PROVEN VCT PLC - Annual Report 2013

ProVen Health VCT plc Annual Report and Accounts

For the year ended 31 January 2013

Managed by Beringea LLP

Fund Overview	5
Chairman's Statement	6
Investment Manager's Review	8
Investment Portfolio	11
Review of Investments	13
Directors	20
Report of the Directors	21
Corporate Governance Statement	29
Directors' Remuneration Report	35
Independent Auditor's Report	37
Income Statement	39
Reconciliation of Movements in Shareholders' Funds	39
Balance Sheet	40
Cash Flow Statement	41
Notes to the Accounts	42
Shareholder Information	56
Company Information	57
Notice of the Annual General Meeting	58
Form of Proxy

ProVen Health VCT plc

Investment Objective

The Company aims to provide investors with an attractive investment return through a stream of tax free dividend distributions from the capital gains and income generated from a diversified portfolio of investments in small and medium sized companies.

Investment Policy

The Company's investment policy is to create a portfolio of growth companies. Investments will be made selectively across a range of sectors.

The Company invests in a range of securities including, but not limited to, ordinary and preference shares, loan stock, convertible securities, warrants and fixed interest securities as well as cash and liquidity funds. Unquoted investments are usually structured as a combination of ordinary shares and loan stock while AIM investments are in ordinary shares.

The Investment Manager targets companies with high growth prospects and bases its selection of investments on:

experience and quality of the management team;
maturity and stage of company development;
existing revenues and revenue growth potential;
potential exit value and timing; and
contribution to portfolio diversification.

The Investment Approach

The Fund will look to provide capital for businesses which display some or all of the following characteristics:

proven business model and recognised barriers to entry for competitors;
established and increasing revenues, which are at or near profitability;
an opportunity for an attractive ongoing yield to investors and strong capital growth potential;
a strong, balanced and well motivated management team with a proven track record of success and achievement; and
a clearly identifiable route for a profitable realisation within a three to five year period.

Fund Overview

Highlights

New investments totalling £1.6 million including £0.9 million in four non‐health sector companies: Inskin Media, Cognolink, Skills Matter and Utility Exchange Online
Merger of the Company with Longbow Growth and Income VCT plc resulting in an increase in assets under management of 11% including new liquid funds for investment of £0.8 million
Enhanced share buyback with a takeup of 15% of the preceding year end shares in issue and funds reinvested of £1.2 million
Dividend of 1p per share paid during the year
Post year end realisation of quoted investment holdings generating cash proceeds of £847,000.

Financial summary

	31 January 2013	31 January 2012
Net asset value per share ("NAV")	37.1p	44.2p
Dividends paid since launch	18.5p	17.5p
Total return (NAV plus dividends paid since launch)	55.6p	61.7p
Mid market share price	34.5p	37.5p

Dividend history (since launch)

Ordinary share dividends paid in the year ended 31 January	pence per share	Ordinary share dividends paid in the year ended 31 January	pence per share
2002	–	2008	6.5
2003	1.0	2009	–
2004	2.0	2010	1.0
2005	–	2011	2.0
2006	2.0	2012	1.0
2007	2.0	2013	1.0
		Cumulative dividends paid to 31 January 2013	18.5

Chairman's Statement

Introduction

At the year end, the Company's net asset value per share ("NAV") stood at 37.1p, a decrease of 6.1p per share, or 13.8%, over the year after adjusting for the dividend of 1.0p per share paid on 9 March 2012. The total return (NAV plus cumulative dividends paid) to ordinary shareholders who invested at the outset of the Company was 55.6p per share at 31 January 2013.

There is no disguising this very disappointing performance over the period which largely reflects further provisions made against three investments in what is a relatively concentrated investment portfolio. These investments were made before the decision to change the Company's investment focus, initially to later stage health sector investments and, during 2012 with shareholder approval, to allow non‐health sector investments. Whilst there has been measurable progress since these changes, the unquoted status of the companies means that the full impact of these changes will take time to become evident.

In March 2012, following approval by the shareholders of both companies, the Company completed a scheme of reconstruction with Longbow Growth and Income VCT plc ("LGIV") (the "Scheme" or "Merger"). The Scheme was effected by LGIV transferring its net assets to the Company, in consideration for which the Company issued new ordinary shares to the shareholders of LGIV. Under the Scheme, LGIV was placed into members' voluntary liquidation.

Portfolio activity and valuation

At 31 January 2013, the Company's investment portfolio consisted of 13 unquoted investments and 2 quoted investments at a total valuation of £5.2 million. In addition, the Company had cash and liquidity fund investments of £2.3 million resulting in total investments of £7.5 million.

Following the change in investment remit to allow non‐health sector investments, I am pleased to report that the Company made four non‐health investments during the year at a total cost of £911,000: Inskin Media (£320,000) is a UK based company that has developed a range of technologies for the rapidly growing area of online video advertising; Cognolink (£319,000) offers a broad range of "expert network" services to private equity firms, hedge funds, asset managers and large consulting businesses; Skills Matter (£159,000) assists its 35,000 strong developer community to learn and share skills to write better software including through the provision of training, networking and seminars; Utility Exchange Online (£113,000) provides utility price comparison services for small businesses. All these investments were made alongside other Beringea managed VCTs. In addition to these investments, there was a further investment of £475,000 in APM Healthcare and an investment of £77,000 in Population Genetics Technologies. The Merger resulted in the transfer into the portfolio of a further £135,000 investment in Polytherics and £796,000 in cash.

The Company received proceeds during the year from the part disposals of investments in Amura Holdings and Omni Dental Sciences, proceeds held in escrow from the initial sale of Biovex and, following the year end, the sale of its investments in Vectura Group and Sinclair IS Pharma, these latter two sales generating net proceeds of £847,000. Shareholders may also recall that further payments of up to \$1.9 million may be received in relation to the realisation of Biovex, dependent on the achievement of certain commercialisation and sales milestones with respect to its skin cancer treatment. As I have pointed out before, there is considerable uncertainty as to whether these payments will be received and, if so, over what timescale. We are further constrained in what information we receive from Amgen Inc, the acquirer of Biovex, because of Amgen's US stock exchange listing. We understand, however, that trials are continuing to progress, although this should not be viewed as a guarantee of future success. Even with a successful launch, a significant proportion of the receipts will only be payable after certain sales are reached. At 31 January 2013, a fair value of £120,000 has been ascribed to these potential receipts although the eventual amounts received may be different.

The investment portfolio showed an overall loss of £1.4 million reflecting further provisions against Population Genetics Technologies, Altacor, Omni Dental Sciences and Digital Healthcare, partially offset by gains in Polytherics, APM Healthcare and the quoted portfolio.

Further details on portfolio activity are provided in the Investment Manager's Review.

Results

The loss on activities after taxation for the year was £1,353,000 (2012: loss £559,000), comprising a revenue loss of £127,000 and a capital loss of £1,226,000. The revenue element of the income statement continues to be impacted by the historic low interest rates achievable on cash deposits and the low income from the venture capital portfolio which is largely in the form of ordinary shares.

Company strategy and development

In my statement last year I reported on the Merger which provided a cost effective way for shareholders of increasing the size of the Company, albeit in a small way, as the Investment Manager agreed to meet the Company's costs. In addition, an enhanced share buyback resulted in funds of £1.2 million being reinvested in the Company and relative certainty over this funding, given the need for shareholders to hold the new shares for five years to retain the upfront tax benefits. It is clear, however, that the Company is still small and its performance, and hence the return to shareholders, can be impacted significantly by some of the larger investments, as has been experienced in this reporting period.

The Board, together with the Investment Manager, has therefore continued to discuss and investigate ways of potentially improving shareholder returns and the viability of the Company. What has been clear from these investigations is that it is currently difficult to attract a meaningful level of new funds and therefore build up the size of the Company. In addition, whilst dividends and an active share buyback scheme are both attractive for VCT shareholders, they result in an outflow of funds for the Company and impact those shareholders who wish to remain invested and therefore potentially the ongoing economic viability of the Company. The Board has therefore been looking into the possibility of a potential merger with another VCT on the basis that this could provide opportunities for all shareholders. A larger, relatively mature and diversified investment portfolio would be less susceptible to investment volatility and could provide scope for more frequent realisations and dividend payouts. A larger fund could also provide a share buyback facility for those shareholders who wish, or need, to realise their investment while retaining scale for shareholders who wish to remain invested.

The Board expects to be able to announce the outcome of this process shortly but has decided that, in the meantime, it would be prudent to temporarily suspend the Company's share buyback policy and not to consider further dividend payments until the outcome is clear.

Shareholder communications

I would like to take this opportunity to thank those shareholders who attended the Investment Manager's annual shareholder presentation which was held in October 2012 at the Royal College of Surgeons in Central London. The Board is always pleased to hear comments from shareholders and can be contacted through the Company's registered office at 39 Earlham Street, London WC2H 9LT. Please note that if you are considering selling your shares in the Company, please speak first to the Company Secretary who will be able to advise as to the Company's share buyback scheme and the prices at which the Company is buying back shares.

Outlook

Whilst the Company's recent performance has been particularly disappointing, VCT investment in general can still provide attractive tax free returns to investors. The four non‐health sector investments completed towards the end of 2012, together with other portfolio investments and potential investment opportunities under review by the Investment Manager, provide some grounds for cautious optimism.

Charles Pinney Chairman 24 May 2013

Investment Manager's Review

Introduction

The period under review saw the extension of the Company's investment remit to allow non‐health sector investments. We are pleased to report that the Company has since made four such investments totalling £911,000, in addition to two health sector investments totalling £552,000. The investment portfolio was also boosted by the addition of a further investment in Polytherics, valued at £135,000, and cash of £796,000 from the merger with LGIV. The portfolio performance has, however, been negatively impacted by the value of four earlier stage health sector investments.

Portfolio performance and activity

Additions
		£'000
APM Healthcare Limited		475
Cognolink Limited		319
Inskin Media Limited		320
Polytherics Limited**		135
Population Genetics Technologies Limited		77
Skills Matter Limited		159
Utility Exchange Online Limited		113
		1,598

**Transfer from LGIV

Disposals	Cost	Market value at 31/01/12	Proceeds	Realised gain/(loss)	Gain/(loss) against cost
	£'000	£'000	£'000	£'000	£'000
Amura Holdings Limited	60	–	38	38	(22)
Biovex Inc	–	–	83	83	83
Omni Dental Sciences Limited	13	13	13	–	–
	73	13	134	121	61

The four non‐health sector investments were made alongside other Beringea managed VCTs.

Inskin Media is a UK based company that has developed a range of technologies for the rapidly growing area of online video advertising. The company has established itself as a significant player in the UK market by its ability to provide innovative technology formats which have been proven to drive higher yields for online media owners and strong returns for advertising campaigns.

Cognolink offers a broad range of "expert network" services to private equity firms, hedge funds, asset managers and large consulting businesses. These services assist these clients in their primary research by facilitating consultations with industry experts via one‐to‐one phone calls, in‐person meetings and interactive conference calls.

Launched in 2003, Skills Matter helps its 35,000 strong developer community to learn and share skills to write better software. ProVen Health VCT invested £159,000 as part of a total investment, alongside other Beringea managed VCTs, of £1.5 million. The new funding will be used to provide even more opportunities for its community to collaborate with the world's top technology experts including through expert talks, meetings and training courses. In addition, the company will now be able to offer work and collaboration space.

Utility Exchange Online provides utility price comparison services for small businesses. An original investment through Beringea managed VCTs was made in October 2011 and a further funding round, including £113,000 from ProVen Health VCT, was made in November 2012.

The Company made a further significant investment of £475,000 in APM Healthcare which, through its subsidiary Community Pharmacies (UK) Limited and in conjunction with local GPs, provides pharmacy services in GP centres. The company is progressing well with 16 pharmacies having been opened at the date of this report and a number in the pipeline. Through its interest in APM Healthcare, the Company received founder shares in Long Eaton Healthcare Limited, a standalone pharmacy in the East Midlands, with additional funding being provided by ProVen Planned Exit VCT.

The Company received modest proceeds from parts of its holdings in Omni Dental Sciences and Amura Holdings and further sales proceeds of US\$134,000 (£83,000) from the initial sale of Biovex, being the release of sales proceeds held in escrow. Further payments of up to \$1.9 million may be received dependent on the achievement of certain commercialisation and sales milestones of Biovex's skin cancer product although there is considerable uncertainty as to whether these individual payments will be received and, if so, over what timescale. A value of £120,000 has been attributed to this contingent consideration at the period end.

The investment portfolio, after taking into account the effect of additions and disposals, showed a decrease in value of £1,372,000. This is the result of reductions in carrying value for Altacor, Population Genetics Technologies, Omni Dental Sciences and Digital Healthcare, partly offset by gains in the value of Polytherics, APM Healthcare, Vectura Group and Sinclair IS Pharma. In March 2012, Altacor received a significant new investment from French listed healthcare company NicOx S.A. A key part of the transaction was the right of NicOx to acquire the entire share capital of Altacor through a combination of shares and/or cash in mid 2012. NicOx subsequently declined to take up this right but remains a significant investor in the company.

Post year end developments

Following the year end, the Company made further investments of £64,000 in Altacor and £23,000 in Population Genetics Technologies. The Company's remaining quoted shareholdings in Vectura Group and Sinclair IS Pharma were sold in March. The combined sales of Vectura, including an earlier sale in August 2011, generated total proceeds of £720,000 against an initial investment cost of £482,000; the sale of Sinclair IS Pharma generated proceeds of £405,000 against an initial investment cost of £585,000.

Outlook

The portfolio has suffered during the year from valuation downgrades to a number of earlier investments. This has negated the positive impact of the new assets from the merger with LGIV. Unlike a quoted portfolio where a manager can relatively quickly dispose of investments that do not meet investment criteria or are not performing as planned, an unquoted portfolio is more inflexible. The impact of relatively poorly performing investments can also be much greater in a smaller portfolio. We have, however, made a number of exciting new investments which we hope will, alongside other portfolio investments, generate value for shareholders in the medium to long term.

Beringea LLP 24 May 2013

Investment Portfolio as at 31 January 2013

The following investments were held at 31 January 2013:

		Valuation movement	% of
Cost £'000	Valuation £'000	in year £'000	portfolio by value

885	1,018	133	13.6%
850	893	43	11.9%
1,020	815	(426)	10.9%
250	446	164	6.0%
585	402	81	5.3%
1,010	384	(134)	5.1%
320	320	–	4.3%
319	319	–	4.3%
1,206	295	(911)	3.9%
159	159	–	2.1%
6,604	5,051	(1,050)	67.4%
2,437	113	(322)	1.5%

			68.9%
	2,128		28.4%
	199		2.7%
			100.0%
	9,041	5,164 7,491	(1,372)

All venture capital investments are unquoted unless otherwise stated.

Other venture capital investments at 31 January 2013 comprise Utility Exchange Online Limited ** Amura Holdings Limited, Long Eaton Healthcare Limited, Omni Dental Sciences Limited and DeltaDOT Limited.

* Polytherics Limited was also held by LGIV which merged with the Company on 16 March 2012
** APM Healthcare Limited, Inskin Media Limited, Cognolink Limited, Skills Matter Limited and Utility Exchange Online Limited are also held by ProVen VCT plc and ProVen Growth and Income VCT plc, both of which are managed by Beringea LLP
*** Quoted on the Main Market
**** Quoted on AIM

All venture capital investments held at the year end are registered in England and Wales.

Review of Investments as at 31 January 2013

Further details of the largest investments (by value) follow:

Polytherics Limited

Polytherics Limited is a biotechnology company that applies precision chemistry technologies to develop protein and peptide‐based drugs. These technologies can extend the duration of action of these drugs, so patients require fewer injections, and can create more efficacious products.

	Cost:		£885,000	Valuation at 31/01/13:	£1,018,000
	Investment comprises:			Valuation at 31/01/12:	£750,000
www.polytherics.com	Equity shares:		£88,000	Valuation method:	Revenue multiple
	Preferred shares:		£797,000
	Abbreviated accounts:	31/12/11	31/12/10	Dividend income:	£Nil
	Turnover:	Unpublished information
	Profit before tax:		Unpublished information	Proportion of equity held:	8.1%
	Net assets/ (liabilities):	£3.2 m	(£0.2 m)	Diluted equity:	7.8%

APM Healthcare Limited

APM Healthcare is the holding company of Community Pharmacies (UK) Limited, a provider of integrated pharmacy services. The pharmacies operate at the heart of primary care in partnership with local surgery practices, but with expert support from a central head office.

	Cost:		£850,000	Valuation at 31/01/13:	£893,000
	Investment comprises:			Valuation at 31/01/12:	£375,000
www.communitypharmacies.co.uk	Equity shares: Loan notes:		£262,000	Valuation method:	Price of recent Investment
			£588,000
	Audited accounts*:	31/03/12	31/03/11	Dividend income:	£Nil
	Turnover:	£119,000	£104,000	Loan note income:	£22,000
	Profit before tax:	£Nil	£57,000	Proportion of equity held:	18.9%
	Net assets:	£231,000	£Nil	Diluted equity:	18.9%

*The company filed full audited accounts for the first time to 31 March 2012; comparative figures for the prior year have therefore been provided.

Altacor Limited

Altacor is an ophthalmology specialty pharmaceutical company which develops and markets products directed to the needs of both ophthalmologists and patients.

www.altacoreyeproducts.co.uk

Cost:		£1,020,000	Valuation at 31/01/13:	£815,000
Investment comprises:			Valuation at 31/01/12:	£1,241,000
Equity shares:		£1,020,000	Valuation method:	Price of recent investment, less provision
Abbreviated accounts:	31/12/11	31/12/10	Dividend income:	£Nil
Turnover:	Unpublished information
Profit before tax:	Unpublished information		Proportion of equity held:	13.8%
Net assets:	£1.4 m	£1.2 m	Diluted equity:	12.8%

Vectura Group plc

Vectura develops products to treat respiratory diseases such as asthma, chronic obstructive pulmonary disease and cystic fibrosis. The company also develops products for non‐respiratory diseases, where optimised delivery via the lungs could provide significant benefits, such as a rapid onset of action, improved efficacy and improved tolerability compared with current therapies.

www.vectura.com

Cost:		£250,000	Valuation at 31/01/13:	£446,000
Investment comprises:			Valuation at 31/01/12:	£282,000
Equity shares:		£250,000	Valuation method:	Bid price
Audited accounts:	31/03/12	31/03/11	Dividend income:	£Nil
Turnover:	£33 m	£43 m
Loss before tax:	(£13 m)	(£13 m)	Proportion of equity held:	0.2%
Net assets:	£140 m	£140 m	Diluted equity:	0.1%

The investment in Vectura Group plc was fully realised in March 2013.

Sinclair IS Pharma plc

Sinclair IS Pharma is an international specialty pharmaceutical company providing solutions to treat wounds, dermatological and oral diseases through advanced surface technology and innovative delivery systems The company merged with IS Pharma plc, another ProVen Health VCT portfolio company, in May 2011.

Cost:		£585,000	Valuation at 31/01/13:	£402,000
Investment comprises:			Valuation at 31/01/12:	£321,000
Equity shares:		£585,000	Valuation method:	Bid price
Audited accounts:	30/06/12	30/06/11	Dividend income:	£Nil
Turnover:	£51 m	£33 m
Loss before tax:	(£12 m)	(£12 m)	Proportion of equity held:	0.4%
Net assets:	£114 m	£124 m	Diluted equity:	0.4%

The investment in Sinclair IS Pharma plc was fully realised in March 2013.

Digital Healthcare Limited

Digital Healthcare delivers software solutions that address some of the world's fastest growing healthcare issues. Founded to provide image management and storage solutions for the ophthalmology sector, the company has extended its product range based on its core competencies in clinical information and patient care management.

	Cost:		£1,010,000	Valuation at 31/01/13:	£384,000
www.digital‐healthcare.co.uk	Investment comprises:			Valuation at 31/01/12:	£518,000
	Equity shares:		£1,010,000	Valuation method:	Cost less provision
	Audited accounts:	30/09/12	30/09/11 restated	Dividend income:	£Nil
	Turnover:	£3.4 m	£2.6 m
	Profit/(loss) before tax:	£0.1 m	(£0.2 m)	Proportion of equity held:	11.1%
	Net assets:	£1.2 m	£1.0 m	Diluted equity:	9.1%

www.digital‐healthcare.co.uk

Inskin Media Limited

	Cost:		£320,000	Valuation at 31/01/13:	£320,000
www.inskinmedia.com	Investment comprises:			Valuation at 31/01/12:	n/a
	Ordinary shares:		£160,000	Valuation method:	Price of recent investment
	Preference shares:		£160,000
	Abbreviated accounts*:	31/12/11	31/12/10	Dividend income:	£Nil
	Turnover:	Unpublished information
	Profit before tax:	Unpublished information		Proportion of equity held:	3.2%
	Net liabilities:	(£0.9 m)	(£0.7 m)	Diluted equity:	3.2%

*These accounts cover periods before the investment by ProVen Health VCT plc.

Cognolink Limited

Cognolink offers a broad range of "expert network" services to private equity firms, hedge funds, asset managers and large consulting businesses.

CognoL:nk

Cost:		£319,000	Valuation at 31/01/13:	£319,000
Investment comprises:			Valuation at 31/01/12:	n/a
Ordinary shares:		£159,500	Valuation method:	Price of recent investment
Preference shares:		£159,500
Abbreviated accounts*:	31/12/11	31/12/10	Dividend income:	£Nil
Turnover:	Unpublished information
Profit before tax:	Unpublished information		Proportion of equity held:	0.7%
Net (liabilities)/ assets:	(£0.3 m)	£0.2 m	Diluted equity:	0.7%

www.cognolink.com

*These accounts cover periods before the investment by ProVen Health VCT plc.

Population Genetics Technologies Limited

Population Genetics Technologies has developed a novel, proprietary approach for performing large‐scale population genetics studies. This technology, conceived by Nobel Laureate Professor Sydney Brenner, identifies the genetic variation responsible for human disease and drug response.

	Cost:		£1,206,000	Valuation at 31/01/13:	£295,000
www.populationgenetics.com	Investment comprises:			Valuation at 31/01/12:	£1,129,000
	Equity shares:		£1,206,000	Valuation method:	Price of recent investment, reviewed for impairment
	Audited accounts:	31/08/12	31/08/11	Dividend income:	£Nil
	Turnover:	£15,000	£72,000 m
	Loss before tax:	(£2.4 m)	(£1.9 m)	Proportion of equity held:	11.1%
	Net assets/ (liabilities)	£1.0 m	(£0.4 m)	Diluted equity:	10.2%

Skills Matter Limited

Launched in 2003, Skills Matter helps its 35,000 strong developer community to learn and share skills to write better software including through expert talks, meetings and training courses.

www.skillsmatter.com

Cost:		£159,000	Valuation at 31/01/13:	£159,000
Investment comprises:			Valuation at 31/01/12:	n/a
Ordinary shares:		£43,000	Valuation method:	Price of recent investment
Preference shares:		£116,000
Abbreviated accounts*:	31/12/11	31/12/10	Dividend income:	£Nil
Turnover:	Unpublished information
Profit before tax:	Unpublished information		Proportion of equity held:	3.8%
Net liabilities	(£0.2 m)	(£0.3 m)	Diluted equity:	3.8%

*These accounts cover periods before the investment by ProVen Health VCT plc.

Utility Exchange Online Limited

Utility Exchange Online Ltd provides price comparison services for utilities, including heating and electricity, for small businesses. Unlike the domestic and large corporate markets, the small business market for utility comparison is underserved as a result of its complexity and manually intensive processes. UEO's automated quoting engine is the first of its kind for business utility price comparison.

	Cost:		£113,000	Valuation at 31/01/13:	£113,000
	Investment comprises:			Valuation at 31/01/12:	n/a
www.utility‐exchange.co.uk	Ordinary shares:		£60,000	Valuation method:	Price of recent investment
	Loan notes:		£53,000
	Abbreviated accounts*:	31/03/12	31/03/11	Dividend income:	£Nil
	Turnover:	Unpublished information		Loan note income	£Nil
	Profit before tax:	Unpublished information		Proportion of equity held:	3.1%
	Net liabilities:	(£1.2 m)	(£1.1 m)	Diluted equity:	3.1%

*These accounts cover periods before the investment by ProVen Health VCT plc.

Notes:

The proportion of equity held by each investment also represents the level of voting rights held by the Company in respect of the investment. Portfolio company financial information is based on publicly available information filed at Companies House in the UK (or equivalent locations in overseas jurisdictions). Certain information may not be required to be filed, dependent, for example, on the company's size, and, in the interests of portfolio company confidentiality, is not disclosed here.

Analysis of top investments (by value)

Early stage investments (6%)

• Population Genetics Technologies (6%)

Mid stage investments (64%)

Altacor (16%)
APM Healthcare (17%)
Polytherics (20%)
Utility Exchange Online (2%)
Vectura Group (9%)
Later stage investments (30%)
Cognolink (6%)
Digital Healthcare (7%)
Inskin Media (6%)
Sinclair IS Pharma (8%)
Skills Matter (3%)

Analysis of investments by nature of instrument

The following chart summarises the Company's investment portfolio by the nature of instrument held (by value at 31 January 2013):

Specialty pharma (33%)

Altacor (16%)
Sinclair Pharma (8%)
Vectura Group (9%)

Healthcare services (30%)

Population Genetics Technologies (6%)
Digital Healthcare (7%)
APM Healthcare (17%)

Drug development services (20%)

• Polytherics (20%)

Non‐health (17%)

Cognolink (6%)
Inskin Media (6%)
Skills Matter (3%)
Utility Exchange Online (2%)

Portfolio balance

At 31 January 2013, the Company assets employed were broadly in line with the targets within the investment policy. These are summarised as follows:

Type of investment (by value,

according to HMRC regulations)	Actual	Target
VCT qualifying investments	91.0%*	Minimum 70%
Other investments, including cash at bank and in hand and liquidity funds	9.0%	Maximum 30%
Total	100.0%

*For share issues to be included in the HMRC investment tests from 1 February 2013.

Directors

Charles Pinney is a director of Baronsmead VCT 5 plc and Amati VCT plc. He was previously a director of Barclays Private Bank Limited, with overall responsibility for the operations of the investment department, and was managing director of BZW Portfolio Management Limited. From 2003 to 2009 he was a consultant to Rathbones Investment Management. He is a fellow of both the Association of Chartered Certified Accountants and the Chartered Institute for Securities & Investment. He is a former director of APCIMS (the Association of Private Client Investment Managers & Stockbrokers).

Peter Arthuris chairman of Aberdeen Asian Income Fund Ltd, a Board member of the Association of Investment Companies (AIC) and also a non‐executive director of a number of private companies. He was previously a managing director of ISIS Asset Management plc (now F&C Asset Management), where he was responsible for the institutional and investment trust businesses, and formerly chairman of Artemis VCT plc. He had previously worked for Franklin Templeton Inc and Edinburgh Fund Managers plc. Peter is a solicitor and a fellow of the Chartered Institute of Secretaries and Administrators.

Frank Harding is chairman of KLM Cityhopper UK Limited and until February 2006 was chairman of Provalis plc (a listed health sector company). He is a chartered accountant with over 40 years' experience at KPMG, of which 29 years was as an audit/general practice partner, latterly specialising in advising UK companies with subsidiaries outside the UK and non‐UK companies with subsidiaries in Europe. Frank was president of the International Federation of Accountants from 1997 to 2000.

Diane Jamesis an independent adviser to a number of healthcare organisations involving healthcare innovation in the UK and Europe. She was formerly the chair of the Surrey & Sussex CLRN (Comprehensive Local Research Network), part of the National Institute for Health Research which was established by the UK Department of Health in 2006, to support clinical innovation research in the UK. She has a wide range of healthcare experience at senior management level in both the public and private sectors and has founded, developed and divested a specialist healthcare communications business.

			At date of this Report
Director	Appointment date	Length of service	Age
Charles Pinney	27/06/07	5.8 years	65
Peter Arthur	22/04/08	5.0 years	56
Frank Harding	12/02/01	12.2 years	75
Diane James	01/03/11	2.1 years	53

None of the Directors is, or has been, employed by the Investment Manager and all are considered to be independent of the Investment Manager.

Report of the Directors

The Directors present the Annual Report and Financial Statements of the Company for the year ended 31 January 2013.

Principal activity and status

The Directors initially obtained provisional approval for the Company to act as a venture capital trust from HM Revenue & Customs at formation. The Directors consider that the Company has conducted its affairs in a manner to enable it to continue to comply with Part 6 of the Income Tax Act 2007.

Business review and developments

The Company's business and developments during the year are reviewed in detail in the Chairman's Statement, the Investment Manager's Review and the Review of Investments.

The investment portfolio showed a fall in value of £1.4 million over the 12 months to 31 January 2013 due largely to reductions in the valuation of three investments. The total running costs of the Company exceeded revenue arising from the investments held (including cash at bank and liquidity funds) by £223,000. This takes into account the reduction in the Investment Manager's fee by £89,000, as a result of the operation of the 3.6% cap on annual expenses (excluding trail commission). The ongoing charges ratio at the year end compared to net assets, taking into account the expense cap, was 4.3% (2012: 3.6%). The increase above the expense cap reflects one‐off costs associated with the enhanced share buyback scheme, the cancellation of the share premium account and initial professional fees in connection with a potential merger with another VCT.

Share capital

On 15 March 2012, 71,621 shares were issued at 43.3p per share under the Company's dividend re‐investment scheme. The aggregate consideration for the shares was £31,000 with related share issue costs of £1,000.

On 16 March 2012, the Company issued 2,150,872 new ordinary shares to the shareholders of LGIV under the terms of the Merger.

Between 5 April 2012 and 13 April 2012, the Company issued 69,246 shares for consideration at approximately 45.9p per share, under an offer for subscription dated 10 February 2012. The aggregate consideration for the shares was £31,000 and share issue costs thereon amounted to £1,000.

Under the terms of an enhanced share buyback, outlined in a circular issued by the Company on 10 February 2012, the Company bought back and subsequently issued a number of shares on 5 April 2012 in the tax year 2011/12 and 13 April 2012 in the tax year 2012/13. On 5 April 2012, the Company purchased 1,804,994 shares for cancellation at a price of 43.3p per share and issued 1,721,418 shares at a price of 45.4p per share. On 13 April 2012, the Company purchased 1,025,322 shares for cancellation at a price of 43.3p per share and issued 977,859 shares at a price of 45.4p per share. Total funds of £1.2 million were re‐invested in the Company with transaction costs of £57,000 being incurred. Beringea LLP received a fee of £12,000 in respect of services provided in connection with the enhanced share buyback which was borne in part by shareholders who participated in the enhanced share buyback.

During the year the Company purchased 736,500 shares for cancellation for an aggregate consideration of £277,000 at an average price of 37.6p per share (approximately equal to a 10% discount to the most recently published NAV at the time of purchase) and representing 3.6% of the issued share capital held at 1 February 2012.

The total authorised share capital at 31 January 2013 was 245,000,000 ordinary shares of 1p each, with 20,607,684 such shares in issue. There are no other share classes in issue.

Results and dividends

		2013	2012
	£'000	Pence per share	£'000	Pence per share
Loss for the year	(1,353)	(6.5p)	(559)	(2.9p)
Dividends paid
9 March 2012	192	1.0p	–	–
17 June 2011	–	–	196	1.0p

Annual General Meeting

The AGM of the Company will be held at 39 Earlham Street, London WC2H 9LT at 10.00 am on 9 July 2013. Notice of the meeting is at the end of this document. Resolutions 1 to 6 will be proposed as ordinary resolutions, meaning that for each resolution to be passed, more than half of the votes cast at the meeting must be in favour of the resolution. Resolutions 7 and 8 will be proposed as special resolutions, meaning that for each resolution to be passed, at least 75% of the votes cast at the meeting must be in favour of the resolution.

Resolution 6 is seeking to renew the Directors' general authority to allot shares up to a maximum nominal amount of £68,692.88 (representing one third of the issued share capital as at 23 May 2013 (being the latest practicable date prior to publication of this document)). Resolution 7 is seeking to disapply shareholders' statutory pre‐emption rights by granting the Directors authority to issue shares having an aggregate nominal value of £20,607.86 (representing approximately 10% of the Company's issued share capital as at 23 May 2013 (being the latest practicable date prior to publication of this document)) for cash without applying the statutory pre‐emption rights. These authorities will lapse on the conclusion of the Company's next annual general meeting or 9 October 2014, whichever is the earlier. The Board may utilise these authorities in connection with the Company's dividend re‐investment scheme and any offer which may be implemented by the Company. The Company does not currently hold any shares in treasury and no warrants or options to subscribe for ordinary shares are outstanding.

Resolution 8 is seeking approval to renew the Company's existing authority to make market purchases of up to 3,089,119 of the Company's own shares (representing approximately 14.99% of the Company's issued share capital as at 23 May 2013 (being the latest practicable date prior to publication of this document)). The authority will lapse on the conclusion of the Company's next annual general meeting or 9 October 2014, whichever is the earlier. The Board intends to utilise this authority in the same manner as previous years. Purchases will only be made on the London Stock Exchange and this authority will only be exercised in circumstances where the Board believes that it is in the best interests of the shareholders generally. The minimum to be paid for a share will be 1p. The maximum to be paid for a share will be the higher of (i) an amount not more than 5% above the average of the middle market quotations for shares of the Company as derived from The London Stock Exchange Daily Official List for the five business days immediately preceding the date of each purchase and (ii) the price stipulated by Article 5(1) of the Buyback and Stabilisation Regulation (EC No. 2273/2003). Any shares purchased by the Company pursuant to this authority will be cancelled.

The Board considers that each of the resolutions is likely to promote the success of the Company and is in the best interests of the Company and its shareholders as a whole. The Directors unanimously recommend that you vote in favour of the resolutions as they intend to do in respect of their own beneficial holdings.

Investment objective

ProVen Health VCT plc aims to provide investors with an attractive return by maximising the stream of tax‐free dividend distributions from the capital gains and income generated from a diversified portfolio of investments in small and medium sized companies, subject to ensuring sufficient liquidity to meet working capital requirements and any need to retain funds to remain at an economically viable size.

Investment policy

The Company's investment policy covers several aspects as follows:

General

The Company's investment policy is to create a balanced portfolio of growth companies. Investments are made selectively across a range of sectors.

The Company invests in a range of securities including, but not limited to, ordinary and preference shares, loan stocks, convertible securities, warrants and fixed interest securities as well as cash and liquidity funds. Unquoted investments may be structured as a combination of ordinary shares and loan stocks, while quoted investments are in ordinary shares. The Investment Manager targets companies with high growth prospects and bases its selection of investments on:

the experience and quality of the management team;
the maturity and stage of company development;
existing revenues and revenue growth potential;
potential exit value and timing; and
contribution to portfolio diversification.

Geographical focus

Investments are usually made in UK companies, although these may trade outside the UK.

Portfolio allocation

Investment is made primarily in VCT Qualifying Investments. Any funds awaiting investment are generally held in cash and liquidity funds so that they are readily available for follow‐on investments, buybacks or to meet the running costs of the fund although investments may be made in other investments as deemed appropriate by the Board. Where possible, the Investment Manager is represented at board level on unquoted investee companies in order to be able to monitor closely the relevant company's progress.

Diversification of risk

The aggregate value of shares and securities in a single issuer or company (other than a VCT) will not exceed 15 per cent. of the value of the Company's investments at the time of investment. The Company's gearing policy is determined by the Board. The level of gearing may be varied from time to time in light of the prevailing circumstances subject to a maximum of 10 per cent. of Shareholders' funds at any time. The Company does not currently have any borrowings.

VCT regulations

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:

the Company holds at least 70% of its investments in qualifying companies (as defined by Part 6 of the Income Tax Act 2007);
at least 30% of the Company's qualifying investments (by value) are held in "eligible shares" ("eligible shares" generally being ordinary share capital). For funds raised on or after 6 April 2011, there is a requirement to have at least 70% by value of qualifying investments in "eligible shares" which includes ordinary shares with certain preferential rights to dividends, but no preferential rights on a winding‐up nor any rights to be redeemed;
at least 10% of each investment in a qualifying company is held in "eligible shares" (by cost at time of investment);
no investment constitutes more than 15% of the Company's total investments (by value at time of investment);
the Company's income for each financial year is derived wholly or mainly from shares and securities;
the Company distributes sufficient revenue dividends to ensure that not more than 15% of the income from shares and securities in any one year is retained;
the Company's ordinary capital has throughout the period been listed on a regulated European market; and
the Company may not, from 16 July 2012, make an investment in a company which causes that company to receive more than £5 million of State Aid investment (including from VCTs) in the twelve months ending on the date of the investment.

Borrowings

The Company's Articles permit borrowing to give a degree of flexibility. The Company's gearing policy is determined by the Board. The level of gearing may be varied from time to time in light of the prevailing circumstances subject to a maximum of 10 per cent. of Shareholders' funds at any time. The Company does not currently have any borrowings.

At 31 January 2013, the maximum amount of borrowing allowed, without the previous sanction at a General Meeting, stood at £765,000. There are no plans to utilise this borrowing limit at the current time.

Environmental and social policy

The Board seeks to conduct the Company's affairs responsibly and considers relevant social and environmental matters where appropriate.

Investment management agreement

On 1 February 2009, Beringea LLP ("Beringea") replaced Noble Fund Managers Limited ("Noble") as the Company's investment manager. Beringea provides investment management services to the Company under a Discretionary Investment Management Agreement dated 12 February 2001 (the "Investment Management Agreement") and a Deed of Novation and Variation dated 23 December 2008. The Investment Management Agreement was for an initial period of four years from 26 March 2001 and continues thereafter unless terminated by either party giving not less than 12 months' notice. Beringea is entitled to receive management fees of 2.5% per annum of the net assets of the Company calculated on a quarterly basis.

Under the terms of an Incentive Agreement dated 12 February 2001, the Investment Manager and the promoter of the original fundraising in 2001, Matrix‐Securities Limited ("Matrix"), are entitled to 20% of the amount by which the actual compound annual growth in the net asset value of the Company, as adjusted to take account of cumulative dividends paid and proposed, exceeds a return of 2% over the NatWest bank base rate applied to the initial net value of the Company over the same period. No payment will be made pursuant to this agreement until the net asset value per share plus cumulative dividends per share paid and proposed have exceeded 174p, of which at least 50p per share must have been paid to shareholders in cash. Under the terms of the termination of Matrix's position as promoter of the VCT dated 5 July 2004, Matrix is not entitled to any incentive payments in respect of funds raised following the date of termination.

The Board considers that the continuing appointment of Beringea as the Investment Manager is in the interests of the Company's shareholders as a whole given Beringea's experience and track record in VCT fund management.

Administration and company secretarial services

On 1 February 2009, Beringea replaced Noble as the provider of Administration and Company Secretarial Services to the Company, under a Deed of Novation and Variation dated 23 December 2008. The agreement is terminable upon the cessation of the Investment Management Agreement. Beringea is entitled to a receive a fee of £30,000 plus VAT per annum under this agreement. Beringea waived its entitlement to administration and company secretarial services fees for the year ended 31 January 2013.

Annual running costs cap

The Company's annual running costs (which exclude trail commission) are capped at 3.6% of the net assets at the year end. Any excess will be paid by Beringea by reducing its fees payable. As previously stated, Beringea's fee was capped for the year under review, with the total fee due being reduced by £89,000. As Beringea had taken a lower fee during the year (to account for the cap), at the year end £40,000 was due from Beringea to the Company in respect of overpaid management fees.

Directors

The Directors of the Company during the year and their beneficial interests in the issued shares of 1p each, in the Company at each year end, and the date of this report, were as follows:

Director	At the date of this report	31 Jan 2013	31 Jan 2012
Charles Pinney	9,103	9,103	9,103
Peter Arthur	71,257	71,257	19,507
Frank Harding	23,177	23,177	23,038
Diane James	–	–	n/a

Directors' retirement and re‐election are subject to the Articles of Association and the AIC Code of Corporate Governance.

Frank Harding is subject to annual re‐election by shareholders having served as a Director for over nine years. The remainder of the Board believes he continues to make a valuable contribution to the Company and remains highly committed to his role. Frank Harding is considered to be independent of the Investment Manager as he has had no previous dealings with them in either a professional or personal capacity. The Board therefore recommends shareholders to re‐elect Frank Harding at the forthcoming AGM. Charles Pinney retires by rotation at the forthcoming AGM and, being eligible, offers himself for re‐election.

Each of the Directors has signed a service contract and Frank Harding and Diane James also have consultancy agreements with the Company. The Directors' appointments are on a continuous basis unless otherwise terminated at the discretion of either party upon three months' written notice. Consultancy agreements shall terminate at the same time as the directorships are terminated. Each Director is required to devote such time to the affairs of the Company as the Board reasonably requires and their powers are bound by the Company's Articles of Association. Appointments of new Directors to the Board are considered by the Nomination Committee as, and when, it is deemed appropriate.

The Company provides Directors' and Officers' liability insurance, giving appropriate cover for legal action brought against its Directors, and has also agreed to indemnify Directors in circumstances where they are not considered to be culpable. The indemnity, which is a qualifying third party indemnity provision for the purpose of the Companies Act, is for the benefit of all of the Company's current Directors.

VCT status

The Company retains PricewaterhouseCoopers LLP to advise it on compliance with VCT requirements, including evaluation of investment opportunities, as appropriate, and to provide a regular review of the portfolio.

A summary of the VCT Regulations is included in the Company's Investment Policy as shown on pages 23 and 24.

Compliance with the main VCT regulations as at 31 January 2013 and for the year then ended is summarised as follows:

• 70% of its investments in qualifying companies	91.0%*
• At least 30% of the Company's qualifying investments in "eligible shares"	58.2%*
• At least 10% of each investment held in "eligible shares"	Complied
• No investment constitutes more than 15% of the Company's portfolio	Complied
• Income is derived wholly or mainly from shares and securities	96.7%
• No more than 15% of the income from shares and securities is retained	Complied
• The Company's ordinary capital has throughout the period been listed on a regulated European market	Complied
• The Company has not made an investment since 16 July 2012 which causes a breach of the £5 million investment limits condition	Complied
*For share issues to be included in the HMRC investment tests from 1 February 2012

Creditor payment policy

The Company's policy is to pay all suppliers' invoices in accordance with agreed terms. Trade creditors and creditor days as at 31 January 2013 were £447 and nil days (2012: £10,000 and 11 days).

Key performance indicators

The Board considers the main key performance indicators for the Company to be the following:

In comparison to similar VCTs:

net asset value and total return (page 5).
share price (page 5) (including buyback price) and the discount level to NAV (page 21).

In relation to the Company:

diversification of the investee portfolio by sector and by stage in relation to meeting the investment strategy (as shown on page 19).
compliance with the Venture Capital Trust Regulations (as shown on page 26).
the ongoing charges ratio of the Company (as shown on page 21).

These are regularly monitored by the Board and are also kept under review by the Investment Manager.

Principal risks and uncertainties

The principal financial risks faced by the Company, which include market risks, credit risks and liquidity risks, are disclosed within note 20 to the financial statements.

In addition to these risks the Board considers the following to be risks to the Company:

Investment risk

This is the risk of investment in poor quality assets which reduce the capital and income returns to shareholders and negatively impact on the Company's reputation. By nature, smaller unquoted businesses, such as those that qualify for venture capital trust purposes, are more fragile than larger, long‐established businesses.

To reduce the risk, the Board places reliance upon the skills and expertise of the Investment Manager and its track record. In addition, the Investment Manager operates a formal and structured investment process, which includes a formal investment committee. Investments are actively and regularly monitored by the Investment Manager and the Board receives detailed reports on each investment as part of the Investment Manager's report at regular Board meetings.

Compliance risk

As a venture capital trust, and a fully listed company whose shares are traded on the main market of the London Stock Exchange, the Company operates in a complex regulatory environment and, therefore, faces a number of related risks. A breach of the VCT regulations could result in the loss of VCT status and consequent loss of tax reliefs currently available to shareholders and the Company being subject to capital gains tax. Serious breaches of other regulations, such as the UKLA Listing Rules and the Companies Act 2006, could lead to suspension from listing on the Official List of the UK Listing Authority and trading on the London Stock Exchange and damage to the Company's reputation.

The Company's compliance with the VCT regulations is continually monitored by the Investment Manager, which reports regularly to the Board on the current position. The Company also retains Pricewaterhouse Coopers to provide regular reviews and advice in this area. The Board considers that this approach reduces the risk of a breach of the VCT regulations to a minimal level. Board members have considerable experience of operating at senior levels within quoted and unquoted businesses. The Company employs Beringea LLP as Company Secretary to ensure that compliance with UK Listing Rules is maintained and seeks legal and regulatory advice from appropriate third‐party experts when required.

The Board reviews and agrees policies for managing each of these risks. It receives quarterly reports from the Investment Manager, which monitor the compliance of these risks, and places reliance on the Investment Manager to give updates in the intervening period. These policies have remained unchanged since the beginning of the period.

Substantial shareholdings

As at 31 January 2013 and at the date of this report, the Company was not aware of any individual shareholdings exceeding 3 per cent of the issued share capital.

Auditor

As a result of PKF (UK) LLP entering into a business combination with BDO LLP on 28 March 2013, PKF (UK) LLP resigned as auditor on 23 May 2013 and BDO LLP was appointed to fill the casual vacancy. A resolution to appoint BDO LLP as the Company's Auditor will be proposed at the forthcoming AGM.

Directors' responsibilities

The Directors are responsible for preparing the Report of the Directors, the Directors' Remuneration Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing those financial statements, the Directors are required to:

select suitable accounting policies and then apply them consistently;
make judgments and accounting estimates that are reasonable and prudent; and
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions, to disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Website publication

The directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors responsibility also extends to the ongoing integrity of the financial statements contained therein.

Directors responsibilities pursuant to DTR 4

The Directors confirm, to the best of their knowledge:

that the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
that the management report contained in the Chairman's Statement, Investment Manager's Review and Report of the Directors includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

The names and functions of all the Directors are stated on page 20.

Electronic publication

The financial statements are published on www.provenvcts.co.uk (maintained by the Investment Manager).

Corporate governance

The Company's compliance with The AIC Code of Corporate Governance (www.aic.co.uk) is shown on pages 29 to 34.

Statement as to disclosure of information to auditor

The Directors in office at the date of the report have confirmed, as far as they are aware, that there is no relevant audit information of which the Auditor is unaware. Each of the Directors has confirmed that they have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the Auditor.

By Order of the Board

Charles Pinney

Chairman

ProVen Health VCT plc Company number: 04131354 Registered Office: 39 Earlham Street London WC2H 9LT

24 May 2013

Corporate Governance Statement

The Board of ProVen Health VCT plc has considered the principles and recommendations of the AIC Code of Corporate Governance issued in October 2010 ("AIC Code") by reference to the AIC Corporate Governance Guide for Investment Companies issued in October 2010 ("AIC Guide"). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in Section 1 of the UK Corporate Governance Code issued in June 2010 (the "Code"), as well as setting out additional principles and recommendations on issues that are of specific relevance to ProVen Health VCT plc.

The Board considers that reporting against the principles and recommendations of the AIC Code, and by reference to the AIC Guide (which incorporates the Code), will provide better information to shareholders.

The Company has complied with the recommendations of the AIC Code and the relevant provisions of Section 1 of the Code, except as set out below.

The Code includes provisions relating to:

the role of the chief executive
executive directors' remuneration
the need for an internal audit function

For the reasons set out in the AIC Guide, and as explained in the Code, the Board considers these provisions are not relevant to the position of ProVen Health VCT plc, being an externally managed investment company. In particular, all of the Company's day‐to‐day management and administrative functions are outsourced to third parties. As a result, the Company has no executive directors, employees or internal operations. The Company has therefore not reported further in respect of these provisions.

A new edition of the UK Corporate Governance Code was published in September 2012 and applies to reporting periods beginning on or after 1 October 2012. The Board are currently considering these changes.

The Board

At the date of this report, the Company had a Board of four directors. As a whole the Board comprises an appropriate balance of skills, experience and tenure. It also believes that each non‐executive director is independent in character and judgement and that there are no relationships or circumstances which are likely to affect the judgement of any directors. Biographical details of all Board members are shown on page 20. The Company has no staff other than the Directors and Officers and does not have a chief executive officer. Frank Harding is the approved Senior Independent Director.

The Board has considered the recommendations of the Code concerning gender diversity and welcomes initiatives aimed at increasing diversity generally. The Board's overriding priority in appointing new directors to the Board is to identify the candidate with the best range of skills and experience to complement existing directors and gender diversity is a significant element of this. Any search for new Board candidates will be conducted, and appointments made, on merit, against objective selection criteria having due regard, amongst other things, to the benefits of diversity on the Board, including gender.

Directors are not appointed for specified terms but are subject to re‐election by shareholders at the first opportunity after their appointment and to further re‐election thereafter at three year intervals. Directors who have been on the Board for more than nine years will only be proposed for annual re‐election provided that the Board is satisfied as to their continuing independence. Frank Harding has served on the Board for more than nine years. The Board is satisfied of Mr Harding's continuing independence as, prior to the appointment of Beringea as Investment Manager, he had no previous dealings with them in either a professional or personal capacity. Charles Pinney retires by rotation and, being eligible, offers himself for re‐election.

Directors are provided with key information on the Company's activities, including regulatory and statutory requirements and internal controls, by the Investment Manager. The Investment Manager, in the absence of explicit instructions from the Board, is empowered to exercise discretion in the use of the Company's voting rights. Shareholdings are generally voted at the Investment Manager's discretion, with the objective of seeking to maximise shareholder value by constructive use of votes at company meetings and by endeavouring to use its influence as an investor with a principled approach to corporate governance. The Board has direct access to company secretarial advice through the Company Secretary, which is responsible for ensuring that Board procedures are followed.

All Directors are able to take independent professional advice in furtherance of their duties if necessary. In accordance with the Code, the Company has in place Directors' and Officers' liability insurance. On appointment any new Director will be given a comprehensive introduction to the Company's business including meeting the Company's key advisers where appropriate.

The Board is responsible to shareholders for the proper management of the Company and meets at least four times annually. The Code states that the Board should have a formal schedule of matters specifically reserved to it for decision, to ensure that it has firm direction and control of the Company. This is achieved by a management agreement between the Company and the Investment Manager, which sets out the matters over which the Investment Manager has authority and the limits above which Board approval must be sought. All other matters including strategy, investment and dividend policies, gearing and corporate governance proceedings are reserved for the approval of the Board of Directors.

The Chairman, together with the Company Secretary, establishes the agenda for each Board meeting. The necessary papers for each meeting are distributed in advance of each meeting.

The Board has authority to make market purchases of the Company's own shares. This authority for up to 14.99% of the Company's issued share capital was granted at the last AGM. A resolution will be put to shareholders at the forthcoming AGM to renew this authority.

The Board also has authority to issue new shares up to 10.00% of the Company's issued share capital. This authority was granted at the last AGM and a resolution will be put to shareholders at the forthcoming AGM to renew this authority.

The Company's capital structure is disclosed on page 21.

Committees to the Board

The Company has an Audit Committee, Nomination Committee and Remuneration Committee, all of which have defined terms of reference and duties, which are available from the Company Secretary. A Management Engagement Committee has not been constituted with matters thereon being dealt with by the Board as a whole.

Audit Committee

A fully constituted committee of the Board of Directors, established to perform the duties set out below and to report on those matters to the Board.

To monitor the integrity of the Company's financial statements including its annual and half yearly reports and review significant financial reporting judgements contained in them.
To review the Company's internal controls and risk management systems.
To review the need for an internal audit function.
To make recommendations to the Board for it to put to shareholders for their approval at the AGM, in relation to the appointment, re‐appointment and removal of the external auditor and to approve the remuneration and terms of engagement of the external auditor.
To review and monitor the external auditor's independence and objectivity and the effectiveness of the audit process, taking into consideration relevant UK professional and regulatory requirements.
To discuss, and to report to the board on, any matters arising from the external audit and any matter the auditor may wish to discuss.
To develop and implement policy on the engagement of the external auditor to supply non‐audit services, taking into account relevant ethical guidance regarding the provision of non‐audit services by the external audit firm.
To report to the Board, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken.
The chairman shall attend the AGM of the Company prepared to respond to any shareholder questions on the Committee's activities.

The Audit Committee comprises Frank Harding (chairman), Charles Pinney, Peter Arthur and Diane James. The Board has deemed it appropriate that all directors sit on the Audit Committee due to their experience in such matters.

The Audit Committee reviews the performance and continued suitability of the Company's auditor on an annual basis. Since the year end, PKF (UK) LLP has merged its business with BDO LLP ("BDO"). In advance of each audit, BDO provides an audit strategy plan for consideration by the Committee, including confirmation of BDO's compliance with the Ethical Standards of the Auditing Practices Board and of the audit and non‐audit fees chargeable to the Company. BDO liaises directly with the Investment Manager during the audit process and attends the Audit Committee meeting at which the Annual Report is considered. BDO provides a detailed Audit Committee Report outlining its audit process and setting out its findings. The Audit Committee and Investment Manager are able to assess the quality of BDO's work and of BDO's understanding of the business. Based on these procedures, the Audit Committee has obtained sufficient assurance as to BDO's independence and performance and it therefore recommends to shareholders that BDO be re‐appointed as Auditor for the forthcoming year.

The Audit Committee safeguards the objectivity and independence of the auditor by reviewing the nature and extent of non‐audit services supplied by the auditor, seeking to balance objectivity and value for money.

Nomination Committee

A fully constituted committee of the Board of Directors, established to perform the duties set out below and to report on those matters to the Board.

To review the structure of the Company's Board, its size and composition and to make recommendations to the Board with regard to any changes that are deemed necessary.
To be responsible for identifying and nominating candidates for the approval of the Board and to fill Board vacancies as and when they arise as well as putting in place plans for succession, in particular, of the Chairman of the Company.
To make recommendations to the Board for the continuation (or not) in service of any Director who has held office for more than nine years.
To recommend Directors who are retiring by rotation to be put forward for re‐election.
The chairman shall attend the AGM of the Company prepared to respond to any shareholder questions on the Committee's activities.

The Nomination Committee comprises Peter Arthur (chairman), Frank Harding and Diane James.

Remuneration Committee

A fully constituted committee of the Board of Directors, established to perform the duties set out below and to report on those matters to the Board.

To consider the levels and make up of remuneration which are sufficient to attract, retain and motivate directors of the quality required and which are needed to run the Company successfully.
To ensure that provisions regarding disclosure of remuneration including pensions are fulfilled.
To produce an annual report of the remuneration policy which will form part of the Company's Annual Report and Accounts and ensure that each year it is put to shareholders for approval at the AGM.
The chairman shall attend the AGM of the Company prepared to respond to any shareholder questions on the Committee's activities and directors' remuneration.

The Remuneration Committee comprises Peter Arthur (chairman), Frank Harding and Diane James. The Committee's annual report can be found on pages 35 and 36 of this report.

Board and Committee meetings

The following table sets out the Directors' attendance at full Board and Committee meetings held during the year ended 31 January 2013.

		Board meetings		Audit Nomination Remuneration Committee meetings Committee meetings		Committee meetings
Director	held	attended	held	attended	held	attended	held	attended
Charles Pinney	5	5	2	2	N/A	N/A	N/A	N/A
Peter Arthur	5	5	2	2	1	1	1	1
Frank Harding	5	5	2	2	1	1	1	1
Diane James	5	5	2	2	1	1	1	1

The Board is in regular contact with the Investment Manager between Board meetings.

Whistle blowing

The Board has considered the Code's recommendations in respect of arrangements by which staff of the Investment Manager may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters. It has concluded that adequate arrangements are in place for proportionate and independent investigation of such matters and, where necessary, for appropriate follow up action to be taken within their respective organisations.

Board performance

During the year, the performance of the Board and individual directors was evaluated through an assessment process led by the Chairman. The Directors, led by the Senior Independent Director, were responsible for performance evaluation of the Chairman.

Financial reporting

The Directors' statement of responsibilities for preparing the accounts is set out in the Report of the Directors on pages 27 and 28, and a statement by the Auditor about its reporting responsibilities is set out in the Auditor's Report on page 37.

Relations with shareholders

The Company welcomes the views of shareholders and places great importance on communication with its shareholders. Shareholders have the opportunity to meet the Board and representatives of the management team at the Annual General Meeting. All shareholders are welcome to attend the meeting and to ask questions of the Directors. The Investment Manager also holds an annual investor day for the VCTs it manages and shareholders are welcome to attend. The Board is also happy to respond to any written queries made by shareholders during the course of the year. All communication from shareholders is recorded and reviewed by the Board to ensure that shareholder enquiries are promptly and adequately resolved.

The Company's Senior Independent Director, Frank Harding, is available to shareholders who have concerns that other channels have failed to allay and can be contacted through the registered office.

Separate resolutions are proposed at the AGM on each substantially separate issue. Proxy votes are collated and the results (together with the proxy forms) are forwarded to the Company Secretary immediately prior to the AGM.

In order to comply with the Code, proxy votes are announced at the AGM, following each vote on a show of hands, except in the event of a poll being called, and are published immediately following the AGM. The notice of the next AGM and proxy form can be found at the end of these financial statements.

The Company also communicates with shareholders through annual and half yearly reports. The Board as a whole approves the terms of the Chairman's Statement and the Investment Manager's Review which form part of these reports in order to ensure that they present a balanced and understandable assessment of the Company's position. The Company also releases quarterly interim management statements, and other information as required, to the London Stock Exchange.

Internal control

The Board acknowledges that it is responsible for the Company's internal control systems and for reviewing their effectiveness. In accordance with Principle C2 of the Code, the Board has established an ongoing process for identifying, evaluating and managing the significant risks faced by the Company. Internal controls are designed to manage the particular needs of the Company and the risks to which it is exposed. The internal control systems aim to ensure the maintenance of proper accounting records, the reliability of the financial information upon which business decisions are made and which is used for publication, and that the assets of the Company are safeguarded. They can by their nature only provide reasonable and not absolute assurance against material misstatement or loss. The controls operated by the Board include the authorisation of the investment strategy and regular reviews of the results and investment performance.

Although the Board is ultimately responsible for safeguarding the assets of the Company, the Board has delegated, through written agreements, the day‐to‐day operation of the Company, i.e. investment management, administration functions (including the financial reporting process) and cash management to Beringea. This contract was entered into after full and proper consideration by the Board of the quality and cost of services offered. The Board receives and considers reports from the Investment Manager. It remains the role of the Board to keep under review the terms of the management agreement with the Investment Manager and to evaluate the performance of the Investment Manager.

An annual review of the control systems is carried out which covers consideration of the key risks in a number of areas. Each risk is considered with regard to the likelihood that the risk may occur, the impact of the risk on the performance and reputation of the Company should it occur, and the controls exercised over that risk. The Investment Manager reports to the Board on the operation of the controls; in addition the external auditor may report on control weaknesses identified during the course of the audit to the Audit Committee. The main aspects of the internal controls that were in place during the financial year to 31 January 2013 were:

All proposed investments are approved by the Beringea Investment Committee and signed off by the Beringea Managing Partner;
An independent review of portfolio valuations is undertaken by the Board on a quarterly basis;
Monthly bank reconciliations are performed by the Investment Manager; and

• The annual and half year reports, interim management statements and any changes to net asset value are approved by the Board prior to publication.

The Board has identified no significant problems with the Company's internal controls that warrant disclosure in the annual report.

Going concern

The Company's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Chairman's Statement on page 6, the Investment Manager's Review on page 8 and the Report of the Directors on page 21. The financial position of the Company, its cash flows and liquidity position are shown in the Balance Sheet on page 40, the Cash Flow Statement on page 41 and the Report of the Directors on page 21. In addition, notes 1 to 22 to the financial statements include the Company's objectives, policies and processes for managing its capital, its financial risk management objectives, details of its financial instruments and its exposures to credit risk and liquidity risk.

As noted in the Chairman's Statement on page 6, the Board has been looking into the possibility of a merger with another VCT. If a merger was to proceed to completion, the Company may be put into voluntary liquidation although Shareholders would receive shares in the merged entity. There is therefore uncertainty whether the Company will continue in existence for a period of 12 months from the date of the audit report. Notwithstanding this uncertainty, and assuming a merger does not go ahead, in accordance with "Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009", issued by the Financial Reporting Council, the Board has assessed the Company's operation as a going concern. The Company has considerable financial resources both at the year end and at the date of this report, and holds a number of different venture capital investments. As a consequence, the Directors believe that the Company is well placed to manage its business risks successfully. The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

Statement of compliance

The Directors consider that the Company has complied throughout the year ended 31 January 2013, and continues to comply at the date of this report, with all the relevant provisions set out in the AIC Code of Corporate Governance, subject to the exceptions noted above.

By order of the Board

Beringea LLP Secretary 39 Earlham Street London WC2H 9LT

24 May 2013

Directors' Remuneration Report

Introduction

The Board has prepared this report, in accordance with the requirements of Section 420 of the Companies Act 2006. A resolution to approve this report will be put to the members at the AGM to be held on 9 July 2013.

Under the requirements of Section 497, the Company's Auditor is required to audit certain disclosures contained within the report. These disclosures have been highlighted and the audit opinion thereon is contained within the Auditor's Report on page 37.

Remuneration Committee

The membership of the Remuneration Committee comprises three non‐executive directors. The current members are Peter Arthur (chairman), Frank Harding and Diane James. The secretary to the Committee is Beringea LLP which is also the secretary to the Company.

The Remuneration Committee, which is a committee of the Board, meets at least annually to consider the Directors' remuneration and to make recommendations thereon to the Board. The secretary provides a comparison of the Directors' remuneration with that of venture capital trusts of similar size. This comparison, together with the consideration of any alteration in Directors' responsibilities, is used to consider whether any change in remuneration is necessary.

Policy on Directors' remuneration

The Board's policy is that the remuneration of directors should be fair and comparable with that of other venture capital trusts of similar size. The level of remuneration should be sufficient to attract and retain the directors required to oversee effectively the Company.

In addition, it should reflect the specific circumstances of the Company, the duties and responsibilities of the Directors and the value and amount of time committed to the Company's affairs. It is intended that this policy will continue in force.

The remuneration for the Directors is determined within the limits set out in the Company's Articles of Association. The present aggregate limit for directors' remuneration is £100,000 per annum and the approval of shareholders at a general meeting would be required to change this limit.

Directors' service contracts

Frank Harding, Charles Pinney, Peter Arthur and Diane James have each signed a service contract and Frank Harding and Diane James have also signed consultancy agreements with the Company. The Directors' appointments are on a continuous basis unless otherwise terminated at the discretion of either party upon three months written notice. Consultancy agreements shall terminate at the same time as the directorships are terminated.

Directors' remuneration (audited)

	2013	2012
Director	£	£
Charles Pinney	20,000	20,000
Peter Arthur	15,000	15,000
Frank Harding	15,000	15,000
Diane James	15,000	13,750
Ann Hacker (resigned 19 April 2011)	–	3,287
	65,000	67,037

No other emoluments, pension contributions or life assurance contributions were paid by the Company to, or on behalf of, any Director. The Company does not have any share options in place and no performance incentive fees are payable to the Directors.

2014 remuneration

The Remuneration Committee agreed that the remuneration levels for the year ending 31 January 2014 will remain the same as for the year ended 31 January 2013. The remuneration levels are therefore as follows:

Director	Annual rate £
Charles Pinney	20,000
Peter Arthur	15,000
Frank Harding	15,000
Diane James	15,000

Performance graph

The graph below compares the change in the Company's net asset value total return and share price total return with that of the Numis Smaller Companies Index ex Investment Trusts Total Return Index since 31 July 2001. The Company's net asset value total return is calculated as the net asset value with dividends reinvested at the net asset value prevailing on the date the dividends were paid. The Company's share price total return is calculated as mid market share price with dividends reinvested at the mid market price prevailing on the date the dividends were paid. The graph does not take into account the initial tax benefits on subscription received by shareholders. There are no options, issued or exercisable, in the Company which would distort the graphical representation below.

On behalf of the Board

Beringea LLP

Secretary 39 Earlham Street London WC2H 9LT 24 May 2013

Independent Auditor's Report to the Members of ProVen Health VCT plc

We have audited the financial statements of ProVen Health VCT plc for the year ended 31 January 2013 which comprise the Income Statement, the Reconciliation of Movements in Shareholders' Funds, the Balance Sheet, the Cash Flow Statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

As explained more fully in the statement of directors' responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at www.frc.org.uk/auditscopeukprivate.

Opinion on financial statements

In our opinion the financial statements:

give a true and fair view of the state of the company's affairs as at 31 January 2013 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:

the part of the directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006;
the information given in the report of the directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the information given in the Corporate Governance Statement set out on pages 29 to 34 of the annual report with respect to internal control and risk management systems in relation to financial reporting processes and about share capital structures is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our opinion:

adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements and the part of the directors' remuneration report to be audited are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit; or
a Corporate Governance Statement has not been prepared by the Company.

Under the Listing Rules we are required to review:

the directors' statement, set out on page 34 in relation to going concern;
the part of the corporate governance statement relating to the company's compliance with the nine provisions of the UK Corporate Governance Code specified for our review; and
certain elements of the report to shareholders by the Board on directors' remuneration.

Jason Homewood (senior statutory auditor)

For and on behalf of BDO LLP, statutory auditor London United Kingdom

24 May 2013

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Income Statement

for the year ended 31 January 2013

			2013			2012
	Note	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Income	2	103	–	103	48	–	48
Net losses on investments	10,11	–	(1,130)	(1,130)	–	(286)	(286)
		103	(1,130)	(1,027)	48	(286)	(238)
Investment management fees	3	(32)	(96)	(128)	(39)	(117)	(156)
Other expenses	4	(198)	–	(198)	(165)	–	(165)
Loss on ordinary activities before tax		(127)	(1,226)	(1,353)	(156)	(403)	(559)
Tax on ordinary activities	6	–	–	–	–	–	–
Loss attributable to equity shareholders		(127)	(1,226)	(1,353)	(156)	(403)	(559)
Basic and diluted loss per share	8	(0.6p)	(5.9p)	(6.5p)	(0.8p)	(2.1p)	(2.9p)

All revenue and capital items in the above statement derive from continuing operations. This includes the return on the assets acquired from LGIV. The total column within the Income Statement represents the profit and loss account of the Company.

A Statement of Total Recognised Gains and Losses has not been prepared as all gains and losses are recognised in the Income Statement as shown above.

Other than revaluation movements arising on investments held at fair value through the Income Statement, there were no differences between the result as stated above and at historical cost.

Reconciliation of Movements in Shareholders' Funds

for the year ended 31 January 2013

	Note	2013 £'000	2012 £'000
Opening shareholders' funds		8,485	9,199
Proceeds from share issues		2,218	272
Share issue costs		(3)	(9)
Purchase of own shares		(1,508)	(222)
Total recognised loss for the year		(1,353)	(559)
Dividends paid	7	(192)	(196)
Closing shareholders' funds		7,647	8,485

The accompanying notes are an integral part of this statement.

Balance Sheet as at 31 January 2013

	Note	2013 £'000	2012 £'000
Fixed assets
Investments	10	5,164	4,951
Current assets
Debtors	11	217	83
Current investments	12	2,128	1,812
Cash at bank and in hand		199	1,772
		2,544	3,667
Creditors: amounts falling due within one year	13	(61)	(133)
Net current assets		2,483	3,534
Net assets		7,647	8,485
Capital and reserves
Called up share capital	14	206	192
Capital redemption reserve	15	439	404
Share premium account	15	–	7,427
Special distributable reserve	15	15,061	7,168
Capital reserve – realised	15	(4,901)	(4,375)
Capital reserve – unrealised	15	(2,142)	(1,442)
Revenue reserve	15	(1,016)	(889)
Total equity shareholders' funds		7,647	8,485
Basic and diluted net asset value per share	16	37.1p	44.2p

The financial statements on pages 39 to 55 were approved and authorised for issue by the Board of Directors on 24 May 2013 and were signed on its behalf by:

Charles Pinney Chairman

The accompanying notes are an integral part of these financial statements.

Cash Flow Statement

for the year ended 31 January 2013

	Note	2013 £'000	2012 £'000
Net cash outflow from operating activities	17	(256)	(304)
Capital expenditure
Purchase of investments		(1,463)	(1,175)
Disposal of investments		134	1,960
Net cash (outflow)/inflow from capital expenditure		(1,329)	785
Equity dividends paid		(161)	(163)
Management of liquid resources
Purchase of current investments held as liquidity funds		(1,500)	–
Withdrawal from liquidity funds		1,185	–
Net cash outflow from liquid resources		(315)	–
Net cash (outflow)/inflow before financing		(2,061)	318
Financing
Funds received as part of acquisition of LGIV		796	–
Proceeds from share issues		1,257	239
Share issue costs		(57)	(9)
Purchase of own shares		(1,508)	(222)
Net cash inflow from financing		488	8
(Decrease)/increase in cash	18	(1,573)	326

The accompanying notes are an integral part of these financial statements.

Notes to the Accounts

for the year ended 31 January 2013

1. Accounting policies

Basis of accounting

The Company has prepared its financial statements under UK Generally Accepted Accounting Practice and in accordance with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" January 2009 ("SORP").

The financial statements are prepared under the historical cost convention except for certain financial instruments measured at fair value.

The Company implements new Financial Reporting Standards ("FRS") issued by the Financial Reporting Council when required.

The financial statements have been prepared on a going concern basis. As outlined in the Corporate Governance Statement on page 34, there is uncertainty whether the Company will continue for a period of 12 months from the date of the audit report, due to discussions around a possible merger. The reported result and net assets of the Company would not be expected to be materially different if the financial statements were not prepared on a going concern basis.

Acquisition of assets from LGIV

On 16 March 2012, the Company acquired the assets and liabilities of LGIV, the transaction being accounted for as an asset acquisition. The income and costs for the period up to 16 March 2012 and the comparable period for last year reflect the activities of the Company before the acquisition, and after that date reflect those of the Company as enlarged by the acquisition. Further information is contained in Note 9 on page 46.

Presentation of Income Statement

In order to better reflect the activities of a venture capital trust and in accordance with the SORP, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement.

Fixed assets investments

Investments are designated as "fair value through profit or loss" assets due to investments being managed and performance evaluated on a fair value basis. A financial asset is designated within this category if it is both acquired and managed, with a view to selling after a period of time, in accordance with the Company's documented investment policy. The fair value of an investment upon acquisition is deemed to be cost. Thereafter investments are measured at fair value in accordance with International Private Equity and Venture Capital Valuation Guidelines ("IPEVCVG") issued in September 2009 together with FRS26.

Publicly traded investments are measured using bid prices.

The valuation methodologies used by the Directors for assessing the fair value of unquoted investments are as follows:

investments are usually retained at cost for an appropriate period following investment, except where a company's performance against plan is significantly below the expectations on which the investment was made in which case a provision against cost is made as appropriate;
where a company is in the early stage of development it will normally continue to be held at cost, reviewed for impairment on the basis described above;
where a company is well established after an appropriate period, the investment may be valued by applying a suitable earnings or revenue multiple to that company's maintainable earnings or revenue. The multiple used is based on comparable listed companies or a sector but discounted to reflect factors such as the different sizes of the comparable businesses, different growth rates and the lack of marketability of unquoted shares;
where a value is indicated by a material arms‐length transaction by a third party in the shares of the company, the valuation will normally be based on this, reviewed for impairment as appropriate; and
where alternative methods of valuation, such as net assets of the business or the discounted cash flows arising from the business are more appropriate, then such methods may be used.

The methodology applied takes account of the nature, facts and circumstances of the individual investment and uses reasonable data, market inputs, assumptions and estimates in order to ascertain fair value. Methodologies are applied consistently from year to year except where a change results in a better estimate of fair value.

Where there is little likelihood of an investment recovering fully its cost, the anticipated permanent diminution below cost, is treated as being realised.

Gains and losses arising from changes in fair value are included in the Income Statement for the year as a capital item.

As permitted by FRS9 "Associates and Joint Ventures", fixed asset investments are held as part of an investment portfolio and are not accounted for under the equity method.

Current asset investments

Current asset investments comprise investments in liquidity funds with AAA rating and are redeemable with a maximum of one day's notice. These investments are valued at bid price.

Contingent consideration

Contingent consideration represents possible future sales proceeds from the realisation of investments and is valued at fair value taking into account an assessment of the likelihood and the timing of such receipts. The amount ultimately realised may differ materially from the amount included in the financial statements.

Income

Dividend income from investments is recognised when the shareholders' rights to receive payment have been established, normally the ex dividend date.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable and only where there is reasonable certainty of collection. Income which is not capable of being received within a reasonable period of time is reflected in the capital value of the investments.

Expenses

All expenses are accounted for on an accruals basis. In respect of the analysis between revenue and capital items presented within the Income Statement, all expenses have been presented as revenue items except as follows:

expenses which are incidental to the acquisition of an investment are charged to the Capital Account;
expenses which are incidental to the disposal of an investment are deducted from the disposal proceeds of the investment; and
expenses are split and presented partly as capital items where a connection with the maintenance or enhancement of the value of the investments held can be demonstrated and accordingly the investment management fee has been allocated 25% to revenue and 75% to capital, in order to reflect the Directors' expected long‐term view of the nature of the investment returns of the Company.

Taxation

The tax effects of different items in the Income Statement are allocated between capital and revenue on the same basis as the particular item to which they relate using the Company's effective rate of tax for the accounting period.

Due to the Company's status as a Venture Capital Trust and the continued intention to meet the conditions required to comply with Part 6 of the Income Tax Act 2007, no provision for taxation is required in respect of any realised or unrealised appreciation of the Company's investments.

Deferred taxation is provided in full on timing differences that result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law and is not discounted. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered.

Other debtors and other creditors

Other debtors (including accrued income) and other creditors are included within the accounts at amortised cost, equivalent to the fair value of the expected balance receivable/payable by the Company.

Share issue costs

Expenses in relation to share issues are deducted from the Share Premium Account.

2. Income

	2013 £'000	2012 £'000
Income from investments
Loan stock interest	85	4
Dividend income	–	22
Income from global liquidity funds	14	12
	99	38
Other income
Deposit interest	4	10
	103	48

3. Investment management fees

	2013 £'000	2012 £'000
Investment management fee	128	156

Investment management fees are payable to Beringea, under a Discretionary Investment Management Agreement dated 12 February 2001 and Deed of Novation dated 23 December 2008, and are 2.5% per annum of the net assets of the Company, calculated on a quarterly basis. These fees are not subject to VAT.

The annual running costs of the Company for the year are subject to an expenses cap of 3.6% of the Company's net assets, based on the balance sheet date. Annual running costs exceeding the cap are borne by the Investment Manager and its investment management fee is reduced accordingly. The net position, after accounting for the annual running costs cap, is therefore disclosed in the table above.

4. Other expenses

	2013 £'000	2012 £'000
Administration services	–	–
Directors' remuneration	65	67
Auditor's remuneration for – audit of the statutory financial statements	19	17
– taxation compliance services	3	2
Other	111	79
	198	165

The Investment Manager is entitled to an annual administration fee of £30,000 plus VAT per annum. The Investment Manager waived its entitlement to administration fees for the years ended 31 January 2012 and 2013. The Investment Manager also received a fee of £12,000 in respect of services provided in connection with the enhanced share buyback in 2011/12 and 2012/13.

5. Directors' remuneration

Details of remuneration (excluding VAT and employers' NIC) are given in the Directors' Remuneration Report on pages 35 and 36. The Company had no employees other than the Directors during either year. No other emoluments or pension contributions were paid by the Company to, or on behalf of, any Directors.

6. Taxation on ordinary activities

		2013 £'000	2012 £'000
(a)	Tax charge for year
	Current year
	UK corporation tax (charged to the Revenue Account)	–	–
	Tax credited to Capital Account	–	–
	Charge for year	–	–

(b) Factors affecting tax charge for the year

Loss on ordinary activities before taxation	(1,353)	(559)
Tax credit calculated on loss on ordinary activities before taxation at the applicable rate of 20% (2012: 20.16%)	(271)	(113)
Effects of:
Losses on investments	226	58
UK dividend income	(3)	(7)
Utilisation of excess management fees	48	62
Charge for year	–	–

(c) A deferred tax asset has not been recognised in respect of timing differences relating to excess management expenses carried forward as there is insufficient evidence that the asset will be recovered. The amount of the asset not recognised is £494,000 (2012: £449,000) and would only be recovered were the Company to make sufficient taxable profits in the future.

7. Dividends

	2013 £'000	2012 £'000
Paid in year:
Interim dividend of 1.0p per share paid on 9 March 2012	192	–
Final dividend of 1.0p per share paid on 17 June 2011	–	196
	192	196
Split as:
Paid directly to shareholders	161	163
Shares issued under dividend re‐investment scheme	31	33
	192	196
Dividends paid since year end:
Interim dividend of 1.0p per share paid on 9 March 2012	–	192

8. Basic and diluted return per share

	Weighted average number of shares in issue	Revenue loss per share (pence)	Revenue loss £'000	Capital loss per share (pence)	Capital loss £'000	Total loss per share (pence)	Total loss £'000
Year ended 31 January 2013	20,743,672	(0.6p)	(127)	(5.9p)	(1,126)	(6.5p)	(1,353)
Year ended 31 January 2012	19,363,165	(0.8p)	(156)	(2.1p)	(403)	(2.9p)	(559)

As the Company has not issued any convertible securities or share options, there is no dilutive effect on return per share. The return per share disclosed therefore represents both the basic and diluted return per share.

9. Asset acquisition of LGIV

On 16 March 2012, the Company acquired the assets and liabilities of LGIV under a scheme of reconstruction. The assets and liabilities of LGIV were transferred to the Company and in exchange the shareholders of LGIV were allotted 2,150,872 ordinary shares in the Company being approximately 2.0536 ordinary shares for each ordinary share of 1p held in the capital of LGIV.

The assets and liabilities which were acquired are set out below:

	£'000
Fixed assets
Investments	135
Current assets
Cash at bank and in hand	796
Net assets	931

The costs of the merger were £109,000 of which £75,000 was allocated to the Company and £34,000 was borne by Longbow Capital LLP in accordance with the terms of the Scheme. Beringea LLP agreed to meet the Company's costs of £75,000 as described further in Note 11.

10. Investments

"Fair value through profit or loss" assets

	Investments quoted on Main Market £'000	Investments quoted £'000	Unquoted on AIM Investments £'000	Total £'000
Opening cost at 1 February 2012	250	585	6,681	7,516
Gains/(losses) at 1 February 2012	32	(264)	(2,333)	(2,565)
Opening fair value at 1 February 2012	282	321	4,348	4,951
Movement in year
Purchases at cost	–	–	1,463	1,463
Sales – proceeds	–	–	(51)	(51)
– realised gains on sales	–	–	38	38
Transfers from merged funds	–	–	135	135
Unrealised gains/(losses) in the income statement	164	81	(1,617)	(1,372)
Closing fair value at 31 January 2013	446	402	4,316	5,164
Closing cost at 31 January 2013	250	585	8,206	9,041
Gains/(losses) at 31 January 2013	196	(183)	(3,890)	(3,877)
Closing fair value at 31 January 2013	446	402	4,316	5,164

A schedule disclosing the material additions and disposals during the year is set out in the Investment Manager's Review on page 8. A further analysis of investments by nature of instrument is given in Note 19.

FRS 29 requires disclosure to be made if changing one or more of the assumptions used in valuing investments would result in a significant change in the fair value of the investments. The portfolio has been reviewed and both downside and upside alternative assumptions identified. These reflect discounts applied to multiples and cost impairments and result in an increase of £923,000 to the value of the unquoted investments for an upside scenario and a decrease of £757,000 to the value of the unquoted investments for a downside scenario.

11. Debtors

	2013 £'000	2012 £'000
Fair value of contingent consideration for Biovex Inc	120	–
Other debtors	82	71
Prepayments and accrued Income	15	12
	217	83

The Company agreed to incur costs and expenses of £75,000 in connection with its merger with LGIV. These will be recovered from the Investment Manager over two years commencing on 16 March 2012 with £9,375 being payable each quarter by Beringea until the £75,000 has been recovered in full. At the year end, £42,000 (2012: nil) was owing from Beringea to the Company.

The timing of the receipt for the consideration for Biovex Inc is uncertain but may be after one year.

12. Current investments

	2013 £'000	2012 £'000
Liquidity funds	2,128	1,812

13. Creditors: amounts falling due within one year

	2013 £'000	2012 £'000
Trade creditors	–	10
Other social security costs	4	6
Other creditors	2	84
Accruals and deferred income	55	33
	61	133

14. Called up share capital

	2013 £'000	2012 £'000
Authorised:
245,000,000 (2012: 245,000,000) ordinary shares of 1p each	2,450	2,450
Issued, allotted, called up and fully‐paid:
20,607,864 (2012: 19,183,664) ordinary shares of 1p each	206	192

On 15 March 2012, 71,621 shares were issued at 43.3p per share under the Company's dividend re‐ investment scheme. The aggregate consideration for the shares was £31,000 with related share issue costs of £1,000.

On 16 March 2012, the Company issued 2,150,872 new ordinary shares to the shareholders of LGIV under the terms of the Merger in exchange for LGIV transferring its net assets amounting to £931,000 (Note 9) to the Company.

15. Reserves

	Capital redemption reserve £'000	Share premium £'000	Special reserve £'000	Capital reserve – realised £'000	Capital reserve – unrealised £'000	Revenue reserve £'000
At 1 February 2012	404	7,427	7,168	(4,375)	(1,442)	(889)
Issue of new shares	–	2,169	–	–	–	–
Share issue costs	–	(3)	–	–	–	–
Purchase of own shares	35	–	(1,508)	–	–	–
Expenses capitalised	–	–	–	(96)	–	–
Gains/(losses) on investments	–	–	–	122	(1,252)	–
Realisation of revaluations from previous years	–	–	–	(552)	552
Cancellation of share premium	–	(9,593)	9,593	–	–	–
Dividends paid	–	–	(192)	–	–	–
Retained net loss	–	–	–	–	–	(127)
At 31 January 2013	439	–	15,061	(4,901)	(2,142)	(1,016)

Included within realisation of revaluations from previous years is an amount of £492,000 in respect of investments which are still held at the balance sheet date.

The Company cancelled its share premium account following approval of the High Court on 14 November 2012. The balance on the share premium at that date was transferred to the special reserve. The special reserve is a distributable reserve that allows the Company to make market purchases of its own shares and to pay dividends.

At the year end there were £7,002,000 (2012: £462,000) of reserves available for distribution after deducting the capital reserve – unrealised of £2,142,000 (2012: £1,442,000).

16. Basic and diluted net asset value per share

			2013		2012
	Shares in issue		Net asset value		Net asset value
	2013	2012	Pence per share	£'000	Pence per share	£'000
Ordinary shares	20,607,684	19,183,664	37.1p	7,647	44.2p	8,485

As the Company has not issued any convertible securities or share options, there is no dilutive effect on net asset per share. The net asset value per share disclosed therefore represents both basic and diluted net asset value per share.

17. Reconciliation of return on ordinary activities before tax to net cash flow from operating activities

	2013 £'000	2012 £'000
Loss on ordinary activities before tax	(1,353)	(559)
Net losses on investments	1,130	286
Re‐invested liquidity fund dividends	(1)	(12)
Increase in debtors	(15)	(62)
(Decrease)/increase in creditors	(17)	43
Net cash outflow from operating activities	(256)	(304)

18. Reconciliation of net cash flow to movement in net funds

	Net funds at 1 February 2012 £'000	Cash flows £'000	Other non cash changes £'000	Net funds at 31 January 2013 £'000
Cash at bank and in hand	1,772	(1,573)	–	199
Liquidity funds	1,812	315	1	2,128
	3,584	(1,258)	1	2,327

19. Financial instruments and derivatives

The Company's financial instruments comprise investments in quoted companies, unquoted companies, liquidity funds, contingent consideration, loans and receivables (including cash at bank and debtors) and other financial liabilities. Investments and contingent consideration are designated as "fair value through profit or loss" assets. The main purpose of these investments is to generate revenue and capital appreciation for the Company's operations. The fair value of investments is determined using the accounting policies as shown in note 1.

Loans and receivables and other financial liabilities are stated at amortised cost which the Directors consider is equivalent to fair value.

The Company has not entered into any derivative transactions.

The Company has categorised its financial instruments at fair value through profit and loss using the fair value hierarchy as follows:

Level 1 Reflects financial instruments quoted in an active market (liquidity fund investments, investments quoted on the Main Market and investments quoted on AIM);
Level 2 Reflects financial instruments that have prices that are observable either directly or indirectly (no such investments currently held);
Level 3 Reflects financial instruments that are not based on observable market data (unquoted equity investments, loan note investments and contingent consideration).

	2013				2012
	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
Quoted on the Main Market	446	–	–	446	282	–	–	282
AIM quoted	402	–	–	402	321	–	–	321
Loan notes	–	–	640	640	–	–	536	536
Unquoted equity	–	–	3,675	3,675	–	–	3,812	3,812
Liquidity fund	2,128	–	–	2,128	1,812	–	–	1,812
Contingent consideration	–	–	120	120	–	–	–	–
	2,976	–	4,435	7,411	2,415	–	4,348	6,763

Reconciliation of fair value for Level 3 financial instruments held at the year end:

	2013 £'000	2012 £'000
Balance at the beginning of the financial year	4,348	4,907
Movements in the income statement:
Unrealised losses in the income statement	(1,498)	(59)
Realised gains in the income statement	121	7
	(1,377)	(52)
Purchases and transfers from merged funds at cost	1,598	1,175
Sales proceeds	(134)	(1,682)
Balance at the end of the financial year	4,435	4,348

This is further analysed between the constituent Level 3 financial instruments as follows:

	2013				2012
	Loan notes £'000	Unquoted £'000	Contingent equity consideration £'000	Loan notes £'000	Unquoted £'000	Contingent equity consideration £'000
Balance at the beginning of the financial year	536	3,812	–	476	4,431	–
Movements in the income statement
Unrealised gains/(losses)	(264)	(1,354)	120	12	(71)	–
Realised gains/(losses)	38	–	83	18	(11)	–
	(226)	(1,354)	203	30	(82)	–
Purchases and transfers at cost	381	1,217	–	260	915	–
Sales proceeds	(51)	–	(83)	–	(1,682)	–
Loan conversions	–	–	–	(230)	230
Balance at the end of the financial year	640	3,675	120	536	3,812	–

Level 3 financial instruments are sensitive to changes in valuation assumptions. These are disclosed in Note 10.

Interest rate risk profile of financial assets and financial liabilities

There are three levels of interest which are attributable to the financial instruments:

"Fixed rate" assets represent investments with predetermined yield targets and comprise certain loan note investments.
"Floating rate" assets predominantly bear interest at rates linked to Bank of England base rate and comprise cash at bank and liquidity funds.
"No interest rate" assets do not attract interest and comprise equity investments, certain loan note investments, loans and receivables (excluding cash at bank and liquidity funds) and other financial liabilities.

	Average interest rate	Average period until maturity	2013 £'000	2012 £'000
Fixed rate	8.2%	1,155 days	642	536
Floating rate	0.5%	–	2,327	3,585
No interest rate		365 days	4,673	4,364
			7,642	8,485

Financial liabilities

The Company has no financial liabilities or guarantees, other than the creditors disclosed within the Balance Sheet (2012: none).

Currency exposure

As at 31 January 2013, the Company had no foreign currency exposure (2012: none).

Borrowing facilities

The Company has no committed borrowing facilities as at 31 January 2013 (2012: none).

20. Principal financial risks

As a VCT, the majority of the Company's assets are represented by financial instruments which are held as part of the investment portfolio. In order to ensure continued compliance with relevant VCT regulations and to be in a position to deliver the long term capital growth, which is part of the Company's investment objective, the Board is aware of the need to manage and mitigate the risks associated with these financial instruments.

The management of these risks starts with the application of a clear investment policy which has been developed by the Board who are experienced investment professionals. Furthermore, the Board has appointed an experienced investment manager to whom they have communicated the Company's investment objectives and whose remuneration is linked to the achievement of those objectives. The Investment Manager reports regularly to the Board on performance.

Further information about the VCT's investment policy is set out in the Report of the Directors on pages 21 to 28.

In assessing the risk profile of its investment portfolio, the Board has identified three principal classes of financial instrument which are analysed within note 19. Additionally, unquoted (level 3) investments may be further analysed between equity and non‐equity investments.

In addition to its investment portfolio, the VCT maintains a portfolio of liquidity funds and cash balances with two of the main UK banks. The Directors consider that the risk profile associated with cash deposits and liquidity fund investments is low and thus the carrying value in the financial statements is a close approximation of the fair value.

The Board has reviewed the Company's financial risk profile and is of the opinion that the exposure to financial risk has not changed significantly since the previous year.

A review of the specific financial risks faced by the Company is presented below.

Market risks

The key market risk to which the Company is exposed is market price risk. The Company has undertaken sensitivity analysis on its financial instruments, split into the relevant component parts, taking into consideration the economic climate at the time of review in order to ascertain the appropriate risk allocation. The impact of reasonably possible changes to interest rates is not considered to be significant on either the return or net assets of the VCT. The level of interest rates does impact more generally on the business environment in which the portfolio companies operate and on the supply and demand for their goods and services. It is, however, not considered practical to quantify accurately the impact of various interest rate scenarios either on the portfolio overall or on individual companies.

Market price risk

Market price risk arises from uncertainty about the future prices of financial instruments held in accordance with the Company's investment objectives. It represents the potential loss that the Company might suffer through holding market positions in the face of market movements. At 31 January 2013, the unrealised gain on quoted investments was £13,000 (2012: loss £232,000).

The investments the Company holds are, in the main, thinly traded (due to the underlying nature of the investments) and, as such, the prices are more volatile than those of more widely traded fully listed securities. In addition, the ability of the Company to realise the investments at their carrying value may at times not be possible if there are no willing purchasers. The ability of the Company to purchase or sell investments is also constrained by the requirements set down for VCTs.

It is not the Company's policy to use derivative instruments to mitigate market risk, as the Board believes that the effectiveness of such instruments does not justify the cost involved.

The sensitivity analysis below assumes that each of the sub categories of venture capital financial instruments (ordinary shares, preference shares and loan stocks) held by the Company produces an overall movement of 20%. Shareholders should note that equal correlation between these sub categories is unlikely to be the case in reality, particularly in the case of loan stock instruments. This is because the loan stock instruments would not share in the impact of any increase in share prices to the same extent as the equity instruments, as the returns are set by reference to interest rates and premiums agreed at the time of the initial investment. Similarly, where share prices are falling, the equity instrument could fall in value before the loan stock instrument. It is not considered practical to assess the sensitivity of the loan stock instruments to market price risk in isolation.

		2013			2012
Sensitivity	20% fall			20% fall
	Risk exposure £'000	Impact on net assets £'000	Impact on NAV per share Pence	Risk exposure £'000	Impact on net assets £'000	Impact on NAV per share Pence
Venture capital investments	5,164	(1,033)	(5.0p)	4,951	(990)	(5.2p)

Credit risk

Credit risk is the risk that a counterparty to a financial instrument is unable to discharge a commitment to the Company made under that instrument. The Company's financial assets that are exposed to credit risk are summarised as follows:

	2013 £'000	2012 £'000
Fair value through profit or loss assets
Investments in loan stocks	640	536
Loans and receivables
Investments in liquidity funds	2,128	1,812
Cash and cash equivalents	199	1,772
Contingent consideration	120	–
Interest, dividends and other receivables	93	78
	3,180	4,198

Investments in loan stocks comprise a fundamental part of the Company's venture capital investments and are managed within the main investment management procedures. At 31 January 2013, loan stock and loan stock interest valued at £9,000, including interest valued at £9,000, was past due for payment (2012: £277,000 including interest valued at £27,000). Total interest past due for payment was £20,000 (2012: £58,000), all of which was past due by less than 12 months.

Credit risk in respect of investments in liquidity funds is minimised by, where possible, investing in AAA‐ rated funds.

Cash is held at Bank of Scotland plc and Natwest Bank plc and consequently, the Directors consider that the risk profile associated with cash deposits is low. There have been no changes in fair value that are directly attributable to changes in credit risk.

Interest, dividends and other receivables are predominantly covered within the investment management procedures. There have been no changes in fair value that are directly attributable to changes in credit risk.

Liquidity risk

Liquidity risk is the risk that the Company encounters difficulties in meeting obligations associated with its financial liabilities. Liquidity risk may also arise from either the inability to sell financial instruments when required at their fair values or from the inability to generate cash inflows as required. As the Company only ever has a very low level of creditors (2013: £61,000, 2012: £133,000) and has no borrowings, the Board believes that the Company's exposure to liquidity risk is minimal.

21. Management of capital

The Company's objective when managing capital is to safeguard the Company's ability to continue as a going concern in order to continue to provide returns for shareholders and to provide an adequate return to shareholders by allocating its capital to assets commensurately with the level of risk.

By its nature, the Company has an amount of capital, at least 70% (as measured under tax legislation) of which must be invested, and retained, in the relatively high risk asset class of small UK companies within three years of that capital being subscribed. The Company accordingly has limited scope to manage its Company's capital structure in the light of changes in economic conditions and the risk characteristics of the underlying assets. Subject to this overall constraint upon the changing capital structure, the Company may adjust the amount of dividends paid to shareholders, purchase its own shares, issue new shares or sell assets if so required to maintain a level of liquidity to remain a going concern. Although, the Company is permitted to borrow to give a degree of flexibility, there are no current plans to do so.

As the Company has a low level of liabilities, the Board considers the Company's net assets to be its capital. The Company does not have any externally imposed capital requirements. There has been no change in the objectives, policies or processes for managing capital from the previous year.

22. Post balance sheet events

The Company realised its holdings in Vectura Group plc and Sinclair IS Pharma plc after the balance sheet date. The realisations generated net proceeds of £847,000 compared to the combined year end valuations of £847,000.

The Company made further investments after the balance sheet date of £64,000 in Altacor Limited and £23,000 in Population Genetics Technologies Limited.

Shareholder Information

Share price

The Company's share price can be found on various financial websites, including the London Stock Exchange (www.londonstockexchange.com) with the TIDM/EPIC code PHV. A link to the share price is also available on Beringea's dedicated VCT website (www.provenvcts.co.uk).

Latest mid market share price (23 May 2013): 32.5p per share

Financial calendar

June 2013	Release of interim management statement to 30 April 2013
9 July 2013	Annual general meeting
September 2013	Announcement of half yearly results to 31 July 2013
December 2013	Release of interim management statement to 31 October 2013
April 2014	Announcement of full year results and release of annual report to 31 January 2014

Dividends

Dividends are paid by the registrar on behalf of the Company. Shareholders who wish to have dividends paid directly into their bank account rather than by cheque to their registered address can complete a mandate form for this purpose. Queries relating to dividends and requests for mandate forms should therefore be directed to the Company's registrar, Computershare Investor Services plc, on 0870 707 1657 (calls charged at national rate), or by writing to them at The Pavilions, Bridgwater Road, Bristol, BS99 6ZZ.

Selling shares

The Company's shares can be bought and sold in the same way as any other company listed on the London Stock Exchange using a stockbroker. Shareholders are advised to seek advice from their tax adviser, before selling shares, particularly if they deferred the payment of capital gains tax in respect of shares acquired prior to 6 April 2004 or purchased shares within the last five years.

The Company normally operates a policy of buying its own shares for cancellation as they become available, although this facility is currently suspended. Any shareholder wishing to sell their shares should contact Beringea LLP, the Company Secretary, on 020 7845 7820.

Unsolicited calls to shareholders

We are aware of cases of shareholders in other VCTs having received unsolicited phone calls, e‐mails or correspondence concerning investment matters. Please note that it is very unlikely that the Company, Beringea or the Company Registrar, Computershare Investor Services plc, would make unsolicited calls of this nature. Shareholders can, however, expect official documentation in connection with the Company and may receive details of investment activity and new VCT offers from the Investment Manager. Furthermore, please be assured that the Company limits access to its share register to the maximum extent permissible under the Companies Act 2006. If you receive either an unexpected phone call or correspondence about which you have concerns, please contact Beringea LLP, the Company Secretary, on 020 7845 7820.

Notification of change of address

Communications with shareholders are mailed to the registered address held on the share register. In the event of a change of address or other amendment this should be notified to the Company's registrar, Computershare Investor Services plc, under the signature of the registered holder.

Websites

Latest financial information, including information on recent investment transactions, newsletters and electronic copies of Annual Reports, Half‐Yearly Reports and Interim Management Statements can be found on the Investment Manager's website: www.provenvcts.co.uk. Shareholders can also check details of their shareholdings using Computershare Investor Services plc's website www.investorcentre.co.uk. Please note that to access this facility investors will need to quote the reference number shown on their share/dividend certificate.

AI assistant

PROVEN VCT PLC — Annual Report 2013

4792_10-k_2013-01-31_e9de1358-fbcf-4664-a51f-2b03fa1c69ab.pdf

ProVen Health VCT plc Annual Report and Accounts

Contents

ProVen Health VCT plc

Investment Objective

Investment Policy

The Investment Approach

Fund Overview

Highlights

Financial summary

Dividend history (since launch)

Chairman's Statement

Introduction

Portfolio activity and valuation

Results

Company strategy and development

Shareholder communications

Outlook

Investment Manager's Review

Introduction

Portfolio performance and activity

Post year end developments

Outlook

Investment Portfolio as at 31 January 2013

Review of Investments as at 31 January 2013

Polytherics Limited

APM Healthcare Limited

Altacor Limited

Vectura Group plc

Sinclair IS Pharma plc

Digital Healthcare Limited

Inskin Media Limited

Cognolink Limited

Population Genetics Technologies Limited

Skills Matter Limited

Utility Exchange Online Limited

Notes:

Analysis of top investments (by value)

Analysis of investments by nature of instrument

Portfolio balance

Type of investment (by value,

Directors

Report of the Directors

Principal activity and status

Business review and developments

Share capital

Results and dividends

Annual General Meeting

Investment objective

Investment policy

General

Geographical focus

Portfolio allocation

Diversification of risk

VCT regulations

Borrowings

Environmental and social policy

Investment management agreement

Administration and company secretarial services

Annual running costs cap

Directors

VCT status

Creditor payment policy

Key performance indicators

Principal risks and uncertainties

Investment risk

Compliance risk

Substantial shareholdings

Auditor

Directors' responsibilities

Website publication

Directors responsibilities pursuant to DTR 4

Electronic publication

Corporate governance

Statement as to disclosure of information to auditor

Charles Pinney

Corporate Governance Statement

The Board

PROVEN VCT PLC Annual Report 2013