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2 Jul 2020 07:48
ProVen VCT plc: Annual Financial ReportProVen VCT plc
Annual Financial ReportYear ended 29 February 2020
ProVen VCT plc, managed by Beringea LLP, today announces the final results for the year ended 29 February 2020. These results were approved by the Board of Directors on 1 July 2020. You may, in due course, view the Annual Financial Report in full at www.provenvcts.co.uk. All other statutory information can also be found there.
Financial summary
| Ordinary Shares as at: | 29 February 2020Pence | 28 February 2019Pence |
| Net asset value per share | 70.1 | 82.2 |
| Dividends paid since launch | 68.25 | 63.75 |
| Total return (net asset value plus dividends paid since launch) | 138.35 | 145.95 |
| Year on year change in: | ||
| Net asset value per share (adjusted for dividends paid in the year) | (9.2%) | 10.3% |
Chairman’s StatementI present the Annual Report for Proven VCT plc (the “Company”) for the year ended 29 February 2020. This report focuses primarily on the year to 29 February but as Shareholders are all aware, subsequent to the year end, the Coronavirus pandemic occurred which had a significant impact on the economy as a whole and on the Company. The portfolio has been regularly reviewed in this time and a new NAV was released in March in advance of the share allotments in early April under the Company’s most recent offer for subscription.
Results for the yearOver the year, there was a decrease in Shareholder total return (net asset value (“NAV”) per share plus dividends) of 9.2% which was largely attributable to the decrease in valuation of five companies. The Company’s NAV per share fell from 82.2p at 28 February 2019 to 70.1p at 29 February 2020. This included a reduction of 4.5p in relation to dividend payments.
The total loss on ordinary activities for the year was £12.0 million, or 8.2p per share (2019: profit of £10.3 million, 10.1p per share), comprising a revenue loss of £501,000, or 0.2p per share, (2019: revenue loss of £660,000, 0.6p per share) and a capital loss of £11.5 million, or 8.0p per share (2019: profit of £11.0 million, 10.7p per share). This capital loss was largely caused by an aggregate decrease of £11.2 million in the valuation of five portfolio companies.
DividendsDuring the year ended 29 February 2020, the Company paid a final dividend of 2.5p per share in respect of the year ended 28 February 2019 on 19 July 2019 and an interim dividend of 2.0p per Ordinary Share was paid in respect of the year ended 29 February 2020 on 6 December 2019.
Your Board is proposing a final dividend for the year ended 29 February 2020 of 2.0p per share to be paid on 28 August 2020 to Shareholders on the register at 7 August 2020. With total tax-free dividends of 4.0p per share for the year ended 29 February 2020, this represents cash returned to Shareholders of 5% on the opening NAV per share at 1 March 2019 after deducting the prior year final dividend of 2.5p per share. Portfolio activity and valuationFollowing a period of several years during which a number of profitable disposals generated strong returns for Shareholders, the focus during the year has been on supporting the existing portfolio and adding new investments.
The Company invested a total of £10.9 million during the year. Six new companies were added to the portfolio, at a cost of £6.8 million. As is the nature of early stage investing, there is usually a delay before the benefit of the Company’s investment is reflected in the performance of the portfolio company. We would not, therefore, expect to recognise an increase in valuation of new investments for some time.
The Company also provided further investment, totaling £4.1 million, into seven of the companies which the Company has invested in during the last few years. Further details of all these investments are provided in the Investment Manager’s Review. The performance of the companies in the portfolio during the year has been mixed, as is to be expected of a relatively young portfolio of venture capital investments. Some companies saw increases in valuation off the back of strong trading, whereas others declined in value as a result of difficult trading as well as a reduction in comparable company valuation multiples. Overall, the portfolio decreased in value by £12.1 million (2019: increase of £213,000). Further information about key developments at existing portfolio companies is given in the Investment Manager’s Review.
It is important to remember that investment in venture capital should be considered as a long-term investment and returns should be measured over the medium term, not a single year.
Fundraising activitiesAs communicated in the interim statement, the combined offer for subscription with Proven Growth and Income VCT plc on 11 January 2019 to raise up to a total of £30 million per company, with an over-allotment facility of £10 million per company, was fully subscribed due to strong investor demand.
The Company launched a further combined offer for subscription with Proven Growth and Income VCT plc on 27 January 2020 to raise up to £10 million per company, with an over-allotment facility of £10 million per company, which the Board utilised in part in the amount of up to £5 million per company. The offer closed to new applications on 10 March 2020 with £14.2 million of gross proceeds for the Company.
Share buybacksThe Company has a policy of buying back shares that become available in the market at a discount of approximately 5% to the latest published net asset value, subject to the Company having sufficient liquidity. The Company retains Panmure Gordon to act as its corporate broker. Shareholders who are considering selling their shares may wish to contact Panmure Gordon, who will be able to provide details of the price at which the Company is buying shares.
During the year, the Company purchased 2,573,632 Ordinary Shares at an average price of 73.0p per share and for an aggregate consideration of £1,878,000. This represented 2.45% of the Company’s issued share capital at the start of the year. All shares were subsequently cancelled.
A special resolution to allow the Company to continue to make market purchases of its own shares of up to 14.99% of the share capital for cancellation will be proposed at the forthcoming Annual General Meeting (“AGM”).
Performance FeeThe Company’s performance incentive arrangements are an important aid for the Investment Manager, Beringea LLP (“Beringea” or the “Investment Manager”), in recruiting and retaining talented investment professionals against competition from other investment management companies. The performance fee structure is designed to align the interests of the Investment Manager with those of Shareholders and encourages capital growth as well as significant payments to Shareholders by means of tax-free dividends, as determined by the Directors.
In consideration of the Investment Manager’s performance in managing the Original Ordinary Share Portfolio (prior to 2012), a performance incentive fee linked to the profit achieved on the disposal of Think Limited is payable, known as the “Residual PIF”. An amount of £31,000 was paid to Beringea LLP in relation to the realised gain achieved on the disposal of Think Limited that completed during the year. There is no more Residual PIF payable by the fund.
Based on the NAV per share at 29 February 2020, no performance fee is accrued at the year-end as the performance hurdles had not been met and consequently there is no obligation for a performance fee.
The payment of a performance fee in future years and the amount thereof, if any, will be dependent on both the performance of the Company and the level of dividends paid to Shareholders, as determined by the Directors.
Annual General Meeting In planning our AGM we have sought to prioritise the safety and wellbeing of our Shareholders and employees. In light of the current Coronavirus ‘social distancing’ measures in England, and the legislative measures that have been proposed to allow companies to hold general meetings safely, the AGM will be held as a closed AGM and Shareholders will not be able to attend the AGM this year. The meeting will still comply with the minimum legal requirements for an AGM.
The closed AGM will be held at 2.00 p.m. on Monday 10 August 2020 via electronic means. Full details of the business to be conducted at the AGM are given in the formal Notice of Annual General Meeting which will be sent to Shareholders by their preferred method in due course. Resolution 12 proposes a change to the Company’s Articles of Association that will allow Shareholders to participate remotely in future AGMs. A copy of the proposed new articles of association is available on the website at https://www.provenvcts.co.uk/.
Shareholders are encouraged to submit their votes by proxy, as they will not be able to do so in person. In addition, we strongly recommend voting electronically at www.signalshares.com as your vote will automatically be counted. Given the current situation, with many people working from home and delays in the postal system, there is a risk that your vote may not be counted if you send a paper proxy.
We always welcome questions from our Shareholders at the AGM but this year, given the restrictions in place, please send any questions via email to info@beringea.co.uk by 5:00 pm on Monday 3 August 2020. Answers to the themes in the questions received will be addressed on the website at https://www.provenvcts.co.uk/. In addition the Company’s annual Shareholder event will proceed in the Autumn, albeit in a different format (further details below).
Shareholder eventThe Company’s annual Shareholder event provides an important opportunity for Shareholders to hear from the Investment Manager, discussing performance and investment activity, as well as receiving insights and updates from our portfolio companies.
For your Board and the Investment Manager, it is also a vital platform for gathering and discussing the views of our Shareholders. It is with this in mind that we are seeking to ensure that we can continue to deliver the Shareholder event in the current environment.
Therefore, in order to ensure the safety and wellbeing of our Shareholders, employees and portfolio companies, we will be hosting our first fully-digital Shareholder Day in the Autumn, using an online platform to deliver our usual insights into fund performance and market conditions, as well as providing an opportunity for you to ask questions of our investment team and hear from our portfolio companies.
We will soon distribute invitations to this digital event, as well as providing you with further information on the format and logistics for the day and we would encourage you to join us for the session.
OutlookThe Company has been able to remain active and productive in spite of a challenging economic, social and political backdrop. while contending with a global pandemic alongside the UK’s departure from the European union, the Company has managed to deliver a successful fundraise, provide important resources to support our portfolio and continue to harness a resilient pipeline of investment opportunities.
The economic and commercial turbulence created by the Coronavirus pandemic subsequent to the year end has inevitably had an impact on the Company. This resulted in a revaluation of the portfolio to take account of the context in which we are now operating and the announcement of a reduced net asset value in March. Nonetheless,I believe that the Company, through its Investment Manager, has effectively helped to guide our portfolio companies through the immediate shock of the outbreak and it is now working alongside these portfolio companies to help them prepare and adapt to a new trading environment. The Directors of the Company will continue to monitor the performance of the portfolio carefully and will announce a new net asset value per share if there is a material movement in valuations.
We warmly welcome our new Shareholders who joined the fund as part of the share offer that successfully closed in March. The funds raised provide the Company with additional resources to support our existing portfolio through any prolonged economic disruption, and ensure that it is able to harness a pipeline of investment opportunities that remains resilient. The Investment Manager has continued to do this following a successful transition to operating remotely during the lockdown, with recent additions to the portfolio and follow-on investments completed through an entirely digital process.
Despite the current challenging economic and social conditions, the Board remains confident that the Company has resilient long-term prospects.
Neal RansomeChairman
Investment Manager’s Review
IntroductionFollowing a number of successful realisations in the last couple of years, the focus this year was on investing into new portfolio companies as well as supporting the current portfolio. During the year, a total of £6.8 million was invested in six new portfolio companies and £4.1 million in seven existing portfolio companies.
At 29 February 2020, the Company’s venture capital portfolio comprised 47 investments at a cost of £74.5 million and a valuation of £67.6 million, an overall decrease of 9.3% on cost.
Subsequent to the year end the Company issued 20,351,020 Ordinary Shares for on aggregate consideration of £14.2 million under the combined offer for subscription with Proven Growth and Income VCT plc which launched on 27 January 2020. Share issue costs thereon amounted to £500,000. The Company remains well capitalised to take advantage of new investment opportunities and support existing portfolio companies where appropriate.
Investment activityNew investmentswe continued to experience a strong level of deal flow, with £6.8 million being invested during the year in six new portfolio companies.
The new investments in the year are:• Stylescape Limited (t/a EDITED) (£1.50m) – a SaaS provider of pricing and product intelligence for apparel and fashion retailers;• Papier Ltd (£1.35m) – an online stationery retailer, specialising in unique curated collections;• Our Path Ltd (t/a Second Nature) (£1.2m) – a provider of a digital healthcoaching app, with an evidence-based program for lifestyle change and diabetes prevention/weight loss;• Arctic Shores Limited (£1.05m) – a provider of data-driven psychometric tests combining neuroscience, artificial intelligence and game technology for more predictive and less biased employee recruitment;• Sannpa Limited (t/a Fnatic) (£1.029m) – an eSports team owner and lifestyle brand, with professional teams in the most popular games such as League of Legends, Dota 2 and Battlefield 4; and• Picasso Labs, Inc. (£0.63m) – an automated creative measurement platform that aims to enhance creativity through objectivity. Their technology is used globally by Fortune 500 brands like Unilever, Mondelez, and Heineken to measure creative efficiency, consistency, and impact across all creatives worldwide.
Follow-on investmentsThe Company has also been active in supporting the development of existing portfolio companies, making follow-on investments in the following seven companies during the year: Mycs (£1.05m), ContactEngine (£0.70m), Thread (£0.6m), Aistemos (£0.6m), POQ (£0.5m), Festicket (£0.38m) and MPB (£0.3m).
Investment disposalsAlthough the disposal of Think was completed in a prior year, contingent proceeds of £2.1 million were recognised in the current year. As reported in the interim statement, the Company’s shareholding in 7digital Group was sold in the year resulting in a loss against cost of £1.1 million. The loss was recognised in previous years so there was no impact to the NAV during the year.
Monmouth Holdings and Rapid Charge Grid repaid £1.1m and £1.05m of loans to the Company during the year. Skills Matter repaid £32,000 of its loan notes during the year.
Key developments at existing portfolio companiesSeveral companies have seen increases in value at the year end, owing to strong performance.
ContactEngine performed well in the year, securing several large new customer contracts. In November, it won the award for “Best use of IP” at the Sunday Times hiscox Tech Track 100 awards. ContactEngine closed a further funding round of £3.75 million in August 2019, to which the Company contributed £0.7 million. The value of the Company’s investment has increased to £3.0m on a cost of £1.3m.
DeepCrawl has grown its revenue significantly in the year. It also closed a $15 million funding round in December 2019, led by specialist US software investor, Five Elms. This has given DeepCrawl significant firepower to invest in accelerating its growth rate, particularly in the USA which already accounts for more than half of its revenue. This has led to an increase in value of the Company’s investment to £3.3m on a cost of £1.9m.
A number of portfolio companies have faced difficult trading conditions during the year and in particular five companies have had a combined decrease in valuation of £11.2m.
POQ Studio, InContext, SmartAssistant and My 1st Years have faced obstacles over the past twelve months and have struggled to hit their milestones and grow their revenues as originally budgeted. As a result, there has been a combined decrease in valuation of £9.6 million.
In addition, Blis has been impacted by the falling comparative multiples for advertising technologies used to value the business as well as slower than anticipated growth in revenues.
We continue to work closely with these companies to help them through these challenges.
Overall, the investment portfolio held at the year-end showed a decrease in value of £12.1 million (2019: increase of £0.2 million).
Post year-end developmentsThe global Coronavirus pandemic has impacted a wide range of companies. On 23 March this year a revised NAV of 65.1p per share was announced to reflect the immediate valuation impact on the Company’s portfolio. This compares to a NAV of 70.1p per share as at 29 February 2020.
Between 29 February 2020 and the date of this report, the Company issued 20.3 million Ordinary Shares for an aggregate consideration of £14.2 million under the combined offer for subscription with Proven Growth and Income VCT plc which launched on 27 January 2020. Share issue costs thereon amounted to £500,000.The Company has invested into the following new companies subsequent to the year end:• Commonplace (£1.5 million) - a B2B software company that has developed a digital community engagement platform enabling developers, local authorities, transport planners, infrastructure developers and other large project owners to engage with local communities; and• Luxury Promise (£1.35 million) - a re-sale platform for luxury women’s handbags and accessories
The Company also made follow on investments into Fnatic (£0.5 million), Thread (£0.42 million) and ContactEngine (£125,000).
In May 2020, the Company’s holding in SPC International Limited was sold. The Company received £544,000 in disposal proceeds.
OutlookThe short-term outlook for the UK economy will be dominated by the Coronavirus pandemic. We will continue to work closely with our portfolio companies to support them through the challenges this has created, including providing additional investment where this is appropriate. Fortunately, few of the investments in the portfolio are in sectors which have been severely affected by Coronavirus, such as travel, hospitality and traditional retailing. Therefore, despite the recent reductions in the valuations of some portfolio companies, we are cautiously optimistic about the prospects of the portfolio as a whole over the medium term.
Following the recent fundraising, the Company is now well placed to take advantage of new investment opportunities. While some companies have been badly affected by Coronavirus, others have seen minimal impact and certain sectors are likely to benefit from the acceleration of market trends arising from the Coronavirus. We are still seeing a strong flow of investment opportunities and will continue to invest selectively where we believe companies have excellent long-term prospects and the pricing of the investment is appropriate. The economic disruption caused by Coronavirus may result, over the next 12 months, in a softening of the lofty investment valuations we have seen recently. This should help to deliver strong returns from investments made during this period.
Despite the turbulent broader economic and political environment, we believe that there will still be opportunities for well-managed, agile, entrepreneurial companies to prosper. we believe the Company is well placed to take advantage of opportunities to invest in these businesses.
Beringea LLPInvestment Manager
Investment activity
Investment activity during the year is summarised as follows:
| Additions | Cost £’000 |
| Stylescape Limited (t/a EDITED) | 1,500 |
| Papier Ltd | 1,350 |
| Our Path Ltd (t/a Second Nature) | 1,200 |
| Arctic Shores Limited | 1,050 |
| Mycs Gmbh | 1,045 |
| Sannpa Limited (t/a Fnatic) | 1,029 |
| ContactEngine Limited | 704 |
| Picasso Labs, Inc. | 630 |
| Thread, Inc. | 600 |
| Aistemos Limited | 596 |
| POQ Studio Ltd | 500 |
| Festicket Ltd | 384 |
| MPB Group Limited | 300 |
| Total | 10,888 |
| Disposals | Cost | Market value at 01/03/19 | Disposal proceeds | Realised gain/ (loss) against cost | Realised gain/ (loss) during the year |
| £’000 | £000 | £’000 | £’000 | £’000 | |
| Think Limited | – | – | 2,113 | 2,113 | 2,113 |
| Monmouth Holdings Limited* | 1,100 | 1,100 | 1,100 | – | – |
| Rapid Charge Grid Limited* | 1,050 | 1,050 | 1,050 | – | – |
| MatsSoft Limited | – | – | 201 | 201 | 201 |
| MEL Topco Limited (t/a Maplin) | 2,218 | – | 98 | (2,120) | 98 |
| Skills Matter Limited* | 32 | – | 32 | – | 32 |
| Senselogix Limited | – | 175 | – | – | (175) |
| 7digital Group plc | 1,101 | 4 | 1 | (1,100) | (3) |
| Total | 5,501 | 2,329 | 4,595 | (906) | 2,266 |
* Loan note repayment
Of the disposals above, MatsSoft Limited was realised in the prior year but proceeds were recognised in the current period in excess of the amounts previously accrued.
The proceeds received in respect of MEL Topco Limited (t/a Maplin) reflect a further interim distribution in respect of the company’s administration. In addition, MEL Topco Limited (t/a Maplin), which had a cost of £2,218,000 and a market value of nil at 1 March 2019, was dissolved in December 2019. However, the loss of £2,218,000 had already been recognized as realised in a prior period.
Investment Portfolio
as at 29 February 2020
The following investments were held at 29 February 2020:
| Cost | Valuation | Valuation movement in year | % of portfolio by value | |
| £’000 | £’000 | £’000 | ||
| Venture capital investments (by value) | ||||
| Infinity Reliance Limited (t/a My 1st Years) | 4,731 | 5,148 | (1,073) | 5.0% |
| Litchfield Media Limited* | 3,580 | 4,069 | (130) | 3.9% |
| Mycs Gmbh | 4,595 | 3,890 | (705) | 3.7% |
| Monica Vinader Limited** | 534 | 3,814 | 497 | 3.7% |
| Festicket Ltd | 3,633 | 3,633 | – | 3.5% |
| Access Systems, Inc. | 3,500 | 3,500 | – | 3.4% |
| Zoovu Limited (formerly Smart Assistant) | 3,487 | 3,404 | (1,755) | 3.3% |
| Thread, Inc. | 3,351 | 3,354 | (29) | 3.2% |
| Written Byte Ltd (t/a DeepCrawl) | 1,888 | 3,293 | 1,018 | 3.2% |
| ContactEngine Limited | 1,266 | 2,960 | 594 | 2.8% |
| Rapid Charge Grid Limited* | 3,150 | 2,699 | (312) | 2.6% |
| MPB Group Limited | 2,511 | 2,665 | 154 | 2.6% |
| Exonar Limited | 2,496 | 2,171 | (325) | 2.1% |
| Poq Studio Ltd | 3,652 | 2,069 | (3,833) | 2.0% |
| Lupa Foods Limited (formerly Donatantonio Group Limited) | 1,078 | 1,935 | 180 | 1.9% |
| Response Tap Limited | 1,060 | 1,911 | 90 | 1.8% |
| Aistemos Limited | 1,819 | 1,821 | 2 | 1.8% |
| Stylescape Limited (t/a EDITED) | 1,500 | 1,500 | – | 1.4% |
| Disposable Cubicle Curtains Limited (t/a Hygenica)** | 2,871 | 1,382 | (812) | 1.3% |
| Papier Ltd | 1,350 | 1,350 | – | 1.3% |
| Blis Media Limited** | 841 | 1,202 | (1,655) | 1.2% |
| Our Path Ltd (t/a Second Nature) | 1,200 | 1,200 | – | 1.2% |
| Arctic Shores Limited | 1,050 | 1,050 | – | 1.0% |
| Sannpa Limited (t/a Fnatic) | 1,029 | 1,029 | – | 1.0% |
| Firefly Learning Limited | 1,202 | 943 | (310) | 0.9% |
| D30 holdings Ltd** | 956 | 926 | 22 | 0.9% |
| Honeycomb.Tv Limited | 900 | 878 | 6 | 0.8% |
| Sealskinz Holdings Limited** | 834 | 834 | (352) | 0.8% |
| Been There Done That Global Limited | 553 | 782 | 229 | 0.8% |
| Picasso Labs, Inc. | 630 | 630 | – | 0.6% |
| SPC International Limited | 58 | 546 | 66 | 0.5% |
| Cogora Group Limited** | 2,643 | 415 | (618) | 0.4% |
| Simplestream Limited** | 191 | 226 | 28 | 0.2% |
| Monmouth Holdings Limited | 400 | 208 | – | 0.2% |
| Netcall plc | 287 | 171 | 44 | 0.1% |
| 64,826 | 67,608 | (8,979) | 65.1% | |
| Other venture capital investments | 9,653 | 18 | (3,087) | 0% |
| Total venture capital investments | 74,479 | 67,626 | (12,066) | 65.1% |
| Cash at bank and in hand | 36,310 | 34.9% | ||
| Total investments | 103,936 | 100.0% |
Valuation movement in the year excludes the cost of investments made in the year.
Other venture capital investments at 29 February 2020 comprise:
Buckingham Gate Financial Services Limited, InContext Solutions, Inc., Inskin Media Limited, Lantum Limited, Macklin Holdings Limited*†, Senselogix Limited, Skills Matter Limited**, Utility Exchange Online Limited (t/a SwitchmyBusiness.com), Whistle Sports, Inc., TVPlayer Limited and Vigilant Applications Limited*.
* Non qualifying investment ** Partially non qualifying investment
With the exception of Netcall plc which is quoted on AIM, all venture capital investments are unquoted.
All venture capital investments are registered in England and Wales except for InContext Solutions, Inc., Picasso Labs Inc., Whistle Sports, Inc., Access Systems, Inc, Deepcrawl holdings, Inc. and Thread, Inc., which are Delaware registered corporations in the United States of America and Mycs Gmbh, which is registered in Germany.
Strategic Report
The Directors present the Strategic Report for the year ended 29 February 2020. The Board prepared this report in accordance with the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013.
Principal objectives and strategy
The Company’s investment objective is to achieve long-term returns greater than those available from investing in a portfolio of quoted companies, by investing in:
·a portfolio of carefully selected qualifying investments in small and medium sized unquoted companies with excellent growth prospects; and
·a portfolio of non-qualifying investments permitted for liquidity management purposes, within the conditions imposed on all VCTs, and to minimise the risk of each investment and the portfolio as a whole.
The Company 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 29 February 2020 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.
Business model
The business acts as an investment company, investing in a portfolio of carefully selected smaller companies. The Company operates as a Venture Capital Trust to ensure that its Shareholders can benefit from tax reliefs available and has outsourced the portfolio management and administration duties.
Business review and developments
The Company began the year with £71.1 million of venture capital investments and ended with £67.6 million spread over a portfolio of 47 companies. 41 of these investments with a value of £60.1 million were VCT qualifying (or part qualifying).
The loss on ordinary activities after taxation for the year was £12 million, comprising a revenue loss of £501,000 and a capital loss of £11.5 million. The capital loss is largely attributed to the decrease in valuation in five portfolio companies which have faced difficult trading conditions. The Ongoing Charges ratio (excluding performance fees and recoverable VAT) as calculated in line with the AIC methodology is an Alternative Performance Measure used by the Board to monitor expenses. The Ongoing Charges ratio in respect of the year ended 29 February 2020 was 2.55% (2019: 3.1%).
The Company’s business review and developments during the year are reviewed further within the Chairman’s Statement, Investment Manager’s Review and Review of Investments.
Investment policy
The Company’s investment policy covers several areas as follows:
Qualifying investments The Company seeks to make investments in VCT Qualifying companies with the following characteristics:
a strong, balanced and well-motivated management team with a proven track record of achievement;a defensible market position;good growth potential;an attractive entry price for the Company; anda clearly identified route for a profitable realisation within a three to four year period.The Company invests in companies at various stages of development, including those requiring capital for expansion, but not in start-ups or management buy-outs or businesses seeking to use funding to acquire other businesses. Investments are spread across a range of different sectors.
Other investments Funds not invested in qualifying investments may be invested in non-qualifying investments permitted for liquidity management purposes, which include cash, alternative investment funds (“AIFs”) and UCITS which may be redeemed on no more than 7 days’ notice, or ordinary shares or securities in a company that are acquired on a regulated market.
BorrowingsIt is not the Company’s intention to have any borrowings. The Company does, however, have the ability to borrow a maximum amount equal to the nominal capital of the Company and its distributable and undistributable reserves which, at 29 February 2020, was equal to £105.4 million (2019: £86.3 million). There are no plans for the Company to borrow at the current time.
Maximum exposuresNo investment will constitute more than 15% of the Company's portfolio by value at the time of investment.
Listing Rules
In accordance with the Listing Rules:
the Company may not invest more than 10%, in aggregate, of the value of the total assets of the Company at the time an investment is made in other listed closed-ended investment funds except listed closed-ended investment funds which have published investment policies which permit them to invest no more than 15% of their total assets in other listed closed-ended investment funds;the Company must not conduct any trading activity which is significant in the context of the Company; andthe Company must, at all times, invest and manage its assets in a way which is consistent with its objective of spreading investment risk and in accordance with its published investment policy set out in this announcement. This investment policy is in line with Chapter 15 of the Listing Rules and Part 6 Income Tax Act 2007.Venture capital trust regulations
The Company has engaged Philip Hare & Associates LLP to advise it on compliance with VCT requirements, including evaluation of investment opportunities as appropriate and regular review of the portfolio. Although Philip Hare & Associates LLP works closely with the Investment Manager, they report directly to the Board.
Compliance with the main VCT regulations as at 28 February 2020 and for the year then ended is summarised as follows:
| The Company holds at least 70 per cent. of its investments in qualifying companies (as defined by Part 6 of the Income Tax Act 2007) | Complied |
| At least 70 per cent. (in the case of funds raised after 5 April 2011) of the Company’s qualifying investments (by value) are held in “eligible shares” – (“eligible shares” generally being ordinary share capital) | Complied |
| At least 10 per cent. of each investment in a qualifying company is held in “eligible shares” (by cost at time of investment) | Complied |
| No investment in a company constitutes more than 15 per cent. of the Company’s portfolio (by value at time of investment) | Complied |
| The Company’s income for each financial year is derived wholly or mainly from shares and securities The Company distributes sufficient revenue dividends to ensure that not more than 15 per cent. of the income from shares and securities in any one year is retained | Complied Complied |
| The Company has not made a prohibited payment to Shareholders derived from an issue of shares since 6 April 2014 | Complied |
| No investment made by the Company causes an investee company to receive more than the permitted investment from State Aid sources (including from VCTs) | Complied |
| Since 18 November 2015, the Company has not made an investment in a company which exceeds the maximum permitted age requirement The funds invested by the Company in another company since 18 November 2015 have not been used to make a prohibited acquisition | Complied Complied |
| Since 6 April 2016, the Company has not made a prohibited non-qualifying investment. 1 As part of the Company’s disposal of Think Limited, the Company received shares in Atom Bank plc. HMRC has agreed to allow the Company a period of time to dispose of these shares. | Complied1 |
Investment management and administration feesBeringea 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 below. The investment management agreement is terminable by either party at any time by one year’s prior written notice. The total fees relating to this service amounted to £2,321,000 (2019: £7,659,000), comprising a management fee of £2,291,000 (2019: £2,045,000) and performance incentive fees as described below of £31,000 (2019: £5,614,000). At the year- end, an amount of £181,000 (2019: £5,592,000) was outstanding.
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 as Investment Manager remains in the best interests of Shareholders.
Throughout the year ended 29 February 2020 Beringea also provided administration services to the Company. In the year, total administration fees amount to £61,000 (2019: £61,000). An amount of £15,000 (2019: £15,000) remained outstanding at the year end.
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 at the end of the year. Any running costs in excess of this are borne by Beringea.
Beringea also received arrangement fees in respect of investments made by the Company and other VCTs managed by Beringea totalling £348,000 (2019: £361,000) and monitoring fees of £364,000 (2019: £506,000) during the year ended 29 February 2020. These fees are payable by the investee companies into which the Company invests and are not a direct liability or expense of the Company.
Performance incentive feesUnder the performance fee arrangements, the Investment Manager is entitled to receive a performance incentive fee in relation to each major fundraising (a “Respective Offer”) if, at the end of a financial year, the relevant Respective Offer Performance Value exceeds the relevant Respective Offer Hurdle. In this event the performance incentive fee per Respective Offer Share will be equal to 20 per cent of the amount by which each such Respective Offer Performance Value exceeds the relevant Respective Offer Initial Net Asset Value per Share, less the aggregate amount of any performance incentive fee per Respective Offer Share already paid in respect of that Respective Offer in relation to previous financial years starting aer 29 February 2012 (which shall not include Residual PIF).
The Respective Offer Performance Value in respect of the relevant financial year end is the sum of (i) the audited net asset value per Ordinary Share or Equivalent Ordinary Share for a Respective Offer at that date, (ii) Respective Offer Cumulative Dividends, (iii) all performance feesper Ordinary Share or Equivalent Ordinary Share paid by the shareholders of the Respective Offer in relation to financial years starting aer29 February 2012, and (iv) any Residual PIF Adjustment relating to that Respective Offer (whether relating to that or any previous financial year).
If at the end of a financial year the relevant Respective Offer Performance Value is less than or equal to the Respective Offer Hurdle, no performance fee will be payable on such Respective Offers in respect of that financial year.
The performance fee per Respective Offer Share payable for a financial year will be reduced, if necessary, to ensure that i) the cumulative performance fee per Respective Offer Share payable to the Investment Manager in respect of a Respective Offer does not exceed 20 per cent. of the relevant Respective Offer Cumulative Dividends; and ii) the audited net asset value per Ordinary Share or Equivalent Ordinary Share at the relevant financial year end plus the relevant Respective Offer Cumulative Dividends plus any Residual PIF Adjustment relating to that Respective Offer is at least equal to the relevant Respective Offer Hurdle.
Performance fees for the year ended 29 February 2020 amounted to £nil (2019: £5,447,000), of which £nil (2019: £5,447,000) was outstanding at the year-end.
Residual PIFIn consideration of the Manager’s performance in managing the Original Ordinary Share Portfolio (prior to 2012), 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). An amount equal to £31,000 was paid to Beringea LLP in relation to the realised gain achieved on the disposal of Think Limited that completed during the year. No amount remained outstanding at the year end.
Key performance indicatorsAt each Board meeting, the Directors consider a number of performance measures to assess the Company’s success in meeting its objective of delivering long term returns. The key performance indicators for the Company are compared against the results published by the Association of Investment Companies (“AIC”). The Board believes the Company’s key performance indicators are:
• Total return (net asset value plus dividends paid since launch);• Dividends paid and the dividend yield; and• Net asset value per share (adjusted for dividends paid in the year).
The total return is calculated by the net asset value per share plus the cumulative dividends paid to date. This is a performance measure of the fund and used to evaluate the total value generated for Shareholders.
The following table shows the total return, annual return shown as the net asset value per share, dividends paid per annum and the dividend yield.
| 29/02/2016 | 28/02/2017 | 28/02/2018 | 28/02/2019 | 29/02/2020 | |
| Total return | 120.7 | 132.8 | 135.7 | 145.95 | 138.35 |
| Net asset value per share (adjusted for dividends paid in the year)* | 4.8% | 12.0% | 2.7% | 10.3% | (9.2%) |
| Dividends paid per share | 5p | 6.5p | 9.5p | 27.75p | 4.5p |
| Dividend yield** | 5.0% | 6.5% | 8.9% | 27.8% | 5.5% |
* Calculated as the change in total return in the year divided by the opening net asset value.** Calculated as the total dividends paid in the year divided by the opening net asset value.
The Net Asset Value per share is defined as an Alternative Performance Measure and the Board considers it to be the primary measure of shareholder value.
The key performance indicators are discussed further in the Chairman’s Statement and the Investment Manager’s Report.
Principal risks and uncertaintiesThe 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 the notes 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, also faces a number of non-financial principal risks. A breach of the VCT Regulations could result in the loss of VCT status, the 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 Company invests in small and immature businesses and there is a risk that the performance of these individual businesses negatively impacts the performance of the Company. The Investment Manager follows a rigorous process in vetting and careful structuring of new investments and, after an investment is made, close monitoring of the businesses.
The Board reviews and agrees policies for managing each of these risks. The Directors receive reports annually from the Investment Manager on the compliance of systems to manage these risks, and place reliance on the Investment Manager to give updates in the intervening periods.
Save for the impact of the Coronavirus pandemic, particularly on performance and valuation of portfolio companies as well as potential risks such as future fundraising, the risks faced by the Company have remained unchanged since the beginning of the financial year.
Viability statementThe Board has assessed the Company’s prospects over the three year period to 28 February 2023. A three year period has been considered appropriate as it broadly aligns with the time frame during which the Investment Manager will be required to invest 80% of the funds from the most recent offer for subscription in qualifying investments.
In order to support this statement, the Board has carried out a robust assessment of the principal and emerging risks faced by the Company, as detailed above, including those risks associated with the Coronavirus pandemic and Brexit, and considered the availability of mitigating factors.
The Board considers that the primary risk faced by the Company is compliance with the VCT rules and although there are a number of mitigating factors such as a robust deal identification and diligence process, an experienced investment team and consultation with the Company’s VCT status adviser to ensure that investments made comply with the VCT rules, these factors cannot mitigate the risk that insufficient qualifying investments are identified to ensure ongoing compliance with the VCT rules.
Accordingly, the amount required to invest in qualifying holdings to maintain compliance with the VCT rules was a major consideration in the Board’s analysis. Together with the expected liabilities of the Company for the three years to 28 February 2023, the Board considered the forecast cash requirements against the expected cash position, taking into account a level of assumed investment realisations and investment income during the period. The Board considered scenario analysis with stress tests on the cash flow forecasts.
Based on the assessment of the above considerations on the cash flow forecasts, the Board has determined that the Company will be able to continue in operation, maintain compliance with the VCT rules and meet its liabilities as they fall due for the three years to 28 February 2023.
Section 172 StatementSection 172 of the Companies Act 2006 requires the Directors of the Company to act in a way that they consider, in good faith, will most likely promote the success of the Company for the benefit of the members as a whole. In doing so, the Directors should have regard (amongst other matters) to:• the likely consequences of any decision in the long term;• the interests of the Company’s employees;• the need to foster the Company’s business relationships with suppliers, customers and others;• the impact of the Company’s operations on the community and the environment;• the desirability of the Company maintaining a reputation for high standards of business conduct; and• the need to act fairly as between members of the Company.
The Board considers its significant stakeholder groups to be its Shareholders, its suppliers (including the Investment Manager to whom most executive functions are delegated) and its portfolio companies. The Company is an externally managed investment company with no employees and no customers in the traditional sense and, therefore, there is nothing to report in relation to these relationships. The Company takes a number of steps to understand the views of its key stakeholders and considers these, along with the matters set out above, in Board discussions and decision making.
ShareholdersThe Company’s Shareholders are key to the success of the Company and the Board engages and communicates with Shareholders by various means. The Company encourages all Shareholders to attend its annual Shareholder Day, which last year was held on 13 November 2019 and attended by around 250 Shareholders, and gives Shareholders the opportunity to ask questions of the Board and the Investment Manager and also hear from some of our portfolio companies. Given the Coronavirus pandemic, the Company is putting in place arrangements for the 2020 Shareholder Day to be held virtually so that our Shareholders will still be given the opportunity to engage with the Board and Investment Manager and hear from some of our new portfolio companies. Further details of the 2020 Shareholders Day can be found in the Chairman’s Statement.
The Board also encourages all Shareholders to vote on the resolutions at the Annual General Meeting. The Company’s Annual General Meeting, this year on 10 August 2020, is typically used as another opportunity to communicate with Shareholders. However, as detailed in the Chairman’s Statement, in light of the current Coronavirus ‘social distancing’ measures in England, the AGM will be run as a closed meeting and Shareholders will not be able to attend this year. However, Shareholders are still strongly encouraged to submit their votes by proxy and will also be able to submit questions via email to info@beringea.co.uk by 5:00 pm on Monday 3 August 2020. Answers to the themes in the questions received will be addressed on the website at https://www.provenvcts.co.uk/. As a result of the Shareholder events, together with other communications with Shareholders and advisors, the Company has received useful feedback which allows the Board to better understand the nature of stakeholder concerns. The Board works very closely with the Investment Manager in reviewing how stakeholder issues are handled, ensuring good governance and responsibility in managing the Company’s affairs. Ultimately, the Directors’ decisions are intended to achieve the Company’s principle objective to achieve long term returns for Shareholders greater than those available from investing in a portfolio of quoted companies. In addition, the Board has continued to maintain the existing arrangements for payments of dividends, dividend re-investment and buy-backs in order to give predictable income returns and liquidity to Shareholders when requested.
SuppliersThe Company’s suppliers, and in particular Beringea as Investment Manager, are the cornerstone of the Company’s business. There is regular contact with the Investment Manager and members of the Investment Manager’s senior management team attend all of the Company’s Board meetings. Since the outbreak of the Coronavirus pandemic, the Board has been in more frequent communication with the Investment Manager to ensure an appropriate and transparent response.
Portfolio CompaniesThe Investment Manager provides updates to the Board on the entire portfolio at least quarterly and this has happened more regularly with the outbreak of the Coronavirus pandemic. In addition to the Investment Manager’s usual monitoring of portfolio companies, in the weeks immediately following the start of the outbreak in Europe, the Investment Manager worked closely with the leadership teams of portfolio companies to ensure that they were prepared for the disruption caused by a global pandemic. The Investment Manager continues to work closely with management teams to ensure that they continue to evaluate and react accordingly to the evolving situation.
ENVIRONMENTAL, SOCIAL, HUMAN RIGHTS POLICY AND GREENHOUSE EMISSIONSThe Board seeks to conduct the Company’s affairs responsibly and maintain high standards in respect of ethical, environmental, governance and social issues. The Board recognises the requirement under section 414C of the Companies Act 2006 to detail information about social and community issues, employees and human rights; including any policies it has in relation to these matters and effectiveness of these policies. As an externally managed investment company with no employees, the Company has no formal policies in these matters and as such these requirements do not apply.
On a general note, the Board considers that the Company’s investment operations create employment, aid economic growth, generate tax revenues and produce wealth, thus benefiting the community and the economy more generally. Where appropriate, the investment proposals considered by the Investment Manager and the Board also include any relevant information on any social, employee, ethical or environmental matters relevant to that investment.
Whilst as a UK quoted company the VCT is required to report on its Greenhouse Gas (GHG) Emissions for any direct emissions, as it outsources all of its activities and does not have any physical assets, property, employees or operations, it is not responsible for any direct emissions.
Directors and senior managementThe Company had four non-executive Directors at the year end, three of whom are male and one of whom is female. The Company has no employees and the same was true of the previous year.
Directors’ remunerationIt is a requirement under Companies Act 2006 for Shareholders to approve the Directors’ remuneration policy every three years, or sooner if the Company wishes to make changes to the policy. The Directors’ remuneration policy was approved at the AGM of the Company on 11 July 2018 and no changes are proposed for the forthcoming year.
Future prospectsThe Company’s future prospects are set out in the Chairman’s Statement and Investment Manager’s Review.
Despite the economic and social disruption caused by the Coronavirus pandemic, 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 or with a presence in the United Kingdom, with a view to providing both capital growth and dividend income to Shareholders over the long term whilst maintaining VCT qualifying status.
By order of the Board
Beringea LLPCompany Secretary of ProVen VCT plc
Directors’ responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. They are also responsible for ensuring that the Annual Report and Accounts 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 thefinancial statements, the Directors are required to:
·select suitable accounting policies and then apply them consistently;
·make judgments and accounting estimates that are reasonable and prudent;
·state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;
·prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and
·prepare a directors’ report, a strategic report and directors’ remuneration report which comply with the Companies Act 2006.
The Board considers that the Annual Report and Accounts, taken as a whole, are fair, balanced and understandable and that they provide the information necessary for Shareholders to assess the Company’s performance, business model and strategy.
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. The maintenance and integrity of the Company’s website is the responsibility of the directors. 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.
Directors’ responsibilities pursuant to the Disclosure and Transparency Rule 4
Each of the Directors confirms that to the best of each person’s knowledge:
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 the Directors’ Report, Chairman’s Statement, Strategic Report, Investment Manager’s Review and Review of Investments include 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.Statement as to disclosure of information to the Auditor
The Directors in office at the date of the report have confirmed, as far as they are aware, that there is no relevant audit information of which the Auditor is unaware. Each of the Directors have 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.
Income Statement
for the year ended 29 February 2020
| Year ended 29 February 2020 | Year ended 28 February 2019 | ||||||
| Revenue | Capital | Total | Revenue | Capital | Total | ||
| £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | ||
| Income | 597 | – | 597 | 405 | – | 405 | |
| Realised gains on investments | – | 2,266 | 2,266 | – | 17,995 | 17,995 | |
| Unrealised (loss) / gain on investments | – | (12,066) | (12,066) | – | 213 | 213 | |
| 597 | (9,800) | (9,203) | 405 | 18,208 | 18,613 | ||
| Investment management fees | (573) | (1,718) | (2,291) | (511) | (1,534) | (2,045) | |
| Performance incentive fees | – | (31) | (31) | – | (5,614) | (5,614) | |
| Other expenses | (525) | (11) | (536) | (554) | (54) | (608) | |
| FX Translation | – | 30 | 30 | – | – | – | |
| (Loss)/return on ordinary activities before tax | (501) | (11,530) | (12,031) | (660) | 11,006 | 10,346 | |
| Tax on ordinary activities | - | - | - | - | - | - | |
| (Loss)/return attributable to equity shareholders | (501) | (11,530) | (12,031) | (660) | 11,006 | 10,346 | |
| Basic and diluted return/(loss) per share | (0.2p) | (8.0p) | (8.2p) | (0.6p) | 10.7p | 10.1p | |
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 Income Statement 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 Comprehensive Income has not been prepared as all gains and losses are recognised in the Income Statement in the current and prior year as shown.
Statement of Changes in Equity
for the year ended 29 February 2020
Year ended 29 February 2020
| Called up share capital £'000 | Capital redemption reserve £'000 | Special reserve £'000 | Share Premium reserve £'000 | Revaluation reserve £'000 | Capital reserve- realised £'000 | Revenue reserve £'000 | Total £'000 | |
| At 1 March 2019 | 10,504 | 102 | 60,820 | 3,367 | 6,799 | 6,412 | (1,668) | 86,336 |
| Comprehensive Income for the year: | ||||||||
| Management fees allocated as capital expenditure | – | – | – | – | – | (1,718) | – | (1,718) |
| Legal fees allocated as capital expense | – | – | – | – | – | (11) | – | (11) |
| Realised gain on investments | – | – | – | – | – | 2,266 | – | 2,266 |
| Unrealised loss on investments | – | – | – | – | (12,066) | – | – | (12,066) |
| Loss after tax | – | – | – | – | – | – | (501) | (501) |
| Performance fee | – | – | – | – | – | (31) | – | (31) |
| Total comprehensive loss | – | – | – | – | (12,066) | 506 | (501) | (12,061) |
| Contributions by and distributions to owners: | ||||||||
| Issue of new shares (includes DRIS) | 4,781 | – | (1,418) | 36,366 | – | – | – | 39,729 |
| Share buybacks | (257) | 257 | (1,888) | – | – | – | – | (1,888) |
| Dividends paid (includes DRIS) | – | – | (6,787) | – | – | – | – | (6,787) |
| Total contributions by and distributions to owners | 4,524 | 257 | (10,093) | 36,366 | – | – | – | 31,054 |
| Other movements: | ||||||||
| Transfer of previously unrealised gains now realised | – | – | – | – | 2,298 | (2,298) | – | – |
| FX translation | – | – | – | – | – | – | 30 | 30 |
| Total other movements | – | – | – | – | 2,298 | (2,298) | 30 | 30 |
| At 29 February 2020 | 15,028 | 359 | 50,727 | 39,733 | (2,969) | 4,620 | (2,139) | 105,359 |
Year ended 28 February 2019
| Called up share capital £'000 | Capital redemption reserve £'000 | Special reserve £'000 | Share Premium reserve £'000 | Revaluation reserve £'000 | Capital reserve- realised £'000 | Revenue reserve £'000 | Total £'000 | |
| At 1 March 2018 | 10,187 | 3,837 | 5,469 | 52,786 | 19,677 | 10,583 | (1,008) | 101,531 |
| Comprehensive Income for the year: | ||||||||
| Management fees allocated as capital expenditure | – | – | – | – | – | (1,534) | – | (1,534) |
| Legal fees allocated as capital expense | – | – | – | – | – | (54) | – | (54) |
| Realised gain on investments | – | – | – | – | – | 17,995 | – | 17,995 |
| Unrealised gain on investments | – | – | – | – | 213 | – | – | 213 |
| Loss after tax | – | – | – | – | – | – | (660) | (660) |
| Performance fee | – | – | – | – | – | (5,614) | – | (5,614) |
| Total comprehensive profit | – | – | – | – | 213 | 10,793 | (660) | 10,346 |
| Contributions by and distributions to owners: | ||||||||
| Issue of new shares (includes DRIS) | 490 | – | – | 3,683 | – | – | – | 4,173 |
| Share buybacks | (173) | 173 | (1,659) | – | – | – | – | (1,659) |
| Dividends paid (includes DRIS) | – | – | – | – | – | (28,055) | – | (28,055) |
| Total contributions by and distributions to owners | 317 | 173 | (1,659) | 3,683 | – | (28,055) | – | (25,541) |
| Other movements: | ||||||||
| Transfer of previously unrealised gains now realised | – | – | – | – | (13,091) | 13,091 | – | – |
| Cancellation of share premium account | – | – | 53,102 | (53,102) | – | – | – | – |
| Cancellation of capital redemption reserve | – | (3,908) | 3,908 | – | – | – | – | – |
| Total other movements | – | (3,908) | 57,010 | (53,102) | (13,091) | 13,091 | – | – |
| At 28 February 2019 | 10,504 | 102 | 60,820 | 3,367 | 6,799 | 6,412 | (1,668) | 86,336 |
The special reserve, capital reserve – realised and revenue reserve are all distributable reserves. Reserves available for distribution therefore amount to £53,208,000 (2019: £65,564,000).
During the year the Company repurchased 2,573,632 shares (2019: 1,729,240) with a nominal value of £257,363 (2019: £173,000). All shares were subsequently cancelled.
The composition of each of these reserves is explained below:
Called up share capital - The nominal value of shares issued, increased for subsequent share issues either via an offer for subscription or the Company’s dividend reinvestment scheme, or reduced due to shares bought back by the Company for cancellation.
Capital redemption reserve - The nominal value of shares bought back and cancelled.
Special reserve – A distributable reserve which is used to fund shares bought back by the Company for cancellation and share issue costs on shares issued under an Offer for Subscription. Dividends that are classified as capital may be paid from this reserve.
Share premium reserve - This reserve contains the excess of gross proceeds over the nominal value of shares allotted under offers for subscription and the Company’s dividend reinvestment scheme, to the extent that it has not been cancelled.
Revaluation reserve - Increases and decreases in the valuation of investments held at the year-end are accounted for in this reserve, except to the extent that the diminution is deemed permanent.
In accordance with stating all investments at fair value through profit and loss, all such movements through both revaluation and capital reserve – realised are shown within the Income Statement for the year.
Capital reserve – realised - The following are accounted for in this reserve:
Gains and losses on realisation of investments;Permanent diminution in value of investments;Transaction costs incurred in the acquisition of investments;75% of the investment manager’s fee expense and 100% of any performance incentive fee payable; andOther capital expenses and charges.Dividends that are classified as capital may be paid from this reserve.
Revenue reserve - Income and expenses that are revenue in nature are accounted for in this reserve together with the related tax effect, as well as dividends paid that are classified as revenue in nature.
Statement of Financial Position
| as at 29 February 2020 | 29 February 2020 | 28 February 2019 | |
| Total | Total | ||
| £’000 | £’000 | ||
| Fixed assets | |||
| Investments | 67,626 | 71,133 | |
| Current assets | |||
| Debtors | 2,355 | 1,478 | |
| Cash at bank and in hand | 36,310 | 19,897 | |
| 38,665 | 21,375 | ||
| Creditors: amounts falling due within one year | (932) | (6,172) | |
| Net current assets | 37,733 | 15,203 | |
| Total assets less current liabilities | 105,359 | 86,336 | |
| Capital and reserves | |||
| Called up share capital | 15,028 | 10,504 | |
| Capital redemption reserve | 359 | 102 | |
| Special reserve | 50,727 | 60,820 | |
| Share premium reserve | 39,733 | 3,367 | |
| Revaluation reserve | (2,969) | 6,799 | |
| Capital reserve – realised | 4,620 | 6,412 | |
| Revenue reserve | (2,139) | (1,668) | |
| Total equity shareholders’ funds | 105,359 | 86,336 | |
| Basic and diluted net asset value per share | 70.1p | 82.2p |
Statement of Cash Flows
for the year ended 29 February 2020
| Year ended 29 February 2020 | Year ended 28 February 2019 | ||
| Total | Total | ||
| £’000 | £’000 | ||
| (Loss)/return on ordinary activities before taxation | (12,031) | 10,346 | |
| Loss/(Gain) on investments | 9,800 | (18,208) | |
| Increase in prepayments, accrued income and other debtors | (92) | (98) | |
| (Decrease)/Increase in accruals and other creditors | (5,388) | 4,376 | |
| Net cash used in operating activities | (7,711) | (3,584) | |
| Cash flows from investing activities | |||
| Purchase of investments | (10,888) | (23,468) | |
| Sale of investments | 3,810 | 43,578 | |
| Net cash from investing activities | (7,078) | 20,110 | |
| Cash flows from financing activities | |||
| Proceeds from share issues | 39,999 | – | |
| Share issue costs | (1,418) | – | |
| Purchase of own shares | (1,740) | (1,417) | |
| Equity dividends paid | (5,639) | (23,883) | |
| Net cash used in financing | 31,202 | (25,300) | |
| Increase/(Decrease) in cash and cash equivalents | 16,413 | (8,774) | |
| Cash at beginning of year | 19,897 | 28,671 | |
| Cash at end of year | 36,310 | 19,897 |
Net cash used in operating activities’ includes interest received of £594,000 (2019: £405,000) and dividends received of £3,000 (2019: £nil). No interest was paid during the period.
Notes to the Announcement
for the year ended 29 February 2020
1. Accounting policies
Basis of preparation
The Company has prepared its financial statements under Financial Reporting Standard 102 (“FRS102”) and in accordance with the Statement of Recommended Practice ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ (the “SORP”) issued by the Association of Investment Companies (“AIC”), which was revised in December 2018.
The financial statements are prepared under the historical cost convention except for the revaluation of certain financial instruments measured at fair value.
The following accounting policies have been applied consistently throughout the period.
Going concern
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.
Presentation of Income Statement
In order to better reflect the activities of an investment company and, in accordance with guidance issued by the AIC, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The revenue return attributable to equity Shareholders 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.
Investments
Investments, including equity and loan stock, are recognised at their trade date and measured at “fair value through profit or loss” due to investments being managed and performance evaluated on a fair value basis. A financial asset is designated within this category if it is both acquired and managed, with a view to selling after a period of time, in accordance with the Company’s documented investment policy. The fair value of an investment upon acquisition is deemed to be cost. Thereafter investments are measured at fair value in accordance with International Private Equity and Venture Capital Valuation Guidelines (“IPEV Guidelines”) issued in December 2018, together with sections 11 and 12 of FRS102.
Publicly traded investments are measured using bid prices in accordance with the IPEV Guidelines.
Key judgements
The valuation methodologies used by the Directors for estimating the fair value of unquoted investments are as follows:• where a company is in the early stage of development, the estimate of fair value is based on market data and assumptions as to the potential outcomes, benchmarked against alternative valuation methodologies during this time;• where a company is well established aer an appropriate period, the investment may be valued by applying a suitable earnings or revenue multiple to that company’s maintainable earnings or revenue. The multiple used is based on comparable listed companies or a sector but discounted to reflect factors such as the different sizes of the comparable businesses, different growth rates and the lack of marketability of unquoted shares;• where a value is indicated by a material arm’s-length transaction by a third party in the shares of the company the valuation will normally be based on this;• where alternative methods of valuation, such as net assets of the business, are more appropriate then such methods may be used; and• where repayment of the equity is not probable, redemption premiums will be recognised.
The methodology applied takes account of the nature, facts and circumstances of the individual investment and uses reasonable data, market inputs, assumptions and estimates in order to ascertain fair value. Methodologies are applied consistently from year to year except where a change results in a better estimate of fair value.Where an investee company has gone into receivership or liquidation, or the loss in value below cost 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.
All investee companies are held as part of an investment portfolio and measured at fair value. Therefore, it is not the policy for investee companies to be consolidated and any gains or losses arising from changes in fair value are included in the Income Statement for the period as a capital item.
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.
Investments are derecognised when the contractual rights to the cash flows from the asset expire or the Company transfers the asset and substantially all the risks and rewards of ownership of the asset to another entity.
Key estimatesThe key estimates involved in determining the fair value of a company can include:• identifying a relevant basket of market comparables;• deducing the discount to take on those market comparables;• determining reoccurring revenue;• determining reoccurring earnings; or• identifying surplus cash.
Fair valueFair value is defined as the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction. The Company has categorised its financial instruments that are measured subsequent to initial recognition at fair value, using the fair value hierarchy as follows:
Level 1: The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable (i.e., developed using market data) for the asset or liability, either directly or indirectly.
Level 3: Inputs are unobservable (i.e., for which market data is unavailable) for the asset or liability.
Income Dividend income from investments is recognised when the shareholders’ rights to receive payment has been established, normally the ex-dividend date.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable and only where there is reasonable certainty of collection 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. A provision is made for any fixed income not expected to be received.
ExpensesAll expenses are accounted for on an accruals basis. In respect of the analysis between revenue and capital items presented within the Income Statement, all expenses have been presented as revenue items except as follows:
expenses which are incidental to the acquisition of an investment are deducted from the Capital Account;expenses which are incidental to the disposal of an investment are deducted from the disposal proceeds of the investment;expenses are split and presented partly as capital items where a connection with the maintenance or enhancement of the value of the investments held can be demonstrated. Accordingly, the investment management fee has been allocated 25% to revenue and 75% to capital in order to reflect the Directors’ expected long-term view of the nature of the investment returns of the Company; andperformance incentive fees are treated as a capital item.TaxationThe 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.
Share issue costs
Expenses in relation to share issues are deducted from the Special Reserve.
Cash
Cash comprises cash on hand and demand deposits.
Debtors
Short term debtors are initially measured at transaction price. Subsequent remeasurement deducts any impairment from the transaction price.
CreditorsShort term trade creditors are initially and subsequently measured at the transaction price.
2. Basic and diluted return per share
| Year ended 29 February 2020 | Year ended 28 February 2019 | |
| Revenue (loss)/ return per share based on: | ||
| Net (loss)/ revenue after taxation (£’000) | (501) | (660) |
| Weighted average number of shares in issue | 145,634,014 | 102,494,641 |
| Pence per share | (0.2) | (0.6) |
| Capital return per share based on: | ||
| Net capital gain for the financial year (£‘000) | (11,530) | 11,006 |
| Weighted average number of shares in issue | 145,634,014 | 102,494,641 |
| Pence per share | (8.0) | 10.7 |
| Total return per share based on: | ||
| Total return for the financial year (£‘000) | (12,031) | 10,346 |
| Weighted average number of shares in issue | 145,634,014 | 102,494,641 |
| Pence per share | (8.2) | 10.1 |
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.
3. Basic and diluted net asset value per share
| 2020 | 2019 | ||||||||||
| Shares in Issue | Net asset value | Net asset value | |||||||||
| 2020 | 2019 | pence per share | £’000 | pence per share | £’000 | ||||||
| Ordinary Shares | 150,278,338 | 105,041,530 | 70.1p | 105,359 | 82.2p | 86,336 | |||||
As the Company has not issued any convertible securities or share options, there is no dilutive effect on net asset value per share. The net asset value per share disclosed therefore represents both basic and diluted net asset value per share.
4. Principal risks and management objectives
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:
Market risks;Credit risk; andLiquidity risk.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:
Market risks
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 Investment Manager monitors investments through regular contact with the management of investee companies, regular review of management accounts and other financial information and attendance at investee company board meetings. This enables the Investment 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; andInterest rate risk.Market price risk
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 29 February 2020, the AIM-quoted portfolio was valued at £171,000 (2019: £130,000).
The Company’s sensitivity to fluctuations in the share prices of its AIM-quoted investments is summarised below. A 20% movement in the share price of all of the AIM-quoted investments held by the Company would have an effect as follows:
| 20% movement in AIM-quoted investments | 2020 | 2019 | ||||
| Impact on net assets | Impact on NAV per share | Impact on net assets | Impact on NAV per share | |||
| £’000 | pence | £’000 | Pence | |||
| AIM-quoted investments | 34 | 0.0p | 26 | 0.0p | ||
At 29 February 2020, the unquoted portfolio was valued at £67,455,000 (2019: £71,003,000).
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 20% movement in the valuations of all of the unquoted investments held by the Company would have an effect as follows:
| 20% movement in unquoted investment valuations | 2020 | 2019 | ||||
| Impact on net assets | Impact on NAV per share | Impact on net assets | Impact on NAV per share | |||
| £’000 | Pence | £’000 | Pence | |||
| Unquoted investments | 13,491 | 9.0p | 14,200 | 13.6p | ||
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 20%. Shareholders should note that equal correlation between these sub-categories is unlikely to be the case in reality, particularly in the case of loan stock instruments. Where share prices are falling, the equity instrument could fall in value before the loan stock instrument.
Interest rate risk
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. Investments in loan stock attract interest predominately at fixed rates. A summary of the interest rate profile of the Company’s financial instruments is shown below.
There are three categories in respect of interest which are attributable to the financial instruments held by the Company as follows:
“Fixed rate” assets represent investments with predetermined yield targets and comprise certain loan note investments. “Floating rate” assets predominantly bear interest at rates linked to Bank of England base rate or LIBOR and comprise cash at bank and certain loan note investments.“No interest rate” assets do not attract interest and comprise equity investments, certain loan note investments, loans and receivables (excluding cash at bank) and other financial liabilities.| Average | Average period | 2020 | 2019 | |
| interest rate | until maturity | £’000 | £’000 | |
| Fixed rate | 6.8% | 417days | 9,349 | 12,672 |
| Floating rate | 0.3% | 0 days | 36,494 | 20,133 |
| No interest rate | 59,516 | 58,531 | ||
| 105,359 | 86,336 |
The Company monitors the level of income received from fixed, floating and non-interest bearing 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 £365,000 (2019: £201,000). Given the low level of interest rates through the year, a further decrease is not considered likely.
Credit risk
Credit risk is the risk that a counterparty to a financial instrument is unable to discharge a commitment to the Company made under that instrument. The Company is exposed to credit risk through its investments in 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:
| 2020 | 2019 | |
| £’000 | £’000 | |
| Cash and cash equivalents | 36,310 | 19,897 |
| Interest, dividends and other receivables | 542 | 580 |
| 36,852 | 20,477 |
The management of credit risk associated with interest, dividends and other receivables is covered within the investment management procedures.Cash is mainly held by the Royal Bank of Scotland plc, rated BBB+ and A+ by Standard and Poor’s and Fitch, respectively, and is 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
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 relative to cash balances (£1 million relative to cash balances of £36.3 million at 29 February 2020) and has no borrowings.
The Company always holds sufficient levels of funds as cash 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 loan stock assets if it were required to do so.
The carrying value of loan stock investments (as opposed to the contractual cash flows) held at 29 February 2020, which is analysed by expected maturity date, is as follows:
| As at 29 February 2020 | Not later | Between | Between | Between | More | |
| than 1 | 1 and 2 | 2 and 3 | 3 and 5 | than 5 | ||
| Year | Years | Years | years | years | Total | |
| £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | |
| Fully performing loan stock | 7,178 | – | – | 732 | 384 | 8,294 |
| Past due loan stock | – | – | – | – | 1,169 | 1,169 |
| 7,178 | – | – | 732 | 1,553 | 9,463 | |
| As at 28 February 2019 | ||||||
| Fully performing loan stock | 1,872 | 9,334 | – | 678 | – | 11,884 |
| Past due loan stock | – | – | – | 1,024 | – | 1,024 |
| 1,872 | 9,334 | – | 1,702 | – | 12,908 |
Of the loan stock classified as “past due” above, the full amount relates to the principal of loan notes where the principal has passed its maturity date.
Fair Value of Financial Instruments
Fair value measurements recognised in the balance sheet
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:
Level 1 Reflects financial instruments quoted in an active market.Level 2 Reflects financial instruments that have been valued using inputs, other than quoted prices, that are observable.Level 3 Reflects financial instruments that have been valued using valuation techniques with unobservable inputs.
| 2020 | 2019 | ||||||||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||
| £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | |||||||
| AIM quoted | 171 | – | – | 171 | 130 | – | – | 130 | |||||
| Loan notes | – | – | 9,463 | 9,463 | – | – | 12,908 | 12,908 | |||||
| Unquoted investments | – | – | 57,992 | 57,992 | – | – | 58,095 | 58,095 | |||||
| 171 | – | 67,455 | 67,626 | 130 | – | 71,003 | 71,133 | ||||||
There have been no movements between levels during the financial year to 29 February 2020.
Reconciliation of fair value for Level 3 financial instruments held at the year-end:
| Loan Notes | Unquoted Equity | Total | |||
| £’000 | £’000 | £’000 | |||
| Balance at 1 March 2019 | 12,908 | 58,095 | 71,003 | ||
| Movements in the Income Statement: | |||||
| Gains in the Income Statement | (1,679) | (8,162) | (9,841) | ||
| Purchases at cost | 384 | 10,504 | 10,888 | ||
| Sales proceeds | (2,150) | (2,445) | (4,595) | ||
| Balance at 29 February 2020 | 9,463 | 57,992 | 67,455 |
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.
5. Post balance sheet eventsBetween 29 February 2020 and the date of this report, the Company issued 20,351,020 Ordinary Shares for an aggregate consideration of £14.2 million under the combined offer for subscription with ProVen Growth and Income VCT plc which launched on 27 January 2020. Share issue costs thereon amounted to £500,000.
In March 2020, the Company invested in two pre-existing portfolio companies. £772,000 was invested in Fnatic and £421,000 in Thread. In the same month, an investment was also made in Commonplace (£1.5m), an online community consultation platform. Subsequent to this, £1.35m was invested in April in Luxury Promise, the leading marketplace to buy, sell and swap pre loved luxury goods. In June, the Company invested £125,000 in ContactEngine, a pre-existing portfolio company.
In May 2020, the Company’s holding in SPC International Limited was sold. The Company received £544,000 in disposal proceeds.
Save for the impact of the Coronavirus pandemic, particularly on performance and valuation of portfolio companies as well as potential risks such as future fundraising, the risks faced by the Company have remained unchanged since the beginning of the financial year.
Announcement based on audited accountsThe financial information set out in this announcement does not constitute the Company's statutory financial statements in accordance with section 434 Companies Act 2006 for the year ended 29 February 2020, but has been extracted from the statutory financial statements for the year ended 29 February 2020, which were approved by the Board of Directors on 1 July 2020 and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The Independent Auditor's Report on those financial statements was unqualified and did not contain any emphasis of matter nor statements under s 498(2) and (3) of the Companies Act 2006.
The statutory accounts for the year ended 28 February 2019 have been delivered to the Registrar of Companies and received an Independent Auditors report which was unqualified and did not contain any emphasis of matter nor statements under S498(2) and (3) of the Companies Act 2006.
A copy of the full annual report and financial statements for the year ended 29 February 2020 will be made available to Shareholders shortly. Copies will be available for download from www.provenvcts.co.uk
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