ProVen VCT plc
Annual Report & Accounts
For the year ended 28 February 2023
Managed by
Luke Boase &
Emma Heal
FOUNDER & MD
LUCKY SAINT
Annual Report & Accounts 2023
2
Contents
3 Fund Overview
4 Chair’s Statement
8 Investment Manager’s Review
12 Investment Activity
14 Investment Portfolio and Review of Investments
21 ESG Report
23 Board of Directors
24 Strategic Report
36 Directors’ Report
40 Statement of Corporate Governance
46 Directors’ Remuneration Report
50 Independent Auditor’s Report
58 Income Statement
59 Statement of Changes in Equity
62 Statement of Financial Position
63 Statement of Cash Flows
64 Notes to the Accounts
78 Shareholder Information
79 Company Information
80 Notice of Annual General Meeting
Annual Report & Accounts 2023
Fund Overview
* Key Performance Indicator (see page 28)
† Alternative Performance Measures (see page 28)
Ordinary Shares as at: 28 February 2023 28 February 2022
Net asset value per Ordinary Share 65.5p 76.7p
Dividends paid since launch* 80.75p 75.25p
Total return (net asset value plus dividends
paid since launch)*†
146.25p 151.95p
Year on year change in:
Net asset value per Ordinary Share (adjusted
for dividends paid in the year)*†
(7.4)% 7.2%
Dividends:
Dividends paid and payable in respect of year 3.75p 5.25p
Dividend yield* 5.1% 7.2%
3
Chair’s Statement
I am pleased to present the Annual Report for ProVen VCT plc (the “Company”) for the year
ended 28 February 2023. The financial year under review was impacted by many
macroeconomic and geopolitical challenges. Despite this backdrop, the Company delivered
several profitable exits. However, the overall portfolio valuation suffered owing to the significant
market volatility, with the valuation of three companies being fully written down in the period.
This is reflected in a negative total return (net asset value (“NAV”) per share plus dividends) for
the year to 28 February 2023.
Results for the Year
For the year, there was a negative total return per share of
7.4%, which was largely attributable to three significant
realised losses in the period, namely MYCS, Festicket and
Thread, which together accounted for 5.7% of this loss.
The loss on ordinary activities for the year was £13.8 million,
or 5.9p per share (2022: profit of £10.6 million, or 5.7p per
share), comprising a revenue loss of £1.1 million, or 0.4p per
share (2022: revenue loss of £1.3 million, or 0.7p per share)
and a capital loss of £12.7 million, or 5.5p per share (2022:
profit of £11.9 million, or 6.4p per share). This capital loss was
predominantly driven by realised and unrealised losses in the
portfolio of £10.1 million and £0.2 million respectively. A
breakdown of portfolio additions, disposals and valuation
movements can be found in the Investment Manager’s
Review on pages 8 to 11 of this Report.
Dividends
During the year ended 28 February 2023, the Company paid
final and special dividends of 2.25p and 1.5p per share
respectively on 5 August 2022 to Shareholders on the
register at 15 July 2022. These dividends were paid in
respect of the year ended 28 February 2022. The Company
also paid an interim dividend in respect of the year ended
28 February 2023 of 1.75p per share on 2 December 2022 to
Shareholders on the register at 11 November 2022.
Your Board is proposing a final dividend for the year ended
28 February 2023 of 2.0p per share to be paid on 4 August
2023 to Shareholders on the register on 7 July 2023. The
payment of this dividend will result in an equivalent reduction
in the Company’s NAV per share.
The total tax-free dividends of 3.75p per share for the year
ended 28 February 2023 represents a cash return to
Shareholders of 5.1% on the opening NAV per share at
1 March 2022, after deducting the prior year’s final and
special dividends of 3.75p per share in total.
I would like to take the opportunity to remind Shareholders
that your Company operates a Dividend Reinvestment
Scheme (“DRIS”). The DRIS provides Shareholders with the
opportunity to reinvest their cash dividends into new shares
in the Company at the latest published NAV per share. New
shares allotted via the DRIS attract the same tax reliefs as
shares purchased through an offer for subscription.
Shareholders who would like to join the scheme for any future
dividends can do so by following the instructions set out on
page 78 or by contacting the Investment Manager at
info@beringea.co.uk
.
Portfolio Activity and Valuation
The Company invested a total of £22.9 million in the year
(2022: £29.0 million), with six new companies added to the
portfolio at a cost of £16.7 million, and follow-on investments
totalling £6.2 million in nine existing portfolio companies. This
active year of investing has provided further diversification to
your Company’s investment portfolio and it is pleasing to
note that several of the new additions have already shown
strong commercial performance since investment, for
example, Lucky Saint and Dash. These additions to the
portfolio are discussed in more detail in the Investment
Manager’s Review.
The Company also saw strong exit activity within the portfolio,
with the partial realisation of Zoovu completing at the
beginning of the year, followed by the full realisations of Blis,
Sealskinz and Firefly. These companies provided a combined
profit against initial cost of £14.5 million. After the year end,
two further profitable exits occurred, from Monica Vinader
and Aistemos.
The financial year began against a backdrop of economic
turbulence due to the invasion of Ukraine by Russia, which
set in motion a series of macroeconomic challenges.
International supply chains, which had only recently shown
signs of recovery following the COVID pandemic, faced huge
disruption, affecting both businesses and consumers. In
addition, inflation increased to levels not seen for decades,
caused primarily by a surge in energy prices. Interest rates
increased globally in response and there was a general
tightening of liquidity in both debt and equity markets.
4
Annual Report & Accounts 2023
Annual Report & Accounts 2023
T
hese challenges had a significant impact across the
portfolio, most notably with three write-downs that have been
treated as realised losses in these accounts:
• MYCS was adversely impacted by loan providers
introducing new lending caps in March 2022, coupled
with a sharp decline in consumer confidence. These
factors compelled the company to merge with another
private equity-backed business. As part of this
transaction, the Company disposed of its interest in
MYCS for a nominal amount, with potential for some
proceeds in the future should the buyer secure a sale for
the enlarged group;
• Festicket, an online platform which packaged festival
tickets together with travel, accommodation and
add-ons to provide complete festival experiences, was
badly impacted by the COVID pandemic, leaving the
company with a weakened balance sheet. An erratic
reopening of the festival market in 2021, followed by the
failure of several festivals in 2022, resulted in highly
challenging cash-flow dynamics for Festicket. This led to
the company entering administration during the year;
and
• Thread, a menswear e-commerce site, had been
pursuing a high growth strategy, including an entry into
the US market, which had delivered a significant
increase in revenues since the Company’s investment.
However, increased risk-aversion among investors
resulted in Thread being unable to raise further capital to
fund its high growth strategy, which led to the business
entering administration during the year.
The profits and write-downs referred to above reflect the
early-stage, high-growth profile of the investments in your
Company’s portfolio. Early-stage businesses carry inherent
risk, meaning that some will be very successful, and some
will fail. When substantial write-downs such as these do
occur, your Board conducts extensive reviews with the
Investment Manager to understand whether there are any
learning points to be applied to future investment activities.
The risk of individual investments is balanced by your
Company’s diversified portfolio of more than fifty companies.
Historically, the successes in the Company’s portfolio have
significantly outweighed the losses over the medium term,
although past performance is not a guide to the future.
Elsewhere, the unrealised portfolio showed resilience in the
year with a marginal fall in value of £0.2 million. Despite
significant falls in market comparables (used as a basis for
valuations) across all sectors applying downward pressure on
valuations, performance across most portfolio companies has
generally been satisfactory, resulting in a relatively flat year-on-
y
ear movement in the value of portfolio companies still held at
the year end.
Further information about key developments at existing
portfolio companies is given in the Investment Manager’s
Review on pages 8 to 11 of this Report.
Fundraising Activities
A combined offer for subscription with ProVen Growth and
Income VCT plc launched on 11 January 2022 to raise up to a
total of £20 million per company, with an over-allotment
facility of up to a further £20 million per company. It closed to
further applications on 12 August 2022 with £37.3 million of
gross proceeds raised for the Company.
The Company launched a further combined offer for
subscription with ProVen Growth and Income VCT plc on
19 October 2022 to raise up to £20 million per company, with
an over-allotment facility of £20 million per company. As at
the date of the Annual Report, the current offer has raised
£10.9 million of gross proceeds for the Company and has
been extended to 28 July 2023 (or such earlier date as the
offer is fully subscribed).
Share Buybacks
The 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
should contact Panmure Gordon who will be able to provide
details of the price at which the Company is buying shares.
Contact details are on page 78 of this Report.
During the year, the Company bought back 3,072,254
Ordinary Shares at an average price of 67.0p per share and
for an aggregate consideration of £2,059,000. This
represented 1.6% 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 Fee
The Company’s performance incentive arrangements are an
important aid for the Investment Manager in recruiting and
retaining talented investment professionals against
5
Chair’s Statement (cont.)
c
ompetition from other investment management companies.
The performance fee structure is designed to align the
interests of the Investment Manager with those of
S
hareholders and encourages capital growth as well as
significant payments to Shareholders by means of tax-free
dividends, as determined by the Directors. These
a
rrangements are set out in more detail in the Strategic
Report on page 27.
However, at 28 February 2023, the relevant performance
hurdles were not met and therefore no performance fee is
payable for the year under review.
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.
Environmental, Social & Governance (ESG)
The Board encourages the Investment Manager’s
commitment to ensuring Environmental, Social and
Governance (ESG) principles are high on the agenda for the
early-stage companies in which your Company invests.
Further detail on the Investment Manager’s approach to ESG,
including its role as Chair of ESG_VC, can be found in the
ESG Report on pages 21 and 22 of this Report.
Annual General Meeting
The next AGM of the Company will be held at the offices of
Beringea LLP, at Charter House, 55 Drury Lane, London,
WC2B 5SQ at 11:00am on Wednesday 12 July 2023. Those
intending to attend the AGM are asked to register their
i
ntention by emailing info@beringea.co.uk
i
n advance of the
meeting.
The Board values the opportunity to meet Shareholders in
person and I would encourage Shareholders to attend the
AGM in person. However, we also understand that
attendance in person may not be possible or desirable for all
who wish to attend. Therefore, this year, the Company will
also offer Shareholders the option to follow proceedings of
the meeting online. Any Shareholders who wish to listen to
the meeting remotely, should email info@beringea.co.uk
for
joining instructions.
Please note that Shareholders will not be able to vote or ask
questions at the AGM when joining remotely. Shareholders
are encouraged, even if they are planning to attend the AGM
in person, to exercise their votes by submitting their proxy
electronically via their Signal Shares account at
www.signalshares.com
and to appoint the Chair of the AGM
as their proxy with their voting instructions.
Shareholders who wish to submit questions in advance of
the AGM may do so via e-mail to info@beringea.co.uk
and
the Board will respond to questions raised at the meeting.
Full details of the business to be conducted at the AGM are
given in the Notice of Annual General Meeting on pages 80
to 81 of this Report.
Shareholder Event
The Company’s Annual Shareholder Event continues to be
well received and provides an important opportunity for
Shareholders to hear from the Investment Manager on topics
such as performance and investment activity, to ask
questions of your Board, and to receive insights and updates
from the portfolio companies.
During the COVID pandemic these events were conducted
virtually. Last year the Investment Manager experimented
with a hybrid event. The majority of Shareholders attending
last year’s event elected to do so virtually. Consequently, it
has been decided that we will revert to hosting a fully virtual
event in 2023. This will enable any Shareholder to join
without the need for travel into Central London. This has been
scheduled for 10:30am to 12.30pm on Thursday,
16 November 2023 and I would encourage you to join us for
the session. You can RSVP to events@beringea.co.uk
.
VCT Regulatory Developments
Shareholders may be aware that in 2015, owing to EU rules in
relation to notified state aid, the Government was required to
introduce a “Sunset Clause” into the VCT legislation. Unless
legislation to extend or remove the Sunset Clause is enacted,
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Annual Report & Accounts 2023
Annual Report & Accounts 2023
7
i
ncome tax relief will no longer be available for new VCT
subscriptions made on or after 6 April 2025. The
Government announced in September 2022 its commitment
t
o extending the VCT scheme beyond 2025, which the
Company welcomed in its Half Year Report and continues to
do so.
No further details of how the removal of the Sunset Clause
will be enacted have been announced to date. The VCT
industry, along with other influential bodies such as the
BVCA, continues to press the Government to implement the
removal of the Sunset Clause as soon as possible, in order to
ensure that VCTs are able to continue their support for
early-stage UK companies.
Another development worthy of note is that HMRC has
recently started to adopt a stricter interpretation of the
Financial Health Test. This is a test in the VCT legislation
designed to ensure that VCT funds are only invested in
companies of adequate financial health. In the opinion of your
Board and the Investment Manager, HMRC’s new
interpretation of this test is too rigorous, and is preventing
VCTs from providing follow-on funding to some existing
portfolio companies. The VCT industry, through the Venture
Capital Trust Association, has made representations to
HMRC to highlight the potentially damaging effect that their
new interpretation of this test is having on UK scale-up
businesses.
Consumer Duty
The Financial Conduct Authority (FCA) has established a new
consumer duty (the ‘Consumer Duty’), which will come into
force in July 2023 for products and services open to retail
customers. The Consumer Duty sets higher and clearer
standards of consumer protection across financial services,
and requires firms to put their customers’ needs first.
VCTs are not directly subject to the new Consumer Duty.
However, the Investment Manager as an FCA-regulated firm
is subject to the Consumer Duty and has completed a
Consumer Duty review in advance of the new rules coming
into effect later this year. The Consumer Duty highlights the
FCA’s drive to protect the interests of retail customers and
the Board will be monitoring the actions put in place by the
Investment Manager to ensure our Shareholders continue to
be put at the heart of our business.
Unsolicited Communication with
Shareholders
While we are not aware of any instances in the last year, we
have in prior years been informed that some Shareholders in
P
roVen VCT plc have received unsolicited phone calls, in
which the caller has sought to discuss their shareholdings.
We have previously advised all Shareholders that these calls
m
ay be associated with an attempted fraud, and
Shareholders should not engage with the caller. If you do
receive a suspect call, we strongly suggest that you hang up
a
s soon as possible, and contact the Investment Manager.
The FCA has published useful guidance for shareholders on
how to protect themselves from scams, which you may wish
to read. You can find it online at:
https://www.fca.org.uk/consumers/protect-yourself-scams.
Outlook
While it is disappointing to report a loss for the year under
review, your Board is encouraged by the resilience shown by
most companies within the portfolio. Despite a very
challenging operating environment, most companies in the
portfolio have continued to grow their revenues, and exit
activity has shown the potential of the portfolio to deliver
positive returns in spite of economic headwinds.
At the time of writing there are mixed signals from the
economy, with a recession avoided to date but inflation
remaining stubbornly high and interest rates likely to rise
further. Despite this, the ambitious entrepreneurs in your
Company’s portfolio continue to seek out and take advantage
of growth opportunities. Your Investment Manager continues
to work closely with and support the leadership teams at
investee companies to help them navigate the challenges
and opportunities of scaling their businesses.
Looking ahead, your Board anticipates that the next twelve
months will continue to be challenging but hopes to see
some of the economic pressures easing. We remain
confident that the Company’s large and diverse portfolio will
yield solid growth over the medium-term, and the Investment
Manager will continue to identify attractive new investment
opportunities to bring into the portfolio, enabling the
Company to deliver the target returns to Shareholders.
Neal Ransome
Chair
9 June 2023
Investment Manager’s Review
We are pleased to present our annual review for the year ended 28 February 2023. Through a
year that was characterised by economic and geopolitical disruption, the investment rate
remained strong with a total of £22.9 million deployed into six new and nine existing portfolio
companies. However, challenging market conditions led to the write-downs of three significant
holdings, and portfolio valuations overall were tempered by declining market comparables.
The year also saw a good run of investment realisations, with
aggregate disposal proceeds of £22.2 million resulting in
realised gains over cost of £6.0 million. Against a backdrop of
economic uncertainty, this demonstrated the strength of the
investment portfolio and the potential for continued returns.
Furthermore, the Company completed two more exits shortly
after the end of the financial year, with the sales of Monica
Vinader and Aistemos completing in March 2023 and
returning 11.8x and 1.7x on cost respectively.
However, despite the profits realised over cost on exits
during the year, three significant losses, namely MYCS,
Festicket and Thread, contributed to a net realised loss on
investments for the year of £10.1 million, and a total loss of
£13.8 million.
At 28 February 2023, the Company’s venture capital portfolio
comprised 52 investments at a cost of £109.5 million and a
valuation of £115.2 million, an overall increase of 5.2% on
cost.
Since the year end, the Company has issued 8,116,540
Ordinary Shares for an aggregate gross consideration of
£5.5 million under the combined offer for subscription with
ProVen Growth and Income VCT plc which launched on
19 October 2022. Net proceeds for the Company after share
issue costs were £5.2 million. This, coupled with the previous
offer, means the Company remains well capitalised to take
advantage of new investment opportunities and to support
existing portfolio companies where appropriate.
Investment Activity
New investments
After a record year for new investments in the previous
financial year, a high volume of deal flow continued in the
period, with a strong pipeline of opportunities translating into
£16.7 million of investment into six new portfolio companies
in the year. More details on the four largest new investments
are given below.
The largest investment in the period was made in June 2022
in WiredScore (£3.7 million), a company that assesses,
certifies and improves digital connectivity and smart
technology in offices and homes globally.
Two further new investments were made in August 2022 for
£2.8m each:
• Chattermill, a cloud-based customer experience
management solution that helps businesses collect,
manage and analyse customer feedback across chats,
emails, app store reviews, surveys, social interactions
and other channels; and
• Lucky Saint, an award-winning alcohol-free beer
company.
8
In December 2022, the Company also invested £2.7 million
into Dash, a leading brand of sparkling zero-calorie seltzer
water infused with flavours from real fruit.
Other new investments were made in Gorilla (£2.4 million)
and Doctify (£2.2 million).
Follow-on investments
The Company also continued to support the development
and growth of its existing portfolio companies, providing
£6.2 million of further funding to nine companies during the
year.
In April 2022, the Company invested £1.0 million into
CreativeX as part of a $25m funding round. CreativeX helps
marketers measure their digital content against four
indicators of long-term brand growth: creative quality, brand
consistency, compliance, and representation.
The Company also invested £1.0 million in July 2022 into
each of Social Value Portal and Second Nature to support
their continued growth.
Other follow-on investments were made in Lumar (formerly
Deepcrawl) (£932,000), Litta (£860,000), Arctic Shores
(£541,000), MYCS (£460,000), Commonplace (£380,000)
and Plum Guide (£88,000).
Investment disposals
The Company experienced an increase in exit activity during
the previous financial year and this continued through to
28 February 2023, as detailed below.
In March 2022, there was a partial disposal of the Company’s
holding in Zoovu. The Company received proceeds of
£13.1 million, a return of 3.8x against the cost of the shares
sold. Having performed well since the initial investment by
the Company in August 2017, Zoovu had been exploring
options for additional fundraising. It agreed on an offer which
saw the Company sell 70% of its holding and roll over its
remaining shares. Zoovu also raised additional primary
capital to fund further expansion as part of the transaction.
In June 2022, the Company disposed of its entire holding in
Blis for proceeds of £5.6 million, in a transaction with Lloyds
Development Capital. This resulted in a return against cost
of 6.7x.
In November 2022, the Company exited Sealskinz for
proceeds of £1.0 million and a return against cost of 1.3x. In
January 2023 the Company’s full holding in Firefly Learning
was sold for initial proceeds of £1.1 million and the potential
for further proceeds in the future.
Unfortunately, MYCS was heavily impacted by adverse
market conditions. Following the Russian invasion of Ukraine
there was a sharp decline in consumer confidence in the
company’s key markets and therefore a slowdown in sales.
MYCS’ lenders also introduced new caps on the amount they
would advance at the end of March 2022. These two
developments led to the company merging with another
private equity-backed business. As part of this transaction,
the Company disposed of its interest in MYCS for a nominal
amount, with potential for some additional proceeds in the
future should the buyer secure a sale for the enlarged group.
During the year the Company also disposed of its holding in
Exonar which had been fully written down in a prior year.
Key developments at existing portfolio companies
The financial year opened with economic turbulence due to
the invasion of Ukraine by Russia, which at the time of writing
Annual Report & Accounts 2023
9
Investment Manager’s Review (cont.)
i
s still ongoing. In addition, inflation increased to levels not
seen for decades, with interest rates rising globally in an
attempt to moderate this inflation. The valuations of many
q
uoted technology stocks have also declined significantly
during a period of correction following the high valuations
seen over the last few years.
These factors have had varying levels of impact across the
portfolio, most notably with significant write-downs in the
valuation of two companies during the period under review,
which combined resulted in £7.2 million in realised losses on
cost for the Company.
Festicket, an online platform which packaged festival tickets
together with travel, accommodation and add-ons to provide
complete festival experiences, was badly impacted by the
COVID pandemic, leaving the company with a weakened
balance sheet. An erratic reopening of the festival market in
2021, followed by the failure of several festivals in 2022,
resulted in highly challenging cash-flow dynamics for
Festicket. This led to the company entering administration
during the year.
Thread, a menswear e-commerce site, had been pursuing a
high growth strategy, including an entry into the US market,
which had delivered a significant increase in revenues since
the Company’s investment. However, increased risk-aversion
among investors led to Thread being unable to raise further
capital to fund its high growth strategy, which led to the
business entering administration during the year.
These two companies have been recognised as realised
losses in the Company’s income statement due to them
both entering administration during the year.
The valuation of Papier, an online personalised stationery
retailer, was particularly affected by declining market
comparables, as well as a softening in trading performance,
and its value fell by £2.4 million. The valuations of Zoovu and
Plum Guide also fell (decreases of £1.8 million and £1.7 million
respectively) owing to lower market comparables. Elsewhere
in the portfolio, despite the challenges noted above, most
companies showed resilience in trading performance during
the year.
Notable valuation increases in the year were seen in Cogora
(increase of £3.1 million), Asterra (increase of £1.8 million) and
Social Value Portal (increase of £1.4 million). All increases
were due to robust trading performance outweighing the
impact of weakening market comparables.
Further detail on the Investment Portfolio is provided on
pages 14 and 15 and in the Review of Investments on
pages 16 to 20.
Other News & Developments
Portfolio Value-Add Initiative
The Investment Manager’s Portfolio Value-Add Initiative,
aimed at supporting companies in overcoming barriers to
growth and harnessing commercial opportunities, has
developed further in the past year. The initiative is led by
Harry Thomas, the Manager’s Portfolio Director, with support
from Vanessa Evanson-Goddard (General Counsel), and
Henry Philipson (Director of Marketing and Communications).
Together, the team provides both ad-hoc and structured
support on a range of topics from recruitment to marketing
and fundraising.
The Beringea Scale-Up Academy is one of the primary pillars
of the Value-Add Initiative, offering a year-round programme
of events for portfolio leadership teams. In 2022, the
Academy delivered ten webinars to portfolio company senior
managers, providing valuable insight and training on topics
such as pricing strategy, accessing R&D tax credits, and
hiring.
The Investment Manager’s Portfolio Value-Add Initiative also
offers a range of services to support portfolio companies in
their growth journey. These services include: identifying
existing and potential service providers and negotiating
group discounts; establishing a central database of
information and contacts related to key operational and
strategic concerns for companies; hosting in-person and
online events for sharing knowledge and ideas; building
relationships with external stakeholders, including investors,
customers and suppliers; helping to identify potential
acquisition or exit opportunities; and encouraging companies
to consider and adopt ESG initiatives.
Environmental, Social and Governance
The Investment Manager has further expanded its initiatives
focused on driving improved performance across
environmental, social and governance (“ESG”) factors.
To evaluate impact and improvement in its internal
operations, the Investment Manager has developed an ESG
committee responsible for assessing and strengthening the
Manager’s approach to sustainability, diversity and inclusion,
and governance. The Manager has performed particularly
strongly in its diversity-focused initiatives, and it is now
certified as a Level 2 firm under the Diversity VC Standard, an
industry accreditation for diversity and inclusion best
practice. The Investment Manager is also a signatory of the
Investing in Women Code, submitting annual data on the
diversity of companies in the portfolio and investment
pipeline.
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Annual Report & Accounts 2023
T
he Investment Manager’s ongoing role as Chair of ESG_VC,
an industry initiative that brings together more than 200
leading VC firms across the UK and Europe, has also
p
rovided valuable opportunities for the firm and the portfolio.
As a result of its pivotal role within ESG_VC, the Investment
Manager was shortlisted among the leading firms for ESG in
v
enture capital at the Real Deals Awards 2022, and Henry
Philipson, Director of Marketing and Communications, was
named among the Future 40 ESG Innovators.
Further details on these initiatives can be found in the ESG
Report at pages 21 and 22 of this Report.
Post Year End Developments
Between 28 February 2023 and the date of the Annual
Report & Accounts, the Company issued 8,116,540 Ordinary
Shares for an aggregate consideration of £5.5 million under
the combined offer for subscription with ProVen Growth and
Income VCT plc which launched on 19 October 2022. Share
issue costs thereon amounted to £0.3 million.
In March 2023, the Company disposed of its holding in
Monica Vinader for initial proceeds of £6.3 million,
representing an 11.8x return on cost, with potential for future
proceeds. A strong performer in the Company’s portfolio for
several years, Monica Vinader had been exploring funding
options and agreed a strategic sale to Bridgepoint
Development Capital IV. After originally investing in Monica
Vinader in 2010, the Company sold 60% of its holding in
February 2016 for proceeds of £5.2 million and a multiple on
cost of 5.2x.
The Company also disposed of its holding in Aistemos in
March 2023, with proceeds of £3.1 million, representing a
multiple on cost of 1.7x.
Outlook
Despite signs that inflation and energy prices are stabilising,
the outlook for the UK economy, and indeed the global
economy, continues to be uncertain. While some economic
constraints may begin to loosen, there are still challenges
ahead as evidenced by the turbulence seen recently in the
global banking sector.
Your Company backs young, growing companies, a
contingent that can be particularly affected by an unsettled
economic environment. Conversely though, smaller
companies tend to be agile and innovative, and therefore
able to navigate challenges quickly and effectively, and this
has been demonstrated in several portfolio companies over
t
he year. We continue to work closely with our portfolio
companies to support them through challenges as they
arise. Proceeds from the current and previous offers, as well
a
s from successful exit activity over the last twelve months,
means we are well placed to provide further investment to
the portfolio where appropriate.
We also continue to look for compelling new investment
opportunities, and we are well placed to take advantage of
these when they arise. Given recent market dynamics,
however, we expect the rate of new investment in the current
year to be lower than in the year to 28 February 2023.
Beringea LLP
9 June 2023
Annual Report & Accounts 2023
11
Annual Report & Accounts 2023
Main Head
A
nnual Report & Accounts 2023
Investment Activity
Investment activity during the year is summarised as follows:
A
dditions Cost £’000
W
S HoldCo, PBC (t/a WiredScore) 3,733
N
ot Another Beer Co Ltd (t/a Lucky Saint) 2,797
C
hattermill Analytics Limited 2,793
Dash Brands Ltd 2,718
Gorillini NV (t/a Gorilla) 2,437
Doctify Limited 2,222
Picasso Labs, Inc. (t/a CreativeX) 990
Second Nature Healthy Habits Ltd 959
Social Value Portal Ltd 958
DeepCrawl Holding Company, Inc. (t/a Lumar) 932
Litta App Limited 860
Arctic Shores Limited 541
MYCS GmbH 460
Commonplace Digital Limited 380
Plu&m Limited (t/a Plum Guide) 88
Total 22,868
The total cost of additions in the year of £22,868,000 as shown above is higher than the ‘Purchase of investments’ cashflow
figure of £22,862,000 as recorded in the Statement of Cash Flows due to £6,000 of deal costs associated with the purchase of
an investment which are a creditor in these accounts.
12
A
nnual Report & Accounts 2023
13
M
arket value Disposal Realised gain/ Realised (loss)/
Cost at 01/03/22 proceeds (loss) against gain during
Disposals £’000 £’000 £’000 cost £’000 the year £’000
Zoovu Limited (t/a SmartAssistant) 3,488 13,121 13,115 9,627 (6)
Blis Global Ltd 841 4,769 5,631 4,790 862
Firefly Learning Limited 1,202 1,439 1,059 (143) (380)
Sealskinz Holdings Limited 834 834 1,039 205 205
Lupa Foods Limited 384 498 498 114 –
Rapid Charge Grid Limited 491 491 491 ––
ContactEngine Limited ––26 26 26
Netcall plc 286 298 247 (39) (51)
Response Tap Limited ––575757
InSkin Media Limited ––29 29 29
D30 Holding Limited ––999
Exonar Limited 2,814 ––(2,814) –
MYCS GmbH 5,908 3,689 (3) (5,911) (3,692)
Total 16,248 25,139 22,198 5,950 (2,941)
Of the disposals above, ContactEngine Limited, Response Tap Limited, InSkin Media Limited and D30 Holdings Limited were
realised in prior periods, but deferred proceeds were recognised in the current period in excess of the amounts previously
accrued.
The disposal proceeds above for Blis Global Ltd and Firefly Learning Limited include amounts of deferred proceeds which have
been recognised in these accounts but have not yet been received.
Total disposal proceeds of £22,198,000 as shown above are higher than the ‘Sale of investments’ cashflow figure of
£22,044,000 as recorded in the Statement of Cash Flows. The difference arises due to a deferred proceeds debtor of
£499,000 held at the year end, partly offset by a deferred proceeds debtor of £345,000 at the previous year end.
The following investments were held at 28 February 2023:
Valuation
Venture capital investments Cost Valuation movement in % of portfolio
(by value) £’000 £’000 year £’000 by value
Luxury Promise Limited 5,680 7,880 (1,417) 4.9%
Monica Vinader Limited** 534 7,037 (914) 4.3%
MPB Group Limited 1,684 6,738 618 4.2%
Infinity Reliance Limited (t/a My 1st Years) 4,731 6,139 (753) 3.8%
Picasso Labs, Inc. (t/a CreativeX) 2,729 5,483 (496) 3.4%
Social Value Portal Ltd 2,458 4,836 1,361 3.0%
DeepCrawl Holding Company, Inc. (t/a Lumar) 3,827 4,193 272 2.6%
Access Systems, Inc. 3,737 4,000 195 2.5%
WS HoldCo, PBC (t/a WiredScore) 3,733 3,874 142 2.4%
Cogora Group Limited** 2,643 3,700 3,076 2.3%
Utilis Israel Ltd (t/a Asterra) 1,809 3,699 1,802 2.3%
Aistemos Limited 1,819 3,093 1,272 1.9%
Dealroom.co B.V. 2,707 3,034 386 1.9%
Litchfield Media Limited* 1,405 2,872 967 1.8%
Not Another Beer Co Ltd (t/a Lucky Saint) 2,797 2,797 – 1.7%
Chattermill Analytics Limited 2,793 2,793 – 1.7%
Lupa Foods Limited 694 2,788 1,133 1.7%
Papier Ltd 2,770 2,770 (2,432) 1.7%
Dash Brands Ltd 2,718 2,718 – 1.7%
YardLink Ltd 2,680 2,680 – 1.7%
Commonplace Digital Limited 1,880 2,587 188 1.6%
EMS Operations Ltd (t/a Archdesk) 2,581 2,581 – 1.6%
Gorillini NV (t/a Gorilla) 2,437 2,448 11 1.5%
Doctify Limited 2,222 2,222 – 1.4%
Been There Done That Global Limited 1,551 2,192 454 1.4%
Second Nature Healthy Habits Ltd 2,158 2,158 (77) 1.3%
Zoovu Limited (t/a SmartAssistant) 637 1,936 (1,850) 1.2%
Litta App Limited 1,797 1,799 1 1.1%
Rapid Charge Grid Limited* 2,073 1,776 51 1.1%
Stylescape Limited (t/a EDITED) 1,500 1,734 (158) 1.1%
As at 28 February 2023
Annual Report & Accounts 2023
14
Investment Portfolio
Valuation
Venture capital investments Cost Valuation movement in % of portfolio
(by value) £’000 £’000 year £’000 by value
Arctic Shores Limited 1,591 1,621 30 1.0%
Moonshot CVE Ltd 1,388 1,469 (120) 0.9%
CG Hero Ltd 1,251 1,251 – 0.8%
Plu&m Limited (t/a Plum Guide) 2,826 1,138 (1,688) 0.7%
Disposable Cubicle Curtains Limited (t/a Hygenica)** 3,292 1,025 (19) 0.6%
Enternships Limited (t/a Learnerbly) 924 924 – 0.6%
Andcrafted Ltd (t/a Plank Hardware) 913 913 – 0.6%
DeepStream Technologies Limited 1,256 750 (506) 0.4%
Sannpa Limited (t/a Fnatic) 1,801 627 (1,471) 0.3%
Honeycomb.TV Limited* 900 332 (269) 0.1%
88,926 114,607 (211) 70.8%
Other venture capital investments 20,615 611 (7,142) 0.4%
Total venture capital investments 109,541 115,218 (7,353) 71.2%
Cash at bank and in hand 46,565 28.8%
Total investments 161,783 100.0%
Valuation movement in the year excludes the cost of investments made in the year. Other venture capital investments at
28 February 2023 comprise:
Buckingham Gate Financial Services Limited, Festicket Ltd, InContext Solutions, Inc, Lantum Limited, Monmouth Holdings
Limited*†, Poq Studio Ltd, Senselogix Limited, Simplestream Limited**, Skills Matter Limited**, Thread, Inc., Vigilant Applications
Limited* and Whistle Sports, Inc.
* Non qualifying investment
** Partially non qualifying investment
† Investee company 100% owned by the Company but not consolidated as held exclusively for resale as part of an investment
portfolio.
All venture capital investments are unquoted.
All venture capital investments are registered in England and Wales except for Access Systems, Inc., DeepCrawl Holding
Company, Inc. (t/a Lumar), InContext Solutions, Inc., Picasso Labs, Inc. (t/a CreativeX), Thread, Inc., Whistle Sports, Inc., WS
HoldCo, PBC (t/a WiredScore) which are Delaware registered corporations in the United States of America, Utilis Israel Limited
(t/a Asterra), which is registered in Israel, Dealroom.co B.V., which is registered in the Netherlands and Gorillini NV (t/a Gorilla),
which is registered in Belgium.
Annual Report & Accounts 2023
15
16
Review of Investments
Cost: £5,680,000
Investment comprises:
Preference shares: £5,127,000
Loan notes: £553,000
Unaudited accounts: 31/12/21 31/12/20
Turnover: Not available Not available
Profit/(Loss) before tax: Not available Not available
Net assets: £10.7m £3.5m
Valuation method: Discounted revenue multiple
Valuation at 28/02/2023: £7,880,000
Valuation at 28/02/2022: £9,297,000
Dividend income: £–
Loan note income: 44,205
Equity held by Company: 17.4%
Equity held by Investment Manager: 35.2%
As at 28 February 2023
Further details of the ten largest unquoted investments (by value) are set out below. Where financial performance detail is
marked as ‘Not available’, this means that it is not publicly available and cannot be published here for confidentiality reasons.
Luxury Promise Limited
www.luxurypromise.com
Luxury Promise is a platform to buy and sell pre-owned luxury handbags and
accessories, featuring brands including Chanel, Hermès, and Louis Vuitton.
Cost: £534,000
Investment comprises:
Ordinary shares: £534,000
Audited accounts: 31/07/22 31/07/21
Turnover: £80.7m £56.9m
Profit/(Loss) before tax: £9.4m £5.1m
Net assets: £15.6m £8.3m
Valuation method: Offer based
Valuation at 28/02/2023: £7,037,000
Valuation at 28/02/2022: £7,951,000
Dividend income: £–
Loan note income: £–
Equity held by Company: 5.7%
Equity held by Investment Manager: 7.9%
Monica Vinader Limited
www.monicavinader.com
Monica Vinader creates ready-to-wear contemporary designer jewellery. The business,
which is managed by sisters Monica and Gabriela Vinader, was founded in 2007.
Cost: £1,684,000
Investment comprises:
Preference shares: £1,684,000
Audited accounts: 31/03/22 31/03/21
Turnover: £97.8m £64.9m
Loss before tax: (£7.7)m (£2.9)m
Net assets: £25.6m£31.3m
Valuation method: Discounted revenue multiple
Valuation at 28/02/2023: £6,738,000
Valuation at 28/02/2022: £6,120,000
Dividend income: £–
Loan note income: £–
Equity held by Company: 3.7%
Equity held by Investment Manager: 6.3%
MPB Group Limited
www.mpb.com
MPB is an online marketplace for high quality, pre-owned photography and
videography equipment.
Annual Report & Accounts 2023
17
Cost: £4,731,000
Investment comprises:
Preference shares: £4,731,000
Audited accounts: 31/12/21 31/12/20
Turnover: £13.4m £20.4m
Profit before tax: £2.4m £1.5m
Net assets: £5.1m £2.7m
Valuation method: Discounted revenue multiple
Valuation at 28/02/2023: £6,139,000
Valuation at 28/02/2022: £6,892,000
Dividend income: £–
Loan note income: £–
Equity held by Company: 16.6%
Equity held by Investment Manager: 26.8%
Infinity Reliance Limited (t/a My 1st Years)
www.my1styears.com
My 1st Years is an e–commerce site for personalised items for babies and children,
with products from their Royal Range having been worn by Prince George.
Cost: £2,729,000
Investment comprises:
Preference shares: £2,729,000
Unaudited accounts: 31/12/22 31/12/21
Turnover: Not available Not available
Profit/(Loss) before tax: Not available Not available
Net assets: Not available Not available
Valuation method: Price of recent investment
Valuation at 28/02/2023: £5,483,000
Valuation at 28/02/2022: £4,989,000
Dividend income: £–
Loan note income: £–
Equity held by Company: 6.6%
Equity held by Investment Manager: 20.0%
Picasso Labs, Inc. (t/a CreativeX)
www.creativex.com
CreativeX is a provider of marketing technology software for brand excellence –
its platform is used by global brands including Google, Samsung, and Pepsi.
Cost: £2,458,000
Investment comprises:
Preference shares: £1,500,000
Convertible loan notes: £958,000
Unaudited accounts: 31/12/21 31/12/20
Turnover: Not available Not available
Profit/(Loss) before tax: Not available Not available
Net (liabilities)/assets: (£0.4)m £1.9m
Valuation method: Price of recent investment
Valuation at 28/02/2023: £4,836,000
Valuation at 28/02/2022: £2,517,000
Dividend income: £–
Loan note income: £–
Equity held by Company: 11.4%
Equity held by Investment Manager: 22.8%
Social Value Portal Ltd
www.socialvalueportal.com
Social Value Portal is a platform for measuring, monitoring and analysing
social impact that supports more than 16,000 users.
Annual Report & Accounts 2023
18
Review of Investments (cont.)
Cost: £3,827,000
Investment comprises:
Preference shares: £3,827,000
Unaudited accounts: 31/03/22 31/03/21
Turnover: Not available Not available
Profit/(Loss) before tax: Not available Not available
Net assets: Not available Not available
Valuation method: Discounted revenue multiple
Valuation at 28/02/2023: £4,193,000
Valuation at 28/02/2022: £2,988,000
Dividend income: £–
Loan note income: £–
Equity held by Company: 11.3%
Equity held by Investment Manager: 23.4%
DeepCrawl Holding Company, Inc. (t/a Lumar)
www.lumar.io
Lumar, formerly Deepcrawl, is a website intelligence platform used by the
world’s best-known enterprise brands, including eBay, Microsoft, and PayPal.
Cost: £3,737,000
Investment comprises:
Preference shares: £3,737,000
Unaudited accounts: 30/04/22 30/04/21
Turnover: Not available Not available
Profit/(Loss) before tax: Not available Not available
Net assets: Not available Not available
Valuation method: Discounted revenue multiple
Valuation at 28/02/2023: £4,000,000
Valuation at 28/02/2022: £3,804,000
Dividend income: £–
Loan note income: £–
Equity held by Company: 9.2%
Equity held by Investment Manager: 13.6%
Access Systems, Inc
www.accesspay.com
AccessPay is a BACS-approved software provider aiming to simplify the payment
processing system by offering a range of payment and cash management products.
Cost: £3,733,000
Investment comprises:
Preference shares: £3,733,000
Unaudited accounts: 31/12/21 31/12/20
Turnover: Not available Not available
Profit/(Loss) before tax: Not available Not available
Net assets: Not available Not available
Valuation method: Discounted revenue multiple
Valuation at 28/02/2023: £3,874,000
Valuation at 28/02/2022: n/a
Dividend income: £–
Loan note income: £–
Equity held by Company: 2.6%
Equity held by Investment Manager: 5.0%
WS HoldCo, PBC (t/a WiredScore)
www.wiredscore.com
WiredScore is a platform setting the global standard for technology in the built
world through education and certification via WiredScore and SmartScore.
Annual Report & Accounts 2023
Cost: £2,643,000
Investment comprises:
Preference shares: £1,031,000
Loan notes: £1,612,000
Audited accounts: 31/12/21 31/12/20
Turnover: £7.3m £5.6m
Profit/(Loss) before tax: Not available Not available
Net liabilities:£4.9m(£4.6)m
Valuation method: Discounted EBITDA multiple
Valuation at 28/02/2023: £3,700,000
Valuation at 28/02/2022: £623,000
Dividend income: £–
Loan note income: £–
Equity held by Company: 24.0%
Equity held by Investment Manager: 36.0%
Cogora Group Ltd
www.cogora.com
Cogora is a full-service healthcare marketing agency that provides brands with innovative
and impactful education that allows them to deliver high-quality care to patients.
Annual Report & Accounts 2023
19
Main Head
Analysis of Investments by Commercial Sector
An analysis of the portfolio by sector and valuation methodology (based on valuation) is set out below:
Portfolio by
Sector
Consumer /
E-Commerce 40%
(2022: 47%)
Other 5%
(
2022: 4%)
Healthcare 8%
(2022: 2%)
SaaS 27%
(2022: 17%)
Business Services 20%
(2022: 26%)
Portfolio by
Valuation
Methodology
Net asset value 4%
(2022: 4%)
Discounted price
of recent offer 10%
(2022: 0%)
Discounted price of
recent transaction 11%
(2022: 0%)
Discounted EBITDA multiple 6%
(2022: 2%)
Discounted
revenue
multiple 69%
(2022: 94%)
Review of Investments (cont.)
Annual Report & Accounts 2023
20
ESG
Report
The Company feels it is important to highlight the
work being delivered by the Manager to ensure that
the ProVen VCTs and the portfolio companies are
e
mbracing environmental, social, and governance
(ESG) best practices.
Annual Report & Accounts 2023
21
Supporting the portfolio: ESG_VC
The Manager is the chair and co-founder of ESG_VC, a
network of more than 200 venture capital firms that works
together to help early-stage companies to measure and
improve their ESG performance. ESG_VC is endorsed by the
British Private Equity and Venture Capital Association (BVCA)
as a key industry initiative in driving greater environmental,
social, and economic impact across the UK.
Through the Manager’s role in ESG_VC, the ProVen VCTs’
portfolio companies are able to access free support for
analysing, tracking, and improving their ESG performance.
This support is structured around three main areas of activity:
• Measurement framework: ESG_VC – in partnership with
Social Value Portal, a member of the ProVen VCTs’
portfolio – has developed a standardised framework for
measuring ESG within venture-backed business. The
framework asks companies to respond to 55 metrics
spanning environmental, social, and governance factors
– in turn, companies receive a benchmark of their ESG
performance and a set of targets for improving their ESG
score.
• Educational events: portfolio companies of ESG_VC
members are provided with access to a regular calendar
of webinars that educate businesses and investors
about specialist ESG topics – across the past year,
sessions hosted by ESG_VC have provided training on
issues such as carbon accounting, gender pay gap
reporting, and ESG policy.
• Online resources: ESG_VC has developed a bank of
resources, ranging from standardised policies to
recommendations on suppliers and consultants, that
portfolio companies can use to embed new processes
and technologies to support their ESG performance.
The Manager has integrated the ESG_VC Measurement
Framework into its investment monitoring processes.
Companies are required to complete the framework upon
securing investment from the ProVen VCTs, providing a
benchmark of ESG performance for the portfolio company
and the Manager. This benchmark is used to highlight areas
of strength and weakness, as well as potential areas for
improvement, and portfolio companies are guided to relevant
resources and events from ESG_VC.
Companies within the ProVen VCTs’ portfolio are also
expected to complete the ESG_VC Measurement Framework
annually, as part of ongoing portfolio monitoring. In total, 28
portfolio companies completed the framework in 2022,
providing the Manager and the ProVen VCTs with valuable
insights into the ESG performance of individual investments
and trends across the portfolio.
B Corps: Certified portfolio companies
B Corp Certification is an independent accreditation of the
social and environmental performance of businesses. Today,
more than 1,000 companies in the UK have secured B Corp
status, including a growing number of businesses in the
ProVen VCTs’ portfolio.
Through providing a reputable audit of a company’s social
and environmental impact, B Corp Certification offers
businesses a useful tool in engaging employees, and
articulating the company’s positive practices to potential
customers, partners, and investors.
The following businesses in the ProVen VCTs’ portfolio are
certified B Corps:
Internal initiatives: ESG at Beringea
The Manager has also established an internal ESG
committee to ensure that its wider operations are tracking
and strengthening the firm’s approach to sustainability,
diversity, community engagement, and corporate
governance.
The Manager has a longstanding commitment to tracking
and improving its approach to diversity and inclusion. In
2022, the Manager secured Level 2 certification by the
Diversity VC Standard, a leading industry accreditation
helping venture capital firms to evaluate and strengthen their
diversity and inclusion practices. In securing the highest
available certification, the Manager was able to demonstrate
a market-leading approach to improving the diversity of its
team, building an inclusive culture, and monitoring diversity
and inclusion within its investment activity. The Manager has
also participated in Future VC, an internship programme for
people from backgrounds under-represented in the venture
capital industry.
Other recent initiatives delivered through the ESG committee
include the implementation of onHand, an employee
engagement platform that provides access to volunteering
opportunities and educational content for members of the
Manager’s team. The Manager has also begun the process
of measuring its carbon footprint.
External initiatives:
Supporting the ecosystem
As well as its leadership role within ESG_VC, the Manager has
participated in a number of industry initiatives that seek to
improve the ESG performance of the venture ecosystem as a
whole. This includes being a signatory to the Investing in
Women Code, an initiative led by the British Business Bank
that tracks diversity across the investment activity of the UK’s
venture capital firms.
Annual Report & Accounts 2023
22
ESG Report (cont.)
23
Board of Directors
Annual Report & Accounts 2023
Neal Ransome
CHAIR
Neal was formerly a corporate finance partner of PwC with
extensive experience as a lead adviser on M&A activity in the
p
harmaceuticals and healthcare sectors. Neal is currently a
non-executive director and chair of Octopus AIM VCT plc and
a non-executive director of Polar Capital Global Healthcare
Trust plc. Neal has been a Director of the Company since
October 2017.
Malcolm Moss
NON-EXECUTIVE DIRECTOR
Malcolm is a Founding Partner of Beringea LLP. Over the last
30 years he has been responsible for the growth,
development and management of Beringea in both the UK
and the USA. In addition to sitting on the boards of ProVen
VCT plc and ProVen Growth and Income VCT plc, he sits on
the investment committees of Beringea Group’s US funds.
He also sits on the boards of Lupa Foods Ltd, Disposable
Cubicle Curtains Trustee Ltd, Cogora Group Ltd and
Litchfield Media Limited, all companies within the ProVen
VCTs’ portfolio, as well as ProVen Legacy Limited. Malcolm
was appointed a Director of the Company in December
2007.
Barry Dean
NON-EXECUTIVE DIRECTOR
Barry has over 30 years’ experience in the venture capital
industry, including 14 years as Managing Director of Dresdner
K
leinwort Benson Private Equity Limited, a longstanding
“mid-market” private equity fund manager. He is currently a
director of Thames Ventures VCT 1 plc (formerly Downing
One VCT plc) and previously served on the board of Molten
Ventures VCT plc (formerly Draper Esprit VCT plc). Barry was
appointed a Director of the Company in May 2006.
Lorna Tilbian
NON-EXECUTIVE DIRECTOR
Lorna was formerly an executive director of Numis
Corporation plc and a director of WestLB Panmure Limited
and S G Warburg Securities. She is currently chair of
Dowgate Capital Limited and a director of Dowgate Wealth
Limited. Lorna also serves as a non-executive director on the
boards of FTSE 250 constituents Finsbury Growth and
Income Trust plc and Premier Foods plc as well as FTSE 100
company Rightmove plc. Lorna was appointed a Director of
the Company in July 2013.
With the exception of Malcolm Moss, all Directors are
independent of the Investment Manager.
Strategic
Report
The Directors present the Strategic Report for the
year ended 28 February 2023. The Board prepared
the Annual Report & Accounts in accordance with
t
he Companies Act 2006 (Strategic Report and
Directors’ Reports) Regulations 2013.
Annual Report & Accounts 2023
24
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 28 February 2023 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 the Annual Report & Accounts, a close
company for the purpose of the Income Tax Act 2007.
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 £124.8 million of venture
capital investments and ended with £115.2 million spread
over a portfolio of 52 companies. Of these companies, 49
investments with a value of £112.2 million were VCT qualifying
(or part qualifying).
The loss on ordinary activities after taxation for the year was
£13.8 million, comprising a revenue loss of £1.1 million and a
capital loss of £12.7 million. The Ongoing Charges ratio
(which is calculated in line with the AIC methodology as
recurring operational expenses excluding performance fees,
trail commission and recoverable VAT divided by the
Company’s average net assets in the period) is an Alternative
Performance Measure used by the Board to monitor
expenses. Recurring operational expenses for the year
ended 28 February 2023, excluding trail commission of
£81,000, were £3,867,000, and the average net assets over
the year were £163,800,000. Therefore, the Ongoing
Charges ratio in respect of the year ended 28 February 2023
was 2.4% (2022 restated: 2.4%) and was within the
Company’s cap of 3.25%. The Ongoing Charges ratio for the
year ended 28 February 2022 was incorrectly stated as 1.8%
in last year's Annual Report & Accounts due to an error in the
net assets figure that was used in the calculation.
The Company’s business review and developments during
the year are reviewed further within the Chair’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:
25
•
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; and
• a 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.
Borrowings
It is not the Company’s intention to have any borrowings. The
Company, does, however, have the ability to borrow a
m
aximum amount equal to the nominal capital of the
Company and its distributable and non-distributable reserves
which, at 28 February 2023, was equal to £161.7 million
(
2022: £147.6 million). There are no plans for the Company to
borrow at the current time.
Maximum exposures
No 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:
(i) 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;
(ii) the Company must not conduct any trading activity which
is significant in the context of the Company; and
(iii) the 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 Report. This
investment policy is in line with Chapter 15 of the Listing
Rules and Part 6 Income Tax Act 2007.
Annual Report & Accounts 2023
DASH WATER
Annual Report & Accounts 2023
26
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 2023 and for the year then ended is summarised as follows:
(i) the Company holds at least 80 per cent. of its investments in qualifying companies (as defined by Complied
Part 6 of the Income Tax Act 2007);
(ii) at least 70 per cent. (in the case of funds raised after 5 April 2011) of the Company’s qualifying investments Complied
(by value) are held in “eligible shares” (“eligible shares” generally being ordinary share capital);
(iii) the Company’s ordinary share capital has throughout the period been listed on a regulated European Complied
market;
(iv) no investment in a company constitutes more than 15 per cent. of the Company’s portfolio (by value at time Complied
of investment);
(v) the Company’s income for each financial year is derived wholly or mainly from shares and securities; Complied
(vi) the Company distributes sufficient revenue dividends to ensure that not more than 15 per cent. of the Complied
incomefrom shares and securities in any one year is retained;
(vii) the Company has not made a prohibited payment to Shareholders derived from an issue of shares since Complied
6 April 2014;
(viii) no investment made by the Company causes an investee company to receive more than the permitted Complied
investment from State Aid sources (including from VCTs);
(ix) since 18 November 2015, the Company has not made an investment in a company which exceeds the Complied
maximum permitted age requirement;
(x) the funds invested by the Company in another company since 18 November 2015 have not been used to Complied
make a prohibited acquisition;
(xi) since 6 April 2016, the Company has not made a prohibited non-qualifying investment; and Complied
(xii) of funds raised on or after 1 March 2019, at least 30% has been invested in qualifying holdings by the Complied
anniversary of the end of the accounting period in which shares were issued.
Strategic Report (cont.)
27
Investment Management and
Administration Fees
Beringea provides investment management services to the
C
ompany 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
m
anagement 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 £3,299,000 (2022: £3,981,000),
comprising a management fee of £3,299,000 (2022:
£2,963,000) and performance incentive fees as described
below of £nil (2022: £1,018,000). At the year end, an amount
of £nil (2022: £1,018,000) 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 28 February 2023, Beringea also
provided administration services to the Company. In the year,
total administration fees amounted to £70,000 (2022:
£65,000).
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 £305,000 (2022: £398,000)
and directors or monitoring fees of £501,000 (2022:
£605,000) during the year ended 28 February 2023. 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 Fees
The Investment Manager is entitled to receive an annual
performance incentive fee in respect of the shares in issue at
29 February 2012 (the “Original Offer”) and each share offer
made by the Company since the Original Offer (each being a
“Relevant Offer”), if the Performance Value of the Relevant
Offer achieves a Hurdle Amount.
The “Performance Value” is calculated on an annual basis
based on the latest annual audited NAV, plus cumulative
dividends and any previous performance fees paid in respect
of the Relevant Offer since 29 February 2012.
The “Hurdle Amount” is represented by the higher of:
(i) 1.25 times the initial share offer NAV; and (ii) the initial share
offer NAV compounded by the annual Bank of England base
rate plus 1%. Please note that the hurdle amount for the
Original Offer is calculated differently but based on similar
principles.
For each Relevant Offer, if the Hurdle Amount is not met, no
performance incentive fee will be payable. Once the Hurdle
Amount has been met, the performance incentive fee
payable in relation to a financial year is 20% of the amount by
which the Performance Value exceeds the initial NAV of the
Relevant Offer, less any performance fees paid previously.
Performance fees will be reduced, if necessary, to ensure
that:(i) the cumulative performance fee per share payable to
the Investment Manager in respect of a Relevant Offer does
not exceed 20% of the relevant cumulative dividends paid in
respect of that share; and (ii) the audited net asset value per
share at the relevant financial year end plus the relevant
cumulative dividends is at least equal to the relevant
respective Hurdle Amount.
Performance fees for the year ended 28 February 2023
amounted to £nil (2022: £1,018,000).
Annual Report & Accounts 2023
Annual Report & Accounts 2023
28
Strategic Report (cont.)
Key Performance Indicators
At 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. Some of
these are classified as alternative performance measures
(“APMs”) in line with Financial Reporting Council (“FRC”)
guidance. The Board believes the Company’s key
p
erformance indicators are:
• total return (net asset value plus dividends paid since
launch)*;
• dividends paid and the dividend yield;
• change in net asset value per share (adjusted for
dividends paid in the year)*;
• ongoing charges ratio*; and
• VCT compliance.
* Classified as an APM.
The total return is calculated as 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 graph shows the
total return over the last five years and is split between the
net asset value and the cumulative dividends paid.
The following table shows the total return, annual return
shown as the movement in net asset value per share
(adjusted for dividends paid in the year), dividends paid in
respect of each year and the dividend yield.
140
120
100
80
60
28/02/19 29/02/20 28/02/21 28/02/22 28/02/23
150
Last 5 Years Total Return
130
110
90
70
NAV
Divs Paid
160
28/02/2019 29/02/2020 28/02/2021 28/02/2022 28/02/2023
Total return (p) 145.95 138.35 146.55 151.95 146.25
Change in net asset value per share
(adjusted for dividends paid in the year)
1
Opening NAV per share (p) 99.7 82.2 70.1 74.8 76.7
Closing NAV per share (p) 82.2 70.1 74.8 76.7 65.5
(Decrease)/increase in NAV per share (p) (17.5) (12.1) 4.7 1.9 (11.2)
Dividends paid per share in the year (p) 27.75 4.5 3.5 3.5 5.5
Increase/(decrease) in NAV per share
(adjusted for dividends paid in the year) (p) 10.25 (7.6) 8.2 5.4 (5.7)
Increase/(decrease) in NAV per share
(adjusted for dividends paid in the year) (%) 10.3% (9.2)% 11.7% 7.2% (7.4)%
Dividends
Opening NAV per share (p) 99.7 82.2 70.1 74.8 76.7
Less final/special dividend(s) paid per
share in relation to prior year (p) 2.5 2.5 2.0 2.0 3.75
Adjusted opening NAV per share (p) 97.2 79.7 68.1 72.8 72.95
Dividends paid and payable in respect of year (p) 27.75 4.0 3.5 5.25 3.75
Dividend yield
2
28.5% 5.0% 5.1% 7.2% 5.1%
1
Calculated as the change in total return in the year divided by the opening net asset value.
2
Calculated as the total dividends paid and payable in respect of the financial year divided by the opening net asset value, adjusted for the final dividend paid in
respect of the previous year.
Annual Report & Accounts 2023
29
T
he change in net asset value per share (adjusted for
dividends paid in the year) is defined as an APM and the
Board considers it to be the primary measure of shareholder
v
alue.
The dividends per share are also set out in Note 8 on
page 69.
As discussed earlier on page 24, the ongoing charges ratio
for the year of 2.4% is within the ongoing charges cap of
3.25%. Also shown earlier on page 26, the Company has
maintained compliance with VCT regulations throughout the
period.
The key performance indicators are discussed further in the
Chair’s Statement on pages 4 to 7 and the Investment
Manager’s Review on pages 8 to 11.
Risks and risk management
The principal financial risks faced by the Company, which
include market price risk, interest rate risk, credit risk and
liquidity risk, are summarised within Note 15 to the financial
statements.
T
he Board carries out a regular review of the risk environment
in which the Company operates, and reviews the mitigating
controls and actions applicable to those risks. In the period
the most noticeable change to the risks faced by the
Company have been as a result of the economic turbulence
due to the invasion of Ukraine by Russia and rising interest
rates and inflation globally. The full impacts of these risks are
likely to continue to be uncertain for some time.
Emerging risks
The Board also discusses emerging risks as they arise and
puts in place appropriate procedures to monitor and, where
possible, mitigate the effects of these emerging risks on the
Company and the portfolio. The following are some of the
potential emerging risks the Investment Manager and the
Board are currently monitoring:
• adverse changes in the global macroeconomic
environment; and
• geo-political instability.
Principal risks
Risk Mitigation Change during period
Increased due to the economic
and geopolitical disruption
referred to above.
No change
The Directors place reliance on the Investment
Manager’s experience and expertise in adding new
companies to the portfolio. The Investment Manager
has a rigorous and robust formal process in selecting
new companies which includes financial and legal
due diligence and review by an Investment
Committee made up of senior investors, whilst also
drawing on the expertise of the Directors. In addition,
a member of the Manager’s team is usually appointed
to the board of each portfolio company on investment.
The Board reviews the investment portfolio and its
performance at least on a quarterly basis.
Investment risk
By nature, companies that
qualify for venture capital trust
purposes have a higher level
of risk than larger quoted
companies and poor
performance could reduce
returns for Shareholders
through downward valuations.
VCT qualification monitoring reports are prepared by
the Administration Manager and approved by the
Board on a quarterly basis. On a bi-annual basis, the
Company’s VCT status adviser reports to the Audit
Committee in relation to compliance with the VCT
legislation. The report for the year ended 28 February
2023 showed compliance with all aspects of the VCT
regulations as summarised on page 26. The
Investment Manager regularly liaises with the
Company’s VCT status adviser in relation to VCT
qualification on individual investments and addresses
any recommended actions to ensure compliance.
VCT qualifying status
A breach of the VCT rules and
loss of approval as a VCT
could lead to Shareholders
losing tax benefits associated
with VCT investments.
30
Strategic Report (cont.)
Annual Report & Accounts 2023
R
isk Mitigation Change during period
Increased due to the economic
and geopolitical disruption
referred to above.
No change
Increased due to the high levels of
inflation, rising interest rates and
the geopolitical risks from the
invasion of Ukraine.
No change
Valuation
T
he companies within the
portfolio are valued in
accordance with the
I
nternational Private Equity
and Venture Capital (IPEV)
guidelines but establishing
fair value can be difficult and
is reliant on the accuracy and
completeness of information
provided.
The unquoted investment valuations are prepared by
the Investment Manager and agreed by the Board on
a quarterly basis although new valuations may be
prepared and agreed as required in the event of a
material movement in the valuations. On an annual
basis, at the year end, the Company’s Auditor, BDO
LLP, reports to, and discusses with, the Audit
Committee their findings and any concerns arising
from their review of the investment valuations.
The Investment Manager ensures that it hires suitably
qualified members of staff who are experienced with
regulatory requirements and relevant accounting
standards and the Investment Manager and the
Company Secretary have procedures in place to
ensure recurring Listing Rules requirements are met.
Legislative and regulatory developments are kept
under review with the Company’s solicitor and
specialist compliance consultants. The Investment
Manager is also a member of the Venture Capital
Trust Association which engages with the
Government to help shape future legislation.
Legislative and Regulatory
The Company operates in a
complex regulatory
environment, failure to comply
could lead to suspension
from the Stock Exchange,
penalties and damage to the
Company’s reputation. A
change in VCT regulation
could also restrict the ability
for the Company to invest.
The Board and Investment Manager continuously
assess the resilience of the portfolio, and ongoing
discussions and planning are held with the portfolio
companies to provide assistance and support,
particularly during periods of economic uncertainly.
The Company has a clear investment policy (outlined
on pages 24 to 25) and a diversified portfolio
operating in a range of sectors which helps to
mitigate against sector specific impacts. Additionally,
ensuring adequate liquidity to cope with unexpected
pressures on the finances of the portfolio and allow
the Company to make follow-on investments where
suitable is an important part of the risk mitigation in
times of economic uncertainty.
Economic
Economic changes such as
the war in Ukraine, higher
interest rates, economic
recession, social upheaval
from events such as COVID
and Brexit and change in
Government could affect
trading conditions for smaller
companies and consequently
the value of the Company’s
qualifying investments.
The Investment Manager has a documented
business continuity plan, which provides for back-up
services in the event of a system breakdown. The
Investment Manager’s systems are protected against
viruses and other cyber-attacks and appropriate
insurances are maintained. The Board reviews the
performance of all service providers at least annually
and the Investment Manager conducts due diligence
on all new service providers to ensure that third
parties have adequate operational systems in place.
Operational
The Company is reliant on a
number of third parties, in
particular the Investment
Manager, for management
and administration services.
Failure of the operational
systems and controls of third
parties could result in an
inability to provide accurate
reporting and monitoring.
Annual Report & Accounts 2023
31
R
isk Mitigation Change during period
No change
No change
No change
Cyber security & IT
O
utsourcing and the increase
in remote working could give
rise to cyber and data security
r
isk. Failure in key IT systems
and controls might lead to
business interruption, loss of
data or loss of access to
systems.
The Investment Manager has significant
cybersecurity controls, including two factor
authentication, email protection software, monitored
firewalls and staff regularly receive training in relation
to their cybersecurity obligations. Due diligence is
conducted on service providers including a review of
controls, to reduce the risk of business interruption
due to insufficient cyber security controls of third
parties. The Investment Manager has a robust cyber
insurance to ensure that financial liabilities are
mitigated in the event of a cyber-attack.
ESG
Failure to comply with current
and future requirements and
recommended practices
could result in reduced
investor attraction which may
affect the level of capital the
Company has available to
meet its investment
objectives.
The Investment Manager has further expanded its
initiatives focused on driving improved performance
across environmental, social and governance (“ESG”)
factors, both internally and across the portfolio.
To evaluate impact and improvement in its internal
operations, the Investment Manager has developed
an ESG committee responsible for assessing and
strengthening the firm’s approach to sustainability,
diversity and inclusion, and governance. Further
details of these initiatives and the Investment
Manager’s role in ESG_VC can be found in the ESG
Report at pages 21 to 22.
The Investment Manager and the Board regularly
review the exposure to foreign currency movement to
make sure the level of risk is appropriately managed.
Investments are primarily made in GBP, EUR and USD
so exposure is limited to a small number of
currencies.
On realisation of investments held in foreign
currencies, cash is translated to GBP shortly after
receiving the proceeds to limit the amount of time
exposed to foreign currency fluctuations.
Foreign exchange
The Company has made a
number of its initial
investments in a foreign
currency; most often in Euros
or US Dollars. Furthermore,
some companies may
function, in part, in a currency
other than GBP. The portfolio
is therefore exposed, to some
extent, to foreign exchange
risk and specifically that of
transaction risk and
translation risk.
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 twelve months from the date of sign off of these financial
statements. In its assessment of the Company’s activities as
a going concern, the Board has reviewed the risks to future
performance as set out in the Strategic Report on pages 29
to 32, and considered the potential impacts of those on the
Company’s future ability to continue as a going concern. The
Company’s cash resources are currently healthy, and the
portfolio of investments is diverse and not reliant on any one
sector. All significant cash outflows, including dividends,
share buybacks and investments, are within the Company’s
control. Therefore, the Board expects that the Company has
sufficient cash resources to withstand any reasonable stress
scenario, for example if the Company was unable to raise
further funds, and believes that it is appropriate to continue to
adopt the going concern basis of accounting in preparing
these financial statements.
Viability Statement
The Board has assessed the Company’s prospects over the
three-year period to 28 February 2026. 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 current economic landscape and
the war in Ukraine, 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 advisers 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 2026, 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 has also
considered stress scenarios whereby no proceeds upon the
realisation of investments are received and no further funds
are raised.
Based on the assessment of the above considerations on
the cash flow forecasts and stress scenarios, 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
2026.
Section 172 Statement
Section 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;
Annual Report & Accounts 2023
32
Strategic Report (cont.)
R
isk Mitigation Change during period
No changeLiquidity
T
he Company invests into
smaller unquoted companies,
which are inherently illiquid as
t
here is no readily available
market for these shares.
Therefore, these may be
difficult to realise for their fair
market value at short notice.
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. 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.
33
•
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.
Shareholders
The 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 event, which
last year was held as a hybrid event on 16 November 2022 and
attended by approximately 200 Shareholders and which gives
Shareholders the opportunity to ask questions of the Board
and the Investment Manager and also hear from some of the
Company’s portfolio companies. Following the success of last
year’s event and our previous virtual events, plans are in
motion for a virtual event in 2023, allowing the maximum
number of Shareholders to attend. The event has been
scheduled for 10.30am to 12.30pm on Thursday, 16 November
2023.
The Board also encourages all Shareholders to attend and
vote on the resolutions proposed at the Annual General
Meeting, which this year will be held at 11:00am on
Wednesday 12 July 2023 at the offices of Beringea LLP, at
Charter House, 55 Drury Lane, London WC2B 5SQ. We are
pleased to report that this year the Company will also offer
Shareholders the option to follow proceedings of the meeting
online. Please note that Shareholders will not be able to vote or
ask questions at the AGM when joining remotely and therefore
Shareholders are encouraged to vote electronically before the
deadline of 11:00am on 10 July 2023. For further details, please
see the Chair’s Statement on page6and the Notice of Annual
General Meeting at the end of the document.
As a result of the shareholder event, together with other
communications with Shareholders and advisors, the
Company has received useful feedback which allows the
Board to understand the nature of stakeholder concerns
better. The Board works very closely with the Investment
M
anager in reviewing how Shareholder issues are handled,
ensuring good governance and responsibility in managing the
Company’s affairs. Ultimately, the Directors’ decisions are
i
ntended to achieve the Company’s principal objective of long
term returns for Shareholders greater than those available
from investing in a portfolio of quoted companies.
The Board recognises the value of the buyback scheme and
approves the level of buyback authority on a quarterly basis
within the maximum authority provided by the Shareholders
annually at the AGM. The buyback policy has been offered to
Shareholders throughout the period under review, providing
Shareholders with liquidity should they wish to sell their
shares. Further details can be found in the Chair’s Statement
at page 5 and Directors’ Report pages 36 to 37.
The Board also understands the importance of tax free
dividends to Shareholders, and takes this into consideration
when making the decision to pay dividends to Shareholders.
During the period under review, the Company paid an interim
dividend in respect of the year ended 28 February 2023 of
1.75p per share on 2 December 2022 and is proposing a final
dividend for the year ended 28 February 2023 of 2.0p per
share to be paid on 4 August 2023 to Shareholders on the
register on 7 July 2023. The total tax-free dividends of 3.75p
per share for the year ended 28 February 2023 represents a
cash return to Shareholders of 5.1% on the opening NAV per
share at 1 March 2022 (after deducting the prior year’s final
and special dividends of 3.25p per share in total). This cash
return is in line with the target dividend yield of 5% per annum
which, although not guaranteed, when achieved can provide
predictable income returns and create value for Shareholders.
The Board is not proposing a special dividend for the year
ended 28 February 2023, principally due to the level of
realised losses during the year.
Suppliers
The 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.
Portfolio Companies
The Investment Manager provides updates to the Board on
the entire portfolio at least quarterly. Furthermore, the
Investment Manager continuously supports the portfolio via a
host of practices, including, but not limited to, having a
representative of the Investment Manager on the boards of
most of our material portfolio companies. The Investment
Annual Report & Accounts 2023
Annual Report & Accounts 2023
34
Strategic Report (cont.)
M
anager’s Portfolio Value-Add Initiative has developed
further in the past year, supporting companies in overcoming
barriers to growth and harnessing commercial opportunities.
T
he initiative is led by Harry Thomas, the firm’s Portfolio
Director, with support from Vanessa Evanson-Goddard
(General Counsel), and Henry Philipson (Director of Marketing
a
nd Communications). Together, the team provides both
ad-hoc and structured support on a range of topics from
recruitment to marketing and fundraising.
The Beringea Scale-Up Academy is one of the primary pillars
of the Value-Add Initiative, offering a year-round programme of
events for portfolio leadership teams. In 2022, the Academy
delivered ten webinars to portfolio company senior managers,
providing valuable insight and training on topics such as
pricing strategy, accessing R&D tax credits, and hiring.
The Investment Manager’s Portfolio Value-Add Initiative also
offers a range of services to support portfolio companies in
their growth journey. These services include: identifying
existing and potential service providers and negotiating
group discounts; establishing a central database of
information and contacts related to key operational and
strategic concerns for companies; hosting in-person and
online events for sharing knowledge and ideas; building
relationships with external stakeholders, including investors,
customers and suppliers; helping to identify potential
acquisition or exit opportunities; and encouraging companies
to consider and adopt ESG initiatives.
Environmental, Social, Human Rights
Policy and Greenhouse Emissions
The 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. However, the Company and the Investment Manager
recognise the need for the Company and the businesses
within its portfolio to embrace environmental, social and
governance (“ESG”) practices. The Investment Manager has
played a pivotal role in the creation of ESG_VC and its
development of a standardised framework for evaluating ESG
within early-stage companies, which has been endorsed by
the British Private Equity and Venture Capital Association
(BVCA). Completing the ESG_VC Measurement Framework is
n
ow part of the annual reporting requested from members of
the ProVen VCTs’ portfolio. It is used as part of the onboarding
of new investments, and to help shape the development of
r
esources and events for the portfolio.
The Investment Manager’s ongoing role as Chair of ESG_VC,
which now brings together more than 200 leading VC firms
across the UK and Europe, has also provided valuable
opportunities for the firm and the portfolio. As a result of its
role within ESG_VC, the Investment Manager was shortlisted
among the leading firms for ESG in venture capital at the Real
Deals Awards 2022, and Henry Philipson, Director of
Marketing and Communications, was named among the
Future 40 ESG Innovators.
To evaluate impact and improvement in its internal
operations, the Investment Manager has an ESG committee
responsible for assessing and strengthening the firm’s
approach to sustainability, diversity and inclusion, and
governance. The firm has performed particularly strongly in
its diversity-focused initiatives, and it is now certified as a
Level 2 firm under the Diversity VC Standard, an industry
accreditation for diversity and inclusion best practice. The
Investment Manager is also a signatory of the Investing in
Women Code, submitting annual data on the diversity of
companies in the portfolio and investment pipeline.
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. As a result, total
energy emissions are less than 40,000 kWh and the
additional Streamlined Energy and Carbon Reporting (SECR)
disclosures have not been made.
Directors and Senior Management
The 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.
Annual Report & Accounts 2023
35
Directors’ Remuneration
It 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. No changes are being proposed to the
Directors’ remuneration policy. The Directors’ remuneration
policy that was approved at the AGM of the Company on
14 July 2021 is set out on page 46, and the following votes
were received at that AGM:
Voting Votes received Percentage
Votes for 7,756,200 88.70%
Votes for – discretion 291,527 3.33%
Votes against 696,858 7.97%
Votes received 8,744,585 100.00%
Votes withheld 353,109
Future Prospects
The Company’s future prospects are set out in the Chair’s
Statement and Investment Manager’s Review.
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.
As noted in the Chair's Statement, unless legislation to
extend or remove the Sunset Clause is enacted, income tax
relief will no longer be available for new VCT subscriptions
made on or after 6 April 2025. However, the Government
announced in September 2022 its commitment to extending
the VCT scheme beyond 2025, and the Directors look
forward to receiving details from the Government in due
course of how the removal of the Sunset Clause will be
enacted.
By order of the Board
Beringea LLP
Company Secretary of ProVen VCT plc
Company number: 03911323
Charter House
55 Drury Lane
London, WC2B 5SQ
9 June 2023
Main Head
Directors’
Report
Results and Dividends
£’000
Pence
per share
Loss on ordinary activities
after tax for the year ended (13,831)(5.9p)
28 February 2023
During the year ended 28 February 2023, the Company paid
final and special dividends on 5 August 2022 of 2.25p and
1.5p per share respectively in relation to the year ended
28 February 2022, and the Company paid an interim
dividend of 1.75p per Ordinary Share in respect of the year
ended 28 February 2023 on 2 December 2022.
The Board is proposing a final dividend of 2.0p per share to
be paid on 4 August 2023 to Shareholders on the register at
7 July 2023.
Directors
The Directors whose names and biographies are set out on
page 23, all served throughout the year.
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 23 together with the performance of the
Company over a number of years, in order to support the
resolutions to re-appoint all four Directors.
Each of the Directors has an agreed letter of appointment
which is terminable by three months’ rolling 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.
Share Capital
The Company has one class of shares: Ordinary Shares of
10p each (“Ordinary Shares”). The total number of Ordinary
Shares in issue at 28 February 2023 was 247,113,415. Each
Ordinary Share entitles the holder to attend and vote at
general meetings of the Company and to receive a copy of
the Annual Report and Financial Statements of the Company.
Each Ordinary Share is entitled to one vote. The Directors are
not aware of any restrictions on the transfer of shares or on
voting rights. Holders of Ordinary Shares are entitled to
receive dividends and are entitled to the return of surplus
capital on winding up or other return of capital based on the
surpluses attributable to the Ordinary Shares.
During the year, 46,497,751 shares were issued at between
70.75p and 80.6p per share, with an aggregate nominal value
of £4,649,775 pursuant to the offer for subscription
announced on 11 January 2022. The aggregate consideration
for the shares was £37,253,437 which excluded share issue
costs of £1,671,169.
Also, 8,104,621 shares were issued at 64.55p per share with
a nominal value of £810,462 pursuant to the offer for
subscription announced on 19 October 2022. The
consideration for these shares was £5,419,393 which
excluded share issue costs of £187,729.
Under the terms of the Company’s Dividend Reinvestment
Scheme, the Company allotted: 2,095,063 Ordinary Shares
at 70.75p per share to subscribing Shareholders on 5 August
2022 and 1,110,056 Ordinary Shares at 64.55p per share to
subscribing Shareholders on 2 December 2022. The
aggregate consideration for the shares was £2,213,229.
At the 2022 Annual General Meeting, Shareholders
authorised the Company to make market purchases of its
own shares of up to 14.99% of the share capital in issue at
that date and to waive pre-emption rights and issue up to
34,922,734 Ordinary Shares.
During the year, the Company repurchased a further
3,072,254 Ordinary Shares for an aggregate consideration
Annual Report & Accounts 2023
36
(
net of costs) of £2,058,958 being an average price of 67.02p
per share and which represented 1.6% of the Company’s
issued share capital at the start of the year and had an
a
ggregate nominal value of £307,225. These shares were
subsequently cancelled. Costs relating to the share
repurchases amounted to £16,969. These shares were
r
epurchased in accordance with the Company’s buyback
policy in order to provide liquidity to Shareholders.
At the current date, authority remains for the Company to
make market purchases of up to 31,850,480 Ordinary
Shares. A resolution to renew this authority will be put to
Shareholders at the Annual General Meeting taking place on
12 July 2023.
Auditor
The financial year to 28 February 2023 sees the twelfth audit
completed by BDO LLP. In line with the FRC’s guidance on
audit best practice and its recommendation that companies
should put their audit out to tender every 10 years, the
Company completed an audit tender process in May 2021
which led to the re-appointment of BDO LLP at the 2021 AGM.
A resolution to re-appoint BDO LLP as the Company’s auditor
for the following year will be proposed at the forthcoming AGM.
Annual General Meeting
The Annual General Meeting will be held at the offices of
Beringea LLP, at Charter House, 55 Drury Lane, London,
WC2B 5SQ at 11:00am on Wednesday 12 July 2023.
Those intending to attend the AGM are asked to register their
intention by emailing info@beringea.co.uk
in advance of the
meeting.
This year, the Company will also offer Shareholders the
option to follow proceedings of the meeting online. Any
Shareholders who wish to listen to the meeting remotely,
should email info@beringea.co.uk
for joining instructions.
Please note that Shareholders will not be able to vote or ask
questions at the AGM when joining remotely. Shareholders
are encouraged, even if they are planning to attend the AGM
in person, to exercise their votes by submitting their proxy
electronically via their Signal Shares account at
www.signalshares.com
in advance of the Meeting and to
appoint the Chair of the AGM as their proxy with their voting
instructions.
Shareholders who wish to submit questions in advance of
the AGM may do so via e-mail to info@beringea.co.uk
and
the Board will respond to questions raised at the meeting.
In addition to the ordinary business, five items of special
business will be proposed at the AGM. There are two
resolutions giving the Directors authority to allot shares, to
e
nable the Company to raise additional funds and, as
mentioned above, there is one resolution to allow the
Company to continue to make share buybacks. In addition,
t
he following resolutions will be proposed:
Cancellation of Share Premium
The Company may, with the sanction of a special resolution
of its Shareholders and the confirmation of the Court, reduce
or cancel all or part of its existing share capital and apply the
sums resulting from such reduction to, among other things,
create distributable reserves. The Company has cancelled
such share capital in the past to provide the Company with
flexibility to support, amongst other things, share buybacks
and the payment of dividends or other distributions to
Shareholders.
The Company now proposes to put a special resolution to
Shareholders at the AGM which seeks approval for the
cancellation of the entire amount standing to the credit of the
Company’ share premium account and capital redemption
reserve as at the date the relevant Court order is made.
Subject to the approval of the Court, and the reduction in
capital taking effect, the amount so cancelled will be credited
to the Company’s distributable reserves to facilitate, amongst
other things, further share buy-backs and/or the payment of
dividends in the future. The Company will monitor all
distributions being made from cancelled share capital to
ensure compliance with the VCT Rules.
Amendment to Articles of Association
A special resolution is proposed to be put to Shareholders at
the AGM to amend the Articles of Association such that the
aggregate limit of £150,000 per annum on director fees is
increased to £200,000 per annum. The £150,000 limit has
remained unchanged since 2015 and since that time, the
Company has significantly increased in size and complexity.
The increase will enable the Company to expand the Board in
the future in order to plan for succession. Further details of
the Directors’ remuneration are set out in the Directors’
Remuneration Report at pages 46 to 49.
A copy of the Company’s proposed new Articles of
Association marked to show the changes is available on
request by email to info@beringea.co.uk
and will be available
for inspection during normal business hours (excluding
Saturdays, Sundays and bank holidays) at the Company’s
registered office from the date of this notice of meeting until
the close of the meeting. The proposed new Articles of
Association will also be available for inspection at the AGM at
least fifteen minutes prior to the start of the meeting and up
until the close of the meeting.
Full details of the business to be conducted at the AGM are
given in the Notice of Annual General Meeting on pages 80
to 81 of this Report.
Annual Report & Accounts 2023
37
Directors’ Report (cont.)
Substantial Interests
As at 28 February 2023, and at the date of this report, the
Company was not aware of any beneficial interest exceeding
3% of the issued share capital. The same was true of the
prior year.
Directors’ Indemnity
Directors’ and Officers’ liability insurance cover is held by the
Company in respect of the Directors.
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 the financial statements, the Directors are
required to:
• select suitable accounting policies and then apply them
consistently;
• make judgments and accounting estimates that are
reasonable;
• 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.
T
he Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions, to disclose with reasonable
a
ccuracy 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.
T
he 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.
Website Publication
The Directors are responsible for ensuring that the Annual
Report and Accounts are made available on a website. The
Annual Report and Accounts are published on the ProVen
VCTs’ website www.proveninvestments.co.uk
, 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.
Directors’ Responsibilities Pursuant to the
Disclosure and Transparency Rule 4
Each of the Directors, whose names are listed on page 23,
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, Chair’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.
Corporate Governance
The Statement of Corporate Governance is set out on
pages 40 to 45 and forms part of this Directors’ Report.
Political Donations
No political donations were made by the Company during the
year ended 28 February 2023 (2022: £nil).
Other Matters
Information in respect of financial instruments, greenhouse
gas emissions and future developments which were
Annual Report & Accounts 2023
38
p
reviously disclosed within the Directors’ Report has been
disclosed within the Strategic Report on pages 24 to 35 and
in the Auditor’s Report.
Post Balance Sheet Events
Between 28 February 2023 and the date of the Annual
R
eport & Accounts, the Company issued 8,116,540 Ordinary
Shares for an aggregate consideration of £5.5 million under
the combined offer for subscription with ProVen Growth and
Income VCT plc which launched on 19 October 2022. Share
issue costs thereon amounted to £0.3 million.
In March 2023, the Company disposed of its holding in
Monica Vinader for initial proceeds of £6.3 million,
representing an 11.8x return on cost at 28 February 2023,
with potential for future proceeds. A strong performer in the
Company’s portfolio for several years, Monica Vinader had
been exploring funding options and agreed a strategic sale
to Bridgepoint Development Capital IV. After originally
investing in Monica Vinader in 2010, the Company sold 60%
of its holding in February 2016 for proceeds of £5.2 million
and a multiple on cost of 5.2x.
The Company also disposed of its holding in Aistemos in
March 2023, with proceeds of £3.1 million, representing a
multiple on cost of 1.7x.
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.
The Directors’ Report, which has been approved by the
Board, includes all relevant information required to be
disclosed under LR9.8.4R.
Going Concern
The Company’s business activities, together with the factors
likely to affect its future development, performance and
position, are set out in the Chair’s Statement on pages 4 to 7,
the Investment Manager’s Review on pages 8 to 11, the
Strategic Report on pages 24 to 35 and the Directors’ Report
on pages 36 to 39. The financial position of the Company, its
cash flows, liquidity position and borrowing facilities are
shown in the Statement of Financial Position on page 62, the
Statement of Cash Flows on page 63 and the Strategic Report
on pages 24 to 35. In addition, notes 15 and 16 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 part of the viability
statement, financial projections for a three year period are
also prepared and subjected to stress testing. As a
consequence, the Directors believe that the Company is well
placed to manage its business risks successfully.
The Directors have a reasonable expectation that the
Company has adequate resources to continue in operational
existence for the twelve months from the date of sign off of
this Report. Thus, they continue to adopt the going concern
basis of accounting in preparing the annual financial
statements.
By order of the Board
Beringea LLP
Company Secretary
Charter House
55 Drury Lane
London, WC2B 5SQ
9 June 2023
Annual Report & Accounts 2023
39
T
he Statement of Corporate Governance forms part of the
Directors’ Report on pages 36 to 39. The longer term viability
statement on page 32 also forms part of this report.
The Board has considered the principles and provisions of
the AIC Code of Corporate Governance (“AIC Code”).
The AIC Code addresses the principles and provisions set
out in the 2018 UK Corporate Governance Code (the “UK
Code”), as well as setting out additional provisions on issues
that are of specific relevance to investment companies. The
Board considers that reporting against the principles and
provisions of the AIC Code, which has been endorsed by the
Financial Reporting Council, provides more relevant
information to Shareholders. Except as set out below, where
it is noted that two directors have served on the Board for
more than nine years, the Company has complied with the
principles and provisions of the AIC Code.
The AIC Code is available on the AIC website
(www.theaic.co.uk
). It includes an explanation of how the AIC
Code adapts the principles and provisions set out in the UK
Code to make them relevant for investment companies.
By reporting against the AIC Code, the Board are meeting
their obligations in relation to the UK Code and associated
disclosure requirements under paragraph 9.8.6 of the Listing
Rules. The UK Code includes provisions relating to the role of
the chief executive, executive directors’ remuneration and
workforce which are not relevant to an externally managed
investment company. The Company has therefore not
reported further in respect of these provisions.
The Board
The Company has a Board comprising four non-executive
Directors. The Chair is Neal Ransome and the Senior
Independent Director is Barry Dean. Neal Ransome, Barry
Dean and Lorna Tilbian are considered to be independent
Directors by the Board, and this independence is considered
and challenged annually through a formal review of
independence. Barry Dean and Lorna Tilbian have served on
the Board for more than nine years and will offer themselves
for re-election at the forthcoming AGM in accordance with
Company policy. The Board has reviewed the independence
of Barry Dean and Lorna Tilbian and concluded that despite
their long tenures, they continue to be independent. They are
not involved in the day-to-day running of the Company and
provide strong strategic insight to the Company as well as
robust challenge to the Investment Manager. Malcolm Moss
is not independent by virtue of being a partner of the
Investment Manager. Biographical details of all Board
members (including the significant commitments of the
Chair) are shown on page 23. All non-executive Directors
have sufficient time to meet their board responsibilities and
n
o significant additional external appointments have been
taken by any of the non-executive Directors during the
current financial year.
In accordance with Company policy, all Directors will resign at
the forthcoming AGM and, being eligible, offer themselves for
re-election. Following a formal Board evaluation (further
details of which are set out on page 44), each Director
continues to be effective, providing considerable experience
and continuity to the Company. Each of the Directors
demonstrates commitment to their role, to the Board and the
Company and the Board therefore has no hesitation in
recommending each of the Directors for re-election at the
forthcoming AGM.
The primary focus of Board meetings is the review of
investment performance and associated matters. Full Board
meetings take place to discuss and approve the quarterly
results of the Company and the Board may meet periodically
to address specific issues including considering
recommendations from the Investment Manager.
The Board has a formal schedule of matters specifically
reserved for its decision which include:
• determination of the Company’s investment objective
and policy;
• determination and approval of appropriate dividend
payments;
• approval of new share issues and share buybacks;
• regular review of the group’s overall corporate
governance arrangements; and
• regular review of the performance of the Company’s
Investment Manager.
The Board also provides oversight of the Company’s strategy.
The Investment Manager regularly consults with the Board
on potential new investments as well as preparing detailed
reports to the Board covering advanced investment
prospects and the performance of individual portfolio
companies which are considered by the Board on a quarterly
basis. When considering business strategy, the Board also
considers other matters such as the interests of its various
stakeholders and the long-term impact of its actions on the
Company’s future and reputation.
The Chair leads the Board in the determination of its strategy
and in the achievement of its objectives. The Chair is
responsible for organising the business of the Board,
ensuring its effectiveness and setting its agenda, and has no
involvement in the day-to-day business of the Company or
any other relationships that may create a conflict of interest
between the Chair’s interest and those of the Shareholders.
Statement of Corporate Governance
Annual Report & Accounts 2023
40
T
he Board does not have a policy of limiting the tenure of any
Director, including the Chair, as the Board does not consider
that a Director’s length of service reduces his or her ability to
a
ct independently of the Investment Manager.
T
he Senior Independent Director is available to Shareholders
if they have a concern that contact through the normal
channels of the Chair and/or other Directors have failed to
resolve or where such contact would be inappropriate. The
Senior Independent Director also provides a sounding board
for the Chair and serves as an intermediary to other
non-executive directors where necessary as well as
reviewing and appraising the Chair’s performance on at least
an annual basis.
Whilst the Company does not have a workforce, the Board
assesses and monitors its own behaviour to ensure it
promotes a culture of openness and debate. The Board is
also very conscious of promoting its culture in its
engagement with the wider stakeholders of the Company.
The Board works closely with the Investment Manager in
reviewing how stakeholder issues are handled, ensuring
good governance and responsibility in managing the
Company’s affairs.
Directors review the disclosure of conflicts of interest
regularly, with any changes reviewed and noted at the
beginning of each Board meeting. Procedures to disclose
and authorise conflicts of interest have been adhered to
throughout the year. 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.
A
ll 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
l
iabilities and other relevant information requested by the
Chair, in advance of each Board meeting as well as advising
on corporate governance related matters. Should any
D
irector have concerns about the operation of the Boards or
Company that cannot be resolved by the Board, they can
raise such concerns with the Company Secretary or with
independent professional advisers. Any such concerns
would be recorded in Board minutes of the Company and in
the case of a resigning non-executive Director, the Director
would be asked to make a written statement to the Chair, for
circulation to the Board.
Share Capital
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 in the Chair’s Statement on page 5 and the Directors’
Report on pages 36 to 37.
Board and Committee Meetings
The following table sets out the Directors’ attendance at full
Board and Committee meetings held during the year ended
28 February 2023.
Audit Committee Remuneration Nomination
Board Meetings Meetings Committee Meetings Committee Meetings
Director held attended held attended held attended held attended
Neal Ransome 5522 1 1 1 1
Barry Dean*54 2 1 1 1 1 1
Malcolm Moss*5 4 n/a n/a n/a n/a n/a n/a
Lorna Tilbian 5522 1 1 1 1
* One Board meeting and one Audit Committee meeting during the year were required to be held outside the normal board meeting cycle and on shorter notice than
is usually provided to board members. This meant that not all Directors were available to attend. However, they received and reviewed all board papers prior to the
meetings and their input was provided to and considered at the meetings.
Annual Report & Accounts 2023
41
Statement of Corporate Governance (cont.)
These areas are discussed between the Audit Committee,
Board and the Investment Manager during the year and at
the regular Board meetings in order that any potential issues
are identified and addressed on a timely basis. The Audit
Committee and/or Investment Manager will engage outside
professional support where this is deemed desirable and in
the interests of Shareholders.
The Audit Committee reviews the performance and
continued suitability of the Company’s auditor. In advance of
each audit, BDO LLP provides an audit strategy plan for
consideration by the Committee, including confirmation of
BDO’s compliance with the Ethical Standards of the Financial
Reporting Council and of the audit and non-audit fees
chargeable to the Company. BDO liaises directly with the
Investment Manager during the audit process and attends
the Audit Committee meeting at which the Annual Report
and Accounts is considered. BDO provides a detailed Audit
Committee Report outlining their audit process and setting
out their findings. The Audit Committee and Investment
Audit Committee
The Company has an Audit Committee currently comprising
of Barry Dean, as Chair, Lorna Tilbian and Neal Ransome
(who sits on the Audit Committee despite being Chair of the
Board because he is a chartered accountant and brings
valuable experience from sitting on several other audit
committees).
The Audit Committee has defined terms of reference and
duties and is responsible for:
• monitoring the Company’s financial reporting;
• advising the Board on whether the Annual Report and
Accounts, taken as a whole, are fair, balanced and
understandable;
• advising the Board on whether the Annual Report and
Accounts provides the information necessary for
Shareholders to assess the Company’s position and
performance, business model and strategy;
• reviewing internal controls and risk management
systems; and
• matters regarding audit and external auditors.
The Directors’ Responsibilities Statement for preparing the
accounts is set out in the Directors’ Report on page 38, and a
statement by the Auditor about their reporting responsibilities
is set out in the Independent Auditor’s Report on pages 55
and 56.
The Audit Committee has considered the Annual Report and
Accounts for the year ended 28 February 2023 and has
reported to the Board that it considers them to be fair,
balanced and understandable providing the information
necessary for Shareholders to assess the Company’s
position and performance, business model and strategy.
The key areas considered by the Audit Committee to be
principal risks in relation to the financial statements of the
Company are set out in the following table, together with how
these risks were addressed. A detailed analysis of the other
risks and uncertainties facing the business is set out in the
Strategic Report on pages 29 to 32.
Principal Risks Mitigation
Valuation of unquoted investments. The unquoted investment valuations are prepared by the Investment Manager and
agreed by the Board on a quarterly basis although new valuations may be prepared
and agreed as required in the event of a material movement in the valuations. On an
annual basis, at the year end, the Company’s Auditor, BDO LLP, reports to, and
discusses with, the Audit Committee their findings and any concerns arising from
their review of the investment valuations.
No material issues were identified for the year ended 28 February 2023.
VCT qualification monitoring reports are prepared by the Administration Manager
and approved by the Board on a quarterly basis. On a bi-annual basis, the
Company’s VCT status adviser reports to the Audit Committee in relation to
compliance with the VCT legislation. The report for the year ended 28 February
2023 showed compliance with all aspects of the VCT regulations as summarised
on page 26. The Investment Manager regularly liaises with the Company’s VCT
status adviser in relation to VCT qualification on individual investments and
addresses any recommended actions to ensure compliance.
No issues were identified for the year ended 28 February 2023.
Compliance with HM Revenue &
Customs conditions for approval as
a Venture Capital Trust and the
consequent preservation and/or
availability of tax reliefs for
Shareholders.
Annual Report & Accounts 2023
42
Annual Report & Accounts 2023
43
M
anager are able to assess the quality of BDO’s work and of
BDO’s understanding of the business. Based on these
procedures, the Audit Committee has obtained sufficient
a
ssurance as to BDO’s independence and performance and
it therefore recommends to Shareholders that BDO be
re-appointed as Auditor for the forthcoming year. Audit fees
a
re disclosed in Note 5, on page 67.
The Audit Committee safeguards the objectivity and
independence of the Auditor by reviewing the nature and
extent of non-audit services supplied by the external Auditor
of the Company, seeking to balance objectivity and value for
money, and pre-approves all non-audit work. No non-audit
work was completed in the year.
The Audit Committee has considered the need for an internal
audit function. Given the size and nature of the Company and
its relationship with key service providers, the Audit
Committee has recommended to the Board that the
oversight of the Audit Committee, together with the
processes in place, are sufficiently robust and that no internal
audit function is required.
The Audit Committee terms of reference are available from
www.proveninvestments.co.uk
.
Remuneration Committee
The Board has appointed a Remuneration Committee
comprising all independent Directors and chaired by Lorna
Tilbian. The Remuneration Committee determines and
agrees with the Board the framework or broad policy for the
remuneration of the Company’s non-executive Directors and
reviews the ongoing appropriateness and relevance of the
remuneration policy. 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 Remuneration Committee
terms of reference are available from
www.proveninvestments.co.uk
.
Nomination Committee
The Board has appointed a Nomination Committee
comprising all independent Directors and chaired by Neal
Ransome. The Nomination Committee’s primary function is
to make recommendations to the Board on all new
appointments and also to advise generally on issues relating
to the Board composition and balance.
In particular, the Nomination Committee:
• regularly reviews the structure, size and composition
(including the skills, knowledge, experience and
d
iversity) required of the Board compared to its current
position and makes recommendations to the Board with
regard to any changes;
• gives full consideration to succession planning for
Directors in the course of its work, taking into account
the challenges and opportunities facing the Company,
and what skills and expertise are therefore needed on
the Board in the future;
• is responsible for identifying and nominating for the
approval of the Board, candidates to fill board vacancies
as and when they arise;
• before any appointment is made by the Board, evaluates
the balance of skills, knowledge and experience on the
Board, and, in the light of this evaluation prepares a
description of the role and capabilities required for a
particular appointment. In identifying suitable
candidates the Nomination Committee:
– uses open advertising or the services of external
advisers to facilitate the search;
– considers candidates from a wide range of
backgrounds; and
– considers candidates on merit and against objective
criteria, and with due regard for the benefits of diversity
on the board, including gender, social and ethnic
background, and cognitive and personal strengths,
taking care that appointees have enough time available
to devote to the position;
• ensures that on appointment to the Board,
non-executive directors receive a formal letter of
appointment setting out clearly what is expected of
them in terms of time commitment, committee service
and involvement outside board meetings.
The Nomination Committee meets as and when appropriate.
The Nomination Committee terms of reference are available
from www.proveninvestments.co.uk
.
Diversity
When considering a new appointment to the Board, the
Nomination Committee’s responsibility is to ensure that
Shareholders are safeguarded by appointing the most
appropriate person for the position (irrespective of gender or
ethnicity) giving due regard to past and present experience in
the sectors in which the Company invests. The Company
therefore does not have a specific diversity policy in place.
However, the Nomination Committee regularly reviews the
composition of the Board, including diversity and, when
considering new candidates, will take due regard to the
benefits of diversity on the Board.
F
or the forthcoming financial year ending 29 February 2024,
the FCA rules requiring listed companies to report
information and disclose against targets on the
r
epresentation of women and ethnic minorities on their
boards as set out in paragraph 9.8.6R(9) of the Listing Rules
will apply to the Company. These requirements are as
f
ollows:
(i) at least 40% of the individuals on the Board of Directors
are women;
(ii) at least one of the senior positions on the Board of
Directors is held by a woman; and
(iii) at least one individual on the Board of Directors is from a
minority ethnic background.
The Directors self-reported their gender identities and ethnic
backgrounds as part of the formal board evaluation process
in May 2023, the result of which are shown in the table
below:
Number of Percentage
Board of the
As at 1 March 2023 members Board
Gender Identity
Male 3 75%
Female 1 25%
Non-binary ––
Not specified/prefer not to
say/other ––
Ethnic Background
White 4 100%
Mixed/Multiple ethnic groups ––
Asian/Asian British __
Black/African/Caribbean/
Black British ––
Other ethnic group ––
The Board notes that it does not currently meet the targets.
Due to the small size of the Board, any change in the Board
membership will have a much greater impact on
representation. Therefore, as referred to above, on future
succession and recruitment of new members to the Board,
the diversity in gender identity and ethnic background will be
taken into consideration.
Anti-Bribery Policy
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 at www.proveninvestments.co.uk
.
Board Performance Evaluation
An evaluation of the performance of the Board, each of its
committees and of the non-executive Directors was last
conducted in May 2023 using a series of questionnaires.
A broad range of standard topics was covered including the
programme of regular Board or Committee business, Board
behaviours, culture and strategy. The evaluation will be
updated each year to assess the approach to risk, Board
training and the Directors’ ability to provide effective
challenge.
Representatives of the Company Secretary were well placed
to prepare an updated evaluation that i) was relevant and
appropriate to the Company, ii) was understandable and iii)
ensured a full and frank discussion around any concerns
raised.
The Chair has reviewed the results of the questionnaire and
followed up relevant matters with each Director. The outcome
of the 2023 Board review has confirmed that the Directors
consider the Board to have a good balance of skills and to be
working well. The Board does not undergo an externally
facilitated board evaluation, but will consider the merits of
such a review on an annual basis.
Investment Manager and Third Party
Performance
The Board conducts a review of the terms and performance
of all service providers, including the Investment Manager
and Administration Manager on at least an annual basis. The
2023 review did not raise any concerns and the performance
of all third party service providers was considered
satisfactory. The Board also reviews the terms of the
investment management agreement with the Investment
Manager immediately before an offer is launched. The
investment management agreement sets out the duties and
responsibilities of the Investment Manager.
Statement of Corporate Governance (cont.)
Annual Report & Accounts 2023
44
Relations with Shareholders
Shareholders have the opportunity to meet the Board at the
Annual General Meeting. 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 Event for the ProVen VCTs is also
held each year and Shareholders were invited to attend a
hybrid version of this in Autumn 2022.
Separate resolutions are proposed at the Annual General
Meeting on each substantially separate issue. The proxy
votes are collated and the results (together with the proxy
forms) are forwarded to the Company Secretary immediately
prior to the Annual General Meeting. In order to comply with
the UK Corporate Governance Code, proxy votes are
announced at the Annual General Meeting, except in the
event of a poll being called. The notice of the next Annual
General Meeting can be found at the end of the Annual
Report and Accounts.
Articles of Association
The Company may amend its Articles of Association by
special resolution in accordance with section 21 of the
Companies Act 2006.
Risk Management and Internal Control
The Board has adopted an Internal Control Manual (the
“Manual”) for which it is responsible, which has been
compiled to comply with the UK Corporate Governance Code
and the AIC Code of 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
a
dditional controls as appropriate. The Board reviews a Risk
Register on at least an annual basis. The main aspects of
internal control in relation to financial reporting by the Board
a
re as follows:
•
review of quarterly reports from the Investment Manager
on the portfolio of investments held, including additions
and disposals;
• quarterly reviews by the Board of the Company’s
investments, other assets and liabilities, and revenue
and expenditure and detailed review of unquoted
investment valuations;
• quarterly reviews by the Board of compliance with the
venture capital trust regulations to retain status,
including a review of half yearly reports from Philip Hare
& Associates LLP;
• a separate review of the Annual Report and Accounts
and Half Yearly report by the Audit Committee prior to
Board approval; and
• a review by the Board of all financial announcements
prior to release.
The Board is responsible for ensuring that the procedures to
be followed by the advisers and themselves are in place, and
for monitoring the systems of risk management and internal
control. It also 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 external advisers, including Beringea LLP as the
Investment Manager and the Administration Manager.
The Board is satisfied that the risk management and internal
control systems are effective and has identified no significant
problems that warrant disclosure in the Annual Report and
Accounts.
By order of the Board
Beringea LLP
Company Secretary
Charter House
55 Drury Lane
London, WC2B 5SQ
9 June 2023
Annual Report & Accounts 2023
45
PAPIER
Directors’
Remuneration
Report
Annual Statement by the Chair of the
Remuneration Committee
The Remuneration Committee comprises all independent
members of the Board and is chaired by Lorna Tilbian. An
increase in Directors’ remuneration in accordance with the
current remuneration policy was recommended based on a
review of similar companies and was effective from 1 March
2023.
Directors’ Remuneration Policy
Shareholders must vote on the Directors’ remuneration
policy every three years or sooner if the Company wishes to
make changes to the policy. Shareholders last voted on the
remuneration policy on 14 July 2021 and no further changes
to the Directors’ remuneration policy are proposed.
The Company’s policy on Directors’ remuneration is to seek
to remunerate board members at a level appropriate for the
time commitment and high level of responsibility borne by
the non-executive Directors and should be broadly
comparable with that paid by similar companies.
Non-executive Directors will not be entitled to any
performance related pay or incentive (other than Malcolm
Moss by virtue of also being a partner of the Investment
Manager).
Directors’ remuneration is also subject to the Company’s
Articles of Association as follows:
• the Directors shall be paid out of the funds of the
Company by way of fees for their services, an aggregate
sum not exceeding £150,000 per annum. The Directors
shall also receive by way of additional fees such further
sums (if any) as the Company in General Meeting may
from time to time determine. Such fees and additional
fees shall be divided among the Directors in such
proportion and manner as they may determine and in
default of determination, equally; and
• the Directors shall be entitled to be repaid all reasonable
travel, hotel and other expenses incurred by them
respectively in the performance of their duties as
Directors including any expenses incurred in attending
meetings of the Board or of Committees of the Board or
General Meetings and if, in the opinion of the Directors, it
is desirable that any of their number should make any
special journeys or perform any special services on
behalf of the Company or its business, such Director or
Directors may be paid reasonable additional
remuneration and expenses as the Directors may from
time to time determine.
The Company’s policy in respect of loss of office payments is
to consider each situation as it arises on its own merits.
Under resolution 14 to be proposed to Shareholders at this
year's AGM, the Company is proposing to amend its Articles
of Association to increase the cap on aggregate service fees
to £200,000 per annum. This will allow the Company to
expand the Board in the future in order to plan for
succession, as needed.
Further details of the resolutions to be proposed at the AGM
are set out on pages 80 and 81.
Statement of Voting at Annual General
Meeting
The Board usually receives feedback from Shareholders from
time to time via direct correspondence, telephone calls, at
the Annual General Meeting and at the Shareholder
presentation held each year. The Remuneration Committee
will take account of any comments in respect of the
remuneration policy when it undertakes its regular review of
the Company’s policy.
Annual Report & Accounts 2023
46
S
hareholders’ views in respect of Directors’ remuneration are
communicated at the Company’s Annual General Meeting
and are taken into account in formulating the Directors’
r
emuneration policy. At the last Annual General Meeting held
on 20 July 2022, the following votes were received in
respect of the resolution approving the Directors’
R
emuneration Report:
Voting Votes received Percentage
Votes for 6,908,463 90.9%
Votes for – discretion 306,294 4.0%
Votes against 388,499 5.1%
Votes received 7,603,256 100.0%
Votes withheld 148,651
Agreements for Service
Each of the Directors has an agreed letter of appointment
(which is available for inspection at the Company’s registered
office) whereby he or she is required to devote such time to
the affairs of the Company as the Board reasonably requires
consistent with his or her role as a non-executive Director.
A three month rolling notice applies.
Annual Report on Remuneration
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 12 July 2023.
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 page 55.
Directors’ Remuneration (Audited)
Directors’ fees for the year under review were as follows:
Year ended Year ended
28 Feb 2023 28 Feb 2022
££
Neal Ransome (Chair) 40,000 40,000
Barry Dean 34,000 34,000
Malcolm Moss 15,000 15,000
Lorna Tilbian 32,000 32,000
121,000 121,000
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 Company
does not have any share options in place.
Directors’ Remuneration for the Year to
29 February 2024
The remuneration levels for the forthcoming year are
expected to be at the following rates:
Expected Annual Expense £
Neal Ransome (Chair) 43,000
Barry Dean 37,000
Malcolm Moss 15,000
Lorna Tilbian 35,000
130,000
Annual Report & Accounts 2023
47
Relative Importance of Spend on Pay
The difference in actual spend between 2023 and 2022 on remuneration for all Directors in comparison to distributions
(dividends and share buy backs) and other significant spending are set out in the tabular graph below:
Dividends and share buy backs
Relative Spend on Pay (£’000)
2023
2022
Directors’ pay
Investment management fees
and performance incentive fee
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
15,040
9,079
121 121
3,299
3,981
Directors’ Remuneration Report (cont.)
Changes to Directors’ Remuneration Over Five Years
Year ended Year ended
28 Feb 2023 28 Feb 2018 Annual
Role (£) (£) Overall Change Average Change
Chair 40,000 37,500 6.7% 1.3%
Audit Chair 34,000 30,000 13.3% 2.7%
Other Independent Director 32,000 30,000 6.7% 1.3%
Non-Independent Director 15,000 15,000 0.0% 0.0%
Total 121,000 112,500 7.6% 1.5%
Insurance Cover
Directors’ and Officers’ liability insurance cover is held by the
Company in respect of the Directors.
Directors
The Directors of the Company during the year and their
beneficial interests in the issued Ordinary Shares of the
Company at 28 February 2023 and 28 February 2022 were
as follows:
Director 28 Feb 2023 28 Feb 2022
Neal Ransome
(Chair) 64,985 64,985
Barry Dean 29,252 29,252
Malcolm Moss 307,757 142,662
Lorna Tilbian 62,987 –
There have been no movements in Directors’ holdings since
the year end.
The Company has not set out any formal shareholding
guidelines for Directors.
Annual Report & Accounts 2023
48
Annual Report & Accounts 2023
49
Performance Graph
The chart above represents the Company’s Ordinary Share
performance over the reporting periods since 28 February
2008 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 as at 28 February 2008.
By order of the Board
Beringea LLP
Company Secretary
Charter House
55 Drury Lane
London, WC2B 5SQ
9 June 2023
ASTERRA
50
Independent
Auditor’s Report
Annual Report & Accounts 2023
Opinion on the financial statements
In our opinion the financial statements:
• give a true and fair view of the state of the Company’s
affairs as at 28 February 2023 and of the loss
attributable to equity shareholders for the year then
ended;
• have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice;
• have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements of ProVen VCT plc
(the ‘Company’) for the year ended 28 February 2023 which
comprise the Income Statement, the Statement of Changes
in Equity, the Statement of Financial Position, the Statement
of Cash Flows and notes to the financial statements,
including a summary of significant accounting policies. The
financial reporting framework that has been applied in their
preparation is applicable law and United Kingdom
Accounting Standards, including Financial Reporting
Standard 102 The Financial Reporting Standard applicable in
the UK and Republic of Ireland (United Kingdom Generally
Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described
in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion. Our audit opinion is
consistent with the additional report to the audit committee.
Independence
Following the recommendation of the audit committee, we
were appointed by the Board of Directors to audit the
financial statements for the year ended 29 February 2012
and subsequent financial periods. The period of total
To the members of ProVen
VCT plc
u
ninterrupted engagement including retenders and
reappointments is 12 years, covering the years ended
29 February 2012 to 28 February 2023. We remain
i
ndependent of the Company in accordance with the ethical
requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard
a
s applied to listed public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. The non-audit services prohibited by
that standard were not provided to the Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that
the Directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the
Company’s ability to continue to adopt the going concern
basis of accounting included:
• Obtaining the VCT compliance reports prepared by
management’s expert during the year and as at year
end and reviewing the calculations therein to check that
the Company was meeting its requirements to retain
VCT status;
• Consideration of the Company’s expected future
compliance with VCT legislation, the absence of bank
debt, contingencies and commitments and any market
or reputational risks;
• Reviewing the forecasted cash flows that support the
Directors’ assessment of going concern, challenging
assumptions and judgements made in the forecasts,
and assessing them for reasonableness. In particular,
we considered the available cash resources relative to
the forecast expenditure which was assessed against
the prior year for reasonableness and considered
additional more severe downside scenarios; and
• Evaluating the Directors’ method of assessing the going
concern in light of market volatility and the present
uncertainties in economic recovery.
Based on the work we have performed, we have not
identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast
significant doubt on the Company’s ability to continue as a
going concern for a period of at least twelve months from
when the financial statements are authorised for issue.
In relation to the Company’s reporting on how it has applied
the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the
Directors’ statement in the financial statements about
w
hether the Directors considered it appropriate to adopt the
going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors
with respect to going concern are described in the relevant
s
ections of this report.
Overview
Key audit
Valuation of unquoted investments
matters
2022 3
2021 3
Materiality
Company financial statements as a whole
£2.3m (2022: £2.5m) based on 2% (2022:
2%) of the gross investment value
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the
Company and its environment, including the Company’s
system of internal control, and assessing the risks of material
misstatement in the financial statements. We also
addressed the risk of management override of internal
controls, including assessing whether there was evidence of
bias by the Directors that may have represented a risk of
material misstatement.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
financial statements of the current period and include the
most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified, including
those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit, and directing
the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Valuation of unquoted investments (Note 1 and Note 10)
We consider the valuation of investments to be the most
significant audit area as there is a high level of estimation
uncertainty involved in determining the unquoted investment
valuations.
There is also an inherent risk of management override arising
from the unquoted investment valuations being prepared by
the Investment Manager, who is remunerated and assessed
based on the net asset value of the Company.
51
Annual Report & Accounts 2023
51
Independent Auditor’s Report (cont.)
F
or these reasons we considered the valuation of unquoted
investments to be a key audit matter.
How the scope of our audit addressed the key audit
m
atter
Our sample for the testing of unquoted investments was
stratified according to the value of individual investments.
For all Investments in our sample we considered whether the
valuation methodology was the most appropriate in the
circumstances under the International Private Equity and
Venture Capital Valuation (“IPEV”) Guidelines and the
applicable accounting standards. We have recalculated the
value attributable to the Company, having regard to the
application of enterprise value across the capital structures
of the investee companies.
For investments sampled that were valued using less
subjective valuation techniques (price of recent investment
and offer price reviewed for changes in fair value) we:
• Verified the cost or price of recent investment to
supporting documentation;
• Considered whether the investment was an arm’s length
transaction through reviewing the parties involved in the
transaction and checking whether or not they were
already investors of the investee Company;
• Considered whether there were any indications that the
cost or price of recent investment was no longer
representative of fair value considering, inter alia, the
current performance of the investee company; and
• Considered whether the price of recent investment is
supported by alternative valuation techniques.
For a sample of investments valued using less subjective
valuation techniques (net asset value) we:
• Agreed the net assets to supporting management
accounts, agreed the cash balances to bank statements
and where applicable agreed other assets to supporting
documentation such as loan agreements; and
• Considered whether there were any indications that net
asset value was not representative of fair value.
F
or investments sampled that were valued using more
subjective techniques (earnings multiples and revenue
multiples) we:
• Challenged and corroborated the inputs to the valuation
with reference to management information of investee
companies, market data and our own understanding and
assessed the impact of the estimation uncertainty
concerning these assumptions and the disclosure of
these uncertainties in the financial statements;
• Reviewed the historical financial statements and any
recent management information available to support
assumptions about maintainable revenues, earnings or
cash flows used in the valuations;
• Considered the revenue or earnings multiples applied
and the discounts applied by reference to observable
listed company market data;
• Challenged the consistency and appropriateness of
discounts applied to multiples; and
• Challenged the consistency and appropriateness of
adjustments made to such market data in establishing
the revenue, or earnings multiple applied in arriving at
the valuations adopted by considering the individual
performance of investee companies, the market and
sector in which the investee company operates and
other factors as appropriate.
Where appropriate, we performed a sensitivity analysis by
developing our own point estimate where we considered that
alternative input assumptions could reasonably have been
applied and we considered the overall impact of such
sensitivities on the portfolio of investments in determining
whether the valuations as a whole are reasonable and free
from bias.
Key observations
Based on the procedures performed we consider the
investment valuations to be appropriate.
Annual Report & Accounts 2023
52
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude
by which misstatements, including omissions, could
influence the economic decisions of reasonable users that
are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability
that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the
extent of testing needed. Importantly, misstatements below
these levels will not necessarily be evaluated as immaterial
as we also take account of the nature of identified
misstatements, and the particular circumstances of their
occurrence, when evaluating their effect on the financial
statements as a whole.
Based on our professional judgement, we determined
materiality for the financial statements as a whole and
performance materiality as follows:
53
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £115,000 (2022:
£125,000). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
Company financial statements
2023 £ 2022 £
Materiality 2,300,000 2,500,000
Basis for determining
materiality
2% of Gross investments
Rationale for the benchmark
applied
As a VCT, investments are considered to be the key measure of performance. In setting
materiality, we have had regard to the nature and disposition of the investment portfolio.
Performance materiality 1,720,000 1,875,000
Basis for determining
performance materiality
75% of materiality
Rationale for the percentage
applied for performance
materiality
The level of performance materiality applied was set after having considered a number of
factors including the brought forward uncorrected misstatements, known or expected
misstatements for the current year, management’s attitude towards proposed adjustments
and the number of areas of the financial statements subject to estimation uncertainty.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the
Annual Report and Accounts other than the financial
statements and our auditor’s report thereon. Our opinion on
the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other information
and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our
knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such
material inconsistencies or apparent material
misstatements, we are required to determine whether this
gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have
performed, we conclude that there is a material
misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Corporate governance statement
The Listing Rules require us to review the Directors’
statement in relation to going concern, longer-term viability
and that part of the Corporate Governance Statement
relating to the Company’s compliance with the provisions of
the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the
Corporate Governance Statement is materially consistent
with the financial statements or our knowledge obtained
during the audit.
Going concern
and longer-term
viability
• The Directors’ statement with
regards to the appropriateness of
adopting the going concern basis
of accounting and any material
uncertainties identified; and
• The Directors’ explanation as to
their assessment of the Company’s
prospects, the period this
assessment covers and why the
period is appropriate.
Other Code
provisions
• Directors’ statement on fair,
balanced and understandable;
• Board’s confirmation that it has
carried out a robust assessment of
the emerging and principal risks;
• The section of the annual report
that describes the review of
effectiveness of risk management
and internal control systems; and
• The section describing the work of
the audit committee.
54
Independent Auditor’s Report (cont.)
Annual Report & Accounts 2023
Y
ARDLINK
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work
performed during the course of the audit, we are required by
the Companies Act 2006 and ISAs (UK) to report on certain
opinions and matters as described below.
Responsibilities of Directors
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, and for such internal control as the
Directors determine is necessary to enable the preparation
of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Company’s ability to continue
as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the
Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of
the financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to
detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud is detailed
below:
Non-compliance with laws and regulations
Based on:
• Our understanding of the Company and the industry in
which it operates;
Strategic report
and Directors’
report
In our opinion, based on the work
undertaken in the course of the audit:
• the information given in the
Strategic report and the Directors’
report for the financial year for
which the financial statements are
prepared is consistent with the
financial statements; and
• the Strategic report and the
Directors’ report have been
prepared in accordance with
applicable legal requirements.
In the light of the knowledge and
understanding of the Company and its
environment obtained in the course of
the audit, we have not identified
material misstatements in the
strategic report or the Directors’ report.
Directors’
remuneration
In our opinion, the part of the Directors’
remuneration report to be audited has
been properly prepared in accordance
with the Companies Act 2006.
Matters on
which we are
required to
report by
exception
We have nothing to report in respect of
the following matters in relation to
which the Companies Act 2006
requires us to report to you if, in our
opinion:
• adequate accounting records have
not been kept, or returns adequate
for our audit have not been received
from branches not visited by us; or
• the financial statements and the
part of the Directors’ remuneration
report to be audited are not in
agreement with the accounting
records and returns; or
• certain disclosures of Directors’
remuneration specified by law are
not made; or
• we have not received all the
information and explanations we
require for our audit.
55
Annual Report & Accounts 2023
•
Discussion with management and Those Charged With
Governance; and
• Obtaining and understanding of the Company’s policies
and procedures regarding compliance with laws and
regulations.
We considered the significant laws and regulations to be the
Companies Act 2006, the FCA listing and DTR rules, the
principles of the UK Corporate Governance Code, industry
practice represented by the Statement of Recommended
Practice: Financial Statements of Investment Trust
Companies and Venture Capital Trusts (“the SORP”) and
updated in 2022 with consequential amendments and the
applicable financial reporting framework. We also considered
the Company’s qualification as a VCT under UK tax
legislation.
Our procedures in respect of the above included:
• Agreement of the financial statement disclosures to
underlying supporting documentation;
• Enquiries of management and those charged with
governance relating to the existence of any non-
compliance with laws and regulations;
• Obtaining the VCT compliance reports prepared by
management’s expert during the year and as at year end
and reviewing their calculations to check that the
Company was meeting its requirements to retain VCT
status; and
• Reviewing minutes of meeting of those charged with
governance and the general ledger for legal fees
throughout the period for instances of non-compliance
with laws and regulations.
Fraud
We assessed the susceptibility of the financial statement to
material misstatement including fraud.
Our risk assessment procedures included:
• Enquiry with management and Those Charged With
Governance regarding any known or suspected
instances of fraud;
• Obtaining an understanding of the Company’s policies
and procedures relating to:
• Detecting and responding to the risks of fraud; and
• Internal controls established to mitigate risks
related to fraud.
•
Review of minutes of meeting of Those Charged With
Governance for any known or suspected instances of
fraud;
• Discussion amongst the engagement team as to how
and where fraud might occur in the financial statements.
Based on our risk assessment, we considered the areas
most susceptible to fraud to be the valuation of unquoted
investments and management override of controls.
Our procedures in respect of the above included:
• Relevant aspects of the procedures set out in the Key
Audit Matters section above;
• Obtaining independent evidence to support the
ownership of investments;
• Recalculating investment management fees in total;
• Obtaining independent confirmation of bank balances;
and
• Testing journals which met a defined risk criteria by
agreeing to supporting documentation and evaluating
whether there was evidence of bias by the Investment
Manager and Directors that represented a risk of
material misstatement due to fraud.
We also communicated relevant identified laws and
regulations and potential fraud risks to all engagement team
members who were all deemed to have appropriate
competence and capabilities and remained alert to any
indications of fraud or non-compliance with laws and
regulations throughout the audit.
Our audit procedures were designed to respond to risks of
material misstatement in the financial statements,
recognising that the risk of not detecting a material
misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are inherent
limitations in the audit procedures performed and the further
removed non-compliance with laws and regulations is from
the events and transactions reflected in the financial
statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the
Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities
. This description
forms part of our auditor’s report.
56
Independent Auditor’s Report (cont.)
Annual Report & Accounts 2023
Use of our report
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.
Chris Meyrick (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
9 June 2023
BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).
57
Annual Report & Accounts 2023
Income Statement
For the year ended 28 February 2023
Year ended 28 February 2023 Year ended 28 February 2022
Note
Revenue Capital Total Revenue Capital Total
£
’000 £’000 £’000 £’000 £’000 £’000
Income 2 405 – 405 199 – 199
Realised (losses)/gains on investments 10 – (10,125) (10,125) – 2,490 2,490
Unrealised (losses)/gains on investments 10 – (163) (163) – 12,673 12,673
405 (10,288) (9,883) 199 15,163 15,362
Investment management fees 3 (825) (2,474) (3,299) (741) (2,222) (2,963)
Performance incentive fees 4––––(1,018) (1,018)
Other expenses 5 (648) (1) (649) (736) (3) (739)
(Loss)/return on ordinary activities
before tax (1,068) (12,763) (13,831) (1,278) 11,920 10,642
Tax on ordinary activities 7––––––
(Loss)/return attributable to equity
shareholders (1,068) (12,763) (13,831) (1,278) 11,920 10,642
Basic and diluted (loss)/return per
share 9 (0.4p) (5.5p) (5.9p) (0.7p) 6.4p 5.7p
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 no items have been recognised in ‘other comprehensive
income’ in the current or prior year as shown.
The accompanying notes are an integral part of these financial statements.
58
Annual Report & Accounts 2023
Statement of Changes in Equity
For the year ended 28 February 2023
Called up Capital Share Re- Capital
share redemption Special Premium valuation reserve- Revenue
Note
capital reserve reserve reserve reserve realised reserve
Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 1 March 2022 19,238 1,066 31,716 71,018 24,793 4,482 (4,729) 147,584
Comprehensive
Income for the year:
Management fees
allocated as capital
expenditure 3–––––(2,474) – (2,474)
Legal fees allocated
as capital expense –––––(1) – (1)
Realised loss on
investments 10 –––––(10,125) – (10,125)
Unrealised loss on
investments 10 ––––(163) ––(163)
Loss after tax ––––––(1,068) (1,068)
Total comprehensive
loss ––––(163) (12,600) (1,068) (13,831)
Contributions by
and distributions to
owners:
Issue of new shares
(includes DRIS) (net
of share issue costs) 13 5,780 – (1,858) 39,105 –––43,027
Share buybacks 13 (307) 307 (2,069) ––––(2,069)
Dividends paid
(includes DRIS) 8––(12,971) ––––(12,971)
Total contributions
by and distributions
to owners 5,473 307 (16,898) 39,105 –––27,987
Other movements:
Transfer of
previously unrealised
gains now realised ––––(5,279) 5,279 ––
Total other
movements ––––(5,279) 5,279 ––
At 28 February 2023 24,711 1,373 14,818 110,123 19,351 (2,839) (5,797) 161,740
59
Annual Report & Accounts 2023
Statement of Changes in Equity (cont.)
For the year ended 28 February 2022
Called up Capital Share Re- Capital
s
hare redemption Special Premium valuation reserve- Revenue
Note
capital reserve reserve reserve reserve realised reserve
Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 1 March 2021 16,982 590 42,765 52,739 13,915 3,440 (3,451) 126,980
Comprehensive
Income for the year:
Management fees
allocated as capital
expenditure 3–––––(2,222) – (2,222)
Legal fees allocated
as capital expense –––––(3) – (3)
Realised gain on
investments –––––2,490 – 2,490
Unrealised gain on
investments ––––12,673 ––12,673
Loss after tax ––––––(1,278) (1,278)
Performance fee –––––(1,018) – (1,018)
Total comprehensive
return ––––12,673 (753) (1,278) 10,642
Contributions by
and distributions to
owners:
Issue of new shares
(includes DRIS) (net
of share issue costs) 2,732 – (866) 18,279 –––20,145
Share buybacks (476) 476 (3,406) ––––(3,406)
Dividends paid
(includes DRIS) 8––(6,777) ––––(6,777)
Total contributions
by and distributions
to owners 2,256 476 (11,049) 18,279 –––9,962
Other movements:
Transfer of
previously unrealised
gains now realised ––––(1,795) 1,795 ––
FX translation ––––––––
Total other
movements ––––(1,795) 1,795 ––
At 28 February 2022 19,238 1,066 31,716 71,018 24,793 4,482 (4,729) 147,584
The special reserve, capital reserve-realised and revenue reserve are all distributable reserves. Reserves available for
distribution therefore amount to £6,182,000 (2022: £31,469,000). During the year the Company repurchased 3,072,254 shares
(2022: 4,762,331) with a nominal value of £307,225 (2022: £476,233). All shares were subsequently cancelled.
60
Annual Report & Accounts 2023
T
he 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 – The Company has previously cancelled its
share premium reserve and capital redemption reserve to
create a special reserve that can assist in writing off losses,
which in turn enhances the ability for a company to make
distributions and implement share buybacks. This is the
distributable reserve which is currently 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. The special reserve is currently wholly distributable
as it does not contain any capital arising from shares issued
less than three years ago.
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.
C
apital 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; and
• other 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.
The accompanying notes are an integral part of these
financial statements.
Annual Report & Accounts 2023
61
Statement of Financial Position
As at 28 February 2023
28 February 28 February
2023 2022
Note
Total Total
£’000 £’000
Fixed assets
Investments 10 115,218 124,836
Current assets
Debtors 11 740 576
Cash at bank and in hand 46,565 23,497
47,305 24,073
Creditors: amounts falling due within one year 12 (783) (1,325)
Net current assets 46,522 22,748
Total assets less current liabilities 161,740 147,584
Capital and reserves
Called up share capital 13 24,711 19,238
Capital redemption reserve 1,373 1,066
Special reserve 14,818 31,716
Share premium reserve 110,123 71,018
Revaluation reserve 19,351 24,793
Capital reserve – realised (2,839) 4,482
Revenue reserve (5,797) (4,729)
Total equity shareholders’ funds 161,740 147,584
Basic and diluted net asset value per share 14 65.5p 76.7p
The financial statements on pages 58 to 63 were approved
and authorised for issue by the Board of Directors on 9 June
2023 and were signed on its behalf by:
Neal Ransome
Chair
ProVen VCT plc
Company number: 03911323
The accompanying notes are an integral part of these
financial statements.
Annual Report & Accounts 2023
62
Statement of Cash Flows
For the year ended 28 February 2023
Year ended Year ended
28 February 2023 28 February 2022
N
ote
Total Total
£’000 £’000
(Loss)/return on ordinary activities before taxation (13,831) 10,642
Loss/(gain) on investments 10,287 (15,163)
(Increase)/decrease in prepayments, accrued income
and other debtors (8) 21
(Decrease)/increase in accruals and other creditors (1,049) 894
Net cash outflow from operating activities (4,601) (3,606)
Cash flows from investing activities
Purchase of investments 10 (22,862) (28,982)
Sale of investments 10 22,044 9,104
Net cash outflow from investing activities (818) (19,878)
Cash flows from financing activities
Proceeds from share issues 13 42,673 19,909
Share issue costs
1
13 (1,672) (867)
Purchase of own shares
2
(1,754) (3,402)
Equity dividends paid 8 (10,760) (5,673)
Net cash inflow from financing activities 28,487 9,967
Increase/(decrease) in cash and cash equivalents 23,068 (13,517)
Cash at beginning of year 23,497 37,014
Cash at end of year 46,565 23,497
1
Share issue costs of £1,672,000 as shown above are lower than those shown in the Statement of Changes in Equity
(£1,858,000) due to a creditor of £186,000 held at the year end.
2
The Purchase of own shares figure of £1,754,000 as shown above is lower than those shown in the Statement of Changes in
Equity (£2,069,000) due to a creditor of £319,000 held at the year end, partly offset by a creditor of £4,000 held at the previous
year end.
The accompanying notes are an integral part of these financial statements.
‘Net cash used in operating activities’ includes interest received of £236,000 (2022: £282,000) and dividends received of £nil
(2022: £4,000). No interest was paid during the period (2022: £nil).
63
Annual Report & Accounts 2023
Annual Report & Accounts 2023
64
Notes to the Accounts
For the year ended 28 February 2023
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
updated in July 2022.
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 twelve months from the date of sign off of these financial
statements. In its assessment of the Company’s activities as
a going concern, the Board has reviewed the risks to future
performance as set out in the Strategic Report on pages 29
to 32, and considered the potential impacts of those on the
Company’s future ability to continue as a going concern. The
Company’s cash resources are currently healthy, and the
portfolio of investments is diverse and not reliant on any one
sector. All significant cash outflows, including dividends,
share buybacks and investments, are within the Company’s
control. Therefore, the Board expects that the Company has
sufficient cash resources to withstand any reasonable stress
scenario, for example if the Company was unable to raise
further funds, and believes that it is appropriate to continue to
adopt the going concern basis of accounting in preparing
these 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
a
t 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”)
updated in December 2022, 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 after an
appropriate period, the investment may be valued by
applying a suitable earnings, revenue or transaction
multiple to that company’s maintainable earnings or
revenue. The multiple used is based on comparable
listed companies, transaction data 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, whilst also
being benchmarked against alternative valuation
methodologies;
• where alternative methods of valuation, such as net
assets of the business, are more appropriate then such
methods may be used; and
Annual Report & Accounts 2023
65
• 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 estimates
The 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.
The table below shows the investment portfolio categorised
by valuation methodology, as well as the range of market
comparables used in reaching the closing valuations. The
table also shows the possible outcomes if different ranges of
multiples were used in valuing the portfolio.
Range of Range of
Valuation as at market market
Range of 28 February comparables Valuation comparables Valuation
market 2023 when reduced outcome when increased outcome
Valuation Basis comparables £'000 by 15% £'000 by 15% £'000
Multiple of revenue or
EBITDA 1.0x - 8.7x 86,412 0.9x - 7.4x 76,316 1.1x - 10.0x 101,545
Price of recent investment n/a 11,941 n/a 11,941 n/a 11,941
Price of recent offer n/a 11,921 n/a 11,921 n/a 11,921
Net asset value n/a 4,944 n/a 4,944 n/a 4,944
Total 115,218 105,122 130,351
Annual Report & Accounts 2023
66
Notes to the Accounts (cont.)
F
air value
F
air 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
f
inancial 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.
Expenses
All expenses are accounted for on an accruals basis. In
respect of the analysis between revenue and capital items
presented within the Income Statement, all expenses have
been presented as revenue items except as follows:
• expenses which are incidental to the acquisition of an
investment are 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; and
• performance incentive fees are treated as a capital item.
T
axation
T
he 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
C
ompany’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.
Foreign Exchange
Where a new investment is made in a currency other than
GBP, its cost is recorded in the accounts at the GBP
equivalent on the date of purchase and held in GBP for the
life of the investment.
Share issue costs
Expenses in relation to share issues are deducted from the
Special Reserve.
Cash
Cash comprises cash on hand and demand deposits. All
cash at the year end is held in instant access accounts.
Debtors
Short term debtors are initially measured at transaction price.
Subsequent remeasurement deducts any impairment from
the transaction price.
Creditors
Short term trade creditors are initially and subsequently
measured at the transaction price, and are settled in a short
time frame.
Annual Report & Accounts 2023
67
2. Income
2023 2022
£’000 £’000
Income from investments
Loan stock interest 288 195
Dividend income –2
288 197
Other income
Deposit interest 117 2
405 199
The Directors consider that the Company has only one
operating segment as reported to the Board of Directors in
their capacity as chief operating decision makers.
All activities arise in the United Kingdom.
3. Investment Management Fees
2023 2022
£’000 £’000
Investment management fees 3,299 2,963
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. 25% of the management fee is
allocated as capital expenditure.
4. Performance Incentive Fees
2023 2022
£’000 £’000
Performance incentive fees – 1,018
B
eringea LLP is entitled to receive performance incentive
fees as described in the Strategic Report on page 27.
At 28 February 2023, performance hurdles were not met.
T
herefore, no performance incentive fee is accrued in these
accounts.
5. Other Expenses
2023 2022
£’000 £’000
Administration services 70 65
Directors’ remuneration 121 121
Social security costs on
Directors’ remuneration 15 14
Trail commission 81 169
Auditors’ remuneration for
the audit of the Company’s
annual accounts (net of VAT) 68 61
Other expenses 294 309
649 739
Included within other expenses is £1,000 (2022: £3,000)
allocated to capital expenses in respect of expenses
incurred in relation to investments. All other expenses are
allocated as revenue costs.
6. Directors’ Remuneration
Details of remuneration (excluding employers’ NIC and VAT)
are given in the Directors’ Remuneration Report on page 47.
The Company had no employees (other than Directors)
during either year. Directors are key management personnel
and no separate key management personnel exist in the
Company. Costs in respect of Directors are disclosed in
Note 5.
Annual Report & Accounts 2023
68
Notes to the Accounts (cont.)
7. Taxation on Ordinary Activities
2023 2022
£’000 £’000
Tax charge for the year
Current year
UK corporation tax (charged to revenue account) ––
Charged to capital expenses ––
Charge for the year ––
Factors affecting tax charge for the year
(Loss)/return on ordinary activities before tax (13,831) 10,642
Tax charge calculated on operating profit at the applicable rate
of 19% (2022: 19%) (2,628) 2,022
Effects of:
Loss/(gain) on investments 1,955 (2,881)
Expenses disallowed for tax purposes 16
Deferred tax not recognised 672 853
––
Deferred tax not recognised
Excess management fees, which are available to be carried forward and set off against future taxable income, amounted to
£36,002,000 (2022: £32,455,000). The deferred tax asset, calculated at a rate of 25%, of £9,001,000 (2022: £8,114,000)
would only be recovered were the Company to make sufficient taxable profits in the future. Given the Company is not expected
to generate taxable income in excess of deductible expenses, no deferred tax asset has been recognised for the year ended
28 February 2023.
(a)
(b)
(c)
Annual Report & Accounts 2023
69
8. Dividends
Year ended 28 February 2023 Year ended 28 February 2022
Revenue Capital Total Revenue Capital Total
P
ence
£’000 £’000 £’000 £’000 £’000 £’000
Ordinary Share dividends paid in the year
2021 Final 2.0 ––––3,872 3,872
2022 Interim 1.5 ––––2,905 2,905
2022 Final 2.25 – 5,272 5,272 –––
2022 Special 1.5 – 3,514 3,514 –––
2023 Interim 1.75 – 4,185 4,185 –––
– 12,971 12,971 – 6,777 6,777
Proposed dividends
2022 Final 2.25 ––––5,242 5,242
2022 Special 1.5 ––––3,495 3,495
2023 Final 2.0 – 5,105 5,105 –––
Dividends paid in the year ended 28 February 2023 of £12,971,000 as shown above differs to that shown in the Statement of
Cash Flows of £10,758,000 due to £2,213,000 of new shares issued as part of the Company’s DRIS.
9. Basic and diluted return per share
Year ended 28 Year ended 28
February 2023 February 2022
Revenue loss per share based on:
Net loss after taxation (£’000) (1,068) (1,278)
Weighted average number of shares in issue 233,086,216 186,421,327
Pence per share (0.4) (0.7)
Capital (loss)/return per share based on:
Net capital (loss)/return for the financial year (£’000) (12,763) 11,920
Weighted average number of shares in issue 233,086,216 186,421,327
Pence per share (5.5) 6.4
Total (loss)/return per share based on:
Total (loss)/return for the financial year (£’000) (13,831) 10,642
Weighted average number of shares in issue 233,086,216 186,421,327
Pence per share (5.9) 5.7
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.
Annual Report & Accounts 2023
70
Notes to the Accounts (cont.)
10. Investments
“Fair value through profit or loss” assets
Investments Unquoted
quoted investments Total
on AIM £’000 £’000 £’000
Opening cost at 1 March 2022 287 102,635 102,922
Unrealised gains at 1 March 2022 11 24,781 24,792
Realised losses on investments held at 1 March 2022 – (2,878) (2,878)
Opening fair value at 1 March 2022 298 124,538 124,836
Movement in year:
Purchases at cost (Note a) – 22,868 22,868
Sales – proceeds (Note b) (247) (21,951) (22,198)
– net realised losses on sales (51) (10,074) (10,125)
Net unrealised losses in the income statement – (163) (163)
Closing fair value at 28 February 2023 – 115,218 115,218
Closing cost at 28 February 2023 – 109,541 109,541
Unrealised gains at 28 February 2023 – 19,352 19,352
Realised losses on investments held at 28 February 2023 – (13,675) (13,675)
Closing fair value at 28 February 2023 – 115,218 115,218
Note a) Purchases in the year of £22,868,000 as shown above is higher than that shown in the Statement of Cash Flows of
£22,862,000 due to £6,000 of deal costs associated with the purchase of an investment which are a creditor in these accounts.
Note b) Sale proceeds in the year of £22,198,000 as shown above is higher than that shown in the Statement of Cash Flows of
£22,044,000. The difference arises due to a deferred proceeds debtor of £499,000 held at the year end, partly offset by a
deferred proceeds debtor of £345,000 at the previous year end. An analysis of venture capital investments is set out in the
review of the investments on pages 14 to 20. Note 15 includes an analysis of the fair value of the financial instruments.
Annual Report & Accounts 2023
71
11. Debtors
2023 2022
£’000 £’000
Contingent proceeds receivable 499 343
Prepayments and accrued income 241 233
740 576
12. Creditors: Amounts Falling Due Within One Year
2023 2022
£’000 £’000
Accruals 448 1,306
Share buybacks awaiting settlement 319 4
Other creditors 16 15
783 1,325
13. Called Up Share Capital
2023 2022
£’000 £’000
Issued, allotted, called up and fully-paid:
247,113,415 (2022: 192,378,178) Ordinary Shares of 10p each 24,711 19,238
During the year, 46,497,751 shares were issued at between
70.75p and 80.6p per share, with an aggregate nominal value
of £4,649,775 pursuant to the offer for subscription
announced on 11 January 2022. The aggregate consideration
for the shares was £37,253,437 which excluded share issue
costs of £1,671,169.
Also, 8,104,621 shares were issued at 64.55p per share with
a nominal value of £810,462 pursuant to the offer for
subscription announced on 19 October 2022. The
consideration for these shares was £5,419,393 which
excluded share issue costs of £187,729.
Under the terms of the Company’s Dividend Reinvestment
Scheme, the Company allotted: 2,095,063 Ordinary Shares
at 70.75p per share to subscribing Shareholders on 5 August
2022 and 1,110,056 Ordinary Shares at 64.55p per share to
subscribing Shareholders on 2 December 2022. The
aggregate consideration for the shares was £2,213,229.
At the 2022 Annual General Meeting, Shareholders
authorised the Company to make market purchases of its
own shares of up to 14.99% of the share capital in issue at
that date and to waive pre-emption rights and issue up to
34,922,734 Ordinary Shares.
During the year, the Company repurchased a further
3,072,254 Ordinary Shares for an aggregate consideration
(net of costs) of £2,058,958 being an average price of 67.02p
per share and which represented 1.6% of the Company’s
issued share capital at the start of the year and which had an
aggregate nominal value of £307,225. These shares were
subsequently cancelled. Costs relating to the share
repurchases amounted to £16,969. These shares were
repurchased in accordance with the Company’s buyback
policy in order to provide liquidity to Shareholders.
Annual Report & Accounts 2023
72
Notes to the Accounts (cont.)
T
he below table sets out a reconciliation of the movement in Ordinary Shares during the year. All Ordinary Shares have full voting,
dividend and capital distribution rights.
2023 2022
Ordinary Shares brought forward 192,378,178 169,820,219
Ordinary Shares issued 57,807,491 27,320,290
Ordinary Shares repurchased for cancellation (3,072,254) (4,762,331)
Ordinary Shares carried forward 247,113,415 192,378,178
14. Basic and diluted net asset value per share
Shares in issue 2023 2022
Pence Net asset Pence Net asset
2023 2022 per share value £’000 per share value £’000
Ordinary Shares 247,113,415 192,378,178 65.5p 161,740 76.7p 147,584
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.
15. Financial Instruments
The Company’s financial instruments comprise investments
held at fair value through profit and loss, being equity and
loan stock investments in quoted companies and unquoted
companies; 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 Statement of
Financial Position.
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; and
• Liquidity risk.
The Board regularly reviews these risks and the policies in
place for managing them. Due to ongoing geo-political and
economic instability, certain risks that the Company is
exposed to have increased in significance over the year, e.g.
market risk. However, these risks are actively managed as
set out below, and their increase in significance has not
resulted in any 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.
Annual Report & Accounts 2023
73
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; and
• Interest 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 28 February 2023, the Company had no AIM-quoted
portfolio companies and therefore the AIM-quoted portfolio
was valued at £nil (2022: £298,000).
At 28 February 2023, the unquoted portfolio was valued at
£115,218,000 (2022: £124,538,000). As many of the
Company’s unquoted investments are valued using revenue
or earnings multiples of comparable companies or sectors, a
fall in listed share prices generally would impact on the
valuation of the unquoted portfolio. A 15% movement in the
multiples used to reach the valuations of the unquoted
investments held by the Company would have an effect as
follows:
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. The Company holds one class of loan with
a portfolio company where the interest is partly based
on LIBOR. As this loan is past due and is not being
repaid, nor is it expected to be repaid in the near future,
the Company has not yet renegotiated the interest
terms of this loan since the transition from LIBOR.
Should there be an expectation that the loan will be
repaid, the Company will renegotiate the interest terms
before repayment occurs.
• “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.
Range of Range of
Valuation as at market market
Range of 28 February comparables Valuation comparables Valuation
market 2023 when reduced outcome when increased outcome
Valuation Basis comparables £'000 by 15% £'000 by 15% £'000
Multiple of revenue or
EBITDA 1.0x - 8.7x 86,412 0.9x - 7.4x 76,316 1.1x - 10.0x 101,545
Price of recent investment n/a 11,941 n/a 11,941 n/a 11,941
Price of recent offer n/a 11,921 n/a 11,921 n/a 11,921
Net asset value n/a 4,944 n/a 4,944 n/a 4,944
Total 115,218 105,122 130,351
Annual Report & Accounts 2023
74
Notes to the Accounts (cont.)
Average Average period 2023 2022
interest rate until maturity £’000 £’000
Fixed rate 6.9% 657 days 7,699 9,291
Floating rate 0.6% 21 days 47,516 23,669
No interest rate 106,525 114,624
161,740 147,584
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 or decrease of 1% in interest rates would have
increased or decreased total return before taxation for the
year by £475,000 (2022: £237,000).
Foreign Exchange risk
The Company has made a number of its initial investments in
a foreign currency; most often in Euros or US Dollars, though
these costs are recorded in their GBP equivalents on the
relevant transaction dates. Furthermore, as not all
companies’ operations are restricted to the UK, some
companies may function, in part, in a currency other than
GBP. The portfolio is therefore exposed, to some extent, to
foreign exchange risk and specifically that of transaction risk
and translation risk.
The Investment Manager and the Board regularly review the
exposure to foreign currency movement to make sure the
level of risk is appropriately managed. On realisation of
investments held in foreign currencies, cash is translated to
GBP shortly after receiving the proceeds to limit the amount
of time exposed to foreign currency fluctuations.
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 in
investee companies is considered to be part of market risk.
The Company’s exposure to credit risk is summarised as
follows:
2023 2022
£’000 £’000
Cash and cash equivalents 46,565 23,497
Interest, dividends and other receivables 197 185
46,762 23,682
The management of credit risk associated with interest,
dividends and other receivables is covered within the
investment management procedures.
For the year ended 28 February 2023, cash was mainly held
by the Royal Bank of Scotland plc, rated A and A+ by
Standard and Poor’s and Fitch, respectively, and is also
ultimately part-owned by the UK Government. Following the
year end, in order to take advantage of recent increases in
interest rates, cash balances have been placed in high
quality liquidity funds held with JP Morgan, Morgan Stanley
and UBS. 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
75
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 (£0.8 million relative to
cash balances of £46.6 million at 28 February 2023) 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
t
he 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.
Annual Report & Accounts 2023
The carrying value of loan stock investments (as opposed to the contractual cash flows) held at 28 February 2023, which is
analysed by expected maturity date, is as follows:
Not later Between 1 Between 2 Between 3 More
than 1 Year and 2 Years and 3 Years and 5 years than 5 years Total
As at 28 February 2023 £’000 £’000 £’000 £’000 £’000 £’000
Fully performing loan stock – 1,073 2,622 3,199 – 6,894
Past due loan stock – 1,752 –––1,752
– 2,825 2,622 3,199 – 8,646
As at 28 February 2022
Fully performing loan stock 4,111 640 – 2,551 – 7,302
Past due loan stock 2,161 ––––2,161
6,272 640 – 2,551 – 9,463
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.
F
air 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
f
inancial 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.
2023 2022
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
AIM quoted ––––298 ––298
Loan notes ––8,646 8,646 – – 9,463 9,463
Unquoted investments ––106,572 106,572 ––115,075 115,075
––115,218 115,218 298 – 124,538 124,836
There have been no movements between levels during the financial year to 28 February 2023.
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 2022 9,463 115,075 124,538
Movements in the Income Statement:
Gains/(losses) in the Income Statement 3,776 (14,013) (10,237)
Reclassification at value (1,109) 1,109 –
Purchases at cost 958 21,910 22,868
Sales proceeds (4,442)(17,509) (21,951)
Balance at 28 February 2023 8,646 106,572 115,218
Annual Report & Accounts 2023
76
Notes to the Accounts (cont.)
There is an element of judgement in the choice of
assumptions for unquoted investments and if different
assumptions were used, different valuations would have
been attributed to certain investments.
Valuations are subject to fluctuations in market conditions
and the sensitivity of the Company to such changes is shown
on page 73.
16. Capital Management
The Company’s capital is managed in accordance with its
investment policy as shown in the Strategic Report on pages
24 to 25, in pursuit of its principal investment objectives as
stated on page 24. There has been no significant change in
the objectives, policies or processes for managing capital
from the previous year.
Annual Report & Accounts 2023
77
B
y 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
o
f 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
o
f the underlying assets. Subject to this overall constraint
upon the changing capital structure, the Company may
adjust the amount of dividends paid to Shareholders,
purchase its own shares, issue new shares or sell assets if
so required to maintain a level of liquidity to remain a going
concern. Although the Company is permitted to borrow to
give a degree of flexibility, there are no current plans to do so.
As the Company has a low level of liabilities, the Board
considers the Company’s net assets to be its capital. The
Company does not have any externally imposed capital
requirements. The Company has the authority to buy back
shares as described in the Directors’ Report.
17. Post balance sheet events
Between 28 February 2023 and the date of the Annual
Report & Accounts, the Company issued 8,116,540 Ordinary
Shares for an aggregate consideration of £5.5 million under
the combined offer for subscription with ProVen Growth and
Income VCT plc which launched on 19 October 2022. Share
issue costs thereon amounted to £0.3 million.
In March 2023, the Company disposed of its holding in
Monica Vinader for initial proceeds of £6.3 million,
representing an 11.8x return on cost at 28 February 2023,
with potential for future proceeds. A strong performer in the
Company’s portfolio for several years, Monica Vinader had
been exploring funding options and agreed a strategic sale
to Bridgepoint Development Capital IV. After originally
investing in Monica Vinader in 2010, the Company sold 60%
of its holding in February 2016 for proceeds of £5.2 million
and a multiple on cost of 5.2x.
The Company also disposed of its holding in Aistemos in
March 2023, with proceeds of £3.1 million, representing a
multiple on cost of 1.7x.
18. Contingencies, Guarantees and
Financial Commitments
The Company had no contingent liabilities, guarantees and
financial commitments at the year end.
19. Controlling and Related Party
Transactions
In the opinion of the Directors there is no immediate or
u
ltimate controlling party.
Malcolm Moss, a Director of the Company, is also a Partner
of Beringea LLP. Beringea LLP was the Company’s
investment manager during the period. During the year
ended 28 February 2023, £3,299,000 (2022: £2,963,000)
was payable to Beringea LLP in respect of these services.
At the year end the Company owed Beringea LLP £nil (2022:
£nil).
As the Company’s investment manager, Beringea LLP is also
entitled to receive a performance incentive fee based on the
Company’s performance for each financial year to
28 February. The performance incentive fee arrangements
are set out, in detail, on page 27. For the year ended
28 February 2023, no performance fee was payable to
Beringea (2022: £1,018,000).
Beringea LLP may charge arrangement fees, in line with
industry practice, to companies in which it invests. It may
also receive directors fees or monitoring fees from investee
companies. These costs are borne by the investee company
not the Company. In the year to 28 February 2023, £305,000
(2022: £398,000) was payable to Beringea LLP for
arrangement fees under such arrangements. Directors and
monitoring fees payable to Beringea LLP in the year to
28 February 2023 amounted to £501,000 (2022: £605,000).
Beringea LLP was also the Company’s Administration
Manager during the period. Fees paid to Beringea in its
capacity as Administration Manager for the year ended
28 February 2023 amounted to £70,000 (2022: £65,000) of
which £nil remained outstanding at the year end (2022: £nil).
During the year ended 28 February 2023 an amount of
£121,000 (2022: £121,000) was payable to the Directors of
the Company for remuneration for services provided to the
Company. No amount was outstanding at the year end (2022:
£nil).
In its role as promoter to the Company, Beringea received
promoter fees totalling £0.9 million for the year ended
28 February 2023 (2022: £0.4 million).
Malcolm Moss, a Director of the Company, is also a Director
of Lupa Foods Limited, Cogora Group Limited, Disposable
Cubicle Curtains Limited and Litchfield Media Limited,
companies that form part of the investment portfolio. Lupa
Foods Limited made loans repayments to the Company in
the year totalling £498,000.
Annual Report & Accounts 2023
Shareholder Information
Websites
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
Company’s website:
www.proveninvestments.co.uk
Shareholders can also check details of their shareholdings
using Link Group’s website at www.signalshares.com
.
Dividends
Dividends are paid by the Registrar on behalf of the
Company. Shareholders who wish to have dividends paid
directly into their bank account rather than by cheque to their
registered address can complete a mandate form for this
purpose (forms can be downloaded from
www.linkassetservices.com
).
Shareholders are also reminded that the Company operates
a Dividend Reinvestment Scheme (“DRIS”). The DRIS
provides Shareholders with the opportunity to reinvest their
cash dividends into new shares in the Company at the latest
published NAV per share. New shares allotted via the DRIS
attract the same tax reliefs as shares purchased through an
offer for subscription. Shareholders who would like to join the
scheme for any future dividends can do so by completing the
Dividend Reinvestment Forms located in the Key Documents
section of the Company’s website at
www
.proveninvestments.co.uk and returning them to the
Company Registrar whose details are set out below.
Alternatively, Shareholders can update their dividend
payment preference using the shareholder portal at
www.signalshares.com
.
Queries relating to dividends and requests for mandate
forms should be directed to the Company’s Registrar:
Registrar: Link Group
Tel: 0371 664 0324 (calls are charged at the standard
geographic rate and will vary by provider)
Email: shareholderenquiries@linkgroup.co.uk
Address:
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds, LS1 4DL
Share prices
The Company’s share prices can be found on various
financial websites with the following TIDM/EPIC codes
TIDM/EPIC code “PVN”
Latest share price (7 June 2023): 61.5p per share
Selling shares
Shareholders should be aware that they need to hold their
shares for a minimum of five years to retain the income tax
relief they received on investment. Selling your shares may
have tax consequences, therefore, you should contact your
financial adviser if you have any queries.
The Company’s shares can be bought and sold in the same
way as any other company listed on the London Stock
Exchange via a stockbroker. The Company also 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 shares 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 close periods (when the
company is prohibited from buying in shares) and details of
the price at which the VCT has bought in shares. Panmure
can be contacted as follows:
Chris Lloyd 0207 886 2716 chris.lloyd@panmure.com
Paul Nolan 0207 886 2717 paul.nolan@panmure.com
Key dates
Annual General Meeting 12 July 2023
Next dividend payment date 4 August 2023
Announcement of half year results November 2023
Shareholder Event 16 November 2023
Unsolicited communication with
Shareholders
Whilst we are not aware of any instances in the last year, we
have in prior years been informed that some Shareholders in
ProVen VCT plc have 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, Link Group, 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 Beringea LLP, the Company Secretary, on 020 7845
7820.
Notification of change of address
Communications with Shareholders are mailed to the
registered address held on the share register. In the event of
a change of address or other amendment this should be
notified to the Company’s registrar, Link Group, under the
signature of the registered holder.
78
79
Annual Report & Accounts 2023 Annual Report & Accounts 2023
Company Information
Company number
03911323
D
irectors
Neal Ransome (Chair)
Barry Dean
L
orna Tilbian
Malcolm Moss
all of
Charter House
55 Drury Lane
London WC2B 5SQ
Investment Manager
Beringea LLP
Charter House
55 Drury Lane
London WC2B 5SQ
Tel: 020 7845 7820
www.proveninvestments.co.uk
Registrars
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Tel: 0371 664 0324
(calls are charged at the
standard geographic rate and
will vary by provider)
www.linkgroup.eu
Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Corporate Broker
Panmure Gordon (UK)
Limited
One New Change
London EC4M 9AF
Company Secretary
Beringea LLP
Charter House
55 Drury Lane
London WC2B 5SQ
Registered Office
Charter House
55 Drury Lane
London WC2B 5SQ
Tel: 020 7845 7820
A
dministration Manager
Beringea LLP
Charter House
55 Drury Lane
London WC2B 5SQ
Tel: 020 7845 7820
www.proveninvestments.co.uk
VCT Status Adviser
Philip Hare & Associates LLP
1 Temple Avenue
London
EC4Y 0HA
Bankers
Royal Bank of Scotland
London Victoria Branch
119/121 Victoria Street
London SW1E 6RA
N
OTICE IS HEREBY GIVEN that the Annual General Meeting
of ProVen VCT plc will be held at the offices of Beringea LLP,
at Charter House, 55 Drury Lane, London, WC2B 5SQ at
1
1:00am on Wednesday 12 July 2023.
A
s Ordinary Business, to consider and, if thought fit, pass
the following resolutions which will be proposed as Ordinary
Resolutions:
1. To receive and adopt the Report of the Directors and
Accounts of the Company for the year ended 28 February
2023 together with the report of the Auditor thereon.
2. To approve the Directors’ Remuneration Report set out on
pages 46 to 49, excluding the Director’s Remuneration Policy
set out on page 46 of the Directors’ Remuneration Report, for
the year ended 28 February 2023.
3. To declare a final dividend of 2.0p per Ordinary Share in
respect of the year ended 28 February 2023.
4. To re-appoint BDO LLP as Auditor of the Company to hold
office until the conclusion of the next Annual General
Meeting at which accounts of the Company are presented.
5. To authorise the Directors to determine the Auditor’s
remuneration.
6. To re-elect as Director, Neal Ransome, who retires in
accordance with Company policy and, being eligible, offers
himself for re-election.
7. To re-elect as Director, Barry Dean, who retires in
accordance with Company policy and, being eligible, offers
himself for re-election.
8. To re-elect as Director, Malcolm Moss, who retires in
accordance with Company policy and, being eligible, offers
himself for re-election.
9. To re-elect as Director, Lorna Tilbian, who retires in
accordance with Company policy and, being eligible, offers
herself for re-election.
As Special Business, to consider and, if thought fit, pass the
following resolutions:
ORDINARY RESOLUTION
10. THAT, in addition to existing authorities, the directors of
the Company be and hereby are generally and
unconditionally authorised in accordance with Section 551 of
the Companies Act 2006 (“CA 2006” or the “Act”) to
exercise all the powers of the Company to allot and issue
shares in the capital of the Company and to grant rights to
subscribe for or to convert any security into shares in the
Company up to an aggregate nominal amount of £19,142,247
(representing approximately 75% of the Ordinary Share
capital in issue at today’s date), provided that the authority
conferred by this resolution shall expire on the conclusion of
t
he next Annual General Meeting of the Company held after
the passing of this resolution or, if earlier, on the expiry of
15 months on the passing of this resolution (unless renewed,
v
aried or revoked by the Company in a general meeting) but
so that this authority shall allow the Company to make, before
the expiry of this authority, offers or agreements which would
o
r might require shares to be allotted or rights to be granted
after such expiry.
SPECIAL RESOLUTIONS
11. 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 10 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 or, if earlier, on the expiry of 15 months on 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.
12. THAT, the Company be and is hereby generally and
unconditionally authorised for the purpose of section 701 of
the Act to make one or more market purchases (as defined in
section 693(4) of the Act) of Ordinary Shares provided that:
(i) the maximum number of Ordinary Shares hereby
authorised to be purchased is 38,258,970 representing
approximately 14.99% of the present issued Ordinary Share
capital of the Company;
(ii) the minimum price (exclusive of expenses) which may be
paid for such Ordinary Shares is 10p the nominal amount
thereof;
(iii) the maximum price (exclusive of expenses) which may be
paid for such Ordinary Shares shall be an amount equal to
5 per cent. above the average of the middle market
quotations for such class of the Company’s shares, as
derived from the Daily Official List of the London Stock
Exchange, for the five business days immediately preceding
the day on which the purchase was made;
(iv) the Company may make a contract to purchase its own
Ordinary Shares under this authority prior to the expiry of this
authority, and such contract will or may be executed wholly or
partly after the expiry of this authority, and the Company may
make a purchase of its own Ordinary Shares in pursuance of
any such contract;
Annual Report & Accounts 2023
Notice of Annual General Meeting
80
81
Annual Report & Accounts 2023
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.
13. THAT, the amounts standing to the credit of the share
premium account of the Company and the capital
redemption reserve of the Company, as at the date an order
is made confirming such cancellation by the Court, be and is
hereby cancelled.
14. THAT, with effect from the conclusion of the meeting, the
articles of association of the Company be amended by
deleting article 88 and replacing it with the following new
article 88:
“The Directors shall be paid out of the funds of the
Company by way of fees for their services an aggregate
sum not exceeding £200,000 per annum. The Directors
shall also receive by way of additional fees such further
sums (if any) as the Company in general meeting may
from time to time determine. Such fees and additional
fees shall be divided among the Directors in such
proportion and manner as they may determine and in
default of determination equally. The provisions of this
Article shall not apply to the remuneration of any
Managing Director or Executive Director which shall be
determined pursuant to the provisions of Article 96
hereof.”
By order of the Board
Beringea LLP
Company Secretary
Registered Office:
Charter House
55 Drury Lane
London WC2B 5SQ
9 June 2023
Information regarding the Annual General Meeting,
including the information required by section 311A of the
Companies Act 2006, is available from
www.proveninvestments.co.uk
.
Note: Please see the notes set out on pages 82 and 83
which contain important information about the Annual
General Meeting.
81
Annual Report & Accounts 2023
82
T
he following notes explain your general rights as a
Shareholder and your right to vote at the Annual General
Meeting.
1. To be entitled to vote at the Annual General Meeting (and
f
or the purpose of the determination by the Company of the
number of votes they may cast), Shareholders must be
registered in the Register of Members of the Company at
close of trading on 10 July 2023. Changes to the Register of
Members after the relevant deadline shall be disregarded in
determining the rights of any person to attend and vote at the
Annual General Meeting.
2. Any Shareholder attending the Annual General Meeting
has the right to ask questions relating to the business being
dealt with at the meeting which, in accordance with
section 319A of the Companies Act 2006, the Company
must cause to be answered.
3. This year, the Company will also offer Shareholders the
option to follow proceedings of the meeting via conference
call link. Any Shareholders who wish to listen to the meeting
remotely, should email info@beringea.co.uk
for joining
instructions. Please note that Shareholders will not be able to
vote or ask questions at the AGM when joining remotely.
Shareholders who wish to submit questions in advance of
the AGM may do so via e-mail to info@beringea.co.uk
and
the Board will respond to questions raised at the meeting.
4. The right to appoint a proxy does not apply to persons
whose shares are held on their behalf by another person and
who have been nominated to receive communications from
the Company in accordance with Section 146 of the
Companies Act 2006 (“nominated persons”). Nominated
persons may have a right under an agreement with the
member who holds the shares on their behalf to be
appointed (or to have someone else appointed) as a proxy.
Alternatively, if nominated persons do not have such a right,
or do not wish to exercise it, they may have a right under
such an agreement to give instructions to the person holding
the shares as to the exercise of voting rights.
5. We recommend that all Shareholders appoint the Chair of
the meeting as proxy. This will ensure that your vote is
counted even if attendance at the meeting is restricted or
you or any other proxy you might appoint are unable to attend
in person. The return of a completed proxy will not prevent a
member attending the Annual General Meeting and voting in
person if the member wishes to do so.
6. In the case of a Shareholder which is a company, the
proxy form must be executed under its common seal or
signed on its behalf by an officer of the company or an
attorney for the company. Any power of attorney or any other
authority under which the proxy form is signed (or a duly
certified copy of such power or authority) must be included
w
ith the proxy form. For the purposes of determining the time
for delivery of proxies, no account has been taken of any part
of a day that is not a working day.
7. In the case of joint holders, where more than one of the
j
oint holders purports to appoint a proxy, only the
appointment submitted by the most senior holder will be
accepted. Seniority is determined by the order in which the
names of the joint holders appear in the Company’s Register
of Members in respect of the joint holding (the first named
being the most senior).
8. A vote withheld is not a vote in law, which means that the
vote will not be counted in the calculation of votes for or
against the resolution. If no voting indication is given, your
proxy will vote or abstain from voting at his or her discretion.
Your proxy will vote (or abstain from voting) as he or she
thinks fit in relation to any other matter which is put before
the Annual General Meeting.
9. To be valid, any Form of Proxy or other instrument
appointing a proxy, must be returned by no later than 11 a.m.
on Monday 10 July 2023 through any one of the following
methods:
i) by post, courier or (during normal business hours only)
hand to the Company’s UK registrar at:
Link Group
PXS1
10th Floor Central Square
29 Wellington Street Leeds
LS1 4DL;
ii) electronically through the website of the Company’s UK
registrar at www.signalshares.com
; or
iii) in the case of shares held through CREST, via the CREST
system (see notes below);
We strongly recommend voting electronically at
www.signalshares.com
as your vote will automatically be
counted.
10. If you return more than one proxy appointment, either by
paper or electronic communication, the appointment
received last by the Registrar before the latest time for the
receipt of proxies will take precedence. You are advised to
read the terms and conditions of use carefully. Electronic
communication facilities are open to all Shareholders and
those who use them will not be disadvantaged.
11. CREST members who wish to appoint a proxy or proxies
through the CREST electronic proxy appointment service
may do so for the Annual General Meeting (and any
adjournment of the Annual General Meeting) by using the
procedures described in the CREST Manual (available from
www.euroclear.com/site/public/EUI
). CREST Personal
Notes for Notice of
Annual General Meeting
83
Annual Report & Accounts 2023
Members or other CREST sponsored members, and those
CREST members who have appointed a service provider(s),
should refer to their CREST sponsor or voting service
provider(s), who will be able to take the appropriate action on
their behalf. CREST members are strongly encouraged to
appoint the Chair as their proxy to exercise all or part of their
rights to attend and vote on their behalf at the Annual
General Meeting.
12. In order for a proxy appointment or instruction made by
means of CREST to be valid, the appropriate CREST
message (a ‘CREST Proxy Instruction’) must be properly
authenticated in accordance with Euroclear UK &
International Limited’s specifications and must contain the
information required for such instructions, as described in the
CREST Manual. The message must be transmitted so as to
be received by the issuer’s agent (ID RA10) by 11.00am on
10 July 2023. For this purpose, the time of receipt will be
taken to mean the time (as determined by the timestamp
applied to the message by the CREST application host) from
which the issuer’s agent is able to retrieve the message by
enquiry to CREST in the manner prescribed by CREST. After
this time, any change of instructions to proxies appointed
through CREST should be communicated to the appointee
through other means.
13. CREST members and, where applicable, their CREST
sponsors or voting service providers should note that
Euroclear UK & International Limited does not make available
special procedures in CREST for any particular message.
Normal system timings and limitations will, therefore, apply in
relation to the input of CREST Proxy Instructions. It is the
responsibility of the CREST member concerned to take (or, if
the CREST member is a CREST personal member, or
sponsored member, or has appointed a voting service
provider(s), to procure that his CREST sponsor or voting
service provider(s) take(s)) such action as shall be necessary
to ensure that a message is transmitted by means of the
CREST system by any particular time. In this connection,
CREST members and, where applicable, their CREST
sponsors or voting system providers are referred, in
particular, to those sections of the CREST Manual concerning
practical limitations of the CREST system and timings. The
Company may treat as invalid a CREST Proxy Instruction in
the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001.
14. Any corporation which is a Shareholder can appoint one
or more corporate representatives who may exercise on its
behalf all of its powers as a Shareholder provided that no
more than one corporate representative exercises powers in
relation to the same shares.
15. As at 8 June 2023 (being the latest practicable business
day prior to the publication of this Notice), the Company’s
ordinary issued share capital consists of 255,229,955
Ordinary Shares, carrying one vote each. Therefore, the total
voting rights in the Company as at 8 June 2023 are
255,229,955.
16. Under Section 527 of the Companies Act 2006,
S
hareholders meeting the threshold requirements set out in
that section have the right to require the Company to publish
on a website a statement setting out any matter relating to:
(i) the audit of the Company’s financial statements (including
the Auditor’s Report and the conduct of the audit) that are to
be laid before the Annual General Meeting; or (ii) any
circumstances connected with an auditor of the Company
ceasing to hold office since the previous meeting at which
annual financial statements and reports were laid in
accordance with Section 437 of the Companies Act 2006 (in
each case) that the shareholders propose to raise at the
relevant meeting. The Company may not require the
Shareholders requesting any such website publication to pay
its expenses in complying with Sections 527 or 528 of the
Companies Act 2006. Where the Company is required to
place a statement on a website under Section 527 of the
Companies Act 2006, it must forward the statement to the
Company’s auditor not later than the time when it makes the
statement available on the website. The business which may
be dealt with at the Annual General Meeting for the relevant
financial year includes any statement that the Company has
been required under Section 527 of the Companies Act
2006 to publish on a website.
17. The following documents are available on request by
email to info@beringea.co.uk
from the date of this Notice until
the time of the Annual General Meeting:
• copies of the Directors’ Letters of Appointments; and
• copies of the Register of Directors’ interests in the
Ordinary Shares of the Company; and
• copies of the amended articles of association of the
Company.
18. You may not use any electronic address (within the
meaning of Section 333(4) of the Companies Act 2006)
provided in either this Notice or any related documents
(including the Form of Proxy) to communicate with the
Company for any purposes other than those expressly
stated.
A copy of this Notice, and other information required by
Section 311A of the Companies Act 2006, can be found on
the Company’s website at www.proveninvestments.co.uk
.
84
Beringea LLP
55 Drury Lane
London
WC2B 5SQ
T. 020 7845 7820
E. info@beringea.co.uk
www.beringea.co.uk
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