set up to generate renewable power from virgin wood, and to exploit the growing demand for wood pellets as a renewable<br />
fuel. The company plans to build 3 plants, in Wales, Scotland and England, at sites chosen for local demand for pellets and proximity<br />
to forestry resources, thereby reducing transport costs for wood supply and distribution of pellets. Our investment of £5 million will<br />
support the first plant.<br />
Heritage House Media Limited<br />
Provides contract publishing and souvenirs to the heritage market. The company is pursuing an aggressive acquisition strategy and aims to<br />
become a ‘one-stop shop’ for online services, publishing and souvenirs to the heritage market.<br />
O-Gen (UK) Limited<br />
O-Gen’s business is to develop, build, own and operate waste wood to energy and combined heat and power (‘CHP’) plants. The<br />
market is driven by government regulation and incentives. Specifically, landfill tax, which is driving waste operators towards cheaper<br />
and more efficient methods of waste disposal such that gate fees will be received by O-Gen from the waste wood (biomass) suppliers.<br />
The electricity generated from processing the wood will be sold to the National Grid and attracts Renewable Obligation Certificates<br />
(“ROCs”) which generate further revenue.
Investment Summary — C Share Portfolio<br />
Closed Loop London Limited<br />
Lynwood <strong>Group</strong> Holdings Limited<br />
Half-Yearly Financial Report for the six months ended 31 March 2008<br />
07<br />
Is the first plant in the UK to recycle waste PET plastic bottles into food grade packaging material. Following a £12 million private and<br />
public sector funding issue led by <strong>Foresight</strong> <strong>Group</strong>, the 35,000 tonne capacity plant in Dagenham is expected to be fully operational<br />
by June 2008. Further funding is being provided to enable the Dagenham plant to also recycle HDPE.<br />
Is a well established business in the UK plastic building products market that has made the transition to using waste plastic streams<br />
as its raw materials. In addition, its Intruplas operation has specialist expertise in manufacturing wood replacement products from waste<br />
plastic. It is well positioned in a growing market for recycled and sustainable goods that offer economic and environmental advantages.<br />
Based in Halifax, it plans to roll-out multiple satellite operations throughout the UK, funded by the £3 million total <strong>Foresight</strong> investment.<br />
TFC Europe Limited<br />
Supplies injection moulded technical fasteners and ring and spring products to customers across a wide range of industries, including<br />
aerospace, automotive, hydraulics and petrochemicals.<br />
Global Immersion Limited<br />
Provides planetariums and immersive theatres with projection equipment, design, installation and maintenance services. There are over<br />
3,200 immersive theatres worldwide and it is estimated that over 108 million people visited these domes last year. The most profound<br />
change to the immersive theatre market over the last ten years has been the transition from optical-mechanical projection systems to the<br />
digital age and the company has identified a number of growth areas to target over the next five years.<br />
Iskra Wind Turbines Limited<br />
Is a manufacturer of high efficiency tree-sized wind turbines, suitable for volume manufacture, that have the best price/performance<br />
combination of any tree-sized turbine currently commercially available.
2<br />
<strong>Foresight</strong> 2 VCT plc<br />
08<br />
Unaudited Half-Yearly Results and Responsibility Statements<br />
I Principal Risks and Uncertainties<br />
The principal risks faced by the Company can be divided into various areas as follows:<br />
● Performance<br />
● Regulatory<br />
● Operational and<br />
● Financial<br />
The Board reported on the principal risks and uncertainties faced by the company in the Annual Report and Accounts<br />
for the year ended 30 September 2007. A detailed explanation can be on found on pages 17 and 18 of the Annual<br />
Report and Accounts which is available on www.foresightgroup.eu or by writing to <strong>Foresight</strong> <strong>Group</strong> at ECA Court,<br />
South Park, Sevenoaks, Kent TN13 1DU.<br />
In the view of the Board, there have not been any changes to the fundamental nature of these risks since the previous<br />
report and these principal risks and uncertainties are equally applicable to the remaining six months of the financial year<br />
as they were to the six months under review.<br />
I Directors Responsibility Statement:<br />
The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority require the Directors to confirm their<br />
responsibilities in relation to the preparation and publication of the Interim Report and financial statements.<br />
The Directors confirm to the best of their knowledge that:<br />
(a) the summarised set of financial statements has been prepared in accordance with the pronouncement on interim<br />
reporting issued by Accounting Standards Board;<br />
(b) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of<br />
important events during the first six months and description of principal risks and uncertainties for the remaining<br />
six months of the year);<br />
(c) the summarised set of financial statements give a true and fair view in accordance with UK GAAP of the state of<br />
affairs of the Company and of the profit and loss of the Company for that period and comply with UK GAAP and<br />
Companies Act 1985 and;<br />
(d) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of<br />
related parties’ transactions and changes therein).<br />
The half-yearly Financial Report has not been audited or reviewed by the auditors.<br />
By order of the Board<br />
Peter Dicks<br />
Chairman<br />
30 May 2008
Income Statements<br />
for the six months to 31 March 2008<br />
Half-Yearly Financial Report for the six months ended 31 March 2008<br />
09<br />
Unaudited Non-Statutory Analysis between the<br />
Ordinary Shares and C Shares Funds<br />
Ordinary Shares Fund C Shares Fund<br />
Revenue Capital Total Revenue Capital Total<br />
£’000 £’000 £’000 £’000 £’000 £’000<br />
Unrealised (losses)/gains on investments — (3,999) (3,999) — 1,460 1,460<br />
Realised gains on investments — 3,760 3,760 — 6 6<br />
Income 351 — 351 405 — 405<br />
Investment management fees (60) (180) (240) (40) (118) (158)<br />
Other expenses (95) — (95) (65) — (65)<br />
Net surplus/(deficit) before taxation 196 (419) (223) 300 1,348 1,648<br />
Tax on ordinary activities (39) 39 — — — —<br />
Return/(deficit) attributable to<br />
equity shareholders 157 (380) (223) 300 1,348 1,648<br />
Return per share 0.8p (1.9)p (1.1)p 2.1p 9.2p 11.3p<br />
Reconciliation of Movements in Shareholders’ Funds<br />
for the six months ended 31 March 2008<br />
Ordinary C<br />
Shares Fund Shares Fund<br />
£’000 £’000<br />
Opening shareholders’ funds 20,530 13,433<br />
Return attributable to equity shareholders:<br />
— revenue 157 300<br />
— capital (380) 1,348<br />
Total (223) 1,648<br />
Share issues 1,593 4,257<br />
Expenses on share issues (101) (235)<br />
Share buy-backs (224) —<br />
Dividends (1,027) —<br />
Dividends reinvested 198 —<br />
Net increase in shareholders’ funds 216 5,670<br />
Closing shareholders’ funds 20,746 19,103
2<br />
<strong>Foresight</strong> 2 VCT plc<br />
10<br />
Unaudited Non-Statutory Analysis between the<br />
Ordinary Shares and C Shares Funds<br />
Balance Sheets<br />
as at 31 March 2008<br />
Ordinary Shares Fund C Shares Fund<br />
£’000 £’000 £’000 £’000<br />
Non-current assets<br />
Assets held at fair value through<br />
profit or loss — investments 12,463 5,418<br />
Current assets<br />
Debtors 1,156 4,344<br />
Money market and other deposits 6,094 9,573<br />
Cash 1,420 1<br />
8,670 13,918<br />
Creditors<br />
Amounts falling due within one year (387) (233)<br />
Net current assets 8,283 13,685<br />
Net assets 20,746 19,103<br />
Capital and reserves<br />
Called-up share capital 210 186<br />
Share premium account 1,697 17,311<br />
Capital reserve — realised 2,778 (254)<br />
Capital reserve — unrealised (1,088) 1,459<br />
Capital redemption reserve 3 —<br />
Distributable reserve 17,146 401<br />
Equity shareholders’ funds 20,746 19,103<br />
Number of shares in issue 20,951,094 18,610,589<br />
Net asset value per share 99.0p 102.6p
Unaudited Income Statement<br />
(incorporating the Revenue Account) for the period to 31 March 2008<br />
Half-Yearly Financial Report for the six months ended 31 March 2008<br />
11<br />
6 Months to 6 Months to Year to<br />
31 March 2008 31 March 2007 30 September 2007<br />
(unaudited) (unaudited) (audited)<br />
Revenue Capital Total Revenue Capital Total Revenue Capital Total<br />
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000<br />
Unrealised (losses)/gains<br />
on investments — (2,539) (2,539) — 1,449 1,449 — 2,407 2,407<br />
Realised gains on investments — 3,766 3,766 — — — — — —<br />
Income 756 — 756 209 — 209 641 — 641<br />
Investment management fees (100) (298) (398) (60) (181) (241) (161) (484) (645)<br />
Other expenses (160) — (160) (126) — (126) (282) — (282)<br />
Net income before taxation 496 929 1,425 23 1,268 1,291 198 1,923 2,121<br />
Tax on ordinary activities (39) 39 — — — — 38 (38) —<br />
Return attributable to equity<br />
shareholders 457 968 1,425 23 1,268 1,291 236 1,885 2,121<br />
Return per Ordinary Share 0.8p (1.9)p (1.1)p 0.1p 6.6p 6.7p 0.6p 10.5p 11.1p<br />
Return per C Share 2.1p 9.2p 11.3p (0.1)p (0.7)p (0.8)p 2.2p (3.0)p (0.8)p<br />
The total column of this statement is the profit and loss account of the Company and the revenue and capital columns represent<br />
supplementary information.<br />
The Company has no recognised gains and losses other than those shown above and therefore no separate statement of total<br />
recognised gains and losses has been presented.<br />
All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued<br />
in the period.<br />
The Company has only one class of business and derives its income from investments made in shares, securities and bank deposits.<br />
Income from investments is recognised on an accruals basis.
2<br />
<strong>Foresight</strong> 2 VCT plc<br />
12<br />
Unaudited Balance Sheet<br />
at 31 March 2008<br />
As at As at As at<br />
31 March 08 31 March 07 30 September 07<br />
(unaudited) (unaudited) (audited)<br />
£’000 £’000 £’000<br />
Non-current assets<br />
Assets held at fair value through profit and loss — investments 17,881 15,821 19,882<br />
Current assets<br />
Debtors 5,275 86 578<br />
Money market and other deposits 15,667 4,567 13,001<br />
Cash 1,421 8,273 617<br />
22,363 12,926 14,196<br />
Creditors<br />
Amounts falling due within one year (395) (75) (115)<br />
Net current assets 21,968 12,851 14,081<br />
Net assets 39,849 28,672 33,963<br />
Capital and reserves<br />
Called-up share capital 396 290 338<br />
Share premium account 19,008 8,880 13,357<br />
Capital reserve — realised 2,524 (642) (983)<br />
Capital reserve — unrealised 371 1,952 2,910<br />
Capital redemption reserve 3 — —<br />
Distributable reserve 17,547 18,192 18,341<br />
Equity shareholders’ funds 39,849 28,672 33,963<br />
Net asset value per Ordinary Share 99.0p 101.1p 105.2p<br />
Net asset value per C Share 102.6p 94.3p 94.2p<br />
Unaudited Reconciliation of Movements in<br />
Shareholders’ Funds<br />
£’000 £’000 £’000<br />
Opening shareholders’ funds 33,963 18,564 18,564<br />
Return attributable to shareholders 1,425 1,291 2,121<br />
Shares issues (net of expenses) 5,514 8,975 13,436<br />
Share buybacks (224) (40) (40)<br />
Dividends (1,027) (118) (118)<br />
Dividends reinvested 198 — —<br />
Closing shareholders’ funds 39,849 28,672 33,963
Unaudited Statement of Cash Flows<br />
for the six months to 31 March 2008<br />
Half-Yearly Financial Report for the six months ended 31 March 2008<br />
13<br />
6 months to 6 months to Year to<br />
31 March 08 31 March 07 30 September 07<br />
(unaudited) (unaudited) (audited)<br />
£’000 £’000 £’000<br />
Cash flow from operating activities<br />
Investment income received 203 64 146<br />
Deposit and similar interest received 443 169 388<br />
Investment management fees paid (369) (225) (645)<br />
Secretarial fees paid (59) (37) (55)<br />
Other cash payments (84) (98) (552)<br />
Net cash inflow/(outflow) from operating activities and returns on investment 134 (127) (718)<br />
Taxation — — —<br />
Returns on investment and servicing of finance<br />
Purchase of unquoted investments and investments quoted on AIM (2,319) (3,256) (6,359)<br />
Net proceeds on sale of unquoted investments 5,559 — —<br />
Repurchase of own shares — (41) (40)<br />
Net capital inflow/(outflow) from financial investment 3,240 (3,297) (6,399)<br />
Equity dividends paid (1,027) (118) (118)<br />
Net cash inflow/(outflow) before financing and liquid resource management 2,347 (3,542) (7,235)<br />
Management of liquid resources<br />
Movement in money market and other deposits (2,567) 2,864 (5,569)<br />
Financing<br />
Proceeds of fund raising 830 9,475 14,258<br />
Expenses of fund raising (4) (532) (845)<br />
Dividends reinvested 198 25 25<br />
1,024 8,968 13,438<br />
Increase in cash 804 8,290 634<br />
Reconciliation of net cash flow to movement in net cash<br />
Increase in cash for the period 804 8,290 634<br />
Net cash at start of period 617 (17) (17)<br />
Net cash at end of period 1,421 8,273 617<br />
Reconciliation of income to net cash flow from operating activities<br />
Net income before taxation 497 23 198<br />
Investment management fee charged to capital (299) (181) (484)<br />
(Increase)/decrease in debtors (111) 18 (474)<br />
Increase in creditors 47 13 42<br />
Net cash inflow/(outflow) from operating activities 134 (127) (718)
2<br />
<strong>Foresight</strong> 2 VCT plc<br />
14<br />
Notes to the Half-Yearly Results<br />
1. The unaudited interim results have been prepared on the basis of accounting policies set out in the statutory accounts of the<br />
Company for the year ended 30 September 2007. Unquoted investments have been valued in accordance with IPEVC<br />
guidelines. Quoted investments are stated at bid prices in accordance with the IPEVC guidelines and Generally Accepted<br />
Accounting Practice.<br />
2. These are not statutory accounts in accordance with section 240 of the Companies Act 1985 and are neither audited nor<br />
reviewed. Statutory accounts in respect of the period to 30 September 2007 have been audited and reported on by the<br />
Company’s auditors and delivered to the Registrar of Companies. No statutory accounts in respect of any period after<br />
30 September 2007 have been reported on by the Company’s auditors or delivered to the Registrar of Companies.<br />
3. Copies of the Interim Report will be sent to shareholders and will be available for inspection at the Registered Office of the<br />
Company at ECA Court, South Park, Sevenoaks, Kent TN13 1DU.<br />
4. The net asset value per share for both the Ordinary Share and the C Shares has been calculated on the appropriate allocation of<br />
the Company’s assets and liabilities. Other than expenses specifically attributable to one fund or the other, all the remaining<br />
costs were attributed to the Ordinary Share fund to 31 March 2007. From 1 April 2007 to 31 March 2008 60 per cent of the<br />
joint costs incurred are allocated to the Ordinary Share fund and 40 per cent to the C Share fund, based on original funds<br />
raised. From 31 March 2008 all costs will be split equally between the two funds. The Net Asset Value per Ordinary Share is<br />
based on net assets of £20,746,468 (31 March 2007: £19,735,461) of the Ordinary Share fund at 31 March 2008 and on<br />
20,951,094 (31 March 2007: 19,514,212) Ordinary Shares, being the number of Ordinary Shares in issue at that date. The Net<br />
Asset Value per C Share is based on net assets of £19,102,392 (31 March 2007: 8,936,279) of the C Share fund at 31 March<br />
2008 and on 18,610,589 (31 March 2007: 9,474,896) C Shares, being the number of C Shares in issue at that date.<br />
5. Earnings for the first six months should not be taken as a guide to the results for the full year. The total earnings after taxation<br />
were £1,425,000 (31 March 2007: £1,291,000), being made up of a deficit on the Ordinary Share fund of £223,000 (31 March<br />
2007: surplus of £1,305,000), and a surplus on the C Share fund of £1,648,000 (31 March 2007: deficit of £14,000).<br />
The revenue return per Ordinary Share is based on the revenue surplus for the period of £157,000 (31 March 2007: surplus of<br />
£25,000) and on 19,738,338 Ordinary Shares (31 March 2007: 19,539,194 Ordinary Shares), being the total weighted average<br />
number of Ordinary Shares in issue during the period. The capital return per Ordinary Share is based on the capital deficit for the<br />
period of £380,000 (31 March 2007: surplus of £1,280,000) and on 19,738,338 Ordinary Shares (31 March 2007: 19,539,194<br />
Ordinary Shares), being the weighted average number of Ordinary Shares in issue during the period. The total return per<br />
Ordinary Share is based on the total deficit for the period of £223,000 (31 March 2007: surplus of £1,305,000) and on<br />
19,738,338 Ordinary Shares (31 March 2007: 19,539,194 Ordinary Shares), being the weighted average number of Ordinary<br />
Shares in issue during the period.<br />
The revenue return per C Share is based on the revenue surplus for the period of £300,000 (31 March 2007: deficit of £2,000)<br />
and on 14,646,797 C Shares (31 March 2007: 1,811,818 C Shares), being the total weighted average number of C Shares in<br />
issue during the period. The capital return per C Share is based on the capital surplus for the period of £1,348,000 (31 March<br />
2007: deficit of £12,000) and on 14,646,797 C Shares (31 March 2007: 1,811,818 C Shares), being the weighted average<br />
number of C Shares in issue during the period. The total return per C Share is based on the total surplus for the period of<br />
£1,648,000 (31 March 2007: deficit of £14,000) and on 14,646,797 C Shares (31 March 2007: 1,811,818 C Shares), being the<br />
weighted average number of C Shares in issue during the period.
Notes to the Half-Yearly Results<br />
Half-Yearly Financial Report for the six months ended 31 March 2008<br />
15<br />
6. Income<br />
COMPANY 6 months to 6 months to Year to<br />
31 March 08 31 March 07 30 September 07<br />
Other income<br />
£’000 £’000 £’000<br />
— Deposit interest 453 163 424<br />
— Venture capital investments 303 46 217<br />
7. Movement in reserves<br />
COMPANY<br />
756 209 641<br />
Share Capital Capital Capital<br />
Called-up premium reserve reserve redemption Distributable<br />
share capital account realised unrealised reserve reserve Total<br />
£’000 £’000 £’000 £’000 £,000 £’000 £’000<br />
As at 30 September 2007 338 13,357 (983) 2,910 — 18,341 33,963<br />
Share issues in the period 59 5,791 — — — — 5,850<br />
Expenses in relation to share issues — (336) — — — — (336)<br />
Dividends reinvested 2 196 — — — — 198<br />
Share buyback (3) — — — 3 (224) (224)<br />
Net decrease in the value of investments — — — (2,539) — — (2,539)<br />
Realised gains on sale of investments — — 3,766 — — — 3,766<br />
Management fees charged to capital — — (298) — — — (298)<br />
Tax charged to capital — — 39 — — — 39<br />
Dividends — — — — — (1,027) (1,027)<br />
Income for the period — — — — — 457 457<br />
As at 31 March 2008 396 19,008 2,524 371 3 17,547 39,849<br />
8. Summary of investments during the period<br />
COMPANY Quoted<br />
on AIM Unquoted Total<br />
£’000 £’000 £’000<br />
Book cost as at 30 September 2007 2,317 14,655 16,972<br />
Unrealised (depreciation) / appreciation (1,096) 4,006 2,910<br />
Valuation at 30 September 2007<br />
Movements in the period:<br />
1,221 18,661 19,882<br />
Purchases at cost 181 2,319 2,500<br />
Disposal proceeds — (5,559) (5,559)<br />
Realised gains — 3,766 3,766<br />
Unrealised appreciation / (depreciation) 6 (2,714) (2,708)<br />
Valuation at 31 March 2008 1,408 16,473 17,881<br />
Book cost at 31 March 2008 2,498 15,181 17,679<br />
Unrealised (depreciation) / appreciation (1,090) 1,292 202<br />
Valuation at 31 March 2008 1,408 16,473 17,881
2<br />
<strong>Foresight</strong> 2 VCT plc<br />
16<br />
Shareholder Information<br />
Dividends<br />
Shareholders who wish to have dividends paid directly into their bank account rather than by cheque to their registered address can<br />
complete a Mandate Form for this purpose. Mandates can be obtained by telephoning the Company’s registrar, Computershare<br />
Investor Services PLC (see over for details).<br />
Share price<br />
The Company’s Ordinary Shares are listed on the London Stock Exchange. The mid-price of the Company’s Ordinary and ‘C’ Shares is<br />
given daily in the Financial Times in the Investment Companies section of the London Share Service. Share price information can also<br />
be obtained from many financial websites.<br />
Notification of change of address<br />
Communications with shareholders are mailed to the registered address held on the share register. A change of address or other<br />
amendment should be notified to the Company’s registrar, Computershare Investor Services PLC, under the signature of the registered<br />
holder.<br />
Trading shares<br />
The Company’s Ordinary and ‘C’ Shares can be bought and sold in the same way as any other quoted company on the London Stock<br />
Exchange via a stockbroker. The primary market maker for <strong>Foresight</strong> 2 VCT plc is Landsbanki (see over for details). Investment in VCTs<br />
should be seen as a long-term investment and shareholders selling their shares within three years of original purchase (five years post-<br />
6 April 2006) may lose any tax reliefs claimed. Investors who are in any doubt about selling their shares should consult their<br />
independent financial adviser.<br />
Please call <strong>Foresight</strong> <strong>Group</strong> (see details below) if you or your adviser have any questions about this process.<br />
Indicative financial calendar<br />
January 2009 Announcement of preliminary results for the year ended 30 September 2008<br />
January 2009 Posting of the Annual Report for the year ended 30 September 2008<br />
January 2009 Annual General Meeting<br />
June 2009 Announcement of Interim Results for the six months ended 31 March 2009<br />
Open invitation to meet the Investment Manager<br />
As part of our investor communications policy, shareholders can arrange a mutually convenient time to come and meet the Company’s<br />
investment management team at <strong>Foresight</strong> <strong>Group</strong>. If you are interested please call <strong>Foresight</strong> <strong>Group</strong> (see details below).<br />
Enquiries<br />
Contact: Please call <strong>Foresight</strong> <strong>Group</strong>, for any queries relating to <strong>Foresight</strong> 2 VCT plc:<br />
Telephone: 01732 471800<br />
Fax: 01732 471810<br />
e-mail: info@foresightgroup.eu<br />
website: www.foresightvct.com<br />
<strong>Foresight</strong> 2 VCT plc is advised by <strong>Foresight</strong> <strong>Group</strong> LLP, which is authorised and regulated by the Financial Services Authority. Past<br />
performance is not necessarily a guide to future performance. Stock markets and currency movements may cause the value of<br />
investments and the income from them to fall as well as rise and investors may not get back the amount they originally invested. Where<br />
investments are made in unquoted securities and smaller companies, their potential volatility may increase the risk to the value of, and<br />
the income from, the investment.
Half-Yearly Financial Report for the six months ended 31 March 2008<br />
17
Corporate Information<br />
<strong>Foresight</strong> 2 VCT<br />
ECA Court<br />
South Park<br />
Sevenoaks<br />
Kent<br />
TN13 1DU<br />
Directors Sponsors and Stockbrokers<br />
Peter Dicks (Chairman) Landsbanki<br />
Roger Blears Beaufort House<br />
Bernard Fairman 15 St Botolph Street<br />
David Quysner London<br />
EC3A 7QR<br />
Company Secretary Auditors<br />
VCF Fund Managers Limited Ernst & Young LLP<br />
ECA Court 1 More London Place<br />
South Park London<br />
Sevenoaks SE1 2AF<br />
TN13 1DU<br />
Registered Office and Investment Managers Solicitors and VCT Tax Adviser<br />
<strong>Foresight</strong> <strong>Group</strong> Martineau Johnson<br />
ECA Court No. 1 Colmore Square<br />
South Park Birmingham<br />
Sevenoaks B4 6AA<br />
TN13 1DU<br />
Registrar Registered Number<br />
Computershare Investor Services PLC 05200494<br />
PO Box 82<br />
The Pavilions<br />
Bridgwater Road<br />
Bristol<br />
BS99 7NH<br />
Registrar’s shareholder helpline: 0870 703 6292<br />
2