Annual Report • Feb 28, 2013
Annual Report
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Managed by Beringea LLP
Page
| Principal Investment Objectives and Fund Overview | 4 |
|---|---|
| Chairman's Statement | 5 |
| Investment Manager's Review | 9 |
| Investment Portfolio | 12 |
| Review of Investments | 14 |
| Board of Directors | 20 |
| Directors' Report and Business Review | 21 |
| Statement of Corporate Governance | 29 |
| Directors' Remuneration Report | 33 |
| Independent Auditor's Report | 35 |
| Income Statement | 37 |
| Reconciliation of Movements in Shareholders' Funds | 38 |
| Balance Sheet | 39 |
| Cash Flow Statement | 40 |
| Notes to the Accounts | 41 |
| Shareholder Information | 57 |
| Company Information | 59 |
| Notice of the Annual General Meeting | 60 |
| New Ordinary Shares |
Ordinary Shares* |
|
|---|---|---|
| As at 28 February | 2013 pence |
2012 pence |
| Net asset value per share | 103.3 | 98.8 |
| Dividends paid since launch | – | – |
| Total return (net asset value plus dividends paid since launch) | 103.3 | 98.8 |
| Year on year change in: Net asset value per share (adjusted for dividends) |
4.6% |
*rebased in respect of the share consolidation that took place on 30 October 2012.
The table above reflects the Company's position after the share conversions and consolidations that took place on 30 October 2012. A full analysis of Shareholder's investment and returns by share class and tax year, has been included in the Shareholder Information section on page 57.
I am pleased to present the Annual Report for ProVen VCT plc for the year ended 28 February 2013.
The Company underwent a reorganisation during the year such that it now has one share class, which significantly simplifies reporting to Shareholders. It is also pleasing to be able to report positive news from the Company's investment portfolio.
At 28 February 2013, the Company's Ordinary Share net asset value ("NAV") stood at 103.3p per share. This represents an increase of 4.5p or 4.6% since 29 February 2012, against the rebased Ordinary Share value at the previous year end. The effective movement for a Shareholder who started the year holding 'C' Shares was an increase of 8.9% and for 'D' Shares was an increase of 4.3%.
Total return (NAV plus cumulative dividends paid) for Shareholders who invested in the Company's original Ordinary Share offer in 2000 now stands at 165.6p for an investment of £1. This is before taking account of any initial income tax relief and the tax free nature of dividend returns. Investment performance since original investment cost for the various groups of Shareholders that now hold Ordinary Shares is summarised on page 57.
Following the successful fundraising discussed below, the Company has an adequate level of funds available for investment and has seen a good level of investment activity during the year. A total of £4.7 million was invested in three new companies and seven existing companies. There were also several disposals and redemptions of loan stock which generated proceeds of £1.3 million.
The Board reviewed the valuations of the unquoted investments at the year end and made a number of adjustments to the previous carrying values. Net unrealised gains for the year were £2.1 million.
The most significant news from the portfolio has come since the year end during which time there have been two profitable disposals. Fjordnet was the subject of an acquisition by international consultancy Accenture, giving rise to a realised gain of £3.1 million upon completion and a possible further consideration of up to £0.4 million within the next twelve months. The valuation of the Company's investment in Fjordnet at the year end reflected the value subsequently realised on disposal. The investment in Tossed was sold for a realised gain of £0.3 million and this was also reflected in the Company's net asset value at the year end.
Further details of investment activity and investments held are provided in the Investment Manager's Review and the Review of Investments.
The total return on ordinary activities for the year was £2.7 million, comprising a £948,000 revenue return and a £1,799,000 capital return.
In line with the dividend policy that I set out in my report last year, an interim dividend of 5p per share will be paid in respect of the year ended 28 February 2013. Based on the NAV of the Ordinary Shares at 29 February 2012, this equates to a yield of 5.1%. The dividend will be paid as an interim dividend on 2 August 2013 to Shareholders on the register at 5 July 2013.
In accordance with the plans set out in the original 'C' Share prospectus, a tender offer was undertaken in August 2012 under which 1,198,996 'C' Shares (representing approximately 8.6% of 'C' Shares in issue at the time) were purchased at a price of 87.4p per share.
On 30 October 2012, the Company's existing 'C' Shares and 'D' Shares were converted into New Ordinary Shares. At the same time, the Original Ordinary Shares underwent a one-for-two consolidation to create New Ordinary Shares. A summary of the conversion rates is as follows:
Each Original Ordinary Share consolidated into 0.5 New Ordinary Shares
Each 'C' Share converted into 0.9213 New Ordinary Shares
Each 'D' Share converted into 0.8720 New Ordinary Shares
All Shareholders were issued with new share certificates for New Ordinary Shares following the transactions in October 2012. Shareholders should note that any share certificates issued prior to 30 October 2012 are no longer valid, and should be destroyed.
The Company's offer for subscription which launched on 8 December 2011, closed on 30 August 2012. This raised gross proceeds of £12.5 million. In November 2012, the Company launched a further 10% top-up nonprospectus offer. This closed in April 2013, having raised approximately £3.6 million.
The Company also offered an Enhanced Buyback Facility during the year. This facility allowed Shareholders, who had held their shares for the required VCT holding period, to sell them back to the Company and reinvest the proceeds in new VCT shares, which were eligible for income tax relief. The Board was pleased with the take up of 4.8 million shares.
Share buybacks (excluding the Enhanced Buyback transactions) which took place during the year are summarised below:
| Number | Aggregate nominal value £'000 |
Average consideration pence per share £'000 |
Aggregate consideration £'000 |
% of issued share capital |
|
|---|---|---|---|---|---|
| New Ordinary Shares | 381,257 | 38 | 91.5p | 349 | 0.85% |
| Original Ordinary Shares | 136,350 | 7 | 44.1p | 60 | 0.5% |
| 'C' Shares | 1,757,860 | 439 | 84.7p | 1,489 | 12.2% |
| 'D' Shares | 21,893 | – | 82.9p | 18 | 0.3% |
All the above shares were subsequently cancelled.
On behalf of the Company, the Board intends to continue to make purchases of its shares when they become available in the market and has a current policy of purchasing New Ordinary Shares at a price equivalent to a 10% discount to the latest published NAV.
A special resolution to allow the Board to continue to purchase shares for cancellation will be proposed at the forthcoming Annual General Meeting ("AGM").
The Company is pleased to announce that it has recently appointed Panmure Gordon to act as its corporate broker. The Board believes that this should bring a significant benefit in reducing the spread on the Company's shares and producing more consistent pricing for Shareholders who wish to sell all or part of their holding or investors who wish to purchase shares in the market. Shareholders who are considering selling their shares may wish to contact Panmure Gordon prior to any sales, who will be able to provide details of the price at which the Company is buying shares. Contact details are on page 59 of this report.
In recent years, returns on cash and cash equivalents held by the Company have been very low. The Board believes that the performance of the Company could be improved if the scope of the investment policy in respect of non-qualifying investments was broadened to include investments in debt and debt-related securities in growth companies. These investments offer the prospect of higher interest rates than can be obtained on cash or near-cash investments in exchange for accepting slightly higher risk.
It has also come to the Board's attention that, in certain circumstances, the performance incentive fee arrangements might not operate precisely as the Board has intended. Two minor amendments are therefore being proposed to correct this matter. Shareholders should note that these amendments do not have any significant impact on the fundamental basis of the performance fee arrangements.
The Company has today issued a circular setting out full details of both of the above proposals. A general meeting is scheduled to follow shortly after the AGM to seek Shareholder approval.
The next Annual General Meeting ("AGM") of the Company will be held in The Forest Room at The Hospital Club, 24 Endell Street, Covent Garden, London WC2H 9HQ at 11.00 a.m. on 30 July 2013.
Three items of special business will be proposed at the AGM as follows:
In order to give the Board flexibility in considering fundraising options over the next year without necessarily having to incur the costs of preparing an additional shareholder circular, the Board is seeking authority to issue and allot up to 25 million new shares.
At 11.30 a.m. on 30 July, following the AGM, the Company will hold a general meeting seeking approval for proposals in respect of the amendment to the investment policy and the performance incentive fee.
Notice of the AGM is at the end of this document.
I would also like to take this opportunity to draw your attention to the Investment Manager's annual Shareholder Event which, this year, will be held at the British Museum in central London on 22 October 2013, starting at 10.30 a.m. The event has been running in its current form for several years and has been well received by Shareholders. It provides attendees with an opportunity to meet Directors and members of the investment management team. There will also be presentations from a number of portfolio companies. I would strongly encourage you to attend. A formal invite is being sent seperately.
7
The Board is pleased with the progress made by the Company over the last year and, with a significant level of new funds available for investment, we expect to see the Company continuing to be an active investor over the coming year, albeit in a volatile and competitive environment. Activity has picked up since the year end with the profitable disposals of Tossed and Fjordnet and further investments made in Monica Vinader and Utility Exchange Online. The Board has encouraged the strategy of investing in more businesses in the media and digital services sectors and remains confident in the Manager's ability to find good companies, then to nurture these investments and eventually exit at a profit. I look forward to updating Shareholders on developments in my statement with the Half Yearly Report to 31 August 2013.
Andrew Davison Chairman 27 June 2013
Beringea is a specialist venture capital management company which manages over £300 million in the UK and USA on behalf of a number of clients. In the UK, Beringea has a dedicated investment team managing over £100 million across four VCTs.
ProVen VCT has been managed by Beringea since its inception in 2000 and in that time has invested over £50 million in over 50 small and medium sized companies. At 28 February 2013, the Company had investments in 29 companies, at an average investment cost of approximately £820,000.
The Company invested £4.7 million during the year (2012: £3.6 million) including three investments in companies new to the portfolio and further funding for seven existing portfolio companies. The Company realised its investments in two companies during the year and there were partial loan repayments from a further four companies. At 28 February 2013, the Company held investments in 27 unquoted companies and 2 quoted companies at a cost of £23.7 million and a valuation of £31.1 million. In addition, the Company held cash of £16.8 million, most of which arose from the recent fundraisings. As a result of the merger of the share classes in October 2012, all shareholders now have an interest in all portfolio investments.
Following the year end, the Company sold its investments in Fjordnet and Tossed generating good returns. Further information is provided below.
Investment activity is summarised on page 11. There were three new additions to the portfolio: Inskin Media, Cognolink and Skills Matter.
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.
Skills Matter supports a community of 35,000 software professionals with the learning and sharing of skills, via public/private training courses and conferences. The new funding will be used to provide even more opportunities for its community to collaborate with the world's top technology experts. In addition, the company will, in future, be able to offer work and collaboration space.
Further funding was provided to Fjordnet (partially offset by a loan repayment), Utility Exchange Online, APM Healthcare, Matssoft, Senselogix and Campden Media.
The disposal of Ashford Colour Press and administration/restructuring of Overtis Group (which resulted in the "new" investment in Vigiliant Applications) were concluded prior to the publication of last year's accounts and therefore included in our report of last year. Since that report, Isango! was sold to tour operator TUI Travel and there were a number of loan repayments from several portfolio companies.
At 28 February 2013, the venture capital portfolio showed a net unrealised gain across all investments of £2.1 million.
There was encouraging performance from a number of companies in the portfolio and this was complemented by broader positive movements in comparable company multiples. Fjordnet and Tossed saw increases in their valuations which were crystallised on realisation after the year end. There were uplifts in the valuations of Campden Media and Matssoft. Think and Espresso saw decreases in valuation but the longer term prospects for these companies remain positive.
In May 2013, the Company's investment in Fjordnet was the subject of an acquisition by Accenture Holdings B.V., a subsidiary company of Accenture (NYSE:CAN), giving rise to a realised gain of £3.1 million upon completion and a possible further consideration of up to £0.4 million within the next twelve months. This continues a list of notable successes in the digital media sector alongside Mergermarket, ILG Digital, Steak Media and Saffron Media.
Healthy eating chain, Tossed, was sold to management in April 2013, generating a return of 36% on the initial investment in three years. A restructuring of Campden Media was also concluded in May 2013 and saw the wealth management arm of the business demerged and purchased by management with backing from an external investor. The VCT now holds an increased equity interest in Campden's health focused business.
Monica Vinader, the luxury jewellery retailer, continues to progress and a further £1.1 million was invested by the Company in May 2013 and, in June 2013, an additional £210,000 was invested in Utility Exchange Online; both investments are to fund continued development. The Company also received proceeds from the partial disposal of Cross Solar PV in May 2013.
We continue to be pleased with the overall performance of the venture capital portfolio and the recent profitable exits from Fjordnet and Tossed provide tangible evidence of this for Shareholders. We are optimistic that both further profitable exits and exciting new investments lie ahead although, as befits a venture capital portfolio, the timing of these is uncertain and subject to wider economic conditions.
Beringea LLP 27 June 2013
Investment activity during the year is summarised as follows:
| Additions | Cost £'000 |
|---|---|
| Cognolink Limited | 949 |
| Fjordnet Limited | 639 |
| Speed-Trap Holdings Limited | 609 |
| Skills Matter Limited | 476 |
| Utility Exchange Online Limited | 461 |
| Vigilant Applications Limited* †† | 400 |
| Inskin Media Limited | 365 |
| APM Healthcare Limited | 238 |
| Matssoft Limited** | 235 |
| Senselogix Limited | 169 |
| Campden Media Limited** | 167 |
| Total | 4,708 |
| Disposals | Cost £'000 |
Market value at 01/03/12† £'000 |
Disposal proceeds £'000 |
(Loss)/gain against cost £'000 |
Total realised (loss)/gain during the year £'000 |
|---|---|---|---|---|---|
| Overtis Group Limited†† | 1,155 | – | – | (1,155) | – |
| Isango! Limited | 600 | – | 21 | (579) | 21 |
| Ashford Colour Press Limited | 500 | 382 | 526 | 26 | 144 |
| Fjordnet Limited | 240 | 240 | 240 | – | – |
| Campden Media Limited** | 167 | 167 | 167 | – | – |
| Cross Solar PV Limited** | 75 | 75 | 75 | – | – |
| Sports Holdings Limited* | 33 | 33 | 33 | – | – |
| Saffron Media Limited | – | – | 196 | 196 | 196 |
| Steak Media Limited | – | – | 12 | 12 | 12 |
| Total | 2,770 | 897 | 1,270 | (1,500) | 373 |
* Non qualifying investment
** Partially non qualifying investment
† Adjusted for purchases during the year
†† Administration/restructuring of Overtis Group into Vigilant Applications
Of the investments above, Steak Media Limited and Saffron Media Limited were realised in prior periods but received proceeds in the current period in excess of the amounts previously accrued.
The following investments were held at 28 February 2013:
| Cost | Valuation | Valuation movement in year |
% of portfolio |
|
|---|---|---|---|---|
| £'000 | £'000 | £'000 | by value | |
| Top ten venture capital investments (by value) | ||||
| Fjordnet Limited** | 1,675 | 4,939 | 3,264 | 10.3% |
| Think Limited** | 1,606 | 3,397 | (992) | 7.1% |
| Espresso Group Limited** | 1,317 | 3,239 | (328) | 6.8% |
| Donatantonio Limited** | 1,467 | 2,463 | (48) | 5.1% |
| SPC International Limited** | 2,021 | 2,409 | 185 | 5.0% |
| Campden Media Limited | 1,516 | 1,902 | 348 | 4.0% |
| Tossed Limited** | 1,226 | 1,545 | 226 | 3.2% |
| Matssoft Limited** | 1,010 | 1,199 | 189 | 2.5% |
| Blis Media Limited** | 482 | 1,119 | 51 | 2.3% |
| Eagle Rock Entertainment Group Limited** | 1,225 | 1,049 | (349) | 2.2% |
| 13,545 | 23,261 | 2,546 | 48.5% | |
| Other venture capital investments | 10,195 | 7,842 | (411) | 16.4% |
| Total venture capital investments | 23,740 | 31,103 | 2,135 | 64.9% |
| Cash at bank and in hand | 16,777 | 35.1% | ||
| Total investments | 47,880 | 100.0% |
Other venture capital investments at 28 February 2013 comprise: Cognolink Limited, Cross Solar PV Limited, Charterhouse Leisure Limited, Monica Vinader Limited, Utility Exchange Online Limited, Chess Technologies Limited, Skills Matter Limited, Speed-Trap Holdings Limited, APM Healthcare Limited, Inskin Media Limited, Cinergy International Limited, Pilat Media Global plc**, Senselogix Limited, UBC Media Group plc**, Dianomi Limited, Sports Holdings Limited*, Long Eaton Healthcare Limited, Baby Innovations S.A. t/a Steribottle* and Vigilant Applications Limited*.
With the exclusion of Pilat Media Global plc and UBC Media Group plc, which are quoted on AIM, all venture capital investments are unquoted.
All of the above investments, with the exclusion of Think Limited, were also held by ProVen Growth & Income VCT plc of which Beringea LLP is the investment manager.
Long Eaton Healthcare Limited, Campden Media Limited, Fjordnet Limited and Cross Solar Limited were also held by ProVen Planned Exit VCT plc during the year, of which Beringea LLP is the investment manager.
Long Eaton Healthcare Limited, APM Healthcare Limited, Skills Matter Limited, Cognolink Limited, Inskin Media Limited and Utility Exchange Online Limited were also held by ProVen Health VCT plc during the year, of which Beringea LLP is the investment manager.
All venture capital investments are registered in England and Wales, with the exception of Baby Innovations S.A., which is registered in Madeira.
Further details of the ten largest investments (by value) are set out below:
Fjord is an established digital design agency working across many sectors including telecommunications, media, finance and healthcare. It has worked on market leading flagship projects-including projects for the BBC, Nokia, Orange, Swisscom and Yahoo!. It was instrumental in bringing the hugely successful award-winning BBC iPlayer to mobile. The company has offices in London, Helsinki, Berlin, Paris, Madrid, Stockholm, New York, San Francisco and Istanbul. The Company's investment in Fjordnet Limited was realised in full after the year end.
| Cost: | £1,675,000 | Valuation at 28/02/13: | £4,939,000 | |
|---|---|---|---|---|
| Investment comprises: | Valuation at 29/02/12: | £1,277,000 | ||
| Ordinary shares: | £500,000 | Valuation method: | Offer price | |
| 'A' ordinary shares: | £276,000 | |||
| Preference shares: | £500,000 | |||
| Loan stock: | £399,000 | |||
| Audited accounts: | 31/12/11 | 31/12/10 | Dividend income: | £– |
| Turnover: | £17.8m | £15.3m | Loan note income: | £21,000 |
| (Loss)/profit before tax: |
(£150,000) | £1.1m | Proportion of equity held: | 9.4% |
| Net assets: | £3.6m | £3.9m | Diluted equity: | 9.3% |
Think Limited is an award winning digital media agency with operations in Newcastle and London. The company has developed a reputation for delivering digital solutions that combine excellent creativity, cutting edge technology and an impressive understanding of the user experience. Its clients include the BBC, Sony, the NHS and Blackberry.
www.think.eu
| Cost: | £1,606,000 | Valuation at 28/02/13: | £3,397,000 | |
|---|---|---|---|---|
| Investment comprises: | Valuation at 29/02/12: | £4,389,000 | ||
| Ordinary shares: | £151,000 | Valuation method: | Earnings multiple |
|
| 'A' ordinary shares: | £250,000 | |||
| Loan stock: | £1,205,000 | |||
| Audited accounts: | 31/10/11 | 31/10/10 | Dividend income: | £152,000 |
| Turnover: | £12.7m | £5.7m | Loan note income: | £76,000 |
| Profit before tax: | £1.5m | £649,000 | Proportion of equity held: | 29% |
| Net assets: | £1.3m | £1.2m | Diluted equity: | 29% |
Espresso Group develops and delivers multimedia education content for schools. Over 9,000 primary schools, equal to approximately 45% of the UK primary school market, now subscribe to its flagship "Espresso for Schools" product. Following the acquisition of 4 Learning, the educational business of Channel 4, the company expanded into the UK secondary schools market. The company has now embarked on an international expansion strategy. It has an established presence in Sweden and a rapidly growing market penetration in the US.
| Cost: | £1,317,000 | Valuation at 28/02/13: | £3,239,000 | ||
|---|---|---|---|---|---|
| Investment comprises: | Valuation at 29/02/12: | £3,567,000 | |||
| Ordinary shares: | £681,000 | Valuation method: | Earnings multiple |
||
| 'A' ordinary shares: | £574,000 | ||||
| 'B' ordinary shares: | |||||
| Audited accounts: | 31/07/12 | 31/07/11 | Dividend income: | £– | |
| www.espresso.co.uk | Turnover: | £13.5m | £13.3m | Loan note income: | n/a |
| Loss before tax: | (£638,000) | (£669,000) | Proportion of equity held: | 20.1% | |
| Net assets: | £5.0m | £5.8m | Diluted equity: | 19.4% |
Donatantonio Limited is the UK market leader in the import and distribution of premium quality, authentic Mediterranean ingredients to the UK food manufacturing and food service sectors. Donatantonio's state-of-the-art facilities allow it to provide certification of food quality once the goods reach the UK. This means that the products supplied to food manufacturers are ready for immediate incorporation into finished products and do not require further testing by the manufacturer before production can begin.
| Cost: | £1,467,000 | Valuation at 28/02/13: | £2,463,000 | |
|---|---|---|---|---|
| Investment comprises: | Valuation at 29/02/12: | £2,511,000 | ||
| Ordinary shares: | £18,000 | Valuation method: | Earnings multiple |
|
| 'A' ordinary shares: | £224,000 | |||
| Preference shares: | £48,000 | |||
| Loan stock: | £1,177,000 | |||
| Audited accounts: | 31/01/12 | 31/01/11 | Dividend income: | £– |
| Turnover: | £22.4m | £18.7m | Loan note income: | £544,000 |
| Profit before tax: | £281,000 | £87,000 | Proportion of equity held: | 25.9% |
| Net liabilities: | (£12,000) | (£156,000) | Diluted equity: | 25.9% |
www.donatantonio.com
SPC specialises in the repair and refurbishment of electronic equipment in the IT, banking and retail sectors. It has operators in the UK, France, Slovakia and India.
| Cost: | £2,021,000 | Valuation at 28/02/13: | £2,409,000 | |||
|---|---|---|---|---|---|---|
| Investment comprises: | Valuation at 29/02/12: | £2,224,000 | ||||
| Ordinary shares: | £164,000 | Valuation method: | Earnings multiple |
|||
| www.spcint.com | 'A' ordinary shares: | £222,000 | ||||
| 'B' ordinary shares: | £12,000 | |||||
| Loan stock: | £1,623,000 | |||||
| Audited accounts: | 30/09/11 | 30/09/10 | Dividend income: | £– | ||
| Turnover: | £16.1m | £15.1m | Loan note income: | £123,000 | ||
| Profit before tax: | £393,000 | £419,000 | Proportion of equity held: | 24.7% | ||
| Net assets: | £3.3m | £3.1m | Diluted equity: | 24.7% |
Campden Media is a magazine publisher and event organiser in the healthcare sector. The company publishes a range of titles, many of which are endorsed by the relevant professional bodies. The business has a strong and proven management team and operates in sectors which are regarded as more resilient to adverse macroeconomic movements.
| Campden Media |
|---|
| --------------- |
| Cost: | £1,516,000 | Valuation at 28/02/13: | £1,902,000 | |
|---|---|---|---|---|
| Investment comprises: | Valuation at 29/02/12: | £1,555,000 | ||
| Ordinary shares: | £195,000 | Valuation method: | Earnings multiple |
|
| 'A' ordinary shares: | £2,000 | |||
| Loan stock: | £1,319,000 | |||
| Audited accounts: | 31/12/11 | 31/12/10 | Dividend income: | £– |
| Turnover: | £10.1m | £6.8m | Loan note income: | £69,000 |
| Profit/(loss) before tax |
£386,000 | (£94,000) | Proportion of equity held: | 11.0% |
| Net liabilities: | (£924,000) | (£1.3m) | Diluted equity: | 11.0% |
Tossed operates a series of takeaway focused healthy eating establishments. There are currently eight locations in operation, including one franchise location, all based in London. ProVen VCT invested £1 million in April 2010 and a further £230,000 in July 2011 alongside ProVen Growth & Income VCT plc. The Company's investment in Tossed Limited was realised in full after the year end.
| Cost: | £1,226,000 | Valuation at 28/02/13: | £1,545,000 | |
|---|---|---|---|---|
| Investment comprises: | Valuation at 29/02/12: | £1,319,000 | ||
| Ordinary shares: | £431,000 | Valuation method: | Offer price | |
| Preference shares: | £332,000 | |||
| Loan stock: | £463,000 | |||
| Audited accounts: | 31/03/12 | 31/03/11 | Dividend income: | £– |
| Turnover: | Unpublished information | Loan note income: | £18,000 | |
| Profit before tax: | Unpublished information | Proportion of equity held: | 22.7% | |
| Net assets: | £1.1m | £1.0m | Diluted equity: | 22.7% |
Matssoft is a software company specialising in developing hosted Software as a Service ("SaaS") business process management, workflow and customer and communications solutions, complete with a comprehensive suite of management information and configuration tools. Matssoft has built a strong reputation by providing solutions for enterprise customers that deliver dramatic processing efficiencies whilst keeping customer satisfaction high through proactive communication.
www.matssoft.co.uk
| Cost: | £1,010,000 | Valuation at 28/02/13: | £1,199,000 | |
|---|---|---|---|---|
| Investment comprises: | Valuation at 29/02/12: | £775,000 | ||
| Ordinary shares: | £470,000 | Valuation method: | Earnings multiple |
|
| 'A' ordinary shares: | £282,000 | |||
| Loan stock: | £258,000 | |||
| Audited accounts: | 31/12/11 | 31/12/10 | Dividend income: | £– |
| Turnover: | Unpublished information | Loan note income: | £16,000 | |
| Profit before tax: | Unpublished information | Proportion of equity held: | 12.0% | |
| Net assets: | £1.1m | £219,000 | Diluted equity: | 12.0% |
Blis Media is a leading mobile marketing specialist featuring a roster of blue-chip clients. It was one of the first players in the UK to specialize in location based media, and retains a strong base of proprietary IP. Its cutting edge technology provides its customers with an unprecedented level of audience granularity.
| ß | |
|---|---|
| COLLEGE |
Cost: £482,000 Valuation at 28/02/13: £1,119,000 Investment comprises: Valuation at 29/02/12: £1,068,000 Ordinary shares: £17,000 Valuation method: Revenue multiple 'A' ordinary shares: £17,000 'C' ordinary shares: £290,000 Preference shares: £79,000 Loan stock: £79,000 Audited accounts: 31/12/12 31/12/11 Dividend income: £– Turnover: £1.64m £1.9m Loan note income: £6,000 (Loss)/profit (£409,000) £108,000 Proportion of equity held: 17.2% before tax Net assets: £1.0m £1.4m Diluted equity: 15.9%
www.blismedia.com
Eagle Rock is a leading independent producer, publisher and distributor of music programming for television and DVD, comprising live concerts and documentaries. Eagle has an extensive catalogue of audio-visual IPR, which is available for multi-media exploitation including broadcast, broadband and telephony.
www.eaglerockent.com
| Cost: | £1,225,000 | Valuation at 28/02/13: | £1,049,000 | |
|---|---|---|---|---|
| Investment comprises: | Valuation at 29/02/12: | £1,399,000 | ||
| Ordinary shares: | £123,000 | Valuation method: | Earnings multiple |
|
| Preference shares: | £378,000 | |||
| Loan stock: | £724,000 | |||
| Audited accounts: | 31/12/11 | 31/12/10 | Dividend income: | £13,000 |
| Turnover: | £27.2m | £27.0m | Loan note income: | £58,000 |
| Loss before tax: | (£2.0m) | (£578,000) | Proportion of equity held: | 12.8% |
| Net assets: | £13.8m | £15.6m | Diluted equity: | 12.8% |
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.
The proportion of equity held in each investment also represents the level of voting rights held by the Company in respect of the investment.
The split of the venture capital investments by commercial sector (by value and cost at 28 February 2013) is summarised as follows:
At 28 February 2013, the assets employed were broadly in line with the targets within the investment policy. These are summarised as follows:
| Type of investment (by fair value) | |
|---|---|
| ------------------------------------ | -- |
| VCT qualifying investments | 75% |
|---|---|
| Non-qualifying investments (including cash at bank and liquidity funds) | 25% |
| 100% |
Andrew has over 30 years' experience of the financial services industry. He was formerly Managing Director of NatWest Ventures, which specialised in venture capital investments, and is a former council member of the British Venture Capital Association. He is a Director of Downing Income 3 VCT plc and was formerly the chairman of other companies including City of London Investment Group plc, The Ethical AIM VCT plc and ProVen Growth and Income VCT plc.
Barry has over 25 years' experience in the venture capital industry, including 14 years as Managing Director of Dresdner Kleinwort Benson Private Equity Limited. He is currently a director of Henderson Private Equity Investment Trust plc, Downing Absolute Income VCT 2 plc and Elderstreet VCT plc. He is also a member of the Investment Committee of Beamreach Capital LLP.
Malcolm is a Senior Managing Director of Beringea LLC and a founder of Beringea LLP. Over the last 20 years he has been responsible for the growth, development and management of the private equity business of Beringea in both the UK and the USA. In addition to sitting on the boards of ProVen VCT plc, ProVen Growth & Income VCT plc and ProVen Planned Exit VCT plc, he sits on the investment committees of Beringea's three other venture capital funds and as a non-executive director on several other portfolio investments. Prior to founding Beringea, Malcolm gained Europe-wide industrial, planning and analytical experience in healthcare, engineering and financial services with, respectively, Baxter International, Uniroyal Inc. and Lloyds TSB Group.
All the Directors are non-executive and, with the exception of Malcolm Moss, are independent of the Investment Manager.
The Directors present the Annual Report and Accounts of the Company for the year ended 28 February 2013.
The principal activity of the Company is that of a venture capital trust. It has been approved by HM Revenue and Customs ("HMRC") as a venture capital trust in accordance with Part 6 of the Income Tax Act 2007, and in the opinion of the Directors the Company has conducted its affairs so as to enable it to continue to maintain approval. Approval for the year ended 28 February 2013 is subject to review should there be any subsequent enquiry under corporation tax self-assessment.
The Directors consider that the Company was not, at any time, up to the date of this report, a close company within the meaning of Section 414 of the Income and Corporation Taxes Act 1988.
The Company has no employees (other than the Directors). The same was true of the previous year.
The Company's business review and developments during the year are reviewed in the Chairman's Statement and the Investment Manager's Review.
Revenue arising from the investments held (including cash at bank and liquidity funds) exceeded the total running costs of the Company by £221,000. The reverse was true in the prior year with running costs exceeding revenue by £730,000. The Ongoing Charges ratio (excluding performance fees and recoverable VAT) in respect of the year ended 28 February 2013, based on net assets at the year end, was 2.8% (2012: 2.7%).
| £'000 | Pence per share | |
|---|---|---|
| Return on ordinary activities after tax for the year ended 28 February 2013 : | 2,747 | 6.2p |
During the year ended 28 February 2013, no dividends were paid.
The Board is proposing to pay an interim dividend of 5.0p per Ordinary Share for the year ended 28 February 2013. This dividend will be paid on 2 August 2013 to Shareholders on the register at 5 July 2013.
The Directors of the Company during the year and their beneficial interests in the issued Ordinary Shares, 'C' Shares, and 'D' Shares of the Company, at 29 February 2012 and 28 February 2013 were as follows:
| Director | 28 Feb 2013 | 29 Feb 2012 | |
|---|---|---|---|
| Andrew Davison | New Ordinary Shares | 27,563 | n/a |
| Original Ordinary Shares | n/a | 33,331 | |
| 'C' Shares | n/a | 9,335 | |
| 'D' Shares | n/a | 2,637 | |
| Barry Dean | New Ordinary Shares | 19,753 | n/a |
| 'C' Shares | n/a | 10,300 | |
| Malcolm Moss | New Ordinary Shares | 2,760 | n/a |
| 'D' Shares | n/a | 3,165 |
Between 28 February 2013 and the date of this report Barry Dean sold 7,289 New Ordinary Shares as part of the Enhanced Buyback Facility and was issued 7,068 New Ordinary Shares. There were no other movements in respect of the Directors holdings, since the year end.
In view of developments in corporate governance practice, the Board has decided that all Directors will retire at each Annual General Meeting. Accordingly all the Directors will retire at the forthcoming Annual General Meeting and being eligible offer themselves for re-election. The Board recommends that Shareholders take into consideration each Director's considerable experience in VCTs and other areas, as shown in their respective biographies on page 20 together with the satisfactory results for the period, in order to support the resolutions to re-appoint all three Directors.
Each of the Directors has an agreed letter of appointment which is terminable by three months' notice on either side. To the extent permitted under the Companies Act 2006, the Company indemnifies each of the Directors against all costs, charges, losses, expenses and liabilities which might arise in the execution of their duties, save for certain exceptions. Each Director is required to devote such time to the affairs of the Company as the Board requires.
The Company's investment policy covers several areas as follows:
The Company seeks to make investments in VCT Qualifying companies with the following characteristics:
The Company invests in companies at various stages of development, including those requiring capital for expansion and in management buy-outs, but not in start-ups. Investments are spread across a range of different sectors.
Funds not invested in qualifying investments will be held in cash, liquidity funds, fixed interest securities of A-rating or better or in investments originated in line with the Company's qualifying VCT policy but which do not qualify under the VCT rules for technical reasons.
In accordance with the Listing Rules:
In continuing to maintain its VCT status, the Company complies with a number of regulations as set out in Part 6 of the Income Tax Act 2007. How the main regulations apply to the Company is summarised as follows:
It is not the Company's intention to have any borrowings. The Company does, however, have the ability to borrow a maximum amount effectively equal to the sum of its share capital and reserves, which is currently equal to £48 million. There are no plans to utilise this facility at the current time.
Proposals will be put to Shareholders at a general meeting to be held on 30 July 2013 to broaden the "Other investments" section within the Investment Policy. It is proposed to add "debt and debt-related securities in growth companies" to the list of investments included under "Other investments".
The Board seeks to conduct the Company's affairs responsibly and considers relevant social and environmental matters where appropriate.
Beringea LLP ("Beringea") provides investment management services to the Company for an annual fee of 2.0% of the net assets per annum. Beringea is also entitled to receive performance incentive fees as described further below. The investment management agreement is terminable by either party at any time by one year's prior written notice. The fees relating to this service, together with performance incentive fees due in the year, amounted to £920,000 (2012: £1,286,000) (inclusive of VAT where applicable), of which £237,000 (2012: £440,972) was outstanding at the year end.
The Board is satisfied with Beringea's approach and procedures in providing investment management services to the Company. The Directors have therefore concluded that the continuing appointment of Beringea LLP as investment manager remains in the best interests of Shareholders.
Downing LLP provided administration services to the Company for a fee of £52,000 (plus VAT if applicable) per annum.
The annual running costs (excluding any performance fees payable) of the Company, are subject to a cap of 3.25% of the Company's net assets. Any running costs in excess of this are borne by Beringea LLP.
For the financial years starting after 29 February 2012, a performance incentive fee will be payable in relation to the Ordinary Shares if, at the end of a financial year, the New Performance Value exceeds the Hurdle using the definitions below. In this event, the performance incentive fee will be equal to 20% of the amount by which the New Performance Value exceeds the Initial Net Asset Value, multiplied by the average number of Ordinary Shares in issue during the relevant financial year, less the amount of any performance incentive fee already paid in relation to previous financial years starting after 29 February 2013 (which will not include, for the avoidance of doubt, the residual performance incentive fee arrangements in respect of Espresso Group Limited and Think Limited as described below).
New Performance Value: In respect of the relevant financial year end, the sum of (i) the net asset value per Ordinary Share at that date, (ii) all dividends per Ordinary Share paid in relation to financial years starting after 28 February 2013 up to the relevant financial year, (iii) all performance related incentive fees per Ordinary Share paid by the Company to the Manager in relation to financial years starting after 28 February 2013, (iv) any 'C' Share Adjustment (whether relating to that or any prior financial year), and (v) any Residual PIF Adjustment (whether relating to that or any prior financial year).
Hurdle: The greater of:
Residual PIF Adjustment: The performance incentive fee relating to the sale of Espresso Group Limited and Think Limited, as set out below ("Residual PIF"), divided by the number of Ordinary Shares in issue on 31 August 2011, assuming that the number of Ordinary Shares in issue on 31 August 2011 included the New Ordinary Shares subsequently issued under the Ordinary Share offer for subscription launched on 8 December 2012.
In consideration of the Manager's performance in managing the Original Ordinary Share Portfolio, a performance incentive fee linked to the profit achieved on the future disposal of two investments from this portfolio, Espresso Group Limited and Think Limited, will be payable, known as the "Residual PIF". This performance incentive fee will be equal to 20% of the aggregate profit realised on the sale of Espresso Group Limited and Think Limited, subject to a maximum fee of £673,000 (being 20% of the aggregate unrealised profit on these investments as at 31 August 2011).
If, after 29 February 2012, the New Performance Value is less than or equal to the Hurdle in any financial year, no performance incentive fee will be payable in respect of that financial year.
The new performance incentive fee per Ordinary Share payable in relation to a financial year will be reduced, if necessary, to ensure that (i) the cumulative new performance incentive fee per Ordinary Share payable in relation to financial years starting after 29 February 2012 does not exceed 20% of Cumulative Dividends per Ordinary Share paid in relation to those financial years and (ii) the New Total Return per Ordinary Share is at least equal to the Hurdle.
All fees paid under the new performance incentive arrangements will be inclusive of VAT, if applicable. The Manager will receive 91% of all fees paid under the new performance incentive arrangements and Downing LLP will receive 9%.
The performance fees payable in respect of Ordinary Shares for the year under review were £nil (2012: £529,000) to Beringea and £nil (2012: £53,000) to Downing LLP. No performance incentive fees were paid in respect of the 'C' Shares or 'D' Shares in the year under review or in the prior year.
Proposals to make a minor adjustments to the performance incentive fee arrangements will be put to Shareholders at a general meeting to be held on 30 July 2013. The proposals make amendments to the calculation and definitions to ensure that fees became payable in line with the Board's intentions in all circumstances.
The Company has retained PricewaterhouseCoopers LLP ("PwC") to advise it on compliance with VCT requirements, including evaluation of investment opportunities as appropriate and regular review of the portfolio. Although PwC works closely with the Investment Manager and Administration Manager, they report directly to the Board.
Compliance with the main VCT regulations as at 28 February 2013 and for the year then ended is summarised as follows:
| 1. | 70% of its investments in qualifying companies | 81.8% |
|---|---|---|
| 2. | At least 30% of the Company's qualifying investments in "eligible shares" for funds raised before 6 April 2011 and at least 70% in "eligible shares" for funds raised on or after 6 April 2011 |
50.8% |
| 3. | At least 10% of each investment held in "eligible shares" | Complied |
| 4. | No investment constitutes more than 15% of the Company's portfolio | Complied |
| 5. | Income is derived wholly or mainly from shares and securities; and | 94.6% |
| 6. | No more than 15% of the income from shares and securities is retained. | Complied |
The Company has one class of shares: Ordinary Shares of 10p each ("New Ordinary Shares").
At the 2012 AGM, Shareholders authorised the Company to make market purchases of its own shares of up to 14.9% of the share capital in issue at that date and to waive pre-emption rights and issue up to 7,176,873 Original Ordinary Shares. At the current date, authority remains for 3,086,455 Ordinary Shares. A resolution to renew this authority will be put to Shareholders at the AGM taking place on 30 July 2013.
Between 15 March 2012 and 30 August 2012, 25,154,068 Ordinary Shares with an aggregate nominal value of £1,258,000 were issued at 50.74p per share pursuant to the offer for subscription dated 8 December 2011. The aggregate consideration for the shares was £12,764,000 which excluded share issue costs of £702,000.
Following Shareholder approval at the AGM and at Shareholder meetings on 24 October 2012 of proposals to convert the 'C' Shares and 'D' Shares into Ordinary Shares, the share conversions took place on 30 October 2012. Immediately prior to the conversions, the Ordinary Shares were consolidated such that Ordinary Shareholders received one New Ordinary Share for every two original Ordinary Shares. As a result, the net asset value of the New Ordinary Shares is double that of the original Ordinary Shares. Under the share conversions, 'C' Shareholders received approximately 0.9213 New Ordinary Shares for each 'C' Share held previously and 'D' Shareholders received approximately 0.8720 New Ordinary Shares for each 'D' Share held previously.
On 21 December 2012 1,078,261 New Ordinary Shares with an aggregate nominal value of £107,826 were issued at £1.08 per share pursuant to the top-up offer for subscription dated 19 November 2012. The aggregate consideration for the shares was £1,160,000 which excluded share issue costs of £64,000.
| Number | Aggregate nominal value £'000 |
Average consideration pence per share |
Aggregate consideration £'000 |
% of issued share capital |
|
|---|---|---|---|---|---|
| New Ordinary Shares | 381,257 | 38 | 91.5p | 349 | 0.85% |
| Original Ordinary Shares | 136,350 | 7 | 44.1p | 60 | 0.5% |
| 'C' Shares | 1,757,860 | 439 | 84.7p | 1,489 | 12.2% |
| 'D' Shares | 21,893 | – | 82.9p | 18 | 0.3% |
The minimum price which may be paid for an Ordinary Share is 10p, exclusive of all expenses, and the maximum price which may be paid for an Ordinary Share is an amount, exclusive of all expenses, equal to 105% of the average of the middle market quotations.
The Company's payment policy is to pay creditors within thirty days of receipt of an invoice except where other terms have been agreed. Trade creditors of the Company at the year end amounted to £nil (2012: £nil).
At each Board meeting, the Directors consider a number of performance measures to assess the Company's success in meeting its investment objectives (as shown on page 4). The Board believes the Company's key performance indicators are Net Asset Value Total Return (NAV plus cumulative dividends paid to date) and dividends per share (see page 4).
In addition, the Board considers the Company's performance in relation to other VCTs.
The principal financial risks faced by the Company, which include market price risk, interest rate risk, credit risk and liquidity risk (being minimal), are summarised within note 19 to the financial statements.
In addition to these risks, the Company, as a fully listed Company on the London Stock Exchange and as a Venture Capital Trust, 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 Listing Rules of the Financial Conduct Authority and the Companies Act 2006, could lead to suspension from the Stock Exchange and damage to the Company's reputation.
The Board reviews and agrees policies for managing each of these risks. The Directors receive quarterly reports from the Managers which monitor the compliance of these risks, and place reliance on the Managers to give updates in the intervening periods. These policies have remained unchanged since the beginning of the financial year.
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 21 June 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.
The Annual General Meeting will be held in The Forest Room at The Hospital Club, 24 Endell Street, Covent Garden, London WC2H 9HQ at 11.00 a.m. on 30 July 2013.
Notice of the Annual General Meeting is at the end of this document.
As at 28 February 2013, and at the date of this report, the Company was not aware of any beneficial interest exceeding 3% of the issued share capital.
The Directors do not foresee any major changes in the activity undertaken by the Company in the coming year. The Company continues with its objective to invest in unquoted companies throughout the United Kingdom with a view to minimising the risks of investment and providing both capital growth and dividend income to Shareholders over the long term whilst maintaining VCT qualifying status.
The Directors are responsible for preparing the Directors' Report and Business Review, the Directors' Remuneration Report and the financial statements in accordance with applicable law and regulations. They are also responsible for ensuring that the annual report includes information required by the Listing Rules of the Financial Conduct Authority.
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 these financial statements, the Directors are required to:
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.
The Directors are responsible for ensuring that the annual report and the financial statements are made available on a website. Financial statements are published on the Investment Manager and Administration Managers' websites 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 Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.
Each of the Directors, whose names and functions are listed on page 20, confirms that to the best of each person's 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 included within the Directors' Report and Business Review, Chairman's Statement, Investment Manager's Review and Review of Investments 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 Company's compliance with, and departures from, the Financial Reporting Council's UK Corporate Governance Code (www.frc.org.uk) are shown on page 32.
The Corporate Governance Statement describes how the principles and supporting principles within the UK Corporate Governance Code, published in June 2010, have been applied by the Company throughout the year ended 28 February 2013, except where disclosed within the Corporate Governance Statement.
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. This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.
By order of the Board
Grant Whitehouse Secretary 39 Earlham Street London WC2H 9LT
27 June 2013
The Directors support the relevant principles of the UK Corporate Governance Code issued in June 2010, being the principles of good governance and the code of best practice, as set out in the UK Corporate Governance Code.
The Board attaches importance to matters set out in the UK Corporate Governance Code and its principles. However, as a venture capital trust company, most of the Company's day to day responsibilities are delegated to third parties and the Directors are all non-executive.
The Company has a Board comprising three non-executive Directors. The Chairman and senior Director is Andrew Davison. Andrew Davison and Barry Dean are considered to be independent Directors by the Board. Biographical details of all Board members (including the significant commitments of the Chairman) are shown on page 20.
In accordance with Company policy all of the Directors will resign at the forthcoming AGM and, being eligible, offer themselves for re-election.
Full Board meetings take place quarterly and the Board meets more regularly to address specific issues, including considering recommendations from the Investment Manager, and reviews, periodically, the terms of engagement of all third party advisers (including the Investment Manager and Administration Manager). The Board has a formal schedule of matters specifically reserved for its decision.
The following table sets out the Directors' attendance at full Board and Committee meetings held during the year ended 28 February 2013.
| Board meetings | Audit Committee meetings |
Remuneration Committee meetings |
||||
|---|---|---|---|---|---|---|
| Director | held | attended | held | attended | held | attended |
| Andrew Davison | 4 | 4 | 2 | 2 | – | – |
| Barry Dean | 4 | 4 | 2 | 2 | – | – |
| Malcolm Moss | 4 | 4 | 2 | 2 | – | – |
The Board has also established procedures whereby Directors wishing to do so in the furtherance of their duties may take independent professional advice at the Company's expense.
All Directors have access to the advice and services of the Company Secretary. The Company Secretary provides the Board with full information on the Company's assets and liabilities and other relevant information requested by the Chairman, in advance of each Board meeting.
The Board has not appointed a nomination committee as it considers itself to be small and it comprises wholly non-executive Directors. Appointments of new Directors are dealt with by the full Board.
An evaluation of the performance of the Board, each of its Committees and of the non-executive Directors was conducted using a series of questionnaires. A broad range of standard topics was covered, including the programme of regular Board or Committee business, Board behaviours and strategy. Different questions were used for assessing the skills and contributions of each of the Chairman and non-executive Directors. The survey will be updated each year, including the approach to risk, Board training and Directors' ability to provide effective challenge.
The Board considered whether to introduce an external facilitator to manage the evaluation. However, it concluded that the Company Secretary was well placed to devise updated questions that are relevant and appropriate to the Company and that, having attended Board and Committee meetings throughout the year, he and the Chairman would also understand and ensure a full and frank discussion around any concerns raised.
The Chairman has reviewed the results of the questionnaire and followed up relevant matters with each Director. The outcome of the 2013 Board review has confirmed that the Directors consider the Board to have a good balance of skills and to be working well.
The Board has appointed a Remuneration Committee comprising all Directors and chaired by Andrew Davison. The Committee generally meets once a year and at other times as required and has specific terms of reference in order to fulfil its duties in respect of matters relating to remuneration.
The Company has an Audit Committee comprising of Barry Dean, as Chairman and Andrew Davison. This Committee has defined terms of reference and duties.
The Audit Committee is responsible for reviewing the half-year and annual accounts before they are presented to the Board, the terms of appointment of the Auditor, together with their remuneration, as well as a full review of the effectiveness of the Company's internal control and risk management systems.
Any non-audit services provided by the Auditor are reviewed and approved by the Committee prior to being undertaken (such services being undertaken by a separate department to the Auditor), to ensure that Auditor objectivity and independence is safeguarded. In addition, the Auditor confirms their independent status on an annual basis.
The Audit Committee met twice during the year. The Committee reviewed the internal financial controls and concluded that they were appropriate. They also considered the need for an internal audit function and concluded that, due to the size of the Company, this would not be an appropriate function.
During the year the Committee discharged its responsibilities by obtaining assurance from their own evaluation of the annual and half yearly reports; the audit feedback documentation and; from correspondence and discussions with the engagement partner of BDO LLP. Based on the assurance obtained, the Committee has recommended, to Shareholders and the Board that BDO LLP, who were appointed as part of a business combination with PKF (UK) LLP detailed on page 26, are appointed as Auditor at the forthcoming AGM.
As the Company has had no staff, other than Directors, there are no procedures in place in respect of C3.4 of the UK Corporate Governance Code, relating to whistleblowing. The Audit Committee understands that the Investment Manager and Administration Manager have whistleblowing procedures in place.
Shareholders have the opportunity to meet the Board at the AGM. The Board is also happy to respond to any written queries made by Shareholders during the course of the year, or to meet with major Shareholders if so requested. A shareholder presentation for all ProVen VCTs is also held each year and Shareholders are invited to attend.
In addition to the formal business of the AGM, representatives of the management team and the Board are available to answer any questions a Shareholder may have.
Separate resolutions are proposed at the AGM on each substantially separate issue. The Administration Manager or the Investment Manager collates proxy votes 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 UK Corporate Governance 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. The notice of the next AGM and proxy form can be found at the end of the Annual Report and accounts.
The terms of reference of the Audit and Remuneration Committees and terms and conditions of appointment of non-executive Directors are available to Shareholders upon request.
The Directors' statement of responsibilities for preparing the accounts is set out in the Directors' Report and Business Review on page 27 and a statement by the Auditor about their reporting responsibilities is set out in the Independent Auditor's Report on page 35.
The Board has adopted an Internal Control Manual ("Manual") for which they are responsible, which has been compiled to comply with the UK Corporate Governance. The Manual is designed to provide reasonable, but not absolute, assurance against material misstatement or loss, which it achieves by detailing the perceived risks and controls in place to mitigate them. The Board reviews the perceived risks in line with relevant guidance on an annual basis and implements additional controls as appropriate.
The Board reviews a Risk Register on an annual basis. The main aspects of internal control in relation to financial reporting by the Board were as follows:
The Board is responsible for ensuring that the procedures to be followed by the advisers and themselves are in place, and reviews the effectiveness of the Manual, based on the report from the Audit Committee, on an annual basis to ensure that the controls remain relevant and were in operation throughout the year.
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 to the following advisers:
| Investment management | Beringea LLP |
|---|---|
| Administration | Downing LLP |
The Company operates an anti-bribery policy to ensure that it meets its responsibilities arising from the Bribery Act 2010. This policy can be found on the website maintained by Downing LLP at www.downing.co.uk.
The rights and obligations attaching to the Company's shares, including the power of the Company to buy back shares and details of any significant Shareholders, are set out on page 6 of the Chairman's Statement and page 25 and 27 of the Directors' Report and Business Review.
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 5, the Investment Manager's Review on page 9 and the Directors' Report and Business Review on page 21. The financial position of the Company, its cash flows, liquidity position and borrowing facilities are shown in the Balance Sheet on page 39, the Cash Flow Statement on page 40 and the Directors' Report and Business Review on page 23. In addition, notes 14, 19 and 20 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.
The Company has considerable financial resources both at the year end and at the date of this report, and holds a diversified portfolio of investments. As a consequence, the Directors believe that the Company is well placed to manage its business risks successfully despite the current uncertain economic outlook.
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.
The Listing Rules require the Board to report on compliance with the fifty-two UK Corporate Governance Code provisions throughout the accounting period. With the exception of the limited items outlined below, the Company has complied throughout the accounting year ended 28 February 2013 with the provisions set out in Section 1 of the UK Corporate Governance Code:
By order of the Board
Secretary 39 Earlham Street London WC2H 9LT
27 June 2013
The Board and Remuneration Committee have prepared this report, in accordance with the requirements of the Companies Act 2006. A resolution to approve this report will be put to the members at the Annual General Meeting to be held on 30 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 Independent Auditor's Report on pages 35 and 36.
The Remuneration Committee comprises all members of the Board and is chaired by Andrew Davison.
Directors' remuneration is calculated in accordance with the Company's Articles of Association as follows:
Directors' remuneration, as shown in the table below, is set at a level designed to reflect the time commitment and high level responsibility borne by the non-executive directors and should be broadly comparable with that paid by similar companies.
Each of the Directors has an agreed letter of appointment whereby he is required to devote such time to the affairs of the Company as the Board reasonably requires consistent with his role as a non-executive Director. A three month rolling notice applies.
Directors' remuneration for the year under review was as follows:
| Year ended 28 Feb 2013 £'000 |
Year ended 29 Feb 2012 £'000 |
|
|---|---|---|
| Andrew Davison (Chairman) | 30 | 30 |
| Barry Dean | 22 | 22 |
| Malcolm Moss | 15 | 15 |
| 67 | 67 |
33
The remuneration of Malcolm Moss is paid to Beringea LLP. No other emoluments or pension contributions were paid by the Company to, or on behalf of, any Director. The remuneration levels for the forthcoming year are expected to be at the following rates:
| Annual Rate £'000 |
|
|---|---|
| Andrew Davison (Chairman) | 30 |
| Barry Dean | 22 |
| Malcolm Moss | 15 |
| 67 |
Directors' and Officers' liability insurance cover is held by the Company in respect of the Directors.
The chart below represents the Company's Ordinary Share performance over the reporting periods since launch of the share classes and compares the Net Asset Value Total Return and the Share Price Total Return to the rebased Numis Smaller Companies Index (excluding investment companies) ("Numis"). Net Asset Value Total Return is calculated as Net Asset Value plus dividends and/or capital distributions reinvested in the share class at the Net Asset Value prevailing at the date the dividends/distributions were paid. Share Price Total Return is calculated in a similar way, but reinvesting dividends at the mid-market share price at the date dividends are paid. Numis is not considered to be a benchmark for the Company but has been selected as an appropriate publicly available broad equity market index. The series has been rebased to 100 at the Company's launch date.
By order of the Board
Secretary 39 Earlham Street London WC2H 9LT
27 June 2013
We have audited the financial statements of ProVen VCT plc for the year ended 28 February 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 the preparation of the financial statements 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.
As explained more fully in the Directors' Responsibilities Statement, 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.
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.
In our opinion the financial statements:
In our opinion:
We have nothing to report in respect of the following matters
Under the Companies Act 2006 we are required to report to you if, in our opinion:
Under the Listing Rules we are required to review:
for and on behalf of BDO LLP, statutory auditor London United Kingdom
27 June 2013
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
| Year ended 28 February 2013 | Year ended 29 February 2012 | ||||||
|---|---|---|---|---|---|---|---|
| Note | Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
|
| Income | 2 | 1,554 | – | 1,554 | 844 | – | 844 |
| Gains on investments | 10 | – | 2,508 | 2,508 | – | 2,245 | 2,245 |
| 1,554 | 2,508 | 4,062 | 844 | 2,245 | 3,089 | ||
| Investment management fees | 3 | (230) | (690) | (920) | (177) | (527) | (704) |
| Performance incentive fees | 4 | – | – | – | – | (582) | (582) |
| Other expenses | 5 | (376) | (19) | (395) | (288) | – | (288) |
| Return on ordinary activities before tax |
948 | 1,799 | 2,747 | 379 | 1,136 | 1,515 | |
| Tax on ordinary activities | 7 | – | – | – | – | – | – |
| Return attributable to equity shareholders |
948 | 1,799 | 2,747 | 379 | 1,136 | 1,515 | |
| Basic and diluted return per share: | |||||||
| Ordinary Share | 9 | 2.1p | 4.1p | 6.2p | 1.1p* | 3.3p* | 4.4p* |
All revenue and capital movements in the year relate to continuing operations. No operations were acquired or discontinued during the year. The total column within the Income Statement represents the profit and loss account of the Company, prepared in accordance with the accounting policies detailed in note 1 to the financial statements. The supplementary revenue and capital columns are presented for information purposes in accordance with the Statement of Recommended Practice issued by The Association of Investment Companies.
A Statement of Total Recognised Gains and Losses has not been prepared as all gains and losses are recognised in the Income Statement in the current and prior year as shown.
Other than revaluation movements arising on investments held at fair value through the Profit and Loss, there were no differences between the return as stated above and at historical cost.
*rebased in respect of the share consolidation and conversions that took place on 30 October 2012.
for the year ended 28 February 2013
| Year ended 28 February 2013 |
Year ended 29 February 2012 |
||
|---|---|---|---|
| Note | Total £'000 |
Total £'000 |
|
| Opening Shareholders' funds | 36,434 | 33,966 | |
| Issue of shares | 13,924 | 1,860 | |
| Share issue costs | (766) | (101) | |
| Purchase of own shares | (1,923) | (572) | |
| Movement in share capital to be issued | (2,609) | 3,206 | |
| Total recognised gains for the year | 2,747 | 1,515 | |
| Dividends paid | 8 | – | (3,440) |
| Closing Shareholders' funds | 47,807 | 36,434 |
| 28 February 2013 |
29 February 2012 |
||
|---|---|---|---|
| Note | Total £'000 |
Total £'000 |
|
| Fixed assets Investments |
10 | 31,103 | 25,556 |
| Current assets Debtors |
11 | 283 | 242 |
| Current investments | 12 | – | 6,200 |
| Cash at bank and in hand | 16,777 | 5,942 | |
| 17,060 | 12,384 | ||
| Creditors: amounts falling due within one year | 13 | (356) | (1,506) |
| Net current assets | 16,704 | 10,878 | |
| Total assets less current liabilities/Net assets | 47,807 | 36,434 | |
| Capital and reserves Called up share capital |
14 | 4,572 | 5,053 |
| Capital redemption reserve | 15 | 2,795 | 313 |
| Share premium | 15 | 21,570 | 10,413 |
| Unallotted share capital | 15 | 597 | 3,206 |
| Special reserve | 15 | 8,127 | 11,763 |
| Capital reserve – realised | 15 | 1,303 | 2,442 |
| Revaluation reserve | 15 | 8,405 | 3,756 |
| Revenue reserve | 15 | 438 | (512) |
| Equity shareholders' funds | 47,807 | 36,434 | |
| Basic and diluted net asset value per share | 16 | 103.3p | 98.8p* |
*rebased in respect of the share consolidation and conversions that took place on 30 October 2012.
The financial statements on pages 37 to 56 were approved and authorised for issue by the Board of Directors on 27 June 2013 and were signed on its behalf by
Chairman ProVen VCT plc Company number: 3911323
| Year ended 28 February 2013 |
Year ended 29 February 2012 |
||
|---|---|---|---|
| Note | Total £'000 |
Total £'000 |
|
| Net cash outflow from operating activities | 17 | (43) | (914) |
| Capital expenditure | |||
| Purchase of investments | 10 | (4,309) | (3,613) |
| Sale of investments | 10 | 1,270 | 1,792 |
| Net cash outflow from capital expenditure | (3,039) | (1,821) | |
| Equity dividends paid | 8 | – | (3,440) |
| Management of liquid resources | |||
| Purchase of current investments held as liquidity funds | – | (400) | |
| Withdrawal from liquidity funds | 6,200 | 3,400 | |
| Net cash inflow from liquid resources | 6,200 | 3,000 | |
| Net cash inflow/(outflow) before financing | 3,118 | (3,175) | |
| Financing Proceeds from share issues |
14 | 10,718 | 1,861 |
| Share issue costs | 14 | (766) | (101) |
| Purchase of own shares | 14 | (1,923) | (572) |
| Unallotted share capital | 597 | 3,206 | |
| Proceeds received on behalf of a co-investor | (909) | 909 | |
| Net cash inflow from financing | 7,717 | 5,303 | |
| Increase in cash | 18 | 10,835 | 2,128 |
The Company has prepared its financial statements under UK Generally Accepted Accounting Practice ("UK GAAP") and in accordance with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" revised January 2009 ("SORP").
The financial statements are prepared under the historical cost convention except for the revaluation of certain financial instruments measured at fair value.
The Company implements new Financial Reporting Standards ("FRS") issued by the Financial Reporting Council when required.
The Directors have, at the time of approving the financial statements, 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 financial statements. Further detail is contained in the Statement of Corporate Governance on page 32.
In order to better reflect the activities of an investment company and in accordance with guidance issued by the Association of Investment Companies ("AIC"), supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The net revenue is the measure the Directors believe appropriate in assessing the Company's compliance with certain requirements set out in Part 6 of the Income Tax Act 2007.
Venture capital 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 on a fair value basis, 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 the International Private Equity and Venture Capital Valuation Guidelines ("IPEV Guidelines") together with FRS26 - Financial Instruments: Recognition and Measurements.
Publicly traded investments are measured using bid prices in accordance with the IPEV Guidelines.
The valuation methodologies used by the Directors for assessing the fair value of unquoted investments are as follows:
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.
Fixed asset investments are derecognised when the contractual rights to the cash flows from the asset expire or it transfers the asset and substantially all the risks and rewards of ownership of the asset to another entity.
Where an investee company has gone into receivership or liquidation, or the loss in value below costs is considered to be permanent, or there is little likelihood of a recovery from a company in administration, the loss on the investment, although not physically disposed of, 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 and transaction costs on acquisition or disposal of the investment are expensed.
In accordance with exemptions under FRS 9, those undertakings in which the company holds more than 20% of the equity as part of an investment portfolio are not accounted for using the equity method.
Current asset investments, which comprise investments in liquidity funds with AAA rating, are held at fair value through profit and loss and are marked-to-market. These assets are purchased and redeemed under a contract and the assets are recognised and derecognised on the trade date. These assets are initially measured at cost and subsequently valued at fair value, being the closing price of the fund as issued by the provider.
Dividend income from investments is recognised when the shareholders' rights to receive payment has been established, normally the ex-dividend date, or, where no ex-dividend date is established, when the Company's right to receive payment is established.
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 in the foreseeable future. Income which is not capable of being received within a reasonable period of time is reflected in the capital value of the investments.
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:
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, which is not discounted, 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.
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. Deferred tax assets and liabilities are not discounted.
Other debtors (including accrued income), other creditors and loan notes are included within the accounts at amortised cost.
Expenses in relation to share issues are deducted from the Share Premium Account upon allotment of shares.
| 2013 £'000 |
2012 £'000 |
|
|---|---|---|
| Income from investments | ||
| Loan stock interest | 1,254 | 516 |
| Dividend income | 168 | 242 |
| Liquidity funds interest | 32 | 60 |
| 1,454 | 818 | |
| Other income | ||
| Deposit interest | 100 | 25 |
| Other income | – | 1 |
| 1,554 | 844 |
The Directors consider that the Company has one class of business and that all its activities arise in the United Kingdom.
| 2013 £'000 |
2012 £'000 |
|
|---|---|---|
| Investment management fees | 920 | 704 |
The Company has an agreement with Beringea LLP for the provision of management services in respect of its portfolio of venture capital investments, which is terminable with one year's notice. The management fee is based upon an annual amount of 2.0% of net assets. The annual running costs (excluding performance incentive fees and trail commission) of the Company are subject to a cap of 3.25% of the Company's net assets.
| 2013 £'000 |
2012 £'000 |
|
|---|---|---|
| Beringea LLP | – | 529 |
| Downing LLP | – | 53 |
| – | 582 |
Beringea LLP ("Beringea") and Downing LLP are entitled to receive performance incentive fees as described in the Directors' Report and Business Review on page 24. The performance incentive fees are stated inclusive of VAT. Fees are attributed to capital or revenue in accordance with the dividend on which they are based.
| 2013 £'000 |
2012 £'000 |
|
|---|---|---|
| Administration services | 52 | 61 |
| Directors' remuneration | 67 | 67 |
| Social security costs and irrecoverable VAT on Directors remuneration |
9 | 9 |
| Trail commission | 59 | 52 |
| Auditor's remuneration for audit of the Company's annual accounts |
17 | 17 |
| Auditor's remuneration for tax compliance services | 6 | 4 |
| Auditor's remuneration for other services | 2 | – |
| Other | 183 | 78 |
| 395 | 288 |
Included within other is £19,000 allocated to capital expenses in respect of arrangement fees in relation to an investment. All other expenses are allocated as revenue costs.
Details of remuneration (excluding employers' NIC and VAT) are given in the Directors' Remuneration Report on page 33.
The Company had no employees (other than Directors) during either year. Costs in respect of Directors are disclosed in note 5.
| 2013 £'000 |
2012 £'000 |
|
|---|---|---|
| (a) Tax charge for the year | ||
| Current year | ||
| UK corporation tax (charged to the revenue account) | – | – |
| Charged to capital expenses | – | – |
| Charge for the year | – | – |
| (b) Factors affecting tax charge for the year | ||
| Return on ordinary activities before taxation | 2,747 | 1,515 |
| Tax charge calculated on return on ordinary activities before taxation at the applicable rate of 24% (2012: 26%) |
659 | 393 |
| Effects of: | ||
| UK dividend (income) | (40) | (63) |
| Gain on investments | (602) | (584) |
| Disallowable expenses | 23 | 17 |
| Excess capital investment management fees | (40) | 237 |
| – | – |
Excess management fees, which are available to be carried forward and set off against future taxable income, amounted to £4,826,000 (2012: £4,975,000). The deferred tax asset of £1,110,000 (2012: £1,244,000) has not been recognised due to the fact that it is unlikely the excess management fees will be set off in the foreseeable future.
| Year ended 28 February 2013 | Year ended 29 February 2012 | ||||||
|---|---|---|---|---|---|---|---|
| Pence | Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
|
| Ordinary Share dividends Paid in the year |
|||||||
| 2012 Interim | 6.25 | – | – | – | 342 | 1,369 | 1,711 |
| 2011 Final | 6.25 | – | – | – | 498 | 1,231 | 1,729 |
| – | – | – | 840 | 2,600 | 3,440 | ||
| Proposed dividends | |||||||
| Interim 2013 | 5.0 | 731 | 1,555 | 2,286 | – | – | – |
| Year ended 28 February 2013 |
Year ended 29 February 2012 |
|
|---|---|---|
| Ordinary Shares |
Ordinary Shares* |
|
| Revenue return per share based on: | ||
| Net revenue after taxation (£'000) | 948 | 379 |
| Weighted average number of shares in issue | 44,205,557 | 34,140,909 |
| Pence per share | 2.1 | 1.1 |
| Capital return per share based on: Net capital gain for the financial year (£'000) |
1,799 | 1,136 |
| Weighted average number of shares in issue | 44,205,557 | 34,140,909 |
| Pence per share | 4.1 | 3.3 |
* rebased in respect of the share consolidation and conversions that took place on 30 October 2012.
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 basic and diluted return per share.
| Investments quoted on AIM £'000 |
Unquoted investments £'000 |
Total £'000 |
|
|---|---|---|---|
| Opening cost at 1 March 2012 | 1,274 | 20,527 | 21,801 |
| Unrealised (losses)/(impairments)/gains at 1 March 2012 | (915) | 4,670 | 3,755 |
| Opening fair value at 1 March 2012 | 359 | 25,197 | 25,556 |
| Movement in year Purchases at cost |
– | 4,309 | 4,309 |
| Sales – proceeds |
– | (1,270) | (1,270) |
| – realised gains on sales | – | 373 | 373 |
| Unrealised (losses)/gains in the income statement | (12) | 2,147 | 2,135 |
| Closing fair value at 28 February 2013 | 347 | 30,756 | 31,103 |
| Closing cost at 28 February 2013 | 1,274 | 22,466 | 23,740 |
| Unrealised (losses)/gains at 28 February 2013 | (187) | 8,592 | 8,405 |
| Realised losses on investments still held | (740) | (302) | (1,042) |
| Closing fair value at 28 February 2013 | 347 | 30,756 | 31,103 |
The combined effect of a change in the basis of valuation is an uplift of £3,718,000 in the valuation relative to the prior year. The only significant movements are in the valuation of Fjordnet Limited (28 February 2013 valuation £4,939,000, uplift of £3,263,000) was changed from an earnings multiple basis to an offer price basis; Tossed Limited (28 February 2013 valuation £1,545,000, uplift of £226,000) was changed from an earnings multiple basis to an offer price basis; and Matssoft Limited (28 February 2013 valuation £1,199,000, uplift of £189,000) was changed from a price of recent investment basis to an earnings multiple basis.
| 2013 £'000 |
2012 £'000 |
|
|---|---|---|
| Other debtors | 13 | 172 |
| Prepayments and accrued Income | 270 | 70 |
| 283 | 242 |
"Fair value through profit or loss" assets
| 2013 £'000 |
2012 £'000 |
|
|---|---|---|
| BlackRock Liquidity Fund | – | 2,000 |
| Insight Liquidity Fund | – | 1,000 |
| Standard Life Investments GBP Liquidity Fund | – | 2,000 |
| RBS Liquidity Fund | – | 1,200 |
| – | 6,200 |
| 2013 £'000 |
2012 £'000 |
|
|---|---|---|
| Other social security costs | 7 | 8 |
| Other creditors | – | 911 |
| Accruals and deferred income | 349 | 587 |
| 356 | 1,506 |
Other creditors in the prior year included monies received from Lazurite Limited on disposal of the investment on behalf of ProVen Growth & Income VCT plc.
| 2013 £'000 |
2012 £'000 |
|
|---|---|---|
| Issued, allotted, called up and fully-paid: | ||
| 45,718,436 (2011: nil) Ordinary Shares of 10p each ("New Ordinary Shares") |
4,572 | – |
| Nil (2011: 27,355,996) Ordinary Shares of 5p each ("Original Ordinary Shares") |
– | 1,367 |
| Nil (2011: 14,414,223) 'C' Shares of 25p each | – | 3,604 |
| Nil (2011: 8,249,401) 'D' Shares of 1p each | – | 82 |
| 4,572 | 5,053 |
Between 15 March 2012 and 30 August 2012, 25,154,068 Original Ordinary Shares with an aggregate nominal value of £1,258,000 were issued at 50.74p per share pursuant to the top-up offer for subscription dated 8 December 2011. The aggregate consideration for the shares was £12,764,000 which excluded share issue costs of £702,000.
Following Shareholder approval at the AGM and at Shareholder meetings on 24 October 2012 of the proposals to convert the 'C' Shares and 'D' Shares into New Ordinary Shares, the share conversions took place on 30 October 2012. Immediately prior to the conversions, the Original Ordinary Shares were consolidated such that Original Ordinary Shareholders received one New Ordinary Share for every two Original Ordinary Shares. As a result, the net asset value of the New Ordinary Shares is double that of the original Ordinary Shares. The pro-forma NAV of the New Ordinary Shares as at 31 August 2012 was therefore 101.6p per share.
Under the share conversions, 'C' Shareholders received approximately 0.9213 New Ordinary Shares for each 'C' Share held previously and 'D' Shareholders received approximately 0.8720 New Ordinary Shares for each 'D' Share held previously.
As part of the process of converting the 'C' Shares into Ordinary Shares, 20 million Deferred Shares were issued. These were subsequently cancelled in accordance with the articles of association.
On 21 December 2012 1,078,261 New Ordinary Shares with an aggregate nominal value of £107,826 were issued at £1.08 per share pursuant to the top-up offer for subscription dated 19 November 2012. The aggregate consideration for the shares was £1,160,000 which excluded share issue costs of £64,000.
| Number | Aggregate nominal value £'000 |
Average consideration pence per share |
Aggregate consideration (net of costs) £'000 |
% of issued share capital |
|
|---|---|---|---|---|---|
| New Ordinary Shares | 381,257 | 38 | 91.5p | 349 | 0.85% |
| Original Ordinary Shares | 136,350 | 7 | 44.1p | 60 | 0.5% |
| 'C' Shares | 1,757,860 | 439 | 84.7p | 1,489 | 12.2% |
| 'D' Shares | 21,893 | – | 82.9p | 18 | 0.3% |
Share buybacks which took place during the year are summarised as follows:
All the above shares were subsequently cancelled.
| Capital redemption |
Share | Unallotted Share |
Special | Capital | reserve- Revaluation | Revenue | |
|---|---|---|---|---|---|---|---|
| reserve £'000 |
premium £'000 |
capital £'000 |
reserve £'000 |
realised £'000 |
reserve £'000 |
reserve £'000 |
|
| At 1 March 2012 | 313 | 10,413 | 3,206 | 11,763 | 2,442 | 3,756 | (512) |
| Issue of new shares (net of costs) |
– | 11,793 | (3,206) | – | – | – | – |
| Unallotted Share capital | – | – | 597 | – | – | – | – |
| Share repurchase | 484 | – | – | (1,905) | – | – | (18) |
| Cancellation of deferred shares |
1,998 | – | – | – | – | – | – |
| Bonus issue of shares | (636) | – | – | – | – | – | |
| Expenses capitalised | – | – | – | – | (709) | – | – |
| Gains on investments | – | – | – | – | 373 | 2,135 | – |
| Retained revenue | – | – | – | – | – | – | 948 |
| Transfer between reserves | – | – | – | (1,731) | (803) | 2,514 | 20 |
| At 28 February 2013 | 2,795 | 21,570 | 597 | 8,127 | 1,303 | 8,405 | 438 |
The special reserve is a distributable reserve that allows the Company to make market purchases of its own shares and to pay distributions. The special reserve, capital reserve – realised and revenue reserve are all distributable reserves. The distributable reserves are reduced by losses of £2,495,000 which are included in the revaluation reserve. Reserves available for distribution therefore amount to £7,373,000.
| Shares in Issue | 2013 Net asset value |
2012 Net asset value |
||||
|---|---|---|---|---|---|---|
| 2013 | 2012 | per share | £'000 | per share | £'000 | |
| New Ordinary Shares | 45,718,436 | n/a | 103.3p | 47,210 | n/a | n/a |
| Original Ordinary Shares | n/a | 27,355,996 | n/a | n/a | 49.4p | 13,505 |
| 'C' Shares | n/a | 14,414,223 | n/a | n/a | 87.4p | 12,594 |
| 'D' Shares | n/a | 8,249,401 | n/a | n/a | 86.4p | 7,129 |
| Ordinary share capital to be issued | 597 | 3,206 | ||||
| 47,807 | 36,434 |
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 return per share.
| 2013 £'000 |
2012 £'000 |
|
|---|---|---|
| Return on ordinary activities before taxation | 2,747 | 1,515 |
| Gain on investment | (2,508) | (2,245) |
| (Increase)/decrease in prepayments, accrued income and other debtors |
(41) | 46 |
| Decrease in accruals and other creditors | (241) | (230) |
| Net cash outflow from operating activities | (43) | (914) |
| 2013 £'000 |
2012 £'000 |
|
|---|---|---|
| Beginning of year | 5,942 | 3,814 |
| Net cash inflow | 10,835 | 2,128 |
| End of year | 16,777 | 5,942 |
The Company's financial instruments comprise investments held at fair value through the profit and loss, being equity and loan stock investments in quoted companies and unquoted companies and liquidity funds; loans and receivables being cash deposits and short term debtors; and financial liabilities being creditors arising from its operations. The main purpose of these financial instruments is to generate cash flow, revenue and capital appreciation for the Company's operations. The Company has no gearing or other financial liabilities apart from short -term creditors and does not use any derivatives.
The fair value of investments is determined using the detailed accounting policy as shown in note 1. The composition of the investments is set out in note 10 and below.
The fair value of cash deposits and short term debtors and creditors equates to their carrying value in the Balance Sheet.
Loans and receivables and other financial liabilities are stated at amortised cost which the Directors consider is equivalent to fair value.
The Company's investment activities expose the Company to a number of risks associated with financial instruments and the sectors in which the Company invests. The principal financial risks arising from the Company's operations are:
The Board regularly reviews these risks and the policies in place for managing them. There have been no significant changes to the nature of the risks that the Company is exposed to over the year and there have also been no significant changes to the policies for managing those risks during the year. The risk management policies used by the Company in respect of the principal financial risks and a review of the financial instruments held at the year end are provided below:
As a VCT, the Company is exposed to market risks in the form of potential losses and gains that may arise on the investments it holds. The management of these market risks is a fundamental part of investment activities undertaken by the Investment Manager and overseen by the Board. The Manager monitors investments through regular contact with management of investee companies, regular review of management accounts and other financial information and attendance at investee company board meetings. This enables the Manager to manage the investment risk in respect of individual investments. Market risk is also mitigated by holding a portfolio diversified across several business sectors and asset classes.
The key market risks to which the Company is exposed are:
Market price risk arises from uncertainty about the future prices and valuations of financial instruments held in accordance with the Company's investment objectives. It represents the potential loss that the Company might suffer through market price movements in respect of quoted investments and also changes in the fair value of unquoted investments that it holds.
At 28 February 2013, the AIM -quoted portfolio was valued at £347,000 (2012: £359,000).
The Company's sensitivity to fluctuations in the share prices of its AIM -quoted investments is summarised below. A 25% movement in the share price of all of the AIM -quoted stocks held by the Company would have an effect as follows:
| Impact on net assets £'000 |
2013 Impact on NAV per share pence |
Impact on net assets £'000 |
2012 Impact on NAV per share Pence |
|
|---|---|---|---|---|
| New Ordinary Share | 87 | 0.2p | n/a | n/a |
| Original Ordinary Shares | n/a | n/a | 90 | 0.3p |
At 28 February 2013, the unquoted portfolio was valued at £30,756,000 (2012: £25,197,000 ).
As many of the Company's unquoted investments are valued using revenue or earnings multiples of comparable companies or sectors, a fall in share prices generally would impact on the valuation of the unquoted portfolio. A 10% movement in the valuations of all of the unquoted investments held by the Company would have an effect as follows:
| Impact on net assets £'000 |
2013 Impact on NAV per share pence |
Impact on net assets £'000 |
2012 Impact on NAV per share pence |
|
|---|---|---|---|---|
| New Ordinary Share | 3,076 | 6.7p | n/a | n/a |
| Original Ordinary Shares | n/a | n/a | 1,208 | 4.4p |
| 'C' Shares | n/a | n/a | 1,109 | 7.7p |
| 'D' Shares | n/a | n/a | 202 | 2.4p |
The sensitivity analysis for unquoted valuations above assumes that each of the sub -categories of financial instruments (ordinary shares, preference shares and loan stocks) held by the Company produces an overall movement of 10%. 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. 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.
The Company is exposed to interest rate risk on floating-rate financial assets through the effect of changes in prevailing interest rates. The Company receives interest on its cash deposits at a rate agreed with its bankers and on liquidity funds at rates based on the underlying investments. Investments in loan stock and fixed interest investments attract interest predominately at fixed rates. A summary of the interest rate profile of the Company's financial instruments is shown overleaf.
There are three categories in respect of interest which are attributable to the financial instruments held by the Company as follows:
| Average interest rate |
Average period until maturity |
2013 £'000 |
2012 £'000 |
|
|---|---|---|---|---|
| Fixed rate | 7.4% | 965 days | 9,836 | 10,169 |
| Floating rate | 0.7% | – | 17,960 | 13,325 |
| No interest rate | 20,367 | 14,446 | ||
| 48,163 | 37,940 |
The Company monitors the level of income received from fixed, floating and non interest rate assets and, if appropriate, may make adjustments to the allocation between the categories, in particular, should this be required to ensure compliance with the VCT regulations.
Based on the assumption that the yield of all floating rate financial instruments would change by an amount equal to the movement in prevailing interest rates, it is estimated that an increase of 1% in interest rates would have increased total return before taxation for the year by £180,000. As the Bank of England base rate stood at 0.5% per annum throughout the year, it is believed that a reduction from this level is unlikely.
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 is exposed to credit risk through its holdings of loan stock in investee companies, investments in liquidity funds, cash deposits and debtors. Credit risk relating to loan stock investee companies is considered to be part of market risk.
The Company's exposure to credit risk is summarised as follows:
| 2013 £'000 |
2012 £'000 |
|
|---|---|---|
| Investments in liquidity funds | – | 6,200 |
| Investments in loan stocks | 11,019 | 11,351 |
| Cash and cash equivalents | 16,777 | 5,942 |
| Interest, dividends and other receivables | 270 | 242 |
| 28,066 | 23,735 |
The Manager manages credit risk in respect of loan stock with a similar approach as described under Investment risks above. In addition the credit risk is partially mitigated by registering floating charges over the assets of certain investee companies. The strength of this security in each case is dependent on the nature of the investee company's business and its identifiable assets. The level of security is a key means of managing credit risk. Similarly, the management of credit risk associated with interest, dividends and other receivables is covered within the investment management procedures.
Credit risk in respect of investments in liquidity funds is minimised by investing in AAA-rated funds.
Cash is mainly held by Bank of Scotland plc and Royal Bank of Scotland plc, both of which are A-rated financial institutions and both also ultimately part-owned by the UK Government. Consequently, the Directors consider that the risk profile associated with cash deposits is low.
There have been no changes in fair value during the year that are directly attributable to changes in credit 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. The Company generally maintains a relatively low level of creditors (£356,000 at 28 February 2013) and has no borrowings. Also, the quoted investments held by the Company are considered to be readily realisable.
The Company always holds sufficient levels of funds as cash and readily realisable investments in order to meet expenses and other cash outflows as required. For these reasons, the Board believes that the Company's exposure to liquidity risk is minimal.
The Company's liquidity risk is managed by the Investment Manager in line with guidance agreed with the Board and is reviewed by the Board at regular intervals.
Although the Company's investments are not held to meet the Company's liquidity requirements, the table below shows an analysis of the loan stock, highlighting the length of time that it could take the Company to realise its assets if it were required to do so.
| Not later than 1 year £'000 |
Between 1 and 2 years £'000 |
Between 2 and 3 years £'000 |
Between 3 and 5 years £'000 |
More than 5 years £'000 |
Total £'000 |
|
|---|---|---|---|---|---|---|
| As at 28 February 2013 | ||||||
| Fully performing loan stock | 1,240 | 906 | 1,592 | 2,528 | 1,135 | 7,401 |
| Past due loan stock | 1,975 | 173 | 172 | 1,298 | – | 3,618 |
| 3,215 | 1,079 | 1,764 | 3,826 | 1,135 | 11,019 | |
| As at 29 February 2012 | ||||||
| Fully performing loan stock | 368 | 1,527 | 1,490 | 4,193 | 710 | 8,288 |
| Past due loan stock | 1,798 | 202 | 202 | 574 | 287 | 3,063 |
| 2,166 | 1,729 | 1,692 | 4,767 | 997 | 11,351 |
The carrying value of loan stock investments held at 28 February 2013, which is analysed by expected maturity date, is as follows:
Of the loan stock classified as "past due" above, £1,802,000 relates to the principal of loan notes where the principal has passed its maturity date. As at the balance sheet date, the extent to which the principal is past its maturity date giving rise to the classification of the loan notes as past due falls within the banding of no later than one year.
Of the loan stock classified as "past due" above, £1,816,000 relates to the principal of loan notes where, although the principal remains within term, the investee company is not fully servicing the interest obligations under the loan note and is thus in arrears. As at the balance sheet date, the interest giving rise to the classification of the loan notes as past due related to the principal of £173,000 falling within the banding of less than one year; £173,000 falling with the banding of one to two years; £172,000 falling within the banding of two to three years and; £1,298,000 falling within the banding of 3 to 5 years. Notwithstanding the arrears of interest, the Directors do not consider that the loan note itself has been impaired.
Investments are valued at fair value as determined using the measurement policies described in note 1. The carrying value of financial assets and financial liabilities recorded at amortised cost, which includes short term debtors and creditors, is considered by the Directors to be equivalent to their fair value.
The Company has categorised its financial instruments that are measured subsequent to initial recognition at fair value, using the fair value hierarchy as follows:
| 2013 | 2012 | |||||||
|---|---|---|---|---|---|---|---|---|
| Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
Total £'000 |
Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
Total £'000 |
|
| AIM quoted | 347 | – | – | 347 | 359 | – | – | 359 |
| Loan notes | – | – | 11,019 | 11,019 | – | – | 11,351 | 11,351 |
| Unquoted equity | – | – | 17,472 | 17,472 | – | – | 12,532 | 12,532 |
| Preference shares | – | – | 2,265 | 2,265 | – | – | 1,314 | 1,314 |
| Liquidity fund | – | – | – | – | 6,200 | – | – | 6,200 |
| 347 | – | 30,756 | 31,103 | 6,559 | – | 25,197 | 31,756 |
| Loan Notes £'000 |
Unquoted Equity £'000 |
Total £'000 |
|
|---|---|---|---|
| Balance at 29 February 2012 | 11,351 | 13,846 | 25,197 |
| Movements in the Income Statement: (Loss)/gain in the Income Statement |
(530) | 3,050 | 2,520 |
| (530) | 3,050 | 2,520 | |
| Purchases at cost | 1,287 | 3,022 | 4,309 |
| Sales proceeds | (1,089) | (181) | (1,270) |
| Balance at 28 February 2013 | 11,019 | 19,737 | 30,756 |
There is an element of judgment in the choice of assumptions for unquoted investments and it is possible that, if different assumptions were used, different valuations could have been attributed to certain of the VCT's investments.
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 result in an overall increase of £535,000 to the value of the unquoted investments for an upside scenario and an overall decrease of £288,000 to the value of the unquoted investments for a downside scenario.
Valuations are subject to fluctuations in market conditions and the sensitivity of the Company to such changes is shown on page 51.
An analysis of venture capital investments between equity and non-equity elements is set out above and on page 46.
The Company's capital is managed in accordance with its investment policy as shown in the Directors' Report and Business Review on page 22, in pursuit of its principal investment objectives as stated on page 4. There has been no significant change in the objectives, policies or processes for managing capital from the previous year.
By its nature the Company has an amount of capital which must be invested, and retained, in the relatively high risk asset class of small UK companies broadly within three years of that capital being subscribed. The Company accordingly has limited scope to manage its capital structure in 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,
purchases of its own shares, issues of 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. The Company has the authority to buy back shares as described in the Directors' Report and Business Review.
Between 4 April 2013 and the date of this report, the Company issued 2,303,786 Ordinary Shares for an aggregate consideration of £2.5million. Share issue costs thereon amounted to £124,000.
On 22 May 2013 Fjordnet Limited was the subject of an acquisition by Accenture, giving rise to a realised gain of £3.1 million upon completion and a possible total realised gain of up to £3.5 million within the next twelve months. On 18 April 2013, the investment in Tossed Limited was sold for a realised gain of £313,000.
The Company has no contingent liabilities, guarantees and financial commitments at the year end.
In the opinion of the Directors there is no immediate or ultimate controlling party.
The table below shows the investment returns per £1 invested for each fundraising. No account has been taken of the possible benefit of any capital gains tax deferral (available for new investments up to and including tax year 2003/2004) or of additional shares that may have been available through early bird or financial intermediary discounts.
| Original share class |
Tax year | Allotment date(s) |
Income tax relief |
Net cost with initial income tax relief |
Dividends received |
Current valuation |
Total return |
|---|---|---|---|---|---|---|---|
| Ordinary | 1999/00 | All dates | 20% | 80.0p | 114.0p | 51.7p | 165.6p |
| Ordinary | 2000/01 | All dates | 20% | 80.0p | 114.0p | 51.7p | 165.6p |
| Ordinary | 2003/04 | All dates | 20% | 80.0p | 110.4p | 54.4p | 164.8p |
| Ordinary | 2004/05 | All dates | 40% | 60.0p | 90.8p | 47.8p | 138.6p |
| Ordinary | 2005/06 | To 12/05/05 | 40% | 60.0p | 90.8p | 47.8p | 138.6p |
| Ordinary | 2005/06 | From 13/05/05 | 40% | 60.0p | 87.0p | 45.7p | 132.8p |
| Ordinary | 2007/08 | All dates | 30% | 70.0p | 39.8p | 57.1p | 96.9p |
| Ordinary | 2008/09 | All dates | 30% | 70.0p | 39.8p | 57.1p | 96.9p |
| Ordinary | 2009/10 | All dates | 30% | 70.0p | 36.5p | 92.1p | 128.6p |
| Ordinary | 2010/11 | To 28/05/10 | 30% | 70.0p | 36.5p | 92.1p | 128.6p |
| Ordinary | 2010/11 | From 29/05/10 | 30% | 70.0p | 20.5p | 84.7p | 105.2p |
| Ordinary | 2011/12 | To 06/05/11 | 30% | 70.0p | 20.5p | 84.7p | 105.2p |
| Ordinary | 2011/12 | From 07/05/11 | 30% | 70.0p | 0.0p | 102.3p | 102.3p |
| Ordinary | 2012/13 | To 29/08/12 | 30% | 70.0p | 0.0p | 102.3p | 102.3p |
| Ordinary | 2012/13 | 30/08/12 | 30% | 70.0p | 0.0p | 98.9p | 98.9p |
| Ordinary | 2012/13 | 21/12/12 | 30% | 70.0p | 0.0p | 95.0p | 95.0p |
| C | All | All | 30% | 70.0p | 4.8p | 95.2p | 100.0p |
| D | All | All | 30% | 70.0p | 0.0p | 90.1p | 90.1p |
Latest financial information, including information on recent investment transactions, newsletters and electronic copies of Annual Reports, Half Yearly Financial Statements and Interim Management Statements can be found on the Investment Managers' website:
Dividend history, links to Company announcements and other financial information can be found on Downing's website at www.downing.co.uk. Shareholders can also check details of their shareholdings using Capita Registrar's website at www.capitaregistrars.com, by clicking on "Shareholders and employees".
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 (forms can be downloaded from www.capitaregistrars.com). Queries relating to dividends and requests for mandate forms should be directed to the Company's Registrar, Capita Registrars, by calling 0871 664 0324 (calls cost 10p per minute plus network extras), or by writing to them at The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU.
The Company's share prices can be found on various financial websites with the following TIDM/EPIC codes
| New Ordinary Shares | |
|---|---|
| TIDM/EPIC code | "PVN" |
| Latest share price (25 June 2013): | 94.0p per share |
The Company's shares can be bought and sold in the same way as any other quoted company on the London Stock Exchange via a stockbroker. Shareholders who invested in the Company in the 2008/2009 tax year and subsequent tax years should be aware that they need to hold their shares for a minimum period to retain the income tax relief they received on investment. Selling your shares may have tax consequences therefore you should contact your independent financial adviser if you have any queries.
The Company operates a policy of buying its own shares for cancellation as they become available. The Company is, however, unable to buy back shares direct from Shareholders, so you will need to use a stockbroker to sell your shares. If you are considering selling your or trading in the secondary market, please contact the Company's Corporate Broker, Panmure Gordon (UK) Limited ("Panmure").
Panmure is able to provide details of the price at which they will buy shares. Panmure can be contacted as follows:
Chris Lloyd 0207 886 2716 [email protected]
Paul Nolan 0207 886 2717 [email protected]
30 July 2013 Annual General Meeting October 2013 Announcement of half year results
We are aware of cases of shareholders in VCTs having received unsolicited telephone calls, e-mails or correspondence concerning investment matters. Please note that it is very unlikely that either the Company, Beringea or the Company registrar, Capita Registrars, would make unsolicited telephone calls, or send e-mails, to Shareholders. 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 the Company's share register by third parties to the maximum extent permissible under the Companies Act 2006. If you receive either an unexpected telephone call or correspondence about which you have concerns, please contact Grant Whitehouse, the Company Secretary, on 020 7416 7780.
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, Capita Registrars, under the signature of the registered holder.
Andrew Davison (Chairman) Grant Whitehouse Barry Dean 39 Earlham Street Malcolm Moss London WC2H 9LT all of 39 Earlham Street London WC2H 9LT
39 Earlham Street London WC2H 9LT London WC2H 9LT Tel: 020 7845 7820 Tel: 020 7845 7820 www.provenvcts.com
Beringea LLP 39 Earlham Street
Capita Registrars Downing LLP The Registry 10 Lower Grosvenor Place 34 Beckenham Road London SW1W 0EN Beckenham Tel: 020 7416 7780 Kent BR3 4TU www.downing.co.uk Tel: 0871 664 0324 (calls cost 10p per minute plus network extras) www.capitaregistrars.com
20 Farringdon Road London WC2N 6RH London EC1M 3AP
Panmure Gordon (UK) Limited Bank of Scotland One New Change 33 Old Broad Street London EC4M 9AF London SW1E 6RA
BDO LLP PricewaterhouseCoopers LLP Farringdon Place 1 Embankment Place
3911323 London Victoria Branch 119/121 Victoria Street London SW1E 6RA
59
NOTICE IS HEREBY GIVEN that the Annual General Meeting of ProVen VCT plc will be held in The Forest Room at The Hospital Club, 24 Endell Street, Covent Garden, London WC2H 9HQ at 11.00 a.m. on 30 July 2013 for the transaction of the following business:
As Ordinary Business, to consider and, if thought fit, pass the following resolutions which will be proposed as Ordinary Resolutions:
As Special Business, to consider and, if thought fit, pass the following resolutions:
THAT, the directors of the Company be and hereby are empowered pursuant to Sections 570(1) of the CA 2006 to allot or make offers to or agreements to allot equity securities (which expression shall have the meaning ascribed to it in Section 560(1) of the CA 2006) for cash pursuant to the authority given pursuant to resolution above, as if Section 561(1) of the CA 2006 (pre-emption rights) did not apply to such allotment, provided that the power provided by this resolution shall expire on the conclusion of the next annual general meeting of the Company held after the passing of this resolution (unless renewed, varied or revoked by the Company in general meeting) but so that this authority shall allow the Company to make before the expiry of this authority offers or agreements which would or might require equity securities to be allotted after such expiry.
and this power, unless previously varied, revoked or renewed, shall come to an end at the conclusion of the Annual General Meeting of the Company next following the passing of this resolution or, if earlier, on the expiry of 15 months from the passing of this resolution.
By order of the Board
Secretary Registered Office 39 Earlham Street London WC2H 9LT
Information regarding the Annual General Meeting, including the information required by section 311A of the Companies Act 2006, is available from www.downing.co.uk.
In either case, the revocation notice must be received by Beringea LLP before the Annual General Meeting or the holding of a poll subsequently thereto. If a member attempts to revoke his or her proxy appointment but the revocation is received after the time specified then, subject to Note (d) directly below, the proxy appointment will remain valid.
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