Regulatory Filings • Oct 22, 2013
Regulatory Filings
Open in ViewerOpens in native device viewer
Managed by Beringea LLP
If you are in any doubt about the contents of this document, you should consult your bank manager, solicitor, accountant or other independent Financial Adviser duly authorised under the Financial Services and Markets Act 2000 ("FSMA") who specialises in advising on investment in shares and other securities without delay.
This document constitutes a securities note (the "Securities Note"). Additional information relating to the Company is contained in a registration document (the "Registration Document"). A brief summary conveying the essential characteristics of, and risks associated with, the Company and the new ordinary shares in the capital of the Company (the "New Ordinary Shares"), which are being offered for subscription (the "Offer"), is contained in a summary note (the "Summary"). The Securities Note, the Registration Document and the Summary together constitute a prospectus (the "Prospectus") dated 22 October 2013. The Prospectus has been prepared in accordance with the Prospectus Rules made under section 74 of FSMA and approved by the Financial Conduct Authority ("FCA") in accordance with section 84 of FSMA.
Persons receiving this document should note that, in connection with the Offer, Howard Kennedy is acting for the Company and no-one else and, subject to the responsibilities and liabilities imposed by FSMA, will not be responsible to any other person for providing the protections afforded to customers of Howard Kennedy nor for providing advice in connection with the Offer. Howard Kennedy is acting as sponsor of the Company in connection with the Offer, and is authorised and regulated in the United Kingdom by the FCA.
Application will be made to the UK Listing Authority for the New Ordinary Shares to be admitted to the premium segment on the Official List. Application will also be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on its main market for listed securities. It is expected that Admission will become effective, and that dealings in the New Ordinary Shares will commence, within 10 Business Days of the issue of such New Ordinary Shares.
Your attention is drawn to the risk factors set out on pages 4 and 5 of this document and to the terms and conditions of application set out on pages 43 to 46 of this document.
The Company and its Directors, whose names appear on page 50 of this document, accept responsibility for the information contained in the Prospectus. To the best of the knowledge of the Company and the Directors (who have taken all reasonable care to ensure that such is the case) the information contained in the Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information.
To raise up to £15,000,000 by way of an issue of New Ordinary Shares in the Company, with an over allotment facility of up to a further £5,000,000, payable in full in cash on application
ProVen VCT plc (Registered Number 3911323) (incorporated in England & Wales under the Companies Act 1985)
The procedure for, and the terms and conditions of, application under this Offer are set out at the end of this document together with an Application Form.
Completed Application Forms must be posted or delivered by hand to the Receiving Agent, Beringea LLP, 39 Earlham Street, London WC2H 9LT. The Offer opens on 22 October 2013 and will close not later than 1.00 pm on 4 April 2014 in respect of the 2013/2014 Offer and not later than 1.00 pm on 30 May 2014 in respect of the 2014/2015 Offer, or as soon as the Offer is fully subscribed. The Directors, in their absolute discretion, may decide to increase the size of the Offer up to a maximum of £20,000,000, close the Offer earlier or extend the closing date of the 2014/2015 Offer to a date no later than 30 September 2014.
This document should be read in conjunction with the Registration Document and the Summary, copies of which are available from the locations listed on page 38 of this document.
No person receiving a copy of this document or an Application Form in any territory other than the UK may treat the same as constituting an offer or invitation to him to subscribe for or purchase New Ordinary Shares unless, in such territory, such offer or invitation could lawfully be made.
| page | |
|---|---|
| Risk Factors |
4 |
| Expected Timetable |
7 |
| Offer Statistics |
7 |
| Discount for early investment |
7 |
| Letter from the Chairman |
8 |
| Why invest in the Offer? |
9 |
| Growth Capital Investing |
12 |
| Part 1 – The Offer |
17 |
| Part 2 – Tax considerations for Investors |
31 |
| Part 3 – Conditions to be met by Venture Capital Trusts |
33 |
| Part 4 – Other information relating to the Company |
35 |
| Part 5 – Rules of the Dividend Reinvestment Scheme |
39 |
| Part 6 – Terms and Conditions of Application |
43 |
| Definitions | 47 |
| Corporate Information |
50 |
| Application Procedure |
51 |
| Application Form |
As a prospective Investor there are a number of risk factors which you should be aware of before investing in the New Ordinary Shares. Prospective Investors should read the whole of the Prospectus and not rely solely on the information in the section entitled "Risk Factors". The business and financial condition of the Company could be adversely affected if any of the following risks were to occur and as a result the trading price of the New Ordinary Shares could decline and Investors could lose part or all of their investment.
The Directors consider the following risks to be material for potential Investors, but the risks listed below do not necessarily comprise all those associated with an investment in the Company and are not set out in order of priority. Additional risks and uncertainties currently unknown to the Directors (such as changes in legal, regulatory or tax requirements), or which the Directors currently believe are immaterial, may also have a materially adverse effect on its financial condition or prospects or the trading price of the New Ordinary Shares.
The Directors draw the attention of potential Investors to the following risk factors which may affect the Company's performance and/or the availability of tax reliefs:
Qualifying Investments made by the Company will be in companies whose shares are not readily marketable and, therefore, may be difficult to realise. There may also be constraints imposed on the realisation of investments in order to maintain the VCT tax status of the Company.
As a minority investor the Company will not control the boards of directors of investee companies and may not be in a position to fully protect its interests.
| Offer opens | 22 October 2013 |
|---|---|
| Final closing dates and deadlines for receipt of Applications, unless fully subscribed earlier: 1 |
|
| 2013/2014 Offer 2014/2015 Offer |
1.00pm on 4 April 20141 1.00pm on 30 May 20141 |
| First admission | within 10 Business Days of the first allotment2 |
| Dealings commence | within 10 Business Days of each allotment2 |
| Share and tax certificates sent out | within 15 Business Days of each allotment2 |
1 The Directors reserve the right to extend the 2014/2015 Offer at their absolute discretion but to a date no later than 30 September 2014. The Offer will close earlier than the dates stated above if it is fully subscribed.
2 New Ordinary Shares will be allotted and issued in respect of valid applications received for the 2013/2014 Offer on 4 April 2014 and any other date prior to 4 April 2014 on which the Directors decide, and for the 2014/2015 Offer on 30 May 2014 and any other dates after 5 April 2014 and prior to the close of the Offer on which the Directors decide.
| Maximum amount to be raised | £20,000,000* |
|---|---|
| Minimum Investment per Investor | £5,000 |
| Maximum estimated number of New Ordinary Shares to be issued based on the NAV per Ordinary Share as at the date of this document |
19,817,073** |
| Maximum net proceeds for the Company, after issue costs | 19,500,000** |
| Maximum expenses of the Offer | £1,100,000*** |
* Assuming the over allotment facility of up to a further £5,000,000 is used.
** Assuming the over allotment facility of up to a further £5,000,000 is used, a Promoter's Fee of 2.5% and no Adviser Charge.
*** Assuming the over allotment facility of up to a further £5,000,000 is used, a Promoter's Fee of 5.5% and no Adviser Charge.
Applicants (and their spouses) who had an existing shareholding in one of the ProVen VCTs on 30 September 2013, and whose Application Form is received by 1.00 pm on 31 January 2014, will be entitled to additional New Ordinary Shares with an aggregate subscription price equivalent to 2% of the amount subscribed. All other Applicants whose Application Form is received by 1.00 pm on 31 January 2014 will be entitled to additional New Ordinary Shares with an aggregate subscription price equivalent to 1% of the amount subscribed. The subscription price of the Additional Shares will be met by the Manager.
ProVen VCT plc Registered in England & Wales no: 3911323 39 Earlham Street London WC2H 9LT Tel: 020 7845 7820 22 October 2013
Dear Potential Investor
I am delighted to be able to introduce the latest share offer (the "Offer") from ProVen VCT, which is an opportunity to invest in the existing investment portfolio of one of the best performing VCTs over the last 10 years. More details of the Company's historic performance are given on page 9.
ProVen VCT has also paid more dividends since launch than almost all other generalist VCTs. Investors who participated in the original share offer and who continue to hold their shares have received a total of £1.16 in dividends for every £1 invested. The Company now has a target of paying dividends of approximately 5% of NAV each year. The board believes that this target is consistent with the NAV remaining broadly stable over time, although this will depend on the returns achieved by the Company's investments and cannot be guaranteed. Larger dividends may be paid if there is a realisation or series of realisations from the portfolio which results in an exceptionally large profit.
ProVen VCT is managed by Beringea (the "Manager"), an award winning venture capital fund manager which has over 25 years' experience of investing in unquoted companies and which has managed the Company since it was launched. Both of the generalist VCTs managed by Beringea, ProVen VCT & PGI VCT, are in the top five best performing generalist VCTs over the last 10 years.*
The Manager continues to experience a strong flow of new investment opportunities. The board of ProVen VCT has, therefore, decided to raise more funds to ensure that the Company can take full advantage of these opportunities.
More details of the Offer are set out on the following pages. To invest, please complete the Application Form at the end of this document. If you have any questions about the Offer or how to complete the Application Form, please call the Manager on 020 7845 7820. Please be aware, however, that the Manager is not able to give personal financial or tax advice.
I look forward to welcoming new Investors to the Company as well as existing Shareholders increasing their holdings.
Yours faithfully
Andrew Davison Chairman ProVen VCT plc
*Source: AIC 21 October 2013, as measured by share price total return.
The Offer is targeting returns which are greater than those available from investing in a portfolio of quoted companies, through the Company's proven strategy of investing in a portfolio of carefully selected small and medium sized private companies with the potential for rapid growth. For more information about the Company's investment strategy and examples of the types of businesses in which it invests, please see the section of this document headed "Growth Capital Investing".
The returns generated by the investment portfolio will be enhanced by several attractive tax benefits, including 30% income tax relief on the amount invested and tax-free dividends.
The Company has been managed since inception by Beringea LLP (and its predecessor companies), a specialist, award winning, venture capital firm, which manages more than £100 million of VCT assets. Beringea LLP is part of an international fund management group which manages more than \$500 million of venture capital assets.
ProVen VCT has net assets of £46.85 million.
ProVen VCT has an excellent track record over the last 10 years, being in fifth position in the generalist VCT ranking table, with a share price total return of £3.47 per £1 invested1.
| Position in generalist VCT ranking table1 | Share price total return per £1 invested1 |
|---|---|
| 5th/65 | £3.47 |
1 Source: AIC 21 October 2013. Share price total return is the return on an investment of £100 assuming dividends paid to shareholders are reinvested in the shares at the time the shares are quoted ex dividend.
The total return (NAV plus cumulative dividends paid) on the Ordinary shares since the launch of the Company in April 2000 is £1.66 per £1 invested. The annual rate of return to investors in ProVen VCT since launch, including initial income tax relief, is 8.6% p.a..
| Total return (NAV plus cumulative dividends paid) per £1 invested |
Cumulative dividends per £1 invested included in total return |
Annual rate of return since launch2 |
|---|---|---|
| £1.66 | £1.16 | 8.6% |
2 Includes initial income tax relief of 20%, the amount applicable when the Company was launched. This is calculated assuming that dividends are not reinvested.
Past performance is not a guide to future performance.
ProVen VCT has a target dividend yield of approximately 5% of NAV per annum. This is equivalent to a gross dividend yield to Investors of 7.1% p.a., after taking into account the initial 30% tax relief. As no tax is payable on VCT dividends, the effective gross dividend yield to a 40% taxpayer is 9.5% p.a.. The board believes that this target is consistent with the NAV remaining broadly stable over time, although this will depend on the returns achieved by the Company's investments and cannot be guaranteed. The objective of paying a dividend of approximately 5% of NAV each year is a target and there is no guarantee that this will be achieved.
| Target dividend yield | Tax-free yield after | Gross equivalent yield | |
|---|---|---|---|
| (% of NAV) | initial 30% tax relief1 | 40% taxpayer | 45% taxpayer |
| 5.0% | 7.1% | 9.5% | 10.3% |
1 Target dividend yield divided by 0.7 to allow for the 30% initial tax relief. The effective subscription price per New Ordinary Share paid by Investors will be higher than the NAV at the date of allotment of Ordinary Shares because of initial charges and/or fees paid to Financial Advisers.
ProVen VCT may pay a special dividend in addition to the target 5% yield in the event of there being a realisation or series of realisations from the portfolio which results in an exceptionally large gain.
The average dividend yield over the past 5 years has been 7.3% p.a. (before taking account of tax reliefs), with a minimum of 5.0% in every year and a maximum of 12.0%.
| Period to the end of February2 | 2009 | 2010 | 2011 | 2012 | 2013 |
|---|---|---|---|---|---|
| ProVen VCT | 12.0% | 8.2% | 6.0% | 5.0% | 5.0% |
2 Dividend yield for the financial years starting prior to the merger of the Ordinary, C and D Shares (i.e. up to and including the year ended 29th February 2012) is calculated as total dividends in £ paid by ProVen VCT for each financial year, divided by the total net asset value of ProVen VCT at the start of the relevant financial year. Dividend yield for the financial year ended 28th February 2013 is calculated as the dividend per Ordinary Share for the year, divided by the NAV per Ordinary Share on 29th February 2012. No account is taken in the table above of the initial tax relief.
The level of previous dividend payments is not a guide to future dividend payments, which will depend on there being sufficient distributable reserves and cash resources, and on VCT regulations.
Investors who would prefer a capital growth option can re-invest their dividendsthrough the Company's dividend reinvestment scheme to obtain more shares in the Company. Any amounts reinvested should be eligible for income tax relief of 30%, subject to the usual VCT restrictions. Investors wishing to take advantage of this opportunity should sign in the relevant box in Section 5 of the Application Form.
ProVen VCT has a policy of buying back its shares at a discount to NAV of 5%. A policy of buying back shares from all Shareholders who wish to sell, subject to an annual limit of 10% of the shares in issue, has been operated by the Company continuously since July 2004.
Investors should note that if they sell their New Ordinary Shares less than 5 years from the date of allotment they will have to repay the initial tax relief.
Investors in the Offer will gain immediate access to an established portfolio of 28 companies. This has a number of benefits to Investors:
Visibility of portfolio: Investors are investing into a known portfolio, rather than a "blind pool".
Diversification: ProVen VCT's assets are spread over 28 companies, which means that poor performance by any single company would have only a limited effect on the Company's overall performance.
Maturity of investments: Several of the investments in ProVen VCT's portfolio are in companies which have grown substantially in value since ProVen VCT invested. The Manager is planning to sell several of these companies within the next 1-2 years. Any profits made on these disposals will be available for distribution to Shareholders as tax-free dividends in line with the Company's dividend policy.
Some examples of recent sales of successful investments from the ProVen VCT portfolio are given in the table below
| Year | Company | ProVen VCT Investment |
Sale Proceeds | Multiple of investment |
|---|---|---|---|---|
| 2013 | Fjordnet | £1.3m1 | £4.9m1 | 3.8x |
| 2013 | Tossed | £1.2m | £1.6m | 1.4x |
| 2011 | Steak | £0.5m | £0.9m2 | 2.0x |
| 2011 | Saffron Digital | £0.5m | £2.8m | 5.8x |
1 Excludes the partially utilised working capital facility provided by ProVen VCT
2 Excludes potential future receipts from an "earn-out"
The past performance of these investments is no guide to the future performance of other portfolio companies. Some investments have been written off or disposed of at zero value.
The Manager has many years' experience of investing in unquoted small and medium sized companies and its approach incorporates several features which are designed to reduce substantially the risk profile of the Company:
The VCT rules now allow VCTs to make larger Qualifying Investments in bigger companies. A VCT can now invest up to £5 million p.a. (previously £1 million p.a.) in companies with up to 250 employees (previously 50) and gross assets of £15 million (previously £7 million). The ability to invest in more substantial companies should help to reduce the risk of investing in a VCT.
The Company is seeking to raise up to £15 million through the Offer, with an over allotment facility of up to a further £5 million. The minimum subscription is £5,000 and subscriptions for larger amounts can be made in multiples of £1,000. There is no maximum size of investment but tax reliefs are only available on investments in VCTs of up to a maximum of £200,000 per person per tax year. Details of the Pricing Formula which will determine the number of New Ordinary Shares to be allotted are given on page 28.
A discount of 2% off the normal subscription price will be given to existing shareholders (and their spouses) in one of the ProVen VCTs whose Application Forms are received before 31 January 2014. All other Investors whose Application Forms are received before 31 January 2014 will receive a 1% discount to the normal subscription price. The discount will be given in the form of additional New Ordinary Shares which will be paid for by the Manager.
An Application Form can be found at the end of this document.
The small and medium sized company ("SME") sector is a vital part of the UK economy, accounting for over half of private sector employment and turnover. Some of these companies have the potential to grow very quickly, given access to sufficient finance and support for management. However, SMEs often find it difficult to raise the capital they need. Banks are frequently not willing to lend to SMEs because of a lack of security for their loans. Furthermore, as private companies, SMEs cannot access public stock markets to raise finance.
The investment strategy of ProVen VCT is to identify a number of small and medium sized UK private companies with the potential to grow rapidly and to provide them with the capital and management support they need to be able to take full advantage of this potential. In return for this capital, ProVen VCT will take a shareholding in the company, allowing it to benefit from future increases in the business's value.
Rapidly growing SMEs make attractive acquisition targets for larger companies looking for ways to boost their own rate of growth. A sale to a larger business is, therefore, the most frequent means by which Proven VCT achieves profitable disposals of successful portfolio companies. Any profit made on an investment will then be available to be paid out to Shareholders as a dividend in line with the Company's investment policy.
One of the key reasons why some SMEs are able to grow so quickly is precisely the fact that they are relatively small at the point of investment. While still challenging, it is much easier to achieve a ten-fold growth in the turnover of a company by increasing sales from £1 million to £10 million, than it is to increase sales from £100 million to £1 billion.
Another attraction of investing in SMEs is that, because they tend to focus on quite specific market sectors, they are much less dependent than larger companies on the performance of the whole economy to generate growth. If an SME develops new products or services which are significantly differentiated from, and superior to, other offerings, they can create a demand which drives exceptional rates of growth, far exceeding the growth rate of the overall economy. Some examples of ProVen VCT investee companies which have achieved this are given on the following pages.
This dependence on a few key products or services does, however, make SMEs more vulnerable to changes in their markets, such as the introduction of competing offerings. This is why, when investing in SMEs, it is important to have a diversified portfolio of investments such as the one that ProVen VCT has.
A key feature of SMEs which differentiates them from most quoted companies is that the directors and other key employees usually have sizeable shareholdings. This means that the management team is highly incentivised to make their business grow, thereby increasing the value of their personal investments, and to realise this value through a sale of the business at an appropriate time.
Investing in private companies, and taking a significant equity stake in the business, allows the Manager to have a significant influence over the business. By appointing one of its investment managers to the board of each company in which ProVen VCT invests, the Manager is able to add significant value to the business, as well as to identify any potential problems at an early stage and to ensure that appropriate action is taken.
There is also much greater flexibility over how investments in private companies are structured, compared to investments in quoted companies, which are normally in ordinary shares only. ProVen VCT is able to use a variety of financial instruments, which includes providing part of its funding as secured loan notes, enabling it to reduce the risk of its investment while continuing to benefit from an increase in the value of the equity.
In identifying companies for ProVen VCT to invest in, the Manager is looking for companies which have the following key characteristics:
The funds provided by ProVen VCT will be deployed in accordance with its investment policy and typically used by a portfolio company for one, or a combination, of the following purposes:
Many of the companies in which ProVen VCT invests are in the "digital media" sector, encompassing businesses which use the internet to distribute information or content to their customers. The internet has the dual advantage of providing a low cost and highly scalable route to market, which means that increasing customer demand can quickly be converted into rapid business growth. There have been a number of high profile businesses which have benefited from the scalability provided by the internet, including Google and Facebook. ProVen VCT also invests in companies which provide digital media services, including digital design and on-line marketing services, to other businesses.
Beringea, the manager of ProVen VCT, has developed substantial experience of investing in the digital media sector over the past 10 years and as a result of its reputation in this area it sees many opportunities to invest in exciting digital media companies. This experience also gives Beringea the ability to evaluate these opportunities effectively and to add value to the companies in which ProVen VCT invests.
In order to ensure that its investment portfolio is broadly diversified, ProVen VCT also invests in SMEs in a wide variety of other sectors, across most of the UK economy.
A number of examples of growth capital investments made by ProVen VCT in the past are given below. Potential investors should note that ProVen VCT has already sold its investments in Saffron Digital and Fjordnet and they will not, therefore, gain exposure to these companies by investing in the Offer. The past performance of these companiesis not a guide to how they, or other companiesin which ProVen VCT invests, will perform in the future.
Fjordnet is a pioneering digital design agency which works with its clients, usually global businesses, to create service solutions that work across multiple technology platforms. It created the BBC iPlayer for mobile devices and has worked on multiple projects for Nokia, among other clients.
Having established offices in London, Helsinki and Berlin, Fjordnet approached Beringea for funding to open further offices in Madrid and New York. This investment completed in December 2008. Since then, Fjordnet has been one of the fastest growing companies in the UK, appearing in The Sunday Times Fast Track 100 list of the UK's fastest growing companies in both 2009 (47th) and 2010 (29th).
In May 2013 Fjordnet was sold to Accenture, a global management consulting, technology services and outsourcing company. The deal valued ProVen VCT's equity investment at £4.9m, which is 3.8 times cost, and generated a return of 44% per annum over the life of the investment.
Saffron is a global video delivery platform company. Founded in 2002, Saffron's unique solutions have been used by some of the biggest names in media to deliver premium video-on-demand services to their viewers across the world. Saffron is the trusted choice of many partners worldwide, including all the major Hollywood studios, Dolby and Deutsche Telekom.
In 2007 ProVen VCT and PGI VCT invested £1.2 million to finance the development and marketing of a range of new services. These were a great success and resulted in extremely rapid growth over the next three years. In 2010 Saffron won Best Video Service Provider for the second year running at the Mobile Entertainment Awards and the company's exceptional year-on-year growth secured its place in the Media Momentum Top 50, the Tech Media Invest Top 100 and Deloitte Technology Fast 50.
In February 2011 Saffron was sold to the HTC Corporation, the global designer of smartphones. The deal valued the company at £30m and generated a return for ProVen VCT of 5.8 times the original investment in a period of under four years, a return of 65% per annum.
Espresso Group is the UK's leading provider of digital education content for schools, delivered over the internet. The company launched its first service, Espresso Primary, in 2000. Following ProVen VCT's initial investment into Espresso in 2001, the number of subscribers to Espresso Primary grew rapidly, and the company featured in The Sunday Times Tech Track 100 list of the UK's fastest growing technology companies three years in a row. Over 9,000 UK primary schools now subscribe to Espresso Primary, representing around 45% of all UK primary schools.
In 2007, Espresso acquired the educational business of Channel 4 and used the content obtained through this acquisition to develop a service for secondary schools, called 4 Learning Clipbank.
Espresso has also expanded internationally. It launched its first overseas service in Sweden in 2007. This was followed in April 2011 by the launch of Espresso Elementary in the USA.
The Company's investment in Espresso comprises ordinary shares representing 20.1% of the company's equity. The investment is currently valued at 2.6 times cost.
Monica Vinader is a high-end, award-winning fashion jewellery brand. The company began distributing the eponymous jewellery line in 2007, starting with high end department stores such as Liberty and Harrods. Sales grew rapidly and by 2010 had reached significant enough levels to attract Beringea's initial investment.
ProVen VCT and PGI VCT made their first investment in September 2010 to finance the opening of the first Monica Vinader stand-alone store in South Molton Street, in London's Mayfair. This opened in August 2011, exceeding expectations in both the first and second year of operation. Total group turnover has increased by more than 5 times in the three years since the VCTs invested.
The VCTs have recently invested a further £1.5 million, as part of a £2.5 million total round, to open several more Monica Vinader stores, to increase the company's on-line presence and to expand the product range. The company is also planning to expand internationally. The Clark group, backers of Links of London prior to itssale to Folli Follie, have also invested, and the business plans to open a Canary Wharf shop in November 2013.
Chess Technologies is a precision engineering company which designs and manufactures multi-axis positioning equipment for military surveillance applications in land, sea and air applications. By the end of 2007 turnover had grown to £1.8 million, with an operating profit of £80,000. However, Chess had reached the limit of its overdraft facility and it was clear that the business could not continue to grow without the injection of substantial additional capital.
ProVen VCT and PGI VCT provided an investment of £1.5 million in June 2008. This was used to finance the development of additional products, to expand the production facilities, to invest in sales and marketing and to finance working capital. This enabled the company to grow its turnover by 5 times by 2013, to £9.2 million and its operating profit by 15 times to £1.2 million. Over the same period the number of people employed by the company has increased from 26 to 73.
Chess continues to expand both its product range and the number of customers it supplies, in both domestic and international markets.
The Directors believe that the Offer will benefit both new and existing Shareholders by enabling the Company to:
The net proceeds of the Offer will be applied in accordance with the Company's investment policy, which is set out below.
The Company's investment objective is to achieve long term returns greater than those available from investing in a portfolio of quoted companies, by investing in:
within the conditions imposed on all VCTs, and to minimise the risk of each investment and the portfolio as a whole.
The Company's investment policy covers several areas as follows:
The Company seeks to make investments in VCT qualifying companies with the following characteristics:
The Company invests in companies at various stages of development, including those requiring capital for expansion and management buy-outs, but not in start-ups. Investments are spread across a range of different sectors.
Funds not invested in qualifying investments will be held in cash, liquidity funds, fixed interest securities of A-rating or better, investments originated in line with the Company's qualifying VCT policy but which do not qualify under the VCT rules for technical reasons and debt and debt-related securities in growth companies.
In continuing to maintain its VCT status, the Company complies with a number of regulations as set out in Part 6 of the Income Tax Act 2007. How the main regulations apply to the Company is summarised as follows:
It is not the Company's intention to have any borrowings. The Company does, however, have the ability to borrow a maximum amount which is equal to the nominal capital of the Company and its distributable and undistributable reserves, currently equal to £46.85 million. There are no plans to utilise this facility at the current time.
The Directors do not intend to vary the Company's investment policy, which will be adhered to for at least three years following the Offer. However, should a change in the investment policy (including the conditions above) be deemed appropriate this will be done with Shareholders' approval and in accordance with the Listing Rules.
Over the three yearsfollowing the Offer, a proportion of the fundsraised will be progressively invested in Qualifying Investments with the objective that ultimately approximately 75% of the Company's assets will be invested in Qualifying Investments. Initially, whilst suitable Qualifying Investments are being identified, the funds will be invested in a portfolio of non-Qualifying Investments including cash deposits, money market funds, fixed interest securities, secured loans, debt and debt related securities in growth companies (directly or indirectly) and non-Qualifying venture capital investments. Progressively, this portfolio will be realised in order to fund investments in Qualifying Investments. Following the initial three year investment period the maximum exposure of the Ordinary Share portfolio to Qualifying Investments will be 80%. The remaining portion of the Ordinary Share portfolio will be retained in non-Qualifying Investments to fund the annual running costs of the Company, to reduce the risk profile of the overall portfolio and to fund any further investments in its investee companies.
It is expected that after investing 75% of its assets in Qualifying Investments, the Ordinary Share portfolio will have at least 35 investments (assuming full subscription) to provide diversification and risk protection. Under current VCT legislation a Qualifying Company's gross assets may not exceed £15 million, and it must have fewer than 250 employees, prior to investment. No single investment will represent more than 15% of the Company's investments at the time the investment is made.
With many years experience of managing the risks involved in investing in unquoted companies, Beringea has implemented a number of measures designed to reduce risk as much as possible, given the investment strategy. Key risk management features include:
• Broad portfolio of companies – The Company will invest in a broad portfolio of different companies, thereby reducing the potential impact of poor performance by any individual investment;
In order to ensure that new investment opportunities are apportioned fairly between the ProVen VCTs, their allocation is governed by the terms of a co-investment agreement. This broadly provides that new investments which meet the Company's investment strategy will be offered first to the Company and PGI VCT. These investments will be apportioned to these companies in the chronological order in which funds were raised. For funds raised in the same financial year the allocation will be in proportion to the total VCT investment value of the relevant fund raisings. The amount which is apportioned to each VCT will be restricted, in order to ensure good portfolio diversification.
Investments which meet the investment policy of ProVen Planned Exit VCT will normally be offered first to ProVen Planned Exit VCT.
For each follow-on investment, the amount to be invested will be offered first to the ProVen VCTs that already have an investment in the target company, pro-rata to their existing investment.
The Company is managed by Beringea, an award winning, specialist venture capital firm which manages more than £100 million of VCT assets. Beringea has over 25 years experience of managing investments in unquoted companies and has managed the Company since it was launched in 2000. Beringea is part of an international fund management group which manages more than \$500 million of venture capital assets. Further details of the investment management agreement (as amended) between Beringea and the Company are set out in Part 6 of the Registration Document.
Beringea has used the experience gained over its 25 year history to develop a rigorous investment process designed to ensure the highest standard of investment decision making. The first stage of this is to select a small proportion of the large number of investment opportunities received by Beringea for further investigation. All of these opportunities are then subjected to a thorough due diligence investigation, comprising a review of the company's management, the market in which the company operates, its competitive position within the market and the opportunities and risks facing the business. The due diligence process usually involves detailed market research, including interviews with customers and suppliers, as well as building and reviewing financial models. Beringea may also appoint specialist professional advisers, such as accountants and market research consultants, to assist it with its investigation.
If there is a satisfactory outcome to the due diligence process, a formal proposal will be submitted to Beringea's investment committee for consideration. The investment committee has full discretion to make investment decisions on behalf of the Company.
Once an investment has been made, Beringea uses the experience of its investment management team to add as much value as possible to the investee company. It also monitors all investments closely to ensure that any problems are identified at an early stage, so that appropriate action can be taken swiftly if necessary. The key steps it takes to achieve this will normally include the following:
As an investment matures, Beringea is proactive about identifying opportunities for a profitable realisation in order to realise capital gains.
The investment management team comprises the following seven executives, who have more than 60 years combined experience of making venture capital investments. They are:
Malcolm is a founding partner of Beringea LLC. Over the last 25 years he has been responsible for the growth, development and management of the private equity business of Beringea in both the UK and the USA. In addition to sitting on the boards of ProVen VCT, ProVen Growth & Income VCT and ProVen Planned Exit VCT, he sits on the investment committees of the Beringea Group's other venture capital funds (Invest Michigan Growth Capital Fund and Invest Michigan Growth Capital Fund 2). Malcolm has a BA and an MBA.
Stuart is Managing Partner of Beringea and has 25 years of private equity investment experience. Prior to joining Beringea, Stuart was a senior director with LDC (the private equity arm of the Lloyds Banking Group) and head of their Thames Valley office. He started his career in venture capital with 3i. Stuart has an MA and an MBA from the London Business School.
Trevor is Chief Investment Officer for Beringea. He has over fifteen years experience of investing in unquoted companies, during which he has made over 45 investments. Trevor started his career in unquoted investing with 3i plc, for which he worked in the UK and USA, before joining Beringea in 2003. His experience of financing small companies also includes eight years working in corporate banking for Barclays and The Royal Bank of Scotland. Trevor has an MBA and is an ACIB.
Karen joined Beringea as an Investment Director in 2007. She previously worked as a consultant with The Boston Consulting Group and Kurt Salmon Associates, where her project work focused on developing growth strategies and hands-on implementation. Karen has an MBA from INSEAD and a BSBA from Boston University.
Stéphane has 10 years experience as a venture capital fund manager in the healthcare sector and focuses on making investments in this sector for VCTs managed by the Manager, including ProVen VCT. Previously, he was Associate Director at SmithKline Beecham and also worked at the American consulting firm, ZS Associates. Stéphane has an MBA from INSEAD.
Rob joined Beringea as an Investment Manager in 2013. He has five years of experience in finance, including two years in social venture capital at Venturesome and a six month secondment in the Social Investment Team at the Cabinet Office. He started his career at NM Rothschild with M&A experience in the energy, leisure and property sectors. Rob has an MA from Cambridge University and an MBA from INSEAD.
Harry is an Analyst and is responsible for sourcing and researching potential investments and producing financial models for both the equity-based and debt-based UK investment teams. His previous experience includes working in real estate, for two start-ups and on a parliamentary campaign. Harry graduated from St Andrew's University with a degree in history.
The Company has agreed long-term performance incentive arrangements with the Manager, which are designed to enable it to attract and retain talented investment managers, by rewarding them for delivering outstanding investment performance. More details of the performance incentive arrangements are given on pages 26 and 27.
Following the Offer, part of each Investor's investment will be represented by a share of the current Ordinary Share portfolio, which at the date of this document comprised holdings in 28 companies. At 31 August 2013, the latest date for which results have been announced, these holdings had a cost of £20.89 million and a valuation of £24.61 million. In addition, the Ordinary Share assets included cash and liquidity funds of £22.40 million.
Since 31 August 2013, the Company has made the following investments:
| Company | Amount (£'000) |
|---|---|
| Utility Exchange Online Limited* | 140 |
| Senselogix Limited* | 159 |
* Further investment in existing portfolio company.
The list of active current investments (unaudited) in the Ordinary Share portfolio set out in the table below constitutes a comprehensive and meaningful analysis of the Company's portfolio as at the date of this document. The valuations are as at 31 August 2013, the latest date for which valuations have been announced, for investments in the portfolio at that date. Additions to the portfolio after 31 August 2013 are valued at cost. All the companies listed below have their headquarters in the United Kingdom.
| Portfolio (by value) | Cost £'000 |
Valuation £'000 |
% of portfolio by value |
Debt/ Shares |
|---|---|---|---|---|
| Espresso Group Limited Supplier of on-line digital educational content for schools |
1,317 | 3,414 | 7.3% | Shares |
| Think Limited Digital Media Agency |
1,606 | 2,954 | 6.3% | Debt and Shares |
| SPC International Limited Provider of repair and refurbishment services for electronic equipment |
2,021 | 2,582 | 5.5% | Debt and Shares |
| Monica Vinader Limited High end jewellery brand |
1,447 | 2,177 | 4.6% | Shares |
| Donatantonio Limited Importer and distributor of Mediterranean food ingredients |
1,396 | 2,128 | 4.5% | Debt and Shares |
| BlisMedia Limited Mobile marketing specialist |
482 | 1,308 | 2.8% | Debt and Shares |
| Utility Exchange Online Limited Provision of utility price comparison services for SMEs |
1,110 | 1,110 | 2.4% | Debt and Shares |
| Chess Technologies Limited Manufacturer of electro-optical devices |
600 | 1,037 | 2.2% | Debt and Shares |
| Charterhouse Leisure Limited Operator of a chain of casual dining restaurants |
700 | 960 | 2.0% | Debt and Shares |
| Cognolink Limited Provider of expert network services to professional investors |
949 | 949 | 2.0% | Shares |
| Eagle Rock Entertainment Group Limited Producer, publisher and distributor of music programming for TV, DVD and digital media |
1,225 | 934 | 2.0% | Debt and Shares |
| Campden Media Limited Magazine publisher and conference organiser |
642 | 711 | 1.5% | Debt and Shares |
| APM Healthcare Limited An aggregator of pharmacies |
500 | 643 | 1.4% | Debt and Shares |
| MatsSoft Limited Business process management software |
1,010 | 546 | 1.2% | Debt and Shares |
| Pilat Media Group plc Supplier of Business management software to broadcasters |
173 | 510 | 1.1% | Shares |
| Other venture capital investments | 6,015 | 2,946 | 6.3% | |
| Total venture capital investments | £21,193 | £24,909 | 53.0% | |
| Liquidity fund investments | – | 0.0% | ||
| Cash at bank and in hand | 22,105 | 47.0% | ||
| 47,014 | 100.0% |
Further details of all the Company's venture capital investments which represent 2% or more of the Company's NAV are as follows:
Espresso Group is the UK's leading provider of digital education content for schools, delivered over the internet. The company launched its first service, Espresso Primary, in 2000. Following ProVen VCT's initial investment into Espresso in 2001, the number of subscribers to Espresso Primary grew rapidly, and the company featured in The Sunday Times Tech Track 100 list of the UK's fastest growing technology companies three years in a row. Over 9,000 UK primary schools now subscribe to Espresso Primary, representing around 45% of all UK primary schools.
In 2007, Espresso acquired the educational business of Channel 4 and used the content acquired through this acquisition to develop a service for secondary schools, called 4 Learning Clipbank. Espresso has also expanded internationally. It launched its first overseas service in Sweden in 2007. This was followed in April 2011 by the launch of Espresso Elementary in the USA.
The Company's investment in Espresso comprises ordinary shares representing 20.1% of the company's equity. The equity investment is currently valued at over 2.6 times cost.
Think is a strategic digital agency which provides strategic consultancy, creative design and technical build capabilities. Among other projects, Think has designed and created the "Pottermore" website, the on-line destination for readers of JK Rowling's "Harry Potter" series of books.
SPC is involved in the repair and refurbishment of electronic equipment. In recent years the company has established additional operations and capacity in Thailand, India and the USA to add to the existing facilities in the UK, France and Slovakia.
Monica Vinader is a high end, award-winning fashion jewellery brand. Designer Monica Vinader began producing jewellery in 2002 and commercialised the brand in 2007. The brand is now regularly featured in glossy magazines such as Vogue, Harpers and Grazia and boasts a celebrity following including Kate Winslet, Rita Ora, Elle Macpherson and Keira Knightley.
Donatantonio imports and distributes high quality Mediterranean food products in the UK. It has a diverse customer base, ranging from high street supermarkets and food manufacturers to retailers, wholesalers and restaurants. The company has enjoyed strong and profitable growth over the last three years.
Blis Media is a specialist in mobile marketing, featuring a roster of blue-chip clients. It was one of the first players in the UK to specialise in location based media, and retains a strong base of proprietary intellectual property.
Utility Exchange Online provides price comparison and switching services to SMEs for utilities such as gas and electricity. The business, based in Derby, provides customers with impartial, comprehensive and free advice saving them time and money. Utility Exchange Online researches the utility markets every day to make sure customers always get up-to-date advice and the best deals. The rapid rise in energy costs and challenging economic climate continue to provide a strong impetus for energy monitoring services in the UK.
Chess designs and manufactures electro-optical systems for use in defence applications worldwide. Chess's leading edge engineering skills and in-house development of innovative technologies enable it to produce an extensive range of standard and customised solutions for land, sea and air applications.
Charterhouse Leisure is a chain of restaurants trading under the name "Coal Grill and Bar", which provide informal dining and drinking in a comfortable and modern atmosphere. The company has seven branches and has plans to roll out the chain nationwide.
Cognolink is a leading primary research firm which specialises in providing expert network services, facilitating consultations between its clients and industry specialists who can deliver vital insights to support key investment decisions. Cognolink was established in 2007 and has offices in London, New York, Shanghai, Hong Kong and New Delhi. Cognolink believes that this international coverage positions it as a leading choice for investors in North America, Europe and Asia who are looking to make informed investment decisions on international markets.
Eagle Rock is a leading independent producer, publisher and distributor of music programming for television and DVD, comprising live concerts and documentaries. Eagle has an extensive catalogue of audio-visual IPR, which is available for multi-media exploitation including broadcast, broadband and telephony.
There has been no significant change to the Company's trading or financial position since 31 August 2013, the latest date to which results have been announced to the London Stock Exchange.
The Directors have overall responsibility for the Company's affairs, including monitoring the performance of the Manager and ensuring that the VCT status of the Company is maintained.
The Directors, all of whom are non-executive, have experience of corporate governance of listed companies. A majority of the Directors is independent of the Manager.
Andrew has over 30 years experience of the financial services industry. He was formerly Managing Director of NatWest Ventures, which specialised in venture capital investments, and is a former council member of the British Venture Capital Association. He has been a director of a number of quoted and unquoted companies.
Barry has over 25 years experience in the venture capital industry, including 14 years as Managing Director of Dresdner Kleinwort Benson Private Equity Limited, a longstanding "mid-market" private equity fund manager. He is currently a director of Downing Absolute Income VCT 2 plc and Elderstreet VCT plc. He also acts as an adviser to an Italian private equity fund management business.
Lorna is an executive director and Head of the Media Sector at Numis Securities Limited. Lorna has been a topranked media analyst by Institutional Investor and Thomson Reuters Extel from 1987 to 2012. She was previously a director at SG Warburg and West LB Panmure. Lorna is a non-executive director of Jupiter Primadona Growth Trust.
Malcolm is a founding partner of Beringea LLC. In addition to sitting on the boards of ProVen VCT, ProVen Growth & Income VCT and ProVen Planned Exit VCT, he sits on the investment committees of the Beringea Group's other venture capital funds (Invest Michigan Growth Capital Fund and Invest Michigan Growth Capital Fund 2).
The Directors have committed to invest a total of £20,000 under the Offer, on the same terms as Investors.
The Company aims to achieve long-term returns greater than those available from investing in a portfolio of quoted companies. The annual rate of return to investors in the Company's original Ordinary Share issue from launch in 2000 to 31 August 2013 (the latest date to which results have been announced) was 8.6% p.a., although this is not a guide to future returns from an investment in the Company.
The Company has a target of paying dividends each year which will equate to a yield of approximately 5% of net asset value. The board believes that this target is consistent with the NAV remaining broadly stable over time, although this will depend on the returns achieved by the Company's investments and cannot be guaranteed. The Company may pay a special dividend in addition to the target 5% yield in the event of there being a realisation or series of realisations from the portfolio which results in an exceptionally large gain. Dividend payments will, however, depend on the amount and timing of profits realised from the sale of investments, which cannot be guaranteed. There is no certainty that any dividends will be paid. The average annual dividend yield from the Company over the five financial years to 28 February 2013 has been 7.3% of NAV, although this is not a guide to the future level of dividend payments.
By investing under the Offer, Investors will immediately gain access to a more mature portfolio of investments than they would by investing in a new VCT share class. This increases the potential for early realisations from the portfolio, enhancing the Company's ability to pay dividends on the Ordinary Shares.
Investors in a VCT are entitled to a range of significant tax benefits, including an income tax rebate of 30% of the amount invested. This means that someone who invests £10,000, for example, will be entitled to an income tax rebate of £3,000.
Another major tax benefit is that dividends paid by a VCT are not subject to income tax. This means that they are a particularly attractive source of income for higher rate tax payers.
These tax benefits significantly enhance the value to Investors of the investment returns achieved by the Company. They are available on total VCT investments of up to £200,000 per person in each tax year. The tax rebate cannot exceed the amount which reduces an Investor's tax liability to nil.
Certificates to enable an Investor to claim tax relief on their investment will be posted within 15 business days of the New Ordinary Shares being allotted. An Investor will then have two options for claiming the tax relief:
(a) writing to their HM Revenue & Customs office to ask for their PAYE tax code to be adjusted, or
(b) waiting until the end of the tax year and completing the appropriate section on the self-assessment form.
The Company operates a dividend reinvestment scheme which enables Shareholders, should they so wish, to reinvest any future cash dividends in Ordinary Shares. The rules of the dividend reinvestment scheme are set out on pages 39 to 42. If an Investor wishes to participate in this scheme, they should complete the mandate that is included in the Application Form. Dividend reinvestment enables Shareholders to increase their holding in the Company without incurring dealing costs, issue costs or stamp duty. Subject to the normal limits on tax relief for investment in VCTs, these Ordinary Shares should qualify for VCT tax reliefs that are applicable to subscription for new VCT shares.
The Directors and the Manager believe strongly in the importance of good communication with Shareholders, and provide information about the progress of the Company in a number of different ways:
All Shareholders are also invited to a Shareholder Event each year, at which a number of portfolio companies give presentations. This event also allows Shareholders to meet the Directors and members of the investment management team.
The Directors intend to ensure that all Shareholders who wish to sell their Ordinary Shares are able to do so, by operating a share buy back policy under which the Company will buy back Ordinary Shares at a 5% discount to net asset value. The Company has operated a policy of buying back Ordinary Shares since July 2004. The number of Ordinary Shares that the Company will buy back in any year will be limited to 10% of the number of Ordinary Shares in issue and may be restricted if necessary to maintain an appropriate level of liquidity in the Company.
Applicants (and their spouses) who had an existing shareholding in one of the ProVen VCTs on 30 September 2013, and whose Application Form is received by 1pm on 31 January 2014, will be entitled to additional New Ordinary Shares with an aggregate subscription price equivalent to 2% of the amount subscribed. All other Applicants whose Application Form is received by 1pm on 31 January 2014 will be entitled to additional New Ordinary Shares with an aggregate subscription price equivalent to 1% of the amount subscribed. The subscription price of the Additional Shares will be met by the Manager.
The Manager is entitled to receive an annual management fee equal to 2% of the NAV, payable quarterly in arrears.
The Manager may charge arrangement fees, in line with industry practice, to companies in which it invests. It may also receive directors' fees or monitoring fees from investee companies. The Manager and not the Company will be responsible for all costs incurred on transactions which do not proceed to completion.
Downing LLP provides certain administration services, financial advisory services and services in connection with share repurchases to the Company, for an annual fee which in the year to 28 February 2013 was £52,000 (inclusive of VAT if applicable). The fees are increased annually in line with the Retail Prices Index. Further details of the administration agreement (and variations thereto) between Downing LLP and the Company are set out in Part 6 of the Registration Document.
The annual running costs of the Company, being the Directors' fees, professional fees, the annual fees payable to the Manager and the costs incurred by the Company in the ordinary course of business (including irrecoverable VAT but excluding any performance related fees and annual commission payable to the Manager and trail commissions payable to intermediaries) are capped at 3.25% of net assets. Any costs above this level are borne by the Manager, by way of a reduction in its fees.
The annual running costs of the Company for the year to 28 February 2013 were 2.8% of the net asset value of the Company at the period end. By raising additional capital, the fixed costs of operating the Company will be spread over a larger asset base, thereby reducing the annual running cost per Ordinary Share. Assuming full subscription, the annual running costs will fall to approximately 2.5% of the net asset value of the Company.
In line with normal VCT practice, the Manager is entitled to receive a performance related fee in relation to the Ordinary Shares in order to align the interests of the Manager as closely as possible with those of the Investors and to encourage and reward exceptional investment performance. The performance related fee structure is designed to encourage significant payments to Investors by means of tax-free dividends, as well as capital growth.
The Manager is entitled to receive a performance fee in relation to the Ordinary Sharesif, at the end of a financial year, the Performance Value exceeds the greater of (i) 117.2p per Ordinary Share and (ii) 92.9p per Ordinary Share increased from 31 August 2011 by, approximately, the Base Rate + 1% per annum, (the "Hurdle"). In this event the performance fee will be equal to 20% of the amount by which the Performance Value exceeds 92.9p per Ordinary Share, multiplied by the average number of Ordinary Shares in issue during the relevant financial year, less the amount of any performance fee already paid in relation to previous financial years (which shall not include, for the avoidance of doubt, Residual PIF).
If the Performance Value is less than or equal to the Hurdle in any financial year, no performance incentive fee will be payable in respect of that financial year.
The performance fee payable in relation to a financial year will be reduced, if necessary, to ensure that (i) the cumulative performance fee per Ordinary Share payable to Beringea year does not exceed 20% of Cumulative Dividends and (ii) the Total Return is at least equal to the Hurdle.
As at the date of this document, the Performance Value was 103.4p, comprising an NAV of 98.4p and Cumulative Dividends of 5.0p.
In consideration of its performance in managing the Original Ordinary Share Portfolio, the Manager will also be entitled to receive a performance fee linked to the profit achieved on the future disposal of two investments from this portfolio, Espresso Group Limited and Think Limited. This performance fee will be equal to 20% of the aggregate profit realised on the sale of Espresso Group Limited and Think Limited (including any dividends received by the Company from such investee companies at any time), subject to a maximum fee of £673,000 (being 20% of the aggregate unrealised profit on these investments as at 31 August 2011).
All fees paid under the performance incentive arrangements will be inclusive of VAT, if applicable.
There was no performance fee payable to Beringea by the Company in respect of the financial year ended 28 February 2013.
Intermediaries authorised by the FCA offering investment advice to their clients ("Financial Advisers") are no longer permitted to receive commission from providers of investment products. Remuneration for their services now has to come from fees charged to their clients. The Company has agreed to facilitate the payment of initial fees to Financial Advisers, by accepting instructions from an Investor to pay the amount of the fee agreed by them to their adviser ("Adviser Charge"), together with any applicable VAT, out of the amount the Company receivesfrom the Investor. The number of New Ordinary Sharesissued to the Investor will depend on the amount of the fee to be facilitated by the Company, as per the Pricing Formula set out on page 28. Investors who wish the Company to facilitate the payment of a fee in this manner should complete Section 3(i) of the Application Form. The amount payable to the Financial Adviser is inclusive of VAT, where applicable.
Investors should be able to claim initial tax relief on the full amount of their investment, subject to the normal rules on eligibility for tax relief.
These rules do not apply to authorised intermediaries who do not offer advice to their clients ("Execution Only Brokers"), who continue to be able to receive commission, subject to any future changes in the rules and regulations.
In order to take account of the different rules applying to the two categories of intermediary, the Company has decided to adopt a dual pricing approach. For Applications received through Financial Advisers, the Company will pay the Manager a fee of 2.5% of the gross funds raised from these intermediaries. For Applications received through Execution Only Brokers and directly from Investors, the Company will pay the Manager a fee of 5.5% of the gross funds raised through these intermediaries.
Out of these fees the Manager will be responsible for paying all the costs of the Offer, including professional fees, marketing expenses and initial commission to Execution Only Brokers. Any trail commission payable to Execution Only Brokers will be paid by the Company. The Manager's fee will be reduced by the aggregate subscription amount for the Additional Shares issued to Investors whose Applications are received by 31 January 2014.
The maximum amount payable by the Company in respect of Offer costs will therefore be 5.5% of the gross proceeds of the Offer. The maximum net proceeds of the Offer will be £19,500,000 (Offer costs of £500,000), assuming that it is fully subscribed, that the over allotment facility of up to a further £5,000,000 is used, a Promoter's Fee of 2.5% and no Adviser Charge.
The Company is seeking to raise up to £15 million through the issue of New Ordinary Shares. Under the over allotment facility, the size of the Offer may be increased at the Directors' discretion, in the event that £15 million is raised, up to a maximum of £20 million. Any increase in the size of the Offer will be announced to the London Stock Exchange through a Regulatory Information Service provider authorised by the Financial Conduct Authority. New Ordinary Shares issued under the Offer will rank pari passu in all respects with the existing Ordinary Shares, including in respect of dividends.
The number of New Ordinary Shares to be issued to each Investor will be calculated using the following Pricing Formula, which is consistent with the agreement with the Manager on launch costs set out above, and which ensures that there is no reduction in the net asset value of the existing Ordinary Shares as a result of the Offer:
| Number of New Ordinary Shares = | ||
|---|---|---|
)
rounded down to the nearest whole number of New Ordinary Shares.
The Promoter's Fee is
Investors should be able to claim initial tax relief on the full amount of their investment, subject to the normal rules on eligibility for tax relief.
* The NAV used in the calculation of the number of New Ordinary Shares will be the NAV most recently announced to the London Stock Exchange, less the amount of any dividend to be paid for which the record date is prior to the relevant allotment date, and any related performance incentive payment.
The most recently published unaudited NAV as at the date of this document is 98.4p but a new NAV may be announced to the London Stock Exchange during the Offer. The Company normally announces its latest NAV on a quarterly basis, although it may announce a new NAV between the normal quarterly dates if there is a material movement. The next NAV announcement following the date of this document is expected to be in January 2014. Such announcements may result in an upwards or downwards movement in the NAV and, therefore, in the denominator of the Pricing Formula. The NAV may change between the date on which an Investor's Application Form is posted and the date on which New Ordinary Shares in respect of that Application Form are allotted.
Applications will be made to the UK Listing Authority for the New Ordinary Shares issued under the Offer to be admitted to the premium segment on the Official List and to the London Stock Exchange for those New Ordinary Shares to be admitted to trading on its main market for listed securities.
Applications for the New Ordinary Shares will be payable in full by cheque or bankers draft on application. Investors may post-date their cheques to 6 April 2014 for applications in respect of the 2014/2015 Offer. Applications under the Offer will be processed upon receipt. Applications accompanied by post dated cheques will not be processed until the cheque can be presented and will not be treated as being received by the Receiving Agent until that date. Multiple subscriptions by Investors are permitted. The Offer is not underwritten.
The subscription list for the Offer will open on 22 October 2013 and close at 1.00 pm on 4 April 2013 for the 2013/2014 Offerand at 1.00 pm on 30 May 2014 for the 2014/2015 Offer (or on any earlier date on which the Offer is fully subscribed), save that the Directors reserve the right to bring forward or extend the closing date of the 2014/2015 Offer to a date no later than 30 September 2014. The result of the Offer will be announced to the London Stock Exchange through a Regulatory Information Service provider authorised by the Financial Conduct Authority. There is no minimum subscription for the Offer to proceed.
In the event that applications are received in excess of the maximum subscription under the Offer, the Directors reserve the right to use their absolute discretion in the allocation of successful applications.
New Ordinary Shares will be allotted and issued in respect of valid applications in respect of the 2013/2014 Offer on 4 April 2014, and any other prior dates on which the Directors decide and, in respect of the 2014/2015 Offer, on 30 May 2014 and any other dates after 5 April 2014 and prior to the close of the Offer on which the Directors decide. Details of such allotments will be announced through a Regulatory Information Service provider by no later than the business day following the allotment. Share certificates (where applicable) will be posted to Shareholders within 15 business days of each allotment. Dealings may commence before such announcement is made.
The New Ordinary Shares will be issued on a fully paid up basis in registered form and evidence of title will be through possession of a share certificate in the Shareholder's name; alternatively, New Ordinary Shares may be held in an account through the CREST system. The Company will apply for the New Ordinary Shares to be admitted to CREST and it is expected that the New Ordinary Shares will be so admitted, and accordingly enabled for settlement in CREST, as soon as practicable after Admission has occurred. Therefore, settlement of transactions in the New Ordinary Shares following Admission may take place within the CREST system if Shareholders wish.
The Offer may not be withdrawn after dealings in the New Ordinary Shares have commenced. In the event of any requirement for the Company to publish a supplementary prospectus, subscribers who have yet to be entered into the Company's register of members will be given two business days to withdraw their subscription. Investors should note, however, that in respect of New Ordinary Shares that have been unconditionally allotted, such withdrawal rights are a matter of law that is yet to be tested in the courts of England and Wales and Investors should, therefore, rely on their own legal advice in this regard. Notification of withdrawal may be given by e-mail to [email protected] or by post. In the event that notification of withdrawal is given by post, such notification will be effected at the time the Applicant posts such notification rather than at the time of receipt by the Company.
Investors wishing to subscribe for New Ordinary Shares may do so by completing the relevant Application Form at the end of this document. Details of how to complete the Application Form are set out under the heading "Application Procedure" on pages 51 to 53 of this document.
A typical Investor will be a UK taxpayer who is aged 18 or over who is professionally advised and already has a portfolio of non-VCT investments such as unit trusts, OEICs, investment trusts and direct shareholdings in listed companies. The Investor should be comfortable with the risk factors set out at the front of this document and be willing to retain the investment for at least five years.
Before deciding whether to apply for New Ordinary Shares it is recommended that potential Investors consult an authorised independent Financial Adviser.
The minimum application per Investor under the Offer is £5,000. Applications in excess of £5,000 may be made for any higher amount in multiples of £1,000, subject to availability. There is no maximum investment although tax reliefs are only available on a maximum investment of £200,000 per individual in all VCTs in any one tax year. A husband and wife can each invest up to £200,000 in any one tax year with each enjoying the tax reliefs.
Execution Only Brokers will usually be paid an initial commission of either 3% or 2.25% on the amount invested by their clients. Additionally, provided that the Execution Only Broker continuesto act for the client and the client continues to be the beneficial owner of the New Ordinary Shares, the Company will pay annual trail commission to Execution Only Brokers who elect to take an initial commission of 2.25%, normally at the rate of 0.5% of the amount invested by the client, for up to 5 years, subject to any future changes in the rules and regulations. The first payment of trail commission in respect of the New Ordinary Shares is expected to be in August 2015 in respect of the financial year to 28 February 2015.
Execution Only Brokers may agree to waive all or part of the initial commission in respect of an application. If this is the case, additional New Ordinary Shares will be allotted to the Investor and the waived commission will be used to satisfy the subscription price of such additional New Ordinary Shares. Execution Only Brokers must indicate on the Application Form the basis on which they wish to receive their commission.
The following is only a summary of the law concerning the tax position of individual investors in VCTs. Potential Investors who are in any doubt about the taxation consequences of investing in a VCT are recommended to consult an appropriate professional adviser.
The tax reliefs set out below are available to individuals aged 18 or over who subscribe for New Ordinary Shares under the Offer. Whilst there is no specific limit on the amount of an individual's acquisition of shares in a VCT, tax reliefs will only be given to the extent that the total of an individual's subscriptions or other acquisitions of shares in VCTs in any tax year do not exceed £200,000. Investors who intend to invest more than £200,000 in VCTs in any one tax year should seek professional advice.
Income tax relief at the rate of 30% will be available on subscriptions for up to a maximum of £200,000 in any tax year. This relief is limited to the amount which reduces the Investor's income tax liability to nil.
The effect of this relief for an Investor subscribing £10,000 for New Ordinary Shares is shown below:
| No VCT tax relief | 30% income tax relief | |
|---|---|---|
| Initial investment | £10,000 | £10,000 |
| 30% income tax relief | – | (£3,000) |
| Effective investment cost | £10,000 | £7,000 |
To obtain relief an Investor must subscribe on his own behalf, although the New Ordinary Shares may subsequently be transferred to a nominee. Investments to be used as security for or financed by loans may not qualify for relief, depending on the circumstances.
An Investor who acquires VCT shares in a given tax year with a value of up to £200,000 will not be liable to income tax on dividends paid by the VCT on those shares.
An individual purchaser of existing VCT shares in the market will be entitled to claim dividend relief (as described in paragraph (ii) above) but not relief from income tax on investment (as described in paragraph (i) above).
Relief from income tax on a subscription for VCT shares will be withdrawn if the VCT shares are disposed of (other than between spouses) within five years of issue or if the VCT loses its approval within this period.
A disposal by an Investor of their New Ordinary Shares will give rise to neither a chargeable gain nor an allowable loss for the purposes of UK capital gains tax. The relief is limited to the disposal of VCT shares acquired within the limit of £200,000 for any tax year.
An individual purchaser of New Ordinary Shares in the market will be entitled to claim relief from capital gains tax on disposal (as described in paragraph (b)(i) above).
The Company will provide to each Investor a certificate which the Investor may use to claim income tax relief, either by obtaining from HMRC an adjustment to his tax coding under the PAYE system or by waiting until the end of the tax year and using his tax return to claim relief.
Investors not resident in the UK should seek professional advice as to the consequences of making an investment in a VCT as they may be subject to tax in other jurisdictions as well as in the UK.
No taxation will be withheld at source on any income arising from the New Ordinary Shares and the Company assumes no responsibility for such withholding.
If a company which has been granted approval as a VCT subsequently fails to comply with the conditions for approval, approval as a VCT may be withdrawn or treated as never having been given. In these circumstances, relief from income tax on the initial investment is repayable unless loss of approval occurs more than five years after the issue of the relevant VCT shares. In addition, relief ceases to be available on any dividend paid in respect of profits or gains in any accounting period ending when VCT status has been lost and any gains on the VCT shares up to the date from which loss of VCT status is treated as taking effect will be exempt, but gains thereafter will be taxable.
To qualify as a VCT, a company must be approved as such by HMRC. To obtain such approval it must:
A Qualifying Investment consists of shares or securities first issued to the VCT (and held by it ever since) by a company satisfying certain conditions. The conditions are detailed but include that the company must be a Qualifying Company, have gross assets not exceeding £15 million immediately before and £16 million immediately after the investment, apply the money raised for the purposes of a Qualifying Trade within certain time periods and not be controlled by another company. In any twelve month period the company can receive no more than £5 million from VCT state aided funds, including VCTs and the Enterprise Investment Scheme. The company must have fewer than 250 full time (or equivalent) employees at the time of making the investment. In certain circumstances, an investment in a company by a VCT can be split into part Qualifying Investment and part non-Qualifying Investment.
A Qualifying Company must be unquoted (for VCT purposes this includes companies whose shares are traded on the ISDX Growth Market and the Alternative Investment Market) and must carry on a Qualifying Trade. For this purpose certain activities are excluded (such as dealing in land or shares or providing financial services). The Qualifying Trade must either be carried on by, or be intended to be carried on by, the Qualifying Company or by a Relevant Qualifying Subsidiary (see below) at the time of the issue of shares or securities to the VCT (and at all times thereafter). Qualifying Companies need not be UK resident but must have a permanent establishment in the UK. A company intending to carry on a Qualifying Trade must begin to trade within two years of the issue of shares or securities to the VCT and continue it thereafter.
A Qualifying Company may have no subsidiaries other than Qualifying Subsidiaries which must be more than 50% owned.
A Relevant Qualifying Subsidiary can be a 90% directly held subsidiary of the company invested in, its wholly owned subsidiary, or a 90% held subsidiary of a wholly owned subsidiary.
A VCT must be approved at all times by HMRC. Approval has effect from the time specified in the approval.
A VCT cannot be approved unless the tests detailed above are met throughout the most recent complete accounting period of the VCT and HMRC is satisfied that they will be met in relation to the accounting period of the VCT which is current when the application is made. However, in order to facilitate the launch of a VCT, HMRC may approve a VCT notwithstanding that certain of the tests are not met at the time of application, provided HMRC is satisfied that the tests will be met within certain time limits. In particular, in the case of the tests described at (d), (e) and (f) under the heading "Qualification as a VCT" above, approval may be given if HMRC is satisfied that these will be met throughout an accounting period of the VCT beginning no more than three years after the date on which approval takes effect.
The Directors intend to conduct the affairs of the Company so that it satisfies the conditions for approval as a VCT and that such approval will be maintained. HMRC has granted the Company approval under section 274 ITA as a VCT. The Company intends to comply with section 274 ITA and has retained PricewaterhouseCoopers LLP to advise it on VCT taxation matters.
Approval of a VCT may be withdrawn by HMRC if the various tests set out above are not satisfied. Withdrawal of approval generally has effect from the time when notice is given to the VCT but, in relation to capital gains of the VCT only, can be backdated to not earlier than the first day of the accounting period commencing immediately after the last accounting period of the VCT in which all of the tests were satisfied.
The above is only a summary of the conditions to be satisfied for a company to be treated as a VCT.
ProVen VCT was incorporated in England as a public company with limited liability on 18 January 2000 with registered number 03911323. The principal legislation under which the Company operates and under which the New Ordinary Shares will be created is the 2006 Act and regulations made thereunder. The existing Ordinary Shares are admitted to the premium segment of the Official List and are traded on the London Stock Exchange's main market for listed securities.
Although it is not intended that the Company should have a limited life, the articles of association contain provisions requiring its Directors to propose a resolution at its annual general meeting in 2019 to seek confirmation from its Shareholders that it should continue as a VCT and, if passed, a similar resolution will be proposed at five yearly intervals thereafter.
The following table shows the capitalisation of the Company as at 31 August 2013 (extracted from the Company's unaudited half-yearly report for the six months ended 31 August 2013).
| £,000 | |
|---|---|
| Total current debt | |
| Guaranteed | |
| Secured | 371 |
| Unguaranteed/secured | |
| Total non-current debt | |
| Guaranteed | |
| Secured | |
| Unguaranteed/secured | |
| Shareholders' equity | |
| Share capital | 4,764 |
| Share premium | 28,343 |
| Other reserves | 13,747 |
| Total | 47,225 |
Since 31 August 2013 there has been no material change to the capitalisation of the Company.
The following table shows the Company's net indebtedness as at 31 August 2013.
| £,000 |
|---|
| 22,404 |
| – |
| – |
| 22,404 |
| 211 |
| (22,615) |
| (22,615) |
In the opinion of the Company, the working capital available to the Company is sufficient for its present requirements, that is for at least 12 months from the date of this document.
The resolutions passed by the Company at the annual general meeting held on 30 July 2013 included authority to allot the New Ordinary Shares.
The rights and restrictions attaching to the New Ordinary Shares are as follows:
Voting Rights
The company has one class of shares: Ordinary Shares.
Subject to any disenfranchisement provided for in the Articles and subject to any special terms as to voting on which any shares may be issued, on a show of hands every holder of Ordinary Shares present in person or by proxy (or, being a corporation present by a duly authorised representative) shall have one vote and, on a poll, every such holder present in person or by proxy shall have one vote for every Ordinary Share of which he is the holder.
Dividends and other distributions
Subject to the provisions of the Articles, the Ordinary Shares entitle their holders to receive such dividends as the Directors may resolve to pay pro rata to their respective holdings of Ordinary Shares.
Subject to the provisions of the Articles, on a winding up or other return of capital, the net assets of the Company (including any income and/or revenue arising from or relating to such assets) less the Company's liabilities, including fees and expenses of liquidation or return of capital, shall be divided amongst the holders of Ordinary Shares pro rata according to their holdings of Ordinary Shares.
The Company may from time to time by ordinary resolution:
(i) increase its share capital by such sum to be divided into shares of such amounts as the resolution shall prescribe;
Subject to the provisions of the 2006 Act, the Company may by special resolution:
The provisions of Section 561(1) of the 2006 Act (which, to the extent not disapplied pursuant to Section 570(1) of the 2006 Act, confer on Shareholders rights of pre-emption in respect of the allotment of equity securities which are, or are to be, paid up in cash) apply to the share capital of the Company, except to the extent disapplied by the Company in general meeting. Subject to the provisions of the 2006 Act relating to authority, pre-emption rights and otherwise and of any resolution of the Company in general meeting passed pursuant thereto, all unissued shares shall be at the disposal of the Directors and they may allot (with or without conferring a right of renunciation), grant options over or otherwise dispose of them to such persons, at such times and on such terms as they think proper.
The shares are in registered form and are freely transferable. All transfers of shares must be effected by a transfer in writing in any usual form or any other form approved by the Directors. The instrument of transfer of a share shall be executed by or on behalf of the transferor and, in the case of a partly paid share, by or on behalf of the transferee. The Directors may refuse to register any transfer of a partly paid share, provided that such refusal does not prevent dealings taking place on an open and proper basis, and may also refuse to register any instrument of transfer unless:
The Manager will be paid an annual investment management fee equal to 2 per cent. per annum of the aggregate net asset value of the Company. In line with normal VCT practice, the Manager will also be entitled to receive a performance related incentive fee in order to align the interests of the Manager as closely as possible with those of the Investors and to encourage and reward exceptional performance. Further details of these arrangements are set out on pages 26 and 27 of this document. In addition, the Manager will receive aggregate initial fees of between 2.5 per cent and 5.5 per cent of the gross proceeds of the Offer, as set out on page 27. Out of these fees Beringea will be responsible for paying all the costs of the Offer, including initial commission paid to Execution Only Brokers.
Malcolm Moss is a partner in Beringea and a member of Beringea's ultimate holding company, Beringea LLC, and Beringea is a party to the material contracts set out in paragraphs 1.1, 1.3, 1.6 and 1.7 of Part 6 of the Registration Document.
At full subscription, the existing Ordinary Shares will be diluted by a maximum of 29.4 per cent, as a result of the Offer.
Information in this document sourced from third parties has been accurately reproduced and, so far as the Company is aware and is able to ascertain from information published by the relevant third parties, no facts have been omitted which would render such information inaccurate or misleading.
No person receiving a copy of this document in any territory other than the UK may treat the same as constituting an offer or invitation to him to subscribe for or purchase New Ordinary Shares unless, in such territory, such offer or invitation could lawfully be made. It is the responsibility of any person outside the UK wishing to make an application to satisfy himself as to the full observance of the laws of the relevant territory in connection therewith, including obtaining any requisite governmental or other consents, observing any other formalities required to be observed in such territory and paying any issue, transfer or other taxes required to be paid in such territory. No action has been taken to permit the distribution of this document in any jurisdiction outside the UK where such action is required to be taken. All applicants under the Offer will be required to warrant that they are not a US person as defined under the United States Securities Act 1933, nor a resident of Canada.
No income from the Ordinary Shares is withheld at source.
The Company and the Directors consent to the use of the Prospectus, and accept responsibility for the content of the Prospectus, with respect to subsequent resale or final placement of securities by financial intermediaries, from the date of the Prospectus until the close of the Offer. The Offer is expected to close not later than 1.00 pm on 30 May 2014 in respect of the 2014/2015 Offer, unless previously extended by the Directors to a date no later than 30 September 2014. There are no conditions attaching to this consent. Financial intermediaries may use the Prospectus only in the UK.
Information on the terms and conditions of the offer will be given to Investors by financial intermediaries at the time that the offer is introduced to Investors. Any financial intermediary using the Prospectus must state on its website that it is using the Prospectus in accordance with the consent set out in the paragraph above.
Copies of the following documents are available for inspection at the Company's registered office and at the offices of Howard Kennedy at 19 Cavendish Square, London, W1A 2AW during normal business hours on any weekday (public holidays excepted) from the date of this document until the closing date of the Offer:
Copies of the Prospectus may be obtained, free of charge, whilst the Offer remains open, from the Company's registered office or from Beringea, 39 Earlham Street, London WC2H 9LT (telephone 020 7845 7820, email [email protected]), or can be downloaded at www.provenvcts.co.uk. In addition, a copy of the Prospectus has been submitted to the National Storage Mechanism and is available to the public for viewing online at the following web-site address: http://www.hemscott.com/nsm.do.
22 October 2013
posted to the Participating Shareholders at their own risk as soon as is reasonably practical, unless such shares are to be uncertificated.
In the event that Admission does not become effective, Mandate Forms will be disregarded in respect of the dividend and the full cash dividend will be paid as soon as possible in the usual way.
he or she shall be deemed to have served such a notice in respect of his or her participation in the Scheme in respect of that class of Shares.
No person receiving a copy of the Circular and/or Mandate Form in any territory other than the United Kingdom may treat it as constituting an invitation to him unless in the relevant territory such an invitation could lawfully be made to him without complying with any registration or other legal requirements. It is the responsibility of the Shareholder outside the United Kingdom wishing to elect to receive Shares to satisfy himself as to the full observance of the laws of the relevant territory in connection with the offer, including obtaining any governmental or other consents which may be necessary and observing any other formalities requiring to be observed in such territory.
Shareholders in any doubt about their tax position should consult an appropriate independent adviser.
rounded down to the nearest whole number of New Ordinary Shares.
The Promoter's Fee is
* The NAV used in the calculation of the number of New Ordinary Shares will be the NAV most recently announced to the London Stock Exchange, less the amount of any dividend to be paid for which the record date is prior to the relevant allotment date, and any related performance incentive payment.
(xi) confirm that you have reviewed the restrictions contained in paragraph 6 below and warrant that you are not a "US Person" as defined in the United States Securities Act of 1933 ("Securities Act") (as amended), nor a resident of Canada and that you are not applying for any New Ordinary Shares with a view to their offer, sale or delivery to or for the benefit of any US Person or a resident of Canada;
(xii) declare that you are an individual aged 18 or over;
(i) 3 per cent. of the amount invested by their client (and no trail commission); or
Beringea will maintain a register of Execution Only Brokers entitled to trail commission. Execution Only Brokers should keep a record of Application Forms submitted bearing their stamp to substantiate any claim for trail commission.
The Receiving Agent will collate the Application Forms bearing the Execution Only Brokers' stamps and calculate the initial commission payable, which will be paid within 14 days of each allotment.
The Receiving Agent will collate the Application Forms bearing the Financial Advisers' stamps and calculate the fees and related VAT, which will be paid within 14 days of each allotment.
The verification of identity requirements of the Money Laundering Regulations will apply and verification of the identity of the applicant may be required. Failure to provide the necessary evidence of identity may result in the application being treated as invalid or in delay in confirming the application.
If the value of the New Ordinary Shares applied for exceeds Euros 15,000 (approximately £12,500 as at the date of this document) paymentshould be made by means of a UK clearing bank cheque drawn in your name on an account in your name. If this is not practicable and you use a cheque drawn by a third party or a building society cheque or banker's draft, you should write your name, address and date of birth on the back of the cheque or banker's draft and:
The following definitions are used throughout this document and, except where the context requires otherwise, have the following meanings.
| 2006 Act | Companies Act 2006, as amended from time to time | ||
|---|---|---|---|
| 2011/2012 Offer | the Company's offer for subscription in respect of the 2011/2012 tax year as described in the prospectus issued by the Company on 8 December 2011 |
||
| 2012/2013 Offer | the Company's offer for subscription in respect of the 2012/2013 tax year as described in the prospectus issued by the Company on 8 December 2011 |
||
| 2013/2014 Offer | the Company's offer for subscription in respect of the 2013/2014 tax year as described in the Prospectus |
||
| 2014/2015 Offer | the Company's offer for subscription in respect of the 2014/2015 tax year as described in the Prospectus |
||
| Additional Shares | additional New Ordinary Shares issued to applicants under the Offer whose applications are received and accepted by 1.00 pm on 31 January 2014 |
||
| Admission | admission of the New Ordinary Shares to the premium segment on the Official List and to trading on the London Stock Exchange's main market for listed securities |
||
| Adviser Charge | the amount an Investor agrees to pay a Financial Adviser in respect of the Offer |
||
| Applicant | a person whose name appears in an Application Form | ||
| Application Form | the application form for use in respect of the Offer set out at the end of this document |
||
| Articles | the articles of association of the Company, as amended from time to time | ||
| Base Rate | the Bank of England base rate | ||
| Beringea Group | Beringea LLC and its subsidiaries (including Beringea) | ||
| Company or ProVen VCT | ProVen VCT plc | ||
| Cumulative Dividends | the cumulative amount of dividends per Ordinary Share paid by the Company in relation to the financial years starting on 1 March 2012 and finishing on the 28 February of the relevant financial year |
||
| Directors or Board | the directors of the Company from time to time (as the context permits) | ||
| Execution Only Broker | an intermediary, authorised by the Financial Conduct Authority, which does not provide advice to its clients |
||
| Financial Adviser | an intermediary, authorised by the Financial Conduct Authority, which provides investment advice to its clients |
||
| HMRC | HM Revenue & Customs | ||
| Howard Kennedy or Sponsor | Howard Kennedy Corporate Services LLP | ||
| Hurdle | the greater of: (i) 117.2p, or (ii) 92.9p increased, asfrom 31 August 2011, by approximately Base Rate plus 1% per annum (compound) |
||
| Investor | an individual aged 18 or over who is resident in the United Kingdom who subscribes for New Ordinary Shares under the Offer |
| ITA | Income Tax Act 2007 (as amended) | ||
|---|---|---|---|
| London Stock Exchange | London Stock Exchange plc | ||
| Manager or Beringea | Beringea LLP | ||
| Money Laundering Regulations | the Money Laundering Regulations 2007 | ||
| NAV | the net asset value of the Ordinary Shares | ||
| New Ordinary Shares | new Ordinary Shares to be issued under the Offer | ||
| Offer | the offer for subscription of New Ordinary Shares described in this document, comprising the 2013/2014 Offer and the 2014/2015 Offer |
||
| Official List | the Official List of the UK Listing Authority | ||
| Ordinary Shares | the ordinary shares of 10p each of ProVen VCT (ISIN number GB00B8GH9P84), including New Ordinary Shares where the context permits |
||
| Original Ordinary Share Portfolio |
the portfolio of investments created by investing the proceeds raised from the issue of Ordinary Shares prior to the 2011/2012 Offer |
||
| Performance Value | in respect of the relevant financial year end, the sum of (i) the net asset value per Ordinary Share at that date, (ii) all dividends per Ordinary Share paid in relation to financial years starting after 29 February 2012 up to the relevant financial year, (iii) all performance related incentive fees per Ordinary Share paid by the Company to the Manager in relation to financial years starting after 29 February 2012, and (iv) any Residual PIF Adjustment (whether relating to that or any prior financial year) |
||
| PGI VCT | ProVen Growth & Income VCT plc | ||
| Pricing Formula | the formula used to calculate the number of New Ordinary Shares to be | ||
| Pro-Forma Number of Ordinary | issued to an Investor, as set out on page 28 37,271,751 Ordinary Shares |
||
| Shares ProVen Planned Exit VCT |
ProVen Planned Exit VCT plc | ||
| ProVen VCTs | ProVen VCT, PGI VCT and ProVen Planned Exit VCT | ||
| Prospectus | together, this document, the Registration Document and the Summary | ||
| Qualifying Company | a company satisfying the conditions as described in Part 3 of this document |
||
| Qualifying Investment | an investment in an unquoted company which satisfies the requirements of Chapter 4 of Part 6 ITA, as described in Part 3 of this document |
||
| Qualifying Subscriber/ Qualifying Investor |
an individual who subscribes for New Ordinary Shares and is aged 18 or over and satisfies the conditions of eligibility for tax relief available to investors in a VCT |
||
| Qualifying Subsidiary | a subsidiary company which falls within the definition of Qualifying Subsidiary contained in section 302 ITA, as described in Part 3 of this document |
||
| Qualifying Trade | a trade complying with the requirements of Chapter 4 of Part 6 ITA | ||
| Receiving Agent | Beringea LLP | ||
| Registrars | Capita Asset Services | ||
| Registration Document | the share registration document that, together with this document and the Summary, constitutes the Prospectus |
||
| Residual PIF Adjustment | the performance incentive fee relating to the sale of Espresso Group Limited and Think Limited, as set out on page 27 ("Residual PIF"), divided by the Pro-Forma Number of Ordinary Shares |
| Summary | the summary that, together with this document and the Registration Document, constitutes the Prospectus |
|---|---|
| Total Return | the sum of (i) the audited net asset value per Ordinary Share at the relevant financial year end, (ii) Cumulative Dividends per Ordinary Share and (iii) any Residual PIF Adjustment (whether relating to that or any prior financial year) |
| UK Listing Authority | the Financial Conduct Authority acting in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000 |
| Venture Capital Trust or VCT | a venture capital trust as defined by section 259 ITA |
(Non-executive) Barry Malcolm Dean
Company Secretary to the Company Grant Leslie Whitehouse
Registered Office of the Company 39 Earlham Street
Investment Manager Beringea LLP
Administrator Downing LLP
the Company and the Offer 19 Cavendish Square
Solicitors to HowardKennedyFsi LLP the Company and the Offer 19 Cavendish Square
Registered Auditors BDO LLP
Receiving Agent Beringea LLP
Directors of ProVen VCT plc Andrew John Davison (Chairman) Malcolm Kennedy Hunt Moss Lorna Tilbian
London WC2H 9LT
39 Earlham Street London WC2H 9LT
10 Lower Grosvenor Place London SW1W 0EN
Sponsor to Howard Kennedy Corporate Services LLP London W1A 2AW
London W1A 2AW
55 Baker Street London W1U 7EU
Bankers Bank of Scotland 33 Old Broad Street London WC2N 6RH
Royal Bank of Scotland London Victoria Branch 119/121 Victoria Street London SW1E 6RA
39 Earlham Street London WC2H 9LT
VCT Tax Advisers PricewaterhouseCoopers LLP 1 Embankment Place London WC2N 6RH
Registrars Capita Asset Services The Registry 34 Beckenham Road Beckenham, Kent BR3 4TU
Please send the completed Application Form together with your payment and proof of identity if required (please see paragraph 13 of the Terms and Conditions) to:
ProVen VCT, c/o Beringea LLP, 39 Earlham Street, London WC2H 9LT
If you have any questions on how to complete an Application Form please contact Beringea on 020 7845 7820
Please note that for legal reasons, Beringea will not be able to provide advice on the merits of the offer or give any personal tax, investment or financial advice.
Please insert your full name, permanent address, daytime and home telephone numbers, date of birth, email address and national insurance number in Section 1 of the Application Form. Your national insurance number, which you will find on your pay slip, is required to ensure you obtain your income tax relief. Joint applications are not permitted but couples may apply separately.
Please note that the minimum investment is £5,000, which may be split between the two tax years. Investments for more than £5,000 must be for a multiple of £1,000.
Specify the amount to be invested in New Ordinary Shares under the 2013/2014 Offer in Box A (state nil if appropriate).
Specify the amount to be invested in New Ordinary Shares under the 2014/2015 Offer in Box B (state nil if appropriate).
Specify the total amount to be invested in New Ordinary Shares under the Offer (i.e. the sum of Boxes A and B) in Box C.
Cheques should be made payable to "ProVen VCT plc" and crossed "A/C Payee only". Cheques must be from a recognised UK bank account and your payment must be related solely to this application.
If the value of the New Ordinary Shares applied for exceeds Euros 15,000 (approximately £12,500 as at the date of this document) payment should be made by means of a UK clearing bank cheque drawn on an account in your name. If this is not practicable and you use a cheque drawn by a third party or a building society cheque or banker's draft, you should write your name, address and date of birth on the back of the cheque or banker's draft and:
Please tick one of the three boxes to indicate whether:
(iii) you are making an Application directly to the Company, ie not through an intermediary.
In the case of (i) above, please insert the amount of the fee you have agreed with your Financial Adviser, inclusive of VAT if applicable, in the box provided for this purpose.
If you are an existing shareholder in PGI VCT, ProVen VCT or ProVen Planned Exit VCT applying before 31 January 2014, please complete this section in order to claim your Additional Shares.
Please complete the mandate instruction if you wish to participate in the Dividend Reinvestment Scheme.
Please complete the mandate instruction if you wish to have dividends paid directly into your bank or building society account.
Read the declaration below and sign and date the Application Form.
By signing this form I HEREBY DECLARE THAT:
By signing this form on behalf of the individual whose details are shown above, I make a declaration (on behalf of such individual) on the terms of sub-paragraphs (i) to (iv) above and attach the power of attorney under which I have authority to sign on behalf of such individual.
Intermediaries should complete Section 8, giving their full name and address, telephone number and details of their authorisation under the Financial Services and Markets Act 2000. An authorised signatory must sign on behalf of the Intermediary. The right is reserved to withhold payment of commission or to decline to facilitate the payment of a fee, as appropriate, if the Company, in its sole discretion, is not satisfied that the Intermediary is authorised.
For Applications submitted through Execution Only Brokers, the Execution Only Broker should complete the appropriate boxes to indicate the preferred commission structure and the amount of commission (if any) to be waived and reinvested in additional New Ordinary Shares.
A: ProVen VCT, c/o Beringea LLP, 39 Earlham Street, London WC2H 9LT
Q: If I apply through a Financial Adviser and the Company facilitatesthe payment of an initial fee to that Advisor, will I be able to claim tax relief on the full amount of my subscription?
For Applications submitted through Execution Only Brokers and directly to the Company:
For Applications submitted through Financial Advisers:
Before completing this Application Form you should read the Terms and Conditions of Application and the Application Procedure. The Offer opens on 22 October 2013 and the closing date in respect of the 2013/14 Offer will be 1.00 pm on 4 April 2014 and in respect of the 2014/15 Offer will be 1.00 pm on 30 May 2014 (or earlier if the maximum subscription has been reached before then).
Please send this Application Form together with your cheque or bankers draft and proof of identity if required, to ProVen VCT, c/o Beringea LLP, 39 Earlham Street, London, WC2H 9LT.
✂
| Section 1 | |||
|---|---|---|---|
| Title (Mr/Mrs/Miss/Ms/Other) Surname |
|||
| Forename(s) in full | |||
| Date of birth (You should be able to find your NI number on a payslip, form P45 or P60, a letter from HMRC, or the DWP, or pension book) |
National Insurance Number | ||
| Permanent residential address | |||
| Telephone (work) | Postcode Telephone (home) |
||
| Please indicate how you would like receipt of your Application to be confirmed: | Post |
||
| Section 2 | |||
| I offer to subscribe the following amount for New Ordinary Shares on the Terms and Conditions of Application set out in this Securities Note and the articles of association of the Company. The minimum Application Amount (which may be spread across two tax years) is £5,000. |
|||
| 2013/14 Offer (tax year 2013/14) | £ | A | |
| 2014/15 Offer (tax year 2014/15) | £ | B | |
| TOTAL INVESTMENT (A+B) | £ | C | |
| I ENCLOSE (A) CHEQUE(S) OR BANKER'S DRAFT(S) DRAWN ON A UK CLEARING BANK, MADE PAYABLE TO "ProVen VCT" (Note: If you are applying for New Ordinary Shares in both the 2013/14 tax year and the 2014/15 tax year, you must submit a separate cheque or banker's draft for each of the tax years). |
|||
| Section 3 | |||
| Please indicate the type of Application you are making by ticking the appropriate box: | Please tick | ||
| (i) | Advised: You have been advised on this investment by a Financial Adviser – please complete the Adviser Charge box below, if applicable, and ensure Section 8(i) is completed by your intermediary. |
one box (✔) | |
| Adviser Charge If you have agreed an Adviser Charge with your Financial Adviser and request that the Company pays that fee, please insert the fee amount in this box. Please note that the number of New Ordinary Shares issued to you will be reduced by the Adviser Charge. This payment is inclusive of VAT, if applicable. |
State as either a sum of money in £ or as a % of the total amount invested in |
Section 2 box C above. | |
| (ii) | Execution only: This investment is being processed through an Execution Only Broker who is not providing you with advice – please ensure Section 8(ii) is completed by your intermediary. |
||
| (iii) | Direct – No Intermediary: This is a direct investment (i.e. you are not submitting this application through an intermediary). |
| Section 4 | ||
|---|---|---|
| Please indicate if you are an existing shareholder in one of the following VCTs: | ||
| ProVen VCT plc | ProVen Growth & Income VCT plc ProVen Planned Exit VCT plc |
|
| Please complete only one of Sections 5 and 6. | ||
| Section 5 | ||
| I confirm that I wish to participate in the Dividend Reinvestment Scheme for each future dividend paid on all of my Shares in ProVen VCT. By agreeing to participate in the Dividend Reinvestment Scheme I agree that any mandate which I have previously given for the payment of cash dividends directly to my Bank or Building Society account shall be suspended for so long as I remain a participant in the Scheme. |
||
| Signature | Date |
All dividends on Shares in the Company may be paid directly into bank and building society accounts. If you wish all future dividends on Shares in ProVen VCT to be paid into your bank or building society account, please complete the mandate instruction form below.
Dividends paid directly to your account will be paid in cleared funds on the dividend payment dates. Your bank or building society statement will identify details of the dividend as well as the dates and amounts paid.
Please forward until further notice, all dividends that may from time to time become due on any Shares now standing, or which may hereafter stand, in my name in the register of members of ProVen VCT plc to the bank account listed below. I understand that if my Application is not accepted in full, the balance of Application monies may also be repaid (without interest) to the bank account listed below.
Bank or Building Society reference number and details:
| Account Name | Account No. | ||
|---|---|---|---|
| Name of Bank/ Building Society |
Sort Code | ||
| Branch Name | |||
| Address of Branch | Signature | ||
| Postcode | Date | ||
| The Company, Registrars and Beringea do not accept responsibility if any details quoted by you are incorrect. |
| Section 7 | |
|---|---|
| Signature | Date |
| For completion by authorised financial intermediaries only Name of firm |
Name of Contact | ||
|---|---|---|---|
| Address | FSA Number | ||
| Telephone | |||
| Post Code | |||
| Please complete either (i) or (ii) below: | Please tick one box (✔) |
||
| (i) The firm named above is a Financial Adviser which has agreed the Adviser Charge specified in Section 3(i) with the Application. |
|||
| (ii) The firm named above is an Execution Only Broker which is permitted to receive commission in respect of this Application. |
|||
| Preferred commission structure (please state commission percentages under the preferred commission structure of either 3% or 2.25% plus trail – so that the percentages stated against A and B total either 3% or 2.25% as appropriate): |
3% | 2.25% plus trail | |
| A: Commission to be paid to Execution only Broker | |||
| B: Commission to be waived and invested in additional shares for your client | |||
| Please confirm how you would like receipt of your client's Application to be confirmed: | Post |
The Company intends to pay all fees (and related VAT) and commission by direct transfer to intermediaries' bank accounts. Please provide your bank details below.
Bank reference number and details:
| Account Name | Account No. | |
|---|---|---|
| Name of Bank | Sort Code | |
| Branch Name | Post Code | |
| Address of Branch | ||
The Company, Registrars and Beringea do not accept responsibility if any details quoted by you are incorrect.
Signature Date
The details set out in this Application Form should be checked carefully by the intermediary as they supersede details given in any accompanying letters or forms.
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.