This blog gives you the latest topical news plus some informal comments on them from ShareSoc’s directors and other contributors. These are the personal comments of the authors and not necessarily the considered views of ShareSoc. The writers may hold shares in the companies mentioned. You can add your own comments on the blog posts, but note that ShareSoc reserves the right to remove or edit comments where they are inappropriate or defamatory.

Foresight 4 VCT – Big Changes Needed at the AGM

ShareSoc recommends that shareholders vote against the re-election of Raymond Abbott and Michael Gray and against the re-appointment of KPMG.

(NOTE: If you have already voted in favour, its not too late to change your vote and resend your proxies. Additional form(s) of proxy may be obtained by contacting Computershare Investor Services plc on 0870 703 6385.)

BACKGROUND OF FAILURE

Foresight 4 VCT has a litany of past failures in investment performance and corporate governance.

It made major £30m errors in several reserves in its accounts 3 years running on a £50m fund.

The Audit Committee Chairman who presided over this failure in 2013-2015 was Raymond Abbott who, quite incredibly, has been reappointed to the Board and immediately made Board Chairman after the merger with Foresight 3 VCT.

KPMG, the auditors who missed this fiasco 3 years running despite it being over 30 times their audit materiality tests, have yet again been proposed for reappointment without explanation as to their past failures.

The failure in reserves reporting led to the Board underpaying C Class shareholders a dividend in Aug 2015 due to, inter alia insufficient distributable reserves. The Board then paid a dividend to Ordinary shareholders in December 2015 beyond the level of distributable reserves shown in the accounts as approved by Board and Auditors. This dividend was approved by the Board, ostensibly on an illegal basis, and in our view requires a GM to correct it.

One concerned shareholder has written to the FRC referring these Auditor and the Audit Committee failures for their review and action – more details of this can be found here:

FRC Foresight 4 VCT Letter
Foresight 4 VCT accounts 2012-2017

In addition to these serious errors, the company continues to have a very poor investment performance against its peers (bottom decile over 3, 5 & 10 years on an AIC VCT NAV total return basis).

It is clear that change is desperately needed and this can only happen if the shareholders express their clear wishes in the AGM.

PREVIOUS SHARESOC ACTION
Last year ShareSoc led a campaign to unseat the directors and the auditors. 49.99% voted against the Chairman, Philip Stevens and over 47% against Peter Dicks &  Simon Jamieson and over 42% against KPMG. See here for further background – https://www.sharesoc.org/campaigns/foresight-4-vct/

What has happened since then has just shown arrogance by the Board and Manager and contempt for shareholders.

A flawed directors selection process conducted by the same discredited directors has led to the appointment of one new director, Michael Gray, who is a non UK resident, has no VCT experience and on appointment held no shares in Foresight 4 VCT. Since appointment he is the only director untainted by the past. However he has failed to use his position to launch an independent inquiry by a 3rd party lawyer and accountant to investigate what went wrong in the past with the accounting and audit and corporate governance. Worse he has supported the appointment of Raymond Abbott, the very man who presided over the initial debacle, to the Board and to Chairman. Shareholders deserve better and more active directors to protect their interests.

ShareSoc therefore recommends a vote against the re-election of Michael Gray and Raymond Abbott as directors.

KPMG have never explained to shareholders how Foresight’s accounting for reserves failure came to pass, how the internal controls missed it and how the Audit Committee and Board failed to notice the error. Nor have KPMG or Foresight 4 VCT explained how controls have subsequently been improved to prevent its recurrence. Nor have they explained KPMG’s own failure to spot these material errors for 3 years running and why they are fit to continue as auditors. It is unclear how KPMG have added value to your company over the last 5 years.

ShareSoc therefore recommends a vote against KPMG being re-appointed as Auditor.

If you are a holder of VCT shares you may wish to join our VCT Investors Group, more details of which can be found here – https://www.sharesoc.org/campaigns/vct-investors-group/

Thanks for your support.

2 Comments
  1. niq 17th September 2017 at 9:51 pm

    Previously posted elsewhere, when this entry was missing the commment facility!

    This AGM overlaps with the tender offer: having tendered all my shares, I don’t know how many I’ll still own at the time of the AGM.

    I submitted my voting instructions to H-L with a request to vote whatever shares I still hold. They replied that because final settlement doesn’t happen until the 29th, they can’t vote my shares this time.

    I don’t understand that reasoning, but I can’t help thinking that the timing of the tender offer relative to the AGM might affect other shareholders ability and motivation to vote, and perhaps materially affect the outcome.

  2. Cliff Weight 24th September 2017 at 10:04 am

    Tender results announced 22/9/17.

    Only 13% of shares tendered in total; excess tender was scaled back to 48%. So if 1000 shares tendered; 74 accepted as basic and 926 x 0.48 = 448 accepted as excess for a total of 522 shares ie 52% at 64p approx (7.5% discount to latest NAV).

    A surprisingly low take up but a good result for those who did. Tendered shares accepted will lose their voting rights at the AGM.

    … and another tender promised for next year!

    https://www.investegate.co.uk/foresight … 0021H6092/

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