Foresight Solar & Technology VCT plc – Annual Financial Report

[ad_1]

FORESIGHT SOLAR & TECHNOLOGY VCT PLC

Ordinary Shares Total Net Assets as at 31 March 2021: £24.2m
Ordinary Shares Net Asset Value per share as at 31 March 2021: 68.9p
Foresight Williams Technology Shares Total Net Assets as at 31 March 2021: £9.8m
Foresight Williams Technology Shares Net Asset Value per share as at 31 March 2021: 98.0p

Ordinary Shares Fund

  • After payment of 2.0p in dividends, Net Asset Value per Ordinary Share at 31 March 2021 was 68.9p (31 March 2020: 72.7p).
  • An interim dividend of 2.0p per Ordinary Share was paid during the year on 25 September 2020.
  • At 31 March 2021, the fund held positions in 11 UK solar assets, with a total installed capacity of 69.7MW.
  • During the year, our existing portfolio companies successfully completed the disposal of its holdings in Littlewood and Telecomponenti.

Foresight Williams Technology Shares Fund

  • During the year, under the Offers for subscription for the Foresight Williams Technology Shares fund (the “FWT Shares fund”), dated 20 December 2019 and 30 December 2020, £8.9m of new funds were raised.
  • During the year, the fund invested in its first four investments in Additive Manufacturing Technologies Limited, Audioscenic Limited, Cambridge GaN Devices Limited & Refeyn Limited, investing a total of £1.4m.
  • Since the end of the reporting period, a further £2.5m has been raised, bringing the total funds raised to £12.5m.
  • Since the end of the reporting period, a further seven investments have been made, bringing total deployment to £5.0m.

Chairman’s Statement

On behalf of the Board, I am pleased to present the Annual Report and Accounts for Foresight Solar & Technology VCT Plc for the year ended 31 March 2021 and to provide you with an update on the developments affecting the Company.

As with previous recent publications, my introduction to the Annual Report and Accounts will be split between the two share classes, the Ordinary Shares and the FWT Shares, with a general section for the Company as a whole at the end.

ORDINARY SHARES

Performance and portfolio activity
The underlying net asset value decreased by 1.8p per Ordinary Share before deducting the 2.0p per Ordinary Share dividend paid during the year.

This decrease was driven by a fall in the underlying value of the portfolio caused by a further reduction in market power prices forecast by the energy industry’s independent, external modelling agencies. The COVID-19 pandemic has been a factor in the decrease in the market forecast power prices, but otherwise will have a limited impact on the assets within the investment portfolio given their underlying nature, and as a result of the strategic decision to maintain a high proportion of fixed revenues linked to government subsidies and fixed price arrangements in the short and medium term.

Furthermore, during the first UK national lockdown in April, the Investment Manager moved swiftly to implement its Business Continuity Plan and co-ordinated closely with its operational service providers to ensure the safety of its staff and stakeholders and the operational stability of the portfolio. This rapid and co-ordinated action between key service providers meant that there was no operational disruption during the year as a result of the pandemic.

There were no new acquisitions in the UK portfolio during the year. As reported in the Interim Report to 30 September 2020, the sale of the Italian rooftop asset, Telecomponenti, completed in December 2020, delivering a return of 1.2x to the Company.

The Board was also pleased with the Investment Manager’s sale of the Littlewood site, completing in December 2020 at a material uplift to its valuation pre-sale. A sale of Greenersite, the smallest asset in the portfolio, is also being pursued.

Following the award of the Spanish claim (equivalent to £2m-£2.5m, or 5.7-7.1p per Ordinary Share), consistent with prior communications, 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 now 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.

The overall performance of the Ordinary Shares remains robust and the total return since inception as at 31 March 2021 was 114.9p per Ordinary Share.

Cash and working capital
The Ordinary Shares had cash and liquid resources of £0.5m at 31 March 2021 (excluding cash held in portfolio companies).

The Company receives regular interest and loan stock payments and dividends from its underlying investments enabling it to continue to fund its dividend policy as well as meeting expenses in the ordinary course of business as they fall due.

Dividends and share buybacks
In its original prospectus, the Board’s stated objective was to pay dividends of 5.0p per Ordinary Share each year throughout the life of the Company after the first year. The level of dividends was not, however, guaranteed.

Following the completion of the tender offer last year, the Board considered the future dividend policy of the Ordinary Shares fund. With the objective of maximising long-term future returns for Ordinary Shareholders, the Board will endeavour to pay out dividends derived from the income generated by the underlying portfolio, rather than a fixed pence per share. The Board and the Investment Manager hope that this may be enhanced by additional ‘special’ dividends as and when particularly successful portfolio exits are made. The impact of COVID-19 will be taken into consideration when the Board considers dividends in the near term.

During the year, an interim dividend of 2.0p per Ordinary Share was paid on 25 September 2020. This means that total dividends of 46.0p per Ordinary Share have been paid during the ten years since launch.

During the year under review, the Ordinary Shares fund repurchased 351,929 shares for cancellation at a cost of £243,000, at an average discount to NAV of 2.0%. No new Ordinary Shares were issued during the year.

Management fees
The annual management fee of the Ordinary Shares fund is calculated as 1.5% of Net Assets and equated to £379,000 during the year.

In the context of realisations achieved during the year and the continuing professional management of the portfolio, the Board believe that the annual management fee represents good value for investors.

Green Economy Mark
The Board is pleased that the Company continues to be classified as a Green Economy Issuer by the London Stock Exchange (“LSE”). This is an initiative launched by the LSE supporting sustainable finance on its markets. The Green Economy Mark recognises listed companies with 50% or more of revenues from environmental solutions.

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 highgrowth-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 over £50 million to date and has made over twenty investments across a range of different sectors so far.

Fundraising and share issues
The Offers for subscription, dated 20 December 2019 and relaunched on 30 December 2020, are each up to £20 million (with an overallotment facility for up to an additional £10 million) through the issue of FWT Shares. During the year, across both Offers, 8.9 million FWT Shares were allotted, raising a further £8.9m, bringing the total funds raised to over £10.0m.

Post year end, a further 2.5 million FWT Shares were allotted, increasing the total funds raised to £12.5m.

Portfolio and deal activity
As at year end, the FWT Shares had made investments totalling £1.4m in four exciting companies: Additive Manufacturing Technologies Limited, Audioscenic Limited, Cambridge GaN Devices Limited and Refeyn Limited. Post year end, the FWT Shares made investments in six new companies plus one follow on investment in Additive Manufacturing Technologies Limited. Further details of all 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 £75,000 during the year.

COMPANY

Auditor
The Board launched a tender for its audit contract following the signing of the 2020 Annual Report and Accounts. The previous auditor, KPMG LLP, was invited to tender alongside several other firms. Following this tender process, Deloitte LLP was appointed as company auditor for the year ending 31 March 2021. The Board is pleased with the appointment but would like to record its thanks to KPMG LLP for its services and advice over the past seven years.

Board composition
Mike Liston resigned from the Board on 3 February 2021. On behalf of the Board, I would like to place on record our thanks to Mike for his contribution to the success of the Company since launch and wish him well for the future.

[ad_2]

Read More:Foresight Solar & Technology VCT plc – Annual Financial Report