Luke Boase & Emma Heal FOUNDER & MD LUCKY SAINT ## ProVen VCT plc ## Annual Report & Accounts ## For the year ended 28 February 2023 Managed by Annual Report & Accounts 2023 ## 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 2 ProVen VCT Annual Report & Accounts 2023 # Fund Overview | 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% | * Key Performance Indicator (see page 28) † Alternative Performance Measures (see page 28) ![img-0.jpeg](img-0.jpeg) ProVen VCT Annual Report & Accounts 2023 # 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 Aisternos. 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 ProVen VCT Annual Report & Accounts 2023 These 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- year 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 Annual Report & Accounts 2023 ## Chair’s Statement (cont.) c ompetition from other investment management companies. i ntention by emailing info@beringea.co.uk i n advance of the The performance fee structure is designed to align the meeting. interests of the Investment Manager with those of The Board values the opportunity to meet Shareholders in S hareholders and encourages capital growth as well as person and I would encourage Shareholders to attend the significant payments to Shareholders by means of tax-free AGM in person. However, we also understand that dividends, as determined by the Directors. These attendance in person may not be possible or desirable for all a rrangements are set out in more detail in the Strategic who wish to attend. Therefore, this year, the Company will Report on page 27. also offer Shareholders the option to follow proceedings of However, at 28 February 2023, the relevant performance the meeting online. Any Shareholders who wish to listen to hurdles were not met and therefore no performance fee is the meeting remotely, should email info@beringea.co.uk for payable for the year under review. joining instructions. The payment of a performance fee in future years and the Please note that Shareholders will not be able to vote or ask amount thereof, if any, will be dependent on both the questions at the AGM when joining remotely. Shareholders performance of the Company and the level of dividends paid are encouraged, even if they are planning to attend the AGM to Shareholders. 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 ### Environmental, Social & Governance (ESG) as their proxy with their voting instructions. The Board encourages the Investment Manager’s Shareholders who wish to submit questions in advance of commitment to ensuring Environmental, Social and the AGM may do so via e-mail to info@beringea.co.uk and Governance (ESG) principles are high on the agenda for the the Board will respond to questions raised at the meeting. early-stage companies in which your Company invests. Further detail on the Investment Manager’s approach to ESG, Full details of the business to be conducted at the AGM are including its role as Chair of ESG_VC, can be found in the given in the Notice of Annual General Meeting on pages 80 ESG Report on pages 21 and 22 of this Report. to 81 of this Report. ### Annual General Meeting ### Shareholder Event The next AGM of the Company will be held at the offices of The Company’s Annual Shareholder Event continues to be Beringea LLP, at Charter House, 55 Drury Lane, London, well received and provides an important opportunity for WC2B 5SQ at 11:00am on Wednesday 12 July 2023. Those Shareholders to hear from the Investment Manager on topics intending to attend the AGM are asked to register their 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, 6 Annual Report & Accounts 2023 i ncome tax relief will no longer be available for new VCT P roVen VCT plc have received unsolicited phone calls, in subscriptions made on or after 6 April 2025. The which the caller has sought to discuss their shareholdings. Government announced in September 2022 its commitment We have previously advised all Shareholders that these calls t o extending the VCT scheme beyond 2025, which the m ay be associated with an attempted fraud, and Company welcomed in its Half Year Report and continues to Shareholders should not engage with the caller. If you do do so. receive a suspect call, we strongly suggest that you hang up a s soon as possible, and contact the Investment Manager. No further details of how the removal of the Sunset Clause The FCA has published useful guidance for shareholders on will be enacted have been announced to date. The VCT how to protect themselves from scams, which you may wish industry, along with other influential bodies such as the to read. You can find it online at: BVCA, continues to press the Government to implement the https://www.fca.org.uk/consumers/protect-yourself-scams. removal of the Sunset Clause as soon as possible, in order to ensure that VCTs are able to continue their support for ### Outlook early-stage UK companies. While it is disappointing to report a loss for the year under Another development worthy of note is that HMRC has review, your Board is encouraged by the resilience shown by recently started to adopt a stricter interpretation of the most companies within the portfolio. Despite a very Financial Health Test. This is a test in the VCT legislation challenging operating environment, most companies in the designed to ensure that VCT funds are only invested in portfolio have continued to grow their revenues, and exit companies of adequate financial health. In the opinion of your activity has shown the potential of the portfolio to deliver Board and the Investment Manager, HMRC’s new positive returns in spite of economic headwinds. interpretation of this test is too rigorous, and is preventing VCTs from providing follow-on funding to some existing At the time of writing there are mixed signals from the portfolio companies. The VCT industry, through the Venture economy, with a recession avoided to date but inflation Capital Trust Association, has made representations to remaining stubbornly high and interest rates likely to rise HMRC to highlight the potentially damaging effect that their further. Despite this, the ambitious entrepreneurs in your new interpretation of this test is having on UK scale-up Company’s portfolio continue to seek out and take advantage businesses. of growth opportunities. Your Investment Manager continues to work closely with and support the leadership teams at ### Consumer Duty investee companies to help them navigate the challenges and opportunities of scaling their businesses. The Financial Conduct Authority (FCA) has established a new consumer duty (the ‘Consumer Duty’), which will come into Looking ahead, your Board anticipates that the next twelve force in July 2023 for products and services open to retail months will continue to be challenging but hopes to see customers. The Consumer Duty sets higher and clearer some of the economic pressures easing. We remain standards of consumer protection across financial services, confident that the Company’s large and diverse portfolio will and requires firms to put their customers’ needs first. yield solid growth over the medium-term, and the Investment Manager will continue to identify attractive new investment VCTs are not directly subject to the new Consumer Duty. opportunities to bring into the portfolio, enabling the However, the Investment Manager as an FCA-regulated firm Company to deliver the target returns to Shareholders. 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 Neal Ransome the Board will be monitoring the actions put in place by the Chair Investment Manager to ensure our Shareholders continue to 9 June 2023 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 7 ProVen VCT ![img-1.jpeg](img-1.jpeg) # 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 Annual Report & Accounts 2023 In December 2022, the Company also invested £2.7 million £13.1 million, a return of 3.8x against the cost of the shares into Dash, a leading brand of sparkling zero-calorie seltzer sold. Having performed well since the initial investment by water infused with flavours from real fruit. the Company in August 2017, Zoovu had been exploring options for additional fundraising. It agreed on an offer which Other new investments were made in Gorilla (£2.4 million) saw the Company sell 70% of its holding and roll over its and Doctify (£2.2 million). remaining shares. Zoovu also raised additional primary capital to fund further expansion as part of the transaction. Follow-on investments In June 2022, the Company disposed of its entire holding in The Company also continued to support the development Blis for proceeds of £5.6 million, in a transaction with Lloyds and growth of its existing portfolio companies, providing Development Capital. This resulted in a return against cost £6.2 million of further funding to nine companies during the of 6.7x. year. In November 2022, the Company exited Sealskinz for In April 2022, the Company invested £1.0 million into proceeds of £1.0 million and a return against cost of 1.3x. In CreativeX as part of a $25m funding round. CreativeX helps January 2023 the Company’s full holding in Firefly Learning marketers measure their digital content against four was sold for initial proceeds of £1.1 million and the potential indicators of long-term brand growth: creative quality, brand for further proceeds in the future. consistency, compliance, and representation. Unfortunately, MYCS was heavily impacted by adverse The Company also invested £1.0 million in July 2022 into market conditions. Following the Russian invasion of Ukraine each of Social Value Portal and Second Nature to support there was a sharp decline in consumer confidence in the their continued growth. company’s key markets and therefore a slowdown in sales. MYCS’ lenders also introduced new caps on the amount they Other follow-on investments were made in Lumar (formerly would advance at the end of March 2022. These two Deepcrawl) (£932,000), Litta (£860,000), Arctic Shores developments led to the company merging with another (£541,000), MYCS (£460,000), Commonplace (£380,000) private equity-backed business. As part of this transaction, and Plum Guide (£88,000). 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. Investment disposals During the year the Company also disposed of its holding in The Company experienced an increase in exit activity during Exonar which had been fully written down in a prior year. the previous financial year and this continued through to 28 February 2023, as detailed below. Key developments at existing portfolio companies In March 2022, there was a partial disposal of the Company’s The financial year opened with economic turbulence due to holding in Zoovu. The Company received proceeds of the invasion of Ukraine by Russia, which at the time of writing 9 ProVen VCT Annual Report & Accounts 2023 # Investment Manager’s Review (cont.) is 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 quoted 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. 10 ProVen VCT Annual Report & Accounts 2023 The 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 provided 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 venture 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 the 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 as 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 ![img-2.jpeg](img-2.jpeg) Annual Report & Accounts 2023 A nnual Report & Accounts 2023 ## Investment Activity Main Head 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 ProVen VCT Annual Report & Accounts 2023 | Disposals | Cost £'000 | Market value at 01/03/22 £'000 | Disposal proceeds £'000 | Realised gain/ (loss) against cost £'000 | Realised (loss)/ gain during 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 | - | - | 57 | 57 | 57 | | InSkin Media Limited | - | - | 29 | 29 | 29 | | D30 Holding Limited | - | - | 9 | 9 | 9 | | 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. 13 Annual Report & Accounts 2023 ## Investment Portfolio ### As at 28 February 2023 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% 14 **ProVen VCT** **Annual Report & Accounts 2023** | Venture capital investments (by value) | Cost £'000 | Valuation £'000 | Valuation movement in year £'000 | % of portfolio 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. 15 Annual Report & Accounts 2023 ## Review of Investments ### 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: £5,680,000 | Valuation method: Discounted revenue multiple | | --- | --- | | Investment comprises: | Valuation at 28/02/2023: £7,880,000 | | Preference shares: £5,127,000 | Valuation at 28/02/2022: £9,297,000 | Loan notes: £553,000 Dividend income: £– | Unaudited accounts: 31/12/21 31/12/20 | Loan note income: 44,205 | | --- | --- | | Turnover: Not available Not available | Equity held by Company: 17.4% | | Profit/(Loss) before tax: Not available Not available | Equity held by Investment Manager: 35.2% | Net assets: £10.7m £3.5m ### 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: £534,000 | Valuation method: Offer based | | --- | --- | | Investment comprises: | Valuation at 28/02/2023: £7,037,000 | | Ordinary shares: £534,000 | Valuation at 28/02/2022: £7,951,000 | | Audited accounts: 31/07/22 31/07/21 | Dividend income: £– | | Turnover: £80.7m £56.9m | Loan note income: £– | | Profit/(Loss) before tax: £9.4m £5.1m | Equity held by Company: 5.7% | | Net assets: £15.6m £8.3m | Equity held by Investment Manager: 7.9% | ### MPB Group Limited www.mpb.com MPB is an online marketplace for high quality, pre-owned photography and videography equipment. | Cost: £1,684,000 | Valuation method: Discounted revenue multiple | | --- | --- | | Investment comprises: | Valuation at 28/02/2023: £6,738,000 | | Preference shares: £1,684,000 | Valuation at 28/02/2022: £6,120,000 | | Audited accounts: 31/03/22 31/03/21 | Dividend income: £– | | Turnover: £97.8m £64.9m | Loan note income: £– | | Loss before tax: (£7.7)m (£2.9)m | Equity held by Company: 3.7% | | Net assets: £25.6m£31.3m | Equity held by Investment Manager: 6.3% | 16 Annual Report & Accounts 2023 ### 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: £4,731,000 | Valuation method: Discounted revenue multiple | | --- | --- | | Investment comprises: | Valuation at 28/02/2023: £6,139,000 | | Preference shares: £4,731,000 | Valuation at 28/02/2022: £6,892,000 | | Audited accounts: 31/12/21 31/12/20 | Dividend income: £– | | Turnover: £13.4m £20.4m | Loan note income: £– | | Profit before tax: £2.4m £1.5m | Equity held by Company: 16.6% | | Net assets: £5.1m £2.7m | Equity held by Investment Manager: 26.8% | ### 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: £2,729,000 | Valuation method: Price of recent investment | | --- | --- | | Investment comprises: | Valuation at 28/02/2023: £5,483,000 | | Preference shares: £2,729,000 | Valuation at 28/02/2022: £4,989,000 | | Unaudited accounts: 31/12/22 31/12/21 | Dividend income: £– | | Turnover: Not available Not available | Loan note income: £– | | Profit/(Loss) before tax: Not available Not available | Equity held by Company: 6.6% | | Net assets: Not available Not available | Equity held by Investment Manager: 20.0% | ### 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. | Cost: £2,458,000 | Valuation method: Price of recent investment | | --- | --- | | Investment comprises: | Valuation at 28/02/2023: £4,836,000 | | Preference shares: £1,500,000 | Valuation at 28/02/2022: £2,517,000 | Convertible loan notes: £958,000 Dividend income: £– | Unaudited accounts: 31/12/21 31/12/20 | Loan note income: £– | | --- | --- | | Turnover: Not available Not available | Equity held by Company: 11.4% | | Profit/(Loss) before tax: Not available Not available | Equity held by Investment Manager: 22.8% | Net (liabilities)/assets: (£0.4)m £1.9m 17 Annual Report & Accounts 2023 ## Review of Investments (cont.) ### 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: £3,827,000 | Valuation method: Discounted revenue multiple | | --- | --- | | Investment comprises: | Valuation at 28/02/2023: £4,193,000 | | Preference shares: £3,827,000 | Valuation at 28/02/2022: £2,988,000 | | Unaudited accounts: 31/03/22 31/03/21 | Dividend income: £– | | Turnover: Not available Not available | Loan note income: £– | | Profit/(Loss) before tax: Not available Not available | Equity held by Company: 11.3% | | Net assets: Not available Not available | Equity held by Investment Manager: 23.4% | ### 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: £3,737,000 | Valuation method: Discounted revenue multiple | | --- | --- | | Investment comprises: | Valuation at 28/02/2023: £4,000,000 | | Preference shares: £3,737,000 | Valuation at 28/02/2022: £3,804,000 | | Unaudited accounts: 30/04/22 30/04/21 | Dividend income: £– | | Turnover: Not available Not available | Loan note income: £– | | Profit/(Loss) before tax: Not available Not available | Equity held by Company: 9.2% | | Net assets: Not available Not available | Equity held by Investment Manager: 13.6% | ### 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. | Cost: £3,733,000 | Valuation method: Discounted revenue multiple | | --- | --- | | Investment comprises: | Valuation at 28/02/2023: £3,874,000 | | Preference shares: £3,733,000 | Valuation at 28/02/2022: n/a | | Unaudited accounts: 31/12/21 31/12/20 | Dividend income: £– | | Turnover: Not available Not available | Loan note income: £– | | Profit/(Loss) before tax: Not available Not available | Equity held by Company: 2.6% | | Net assets: Not available Not available | Equity held by Investment Manager: 5.0% | 18 Annual Report & Accounts 2023 ### 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. | Cost: £2,643,000 | Valuation method: Discounted EBITDA multiple | | --- | --- | | Investment comprises: | Valuation at 28/02/2023: £3,700,000 | | Preference shares: £1,031,000 | Valuation at 28/02/2022: £623,000 | Loan notes: £1,612,000 Dividend income: £– | Audited accounts: 31/12/21 31/12/20 | Loan note income: £– | | --- | --- | | Turnover: £7.3m £5.6m | Equity held by Company: 24.0% | | Profit/(Loss) before tax: Not available Not available | Equity held by Investment Manager: 36.0% | Net liabilities:£4.9m(£4.6)m 19 Annual Report & Accounts 2023 ## Main Head Review of Investments (cont.) ### 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 Other 5% Discounted price | | | ( 2022: 4%) | | | --- | --- | --- | --- | | Sector | | | of recent offer 10% | | Portfolio by | Discounted EBITDA multiple 6% | | | Business Services 20% (2022: 0%) (2022: 2%) (2022: 26%) ### Valuation ### Methodology Consumer / E-Commerce 40% Net asset value 4% (2022: 47%) (2022: 4%) Discounted price of recent transaction 11% (2022: 0%) SaaS 27% (2022: 17%) Discounted revenue multiple 69% 20 Healthcare 8% (2022: 94%) (2022: 2%) Annual Report & Accounts 2023 ## 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. ### Supporting the portfolio: ESG_VC The Manager is the chair and co-founder of ESG_VC, a • Online resources: ESG_VC has developed a bank of network of more than 200 venture capital firms that works resources, ranging from standardised policies to together to help early-stage companies to measure and recommendations on suppliers and consultants, that improve their ESG performance. ESG_VC is endorsed by the portfolio companies can use to embed new processes British Private Equity and Venture Capital Association (BVCA) and technologies to support their ESG performance. as a key industry initiative in driving greater environmental, The Manager has integrated the ESG_VC Measurement social, and economic impact across the UK. Framework into its investment monitoring processes. Through the Manager’s role in ESG_VC, the ProVen VCTs’ Companies are required to complete the framework upon portfolio companies are able to access free support for securing investment from the ProVen VCTs, providing a analysing, tracking, and improving their ESG performance. benchmark of ESG performance for the portfolio company This support is structured around three main areas of activity: and the Manager. This benchmark is used to highlight areas of strength and weakness, as well as potential areas for • Measurement framework: ESG_VC – in partnership with improvement, and portfolio companies are guided to relevant Social Value Portal, a member of the ProVen VCTs’ resources and events from ESG_VC. portfolio – has developed a standardised framework for measuring ESG within venture-backed business. The Companies within the ProVen VCTs’ portfolio are also framework asks companies to respond to 55 metrics expected to complete the ESG_VC Measurement Framework spanning environmental, social, and governance factors annually, as part of ongoing portfolio monitoring. In total, 28 – in turn, companies receive a benchmark of their ESG portfolio companies completed the framework in 2022, performance and a set of targets for improving their ESG providing the Manager and the ProVen VCTs with valuable score. insights into the ESG performance of individual investments and trends across the portfolio. • 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. 21 Annual Report & Accounts 2023 ## ESG Report (cont.) ### B Corps: Certified portfolio companies Internal initiatives: ESG at Beringea B Corp Certification is an independent accreditation of the The Manager has also established an internal ESG social and environmental performance of businesses. Today, committee to ensure that its wider operations are tracking more than 1,000 companies in the UK have secured B Corp and strengthening the firm’s approach to sustainability, status, including a growing number of businesses in the diversity, community engagement, and corporate ProVen VCTs’ portfolio. governance. Through providing a reputable audit of a company’s social The Manager has a longstanding commitment to tracking and environmental impact, B Corp Certification offers and improving its approach to diversity and inclusion. In businesses a useful tool in engaging employees, and 2022, the Manager secured Level 2 certification by the articulating the company’s positive practices to potential Diversity VC Standard, a leading industry accreditation customers, partners, and investors. helping venture capital firms to evaluate and strengthen their diversity and inclusion practices. In securing the highest The following businesses in the ProVen VCTs’ portfolio are available certification, the Manager was able to demonstrate certified B Corps: 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. 22 Annual Report & Accounts 2023 ## Board of Directors ### Neal Ransome Barry Dean CHAIR NON-EXECUTIVE DIRECTOR Neal was formerly a corporate finance partner of PwC with Barry has over 30 years’ experience in the venture capital extensive experience as a lead adviser on M&A activity in the industry, including 14 years as Managing Director of Dresdner p harmaceuticals and healthcare sectors. Neal is currently a K leinwort Benson Private Equity Limited, a longstanding non-executive director and chair of Octopus AIM VCT plc and “mid-market” private equity fund manager. He is currently a a non-executive director of Polar Capital Global Healthcare director of Thames Ventures VCT 1 plc (formerly Downing Trust plc. Neal has been a Director of the Company since One VCT plc) and previously served on the board of Molten October 2017. Ventures VCT plc (formerly Draper Esprit VCT plc). Barry was appointed a Director of the Company in May 2006. ### Malcolm Moss Lorna Tilbian NON-EXECUTIVE DIRECTOR NON-EXECUTIVE DIRECTOR Malcolm is a Founding Partner of Beringea LLP. Over the last Lorna was formerly an executive director of Numis 30 years he has been responsible for the growth, Corporation plc and a director of WestLB Panmure Limited development and management of Beringea in both the UK and S G Warburg Securities. She is currently chair of and the USA. In addition to sitting on the boards of ProVen Dowgate Capital Limited and a director of Dowgate Wealth VCT plc and ProVen Growth and Income VCT plc, he sits on Limited. Lorna also serves as a non-executive director on the the investment committees of Beringea Group’s US funds. boards of FTSE 250 constituents Finsbury Growth and He also sits on the boards of Lupa Foods Ltd, Disposable Income Trust plc and Premier Foods plc as well as FTSE 100 Cubicle Curtains Trustee Ltd, Cogora Group Ltd and company Rightmove plc. Lorna was appointed a Director of Litchfield Media Limited, all companies within the ProVen the Company in July 2013. VCTs’ portfolio, as well as ProVen Legacy Limited. Malcolm was appointed a Director of the Company in December 2007. With the exception of Malcolm Moss, all Directors are independent of the Investment Manager. 23 ProVen VCT Annual Report & Accounts 2023 # 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 the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013. ![img-3.jpeg](img-3.jpeg) ## 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: 24 Annual Report & Accounts 2023 • a strong, balanced and well-motivated management m aximum amount equal to the nominal capital of the team with a proven track record of achievement; Company and its distributable and non-distributable reserves which, at 28 February 2023, was equal to £161.7 million • a defensible market position; ( 2022: £147.6 million). There are no plans for the Company to borrow at the current time. • good growth potential; • an attractive entry price for the Company; and Maximum exposures • a clearly identified route for a profitable realisation within No investment will constitute more than 15% of the a three to four year period. Company’s portfolio by value at the time of investment. The Company invests in companies at various stages of ### development, including those requiring capital for expansion, Listing Rules but not in start-ups or management buy-outs or businesses In accordance with the Listing Rules: seeking to use funding to acquire other businesses. Investments are spread across a range of different sectors. (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 Other investments investment is made in other listed closed-ended investment funds except listed closed-ended investment funds which Funds not invested in qualifying investments may be have published investment policies which permit them to invested in non-qualifying investments permitted for liquidity invest no more than 15% of their total assets in other listed management purposes, which include cash, alternative closed-ended investment funds; investment funds (“AIFs”) and UCITS which may be redeemed on no more than 7 days’ notice, or ordinary shares (ii) the Company must not conduct any trading activity which or securities in a company that are acquired on a regulated is significant in the context of the Company; and market. (iii) the Company must, at all times, invest and manage its assets in a way which is consistent with its objective of Borrowings spreading investment risk and in accordance with its published investment policy set out in this Report. This It is not the Company’s intention to have any borrowings. The investment policy is in line with Chapter 15 of the Listing Company, does, however, have the ability to borrow a Rules and Part 6 Income Tax Act 2007. DASH WATER 25 Annual Report & Accounts 2023 ## Strategic Report (cont.) ### 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. 26 ProVen VCT Annual Report & Accounts 2023 ## Investment Management and Administration Fees Beringea provides investment management services to the Company for an annual fee of 2.0% of the net assets per annum. Beringea is also entitled to receive performance incentive fees as described below. The investment management agreement is terminable by either party at any time by one year's prior written notice. The total fees relating to this service amounted to £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). ![img-4.jpeg](img-4.jpeg) 27 ProVen VCT Annual Report & Accounts 2023 # 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 performance 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. ## Last 5 Years Total Return ![img-5.jpeg](img-5.jpeg) | | 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. 28 Annual Report & Accounts 2023 T he change in net asset value per share (adjusted for T he Board carries out a regular review of the risk environment dividends paid in the year) is defined as an APM and the in which the Company operates, and reviews the mitigating Board considers it to be the primary measure of shareholder controls and actions applicable to those risks. In the period v alue. the most noticeable change to the risks faced by the Company have been as a result of the economic turbulence The dividends per share are also set out in Note 8 on due to the invasion of Ukraine by Russia and rising interest page 69. rates and inflation globally. The full impacts of these risks are likely to continue to be uncertain for some time. As discussed earlier on page 24, the ongoing charges ratio for the year of 2.4% is within the ongoing charges cap of ### Emerging risks 3.25%. Also shown earlier on page 26, the Company has maintained compliance with VCT regulations throughout the The Board also discusses emerging risks as they arise and period. puts in place appropriate procedures to monitor and, where possible, mitigate the effects of these emerging risks on the The key performance indicators are discussed further in the Company and the portfolio. The following are some of the Chair’s Statement on pages 4 to 7 and the Investment potential emerging risks the Investment Manager and the Manager’s Review on pages 8 to 11. Board are currently monitoring: • adverse changes in the global macroeconomic ### Risks and risk management environment; and • geo-political instability. 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. ### Principal risks Risk Mitigation Change during period Investment risk The Directors place reliance on the Investment Increased due to the economic Manager’s experience and expertise in adding new and geopolitical disruption By nature, companies that companies to the portfolio. The Investment Manager referred to above. qualify for venture capital trust has a rigorous and robust formal process in selecting purposes have a higher level new companies which includes financial and legal of risk than larger quoted due diligence and review by an Investment companies and poor Committee made up of senior investors, whilst also performance could reduce drawing on the expertise of the Directors. In addition, returns for Shareholders a member of the Manager’s team is usually appointed through downward valuations. to the board of each portfolio company on investment. The Board reviews the investment portfolio and its performance at least on a quarterly basis. VCT qualifying status VCT qualification monitoring reports are prepared by No change the Administration Manager and approved by the A breach of the VCT rules and Board on a quarterly basis. On a bi-annual basis, the loss of approval as a VCT Company’s VCT status adviser reports to the Audit could lead to Shareholders Committee in relation to compliance with the VCT losing tax benefits associated legislation. The report for the year ended 28 February with VCT investments. 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. 29 Annual Report & Accounts 2023 ## Strategic Report (cont.) R isk Mitigation Change during period Valuation The unquoted investment valuations are prepared by Increased due to the economic the Investment Manager and agreed by the Board on and geopolitical disruption T he companies within the a quarterly basis although new valuations may be referred to above. portfolio are valued in prepared and agreed as required in the event of a accordance with the material movement in the valuations. On an annual I nternational Private Equity basis, at the year end, the Company’s Auditor, BDO and Venture Capital (IPEV) LLP, reports to, and discusses with, the Audit guidelines but establishing Committee their findings and any concerns arising fair value can be difficult and from their review of the investment valuations. is reliant on the accuracy and completeness of information provided. Legislative and Regulatory The Investment Manager ensures that it hires suitably No change qualified members of staff who are experienced with The Company operates in a regulatory requirements and relevant accounting complex regulatory standards and the Investment Manager and the environment, failure to comply Company Secretary have procedures in place to could lead to suspension ensure recurring Listing Rules requirements are met. from the Stock Exchange, Legislative and regulatory developments are kept penalties and damage to the under review with the Company’s solicitor and Company’s reputation. A specialist compliance consultants. The Investment change in VCT regulation Manager is also a member of the Venture Capital could also restrict the ability Trust Association which engages with the for the Company to invest. Government to help shape future legislation. Economic The Board and Investment Manager continuously Increased due to the high levels of assess the resilience of the portfolio, and ongoing inflation, rising interest rates and Economic changes such as discussions and planning are held with the portfolio the geopolitical risks from the the war in Ukraine, higher companies to provide assistance and support, invasion of Ukraine. interest rates, economic particularly during periods of economic uncertainly. recession, social upheaval The Company has a clear investment policy (outlined from events such as COVID on pages 24 to 25) and a diversified portfolio and Brexit and change in operating in a range of sectors which helps to Government could affect mitigate against sector specific impacts. Additionally, trading conditions for smaller ensuring adequate liquidity to cope with unexpected companies and consequently pressures on the finances of the portfolio and allow the value of the Company’s the Company to make follow-on investments where qualifying investments. suitable is an important part of the risk mitigation in times of economic uncertainty. Operational The Investment Manager has a documented No change business continuity plan, which provides for back-up The Company is reliant on a services in the event of a system breakdown. The number of third parties, in Investment Manager’s systems are protected against particular the Investment viruses and other cyber-attacks and appropriate Manager, for management insurances are maintained. The Board reviews the and administration services. performance of all service providers at least annually Failure of the operational and the Investment Manager conducts due diligence systems and controls of third on all new service providers to ensure that third parties could result in an parties have adequate operational systems in place. inability to provide accurate reporting and monitoring. 30 Annual Report & Accounts 2023 R isk Mitigation Change during period Cyber security & IT The Investment Manager has significant No change cybersecurity controls, including two factor O utsourcing and the increase authentication, email protection software, monitored in remote working could give firewalls and staff regularly receive training in relation rise to cyber and data security to their cybersecurity obligations. Due diligence is r isk. Failure in key IT systems conducted on service providers including a review of and controls might lead to controls, to reduce the risk of business interruption business interruption, loss of due to insufficient cyber security controls of third data or loss of access to parties. The Investment Manager has a robust cyber systems. insurance to ensure that financial liabilities are mitigated in the event of a cyber-attack. ESG The Investment Manager has further expanded its No change initiatives focused on driving improved performance Failure to comply with current across environmental, social and governance (“ESG”) and future requirements and factors, both internally and across the portfolio. recommended practices To evaluate impact and improvement in its internal could result in reduced operations, the Investment Manager has developed investor attraction which may an ESG committee responsible for assessing and affect the level of capital the strengthening the firm’s approach to sustainability, Company has available to diversity and inclusion, and governance. Further meet its investment details of these initiatives and the Investment objectives. Manager’s role in ESG_VC can be found in the ESG Report at pages 21 to 22. Foreign exchange The Investment Manager and the Board regularly No change review the exposure to foreign currency movement to The Company has made a make sure the level of risk is appropriately managed. number of its initial Investments are primarily made in GBP, EUR and USD investments in a foreign so exposure is limited to a small number of currency; most often in Euros currencies. or US Dollars. Furthermore, some companies may On realisation of investments held in foreign function, in part, in a currency currencies, cash is translated to GBP shortly after other than GBP. The portfolio receiving the proceeds to limit the amount of time is therefore exposed, to some exposed to foreign currency fluctuations. extent, to foreign exchange risk and specifically that of transaction risk and translation risk. 31 Annual Report & Accounts 2023 ## Strategic Report (cont.) R isk Mitigation Change during period The Company’s liquidity risk is managed by the No changeLiquidity Investment Manager in line with guidance agreed with T he Company invests into the Board and is reviewed by the Board at regular smaller unquoted companies, intervals. The Company always holds sufficient levels which are inherently illiquid as of funds as cash in order to meet expenses and other t here is no readily available cash outflows as required. For these reasons, the market for these shares. Board believes that the Company’s exposure to Therefore, these may be liquidity risk is minimal. difficult to realise for their fair market value at short notice. deal identification and diligence process, an experienced ### Going Concern investment team and consultation with the Company’s VCT The Directors have, at the time of approving the financial status advisers to ensure that investments made comply statements, a reasonable expectation that the Company has with the VCT rules, these factors cannot mitigate the risk that adequate resources to continue in operational existence for insufficient qualifying investments are identified to ensure the twelve months from the date of sign off of these financial ongoing compliance with the VCT rules. statements. In its assessment of the Company’s activities as Accordingly, the amount required to invest in qualifying a going concern, the Board has reviewed the risks to future holdings to maintain compliance with the VCT rules was a performance as set out in the Strategic Report on pages 29 major consideration in the Board’s analysis. Together with the to 32, and considered the potential impacts of those on the expected liabilities of the Company for the three years to Company’s future ability to continue as a going concern. The 28 February 2026, the Board considered the forecast cash Company’s cash resources are currently healthy, and the requirements against the expected cash position, taking into portfolio of investments is diverse and not reliant on any one account a level of assumed investment realisations and sector. All significant cash outflows, including dividends, investment income during the period. The Board has also share buybacks and investments, are within the Company’s considered stress scenarios whereby no proceeds upon the control. Therefore, the Board expects that the Company has realisation of investments are received and no further funds sufficient cash resources to withstand any reasonable stress are raised. scenario, for example if the Company was unable to raise further funds, and believes that it is appropriate to continue to Based on the assessment of the above considerations on adopt the going concern basis of accounting in preparing the cash flow forecasts and stress scenarios, the Board has these financial statements. determined that the Company will be able to continue in operation, maintain compliance with the VCT rules and meet ### Viability Statement its liabilities as they fall due for the three years to 28 February 2026. 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 Section 172 Statement time frame during which the Investment Manager will be Section 172 of the Companies Act 2006 requires the Directors required to invest 80% of the funds from the most recent of the Company to act in a way that they consider, in good offer for subscription in qualifying investments. faith, will most likely promote the success of the Company for In order to support this statement, the Board has carried out the benefit of the members as a whole. In doing so, the a robust assessment of the principal and emerging risks Directors should have regard (amongst other matters) to: faced by the Company, as detailed above, including those • the likely consequences of any decision in the long term; risks associated with the current economic landscape and the war in Ukraine, and considered the availability of • the interests of the Company’s employees; mitigating factors. • the need to foster the Company’s business relationships with suppliers, customers and others; The Board considers that the primary risk faced by the Company is compliance with the VCT rules and although • the impact of the Company’s operations on the there are a number of mitigating factors such as a robust community and the environment; 32 ProVen VCT Annual Report & Accounts 2023 - the desirability of the Company maintaining a reputation for high standards of business conduct; and 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 page 6 and 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 Manager in reviewing how Shareholder issues are handled, ensuring good governance and responsibility in managing the Company's affairs. Ultimately, the Directors' decisions are intended to achieve the Company's 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 33 Annual Report & Accounts 2023 ## Strategic Report (cont.) M anager’s Portfolio Value-Add Initiative has developed n ow part of the annual reporting requested from members of further in the past year, supporting companies in overcoming the ProVen VCTs’ portfolio. It is used as part of the onboarding barriers to growth and harnessing commercial opportunities. of new investments, and to help shape the development of T he initiative is led by Harry Thomas, the firm’s Portfolio r esources and events for the portfolio. Director, with support from Vanessa Evanson-Goddard The Investment Manager’s ongoing role as Chair of ESG_VC, (General Counsel), and Henry Philipson (Director of Marketing which now brings together more than 200 leading VC firms a nd Communications). Together, the team provides both across the UK and Europe, has also provided valuable ad-hoc and structured support on a range of topics from opportunities for the firm and the portfolio. As a result of its recruitment to marketing and fundraising. role within ESG_VC, the Investment Manager was shortlisted The Beringea Scale-Up Academy is one of the primary pillars among the leading firms for ESG in venture capital at the Real of the Value-Add Initiative, offering a year-round programme of Deals Awards 2022, and Henry Philipson, Director of events for portfolio leadership teams. In 2022, the Academy Marketing and Communications, was named among the delivered ten webinars to portfolio company senior managers, Future 40 ESG Innovators. providing valuable insight and training on topics such as To evaluate impact and improvement in its internal pricing strategy, accessing R&D tax credits, and hiring. operations, the Investment Manager has an ESG committee The Investment Manager’s Portfolio Value-Add Initiative also responsible for assessing and strengthening the firm’s offers a range of services to support portfolio companies in approach to sustainability, diversity and inclusion, and their growth journey. These services include: identifying governance. The firm has performed particularly strongly in existing and potential service providers and negotiating its diversity-focused initiatives, and it is now certified as a group discounts; establishing a central database of Level 2 firm under the Diversity VC Standard, an industry information and contacts related to key operational and accreditation for diversity and inclusion best practice. The strategic concerns for companies; hosting in-person and Investment Manager is also a signatory of the Investing in online events for sharing knowledge and ideas; building Women Code, submitting annual data on the diversity of relationships with external stakeholders, including investors, companies in the portfolio and investment pipeline. customers and suppliers; helping to identify potential On a general note, the Board considers that the Company’s acquisition or exit opportunities; and encouraging companies investment operations create employment, aid economic to consider and adopt ESG initiatives. growth, generate tax revenues and produce wealth, thus benefiting the community and the economy more generally. ### Environmental, Social, Human Rights Where appropriate, the investment proposals considered by ### Policy and Greenhouse Emissions the Investment Manager and the Board also include any relevant information on any social, employee, ethical or The Board seeks to conduct the Company’s affairs environmental matters relevant to that investment. responsibly and maintain high standards in respect of ethical, environmental, governance and social issues. The Whilst as a UK quoted company the VCT is required to report Board recognises the requirement under section 414C of the on its Greenhouse Gas (GHG) Emissions for any direct Companies Act 2006 to detail information about social and emissions, as it outsources all of its activities and does not community issues, employees and human rights; including have any physical assets, property, employees or operations, any policies it has in relation to these matters and it is not responsible for any direct emissions. As a result, total effectiveness of these policies. energy emissions are less than 40,000 kWh and the additional Streamlined Energy and Carbon Reporting (SECR) As an externally managed investment company with no disclosures have not been made. employees, the Company has no formal policies in these matters. However, the Company and the Investment Manager ### Directors and Senior Management recognise the need for the Company and the businesses within its portfolio to embrace environmental, social and The Company had four non-executive Directors at the year governance (“ESG”) practices. The Investment Manager has end, three of whom are male and one of whom is female. The played a pivotal role in the creation of ESG_VC and its Company has no employees and the same was true of the development of a standardised framework for evaluating ESG previous year. 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 34 ProVen VCT Annual Report & Accounts 2023 ## 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 35 ProVen VCT Annual Report & Accounts 2023 # Directors' Main Head Report ![img-6.jpeg](img-6.jpeg) ## Results and Dividends | | £'000 | Pence per share | | --- | --- | --- | | Loss on ordinary activities after tax for the year ended 28 February 2023 | (13,831) | (5.9p) | 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 36 ProVen VCT Annual Report & Accounts 2023 (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 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. 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@beringa.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@beringa.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@beringa.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 enable 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, the 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's 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@beringa.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. 37 Annual Report & Accounts 2023 ## Directors’ Report (cont.) T he Directors are responsible for keeping adequate ### Substantial Interests accounting records that are sufficient to show and explain As at 28 February 2023, and at the date of this report, the the Company’s transactions, to disclose with reasonable Company was not aware of any beneficial interest exceeding a ccuracy at any time the financial position of the Company 3% of the issued share capital. The same was true of the and to enable them to ensure that the financial statements prior year. comply with the requirements of the Companies Act 2006. T he maintenance and integrity of the Company’s website is ### Directors’ Indemnity the responsibility of the directors. They are also responsible for safeguarding the assets of the Company and hence for Directors’ and Officers’ liability insurance cover is held by the taking reasonable steps for the prevention and detection of Company in respect of the Directors. fraud and other irregularities. ### Directors’ responsibilities ### Website Publication The Directors are responsible for preparing the Annual The Directors are responsible for ensuring that the Annual Report and the financial statements in accordance with Report and Accounts are made available on a website. The applicable law and regulations. They are also responsible for Annual Report and Accounts are published on the ProVen ensuring that the Annual Report and Accounts includes VCTs’ website www.proveninvestments.co.uk , in accordance information required by the Listing Rules of the Financial with legislation in the United Kingdom governing the Conduct Authority. preparation and dissemination of financial statements, which Company law requires the Directors to prepare financial may vary from legislation in other jurisdictions. The Directors’ statements for each financial year. Under that law the responsibility also extends to the ongoing integrity of the Directors have elected to prepare the financial statements in financial statements contained therein. accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards ### Directors’ Responsibilities Pursuant to the and applicable law). Under company law, the Directors must ### Disclosure and Transparency Rule 4 not approve the financial statements unless they are satisfied that they give a true and fair view of the state of Each of the Directors, whose names are listed on page 23, affairs of the Company and of the profit or loss of the confirms that to the best of each person’s knowledge: Company for that period. • the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted In preparing the financial statements, the Directors are Accounting Practice, give a true and fair view of the required to: assets, liabilities, financial position and profit or loss of • select suitable accounting policies and then apply them the Company; and consistently; • the Directors’ Report, Chair’s Statement, Strategic • make judgments and accounting estimates that are Report, Investment Manager’s Review and Review of reasonable; Investments include a fair review of the development and performance of the business and the position of the • state whether applicable UK accounting standards have Company, together with a description of the principal been followed, subject to any material departures risks and uncertainties that it faces. disclosed and explained in the financial statements; • prepare the financial statements on the going concern ### Corporate Governance basis unless it is inappropriate to presume that the Company will continue in business; and The Statement of Corporate Governance is set out on pages 40 to 45 and forms part of this Directors’ Report. • prepare a directors’ report, a strategic report and directors’ remuneration report which comply with the ### Companies Act 2006. Political Donations The Board considers that the Annual Report and Accounts, No political donations were made by the Company during the taken as a whole, are fair, balanced and understandable and year ended 28 February 2023 (2022: £nil). that they provide the information necessary for Shareholders ### to assess the Company’s performance, business model and Other Matters strategy. Information in respect of financial instruments, greenhouse gas emissions and future developments which were 38 ProVen VCT Annual Report & Accounts 2023 previously 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 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. ## 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 ![img-7.jpeg](img-7.jpeg) 39 Annual Report & Accounts 2023 ## Statement of Corporate Governance T he Statement of Corporate Governance forms part of the n o significant additional external appointments have been Directors’ Report on pages 36 to 39. The longer term viability taken by any of the non-executive Directors during the statement on page 32 also forms part of this report. current financial year. The Board has considered the principles and provisions of In accordance with Company policy, all Directors will resign at the AIC Code of Corporate Governance (“AIC Code”). the forthcoming AGM and, being eligible, offer themselves for re-election. Following a formal Board evaluation (further The AIC Code addresses the principles and provisions set details of which are set out on page 44), each Director out in the 2018 UK Corporate Governance Code (the “UK continues to be effective, providing considerable experience Code”), as well as setting out additional provisions on issues and continuity to the Company. Each of the Directors that are of specific relevance to investment companies. The demonstrates commitment to their role, to the Board and the Board considers that reporting against the principles and Company and the Board therefore has no hesitation in provisions of the AIC Code, which has been endorsed by the recommending each of the Directors for re-election at the Financial Reporting Council, provides more relevant forthcoming AGM. information to Shareholders. Except as set out below, where it is noted that two directors have served on the Board for The primary focus of Board meetings is the review of more than nine years, the Company has complied with the investment performance and associated matters. Full Board principles and provisions of the AIC Code. meetings take place to discuss and approve the quarterly results of the Company and the Board may meet periodically The AIC Code is available on the AIC website to address specific issues including considering (www.theaic.co.uk ). It includes an explanation of how the AIC recommendations from the Investment Manager. Code adapts the principles and provisions set out in the UK Code to make them relevant for investment companies. The Board has a formal schedule of matters specifically reserved for its decision which include: By reporting against the AIC Code, the Board are meeting their obligations in relation to the UK Code and associated • determination of the Company’s investment objective disclosure requirements under paragraph 9.8.6 of the Listing and policy; Rules. The UK Code includes provisions relating to the role of • determination and approval of appropriate dividend the chief executive, executive directors’ remuneration and payments; workforce which are not relevant to an externally managed investment company. The Company has therefore not • approval of new share issues and share buybacks; reported further in respect of these provisions. • regular review of the group’s overall corporate ### The Board governance arrangements; and The Company has a Board comprising four non-executive • regular review of the performance of the Company’s Directors. The Chair is Neal Ransome and the Senior Investment Manager. Independent Director is Barry Dean. Neal Ransome, Barry Dean and Lorna Tilbian are considered to be independent The Board also provides oversight of the Company’s strategy. Directors by the Board, and this independence is considered The Investment Manager regularly consults with the Board and challenged annually through a formal review of on potential new investments as well as preparing detailed independence. Barry Dean and Lorna Tilbian have served on reports to the Board covering advanced investment the Board for more than nine years and will offer themselves prospects and the performance of individual portfolio for re-election at the forthcoming AGM in accordance with companies which are considered by the Board on a quarterly Company policy. The Board has reviewed the independence basis. When considering business strategy, the Board also of Barry Dean and Lorna Tilbian and concluded that despite considers other matters such as the interests of its various their long tenures, they continue to be independent. They are stakeholders and the long-term impact of its actions on the not involved in the day-to-day running of the Company and Company’s future and reputation. provide strong strategic insight to the Company as well as The Chair leads the Board in the determination of its strategy robust challenge to the Investment Manager. Malcolm Moss and in the achievement of its objectives. The Chair is is not independent by virtue of being a partner of the responsible for organising the business of the Board, Investment Manager. Biographical details of all Board ensuring its effectiveness and setting its agenda, and has no members (including the significant commitments of the involvement in the day-to-day business of the Company or Chair) are shown on page 23. All non-executive Directors any other relationships that may create a conflict of interest have sufficient time to meet their board responsibilities and between the Chair’s interest and those of the Shareholders. 40 Annual Report & Accounts 2023 T he Board does not have a policy of limiting the tenure of any A ll Directors have access to the advice and services of the Director, including the Chair, as the Board does not consider Company Secretary. The Company Secretary provides the that a Director’s length of service reduces his or her ability to Board with full information on the Company’s assets and a ct independently of the Investment Manager. l iabilities and other relevant information requested by the Chair, in advance of each Board meeting as well as advising T he Senior Independent Director is available to Shareholders on corporate governance related matters. Should any if they have a concern that contact through the normal D irector have concerns about the operation of the Boards or channels of the Chair and/or other Directors have failed to Company that cannot be resolved by the Board, they can resolve or where such contact would be inappropriate. The raise such concerns with the Company Secretary or with Senior Independent Director also provides a sounding board independent professional advisers. Any such concerns for the Chair and serves as an intermediary to other would be recorded in Board minutes of the Company and in non-executive directors where necessary as well as the case of a resigning non-executive Director, the Director reviewing and appraising the Chair’s performance on at least would be asked to make a written statement to the Chair, for an annual basis. circulation to the Board. Whilst the Company does not have a workforce, the Board assesses and monitors its own behaviour to ensure it ### Share Capital promotes a culture of openness and debate. The Board is also very conscious of promoting its culture in its The rights and obligations attaching to the Company’s engagement with the wider stakeholders of the Company. shares, including the power of the Company to buy back The Board works closely with the Investment Manager in shares and details of any significant Shareholders, are set reviewing how stakeholder issues are handled, ensuring out in the Chair’s Statement on page 5 and the Directors’ good governance and responsibility in managing the Report on pages 36 to 37. Company’s affairs. ### Directors review the disclosure of conflicts of interest Board and Committee Meetings regularly, with any changes reviewed and noted at the The following table sets out the Directors’ attendance at full beginning of each Board meeting. Procedures to disclose Board and Committee meetings held during the year ended and authorise conflicts of interest have been adhered to 28 February 2023. 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. 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. 41 Annual Report & Accounts 2023 ## Statement of Corporate Governance (cont.) • reviewing internal controls and risk management ### Audit Committee systems; and The Company has an Audit Committee currently comprising • matters regarding audit and external auditors. of Barry Dean, as Chair, Lorna Tilbian and Neal Ransome (who sits on the Audit Committee despite being Chair of the The Directors’ Responsibilities Statement for preparing the Board because he is a chartered accountant and brings accounts is set out in the Directors’ Report on page 38, and a valuable experience from sitting on several other audit statement by the Auditor about their reporting responsibilities committees). is set out in the Independent Auditor’s Report on pages 55 and 56. The Audit Committee has defined terms of reference and duties and is responsible for: The Audit Committee has considered the Annual Report and Accounts for the year ended 28 February 2023 and has • monitoring the Company’s financial reporting; reported to the Board that it considers them to be fair, • advising the Board on whether the Annual Report and balanced and understandable providing the information Accounts, taken as a whole, are fair, balanced and necessary for Shareholders to assess the Company’s understandable; position and performance, business model and strategy. • advising the Board on whether the Annual Report and The key areas considered by the Audit Committee to be Accounts provides the information necessary for principal risks in relation to the financial statements of the Shareholders to assess the Company’s position and Company are set out in the following table, together with how performance, business model and strategy; 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. Compliance with HM Revenue & VCT qualification monitoring reports are prepared by the Administration Manager Customs conditions for approval as and approved by the Board on a quarterly basis. On a bi-annual basis, the a Venture Capital Trust and the Company’s VCT status adviser reports to the Audit Committee in relation to consequent preservation and/or compliance with the VCT legislation. The report for the year ended 28 February availability of tax reliefs for 2023 showed compliance with all aspects of the VCT regulations as summarised Shareholders. 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. These areas are discussed between the Audit Committee, each audit, BDO LLP provides an audit strategy plan for Board and the Investment Manager during the year and at consideration by the Committee, including confirmation of the regular Board meetings in order that any potential issues BDO’s compliance with the Ethical Standards of the Financial are identified and addressed on a timely basis. The Audit Reporting Council and of the audit and non-audit fees Committee and/or Investment Manager will engage outside chargeable to the Company. BDO liaises directly with the professional support where this is deemed desirable and in Investment Manager during the audit process and attends the interests of Shareholders. the Audit Committee meeting at which the Annual Report and Accounts is considered. BDO provides a detailed Audit The Audit Committee reviews the performance and Committee Report outlining their audit process and setting continued suitability of the Company’s auditor. In advance of out their findings. The Audit Committee and Investment 42 Annual Report & Accounts 2023 M anager are able to assess the quality of BDO’s work and of d iversity) required of the Board compared to its current BDO’s understanding of the business. Based on these position and makes recommendations to the Board with procedures, the Audit Committee has obtained sufficient regard to any changes; a ssurance as to BDO’s independence and performance and • gives full consideration to succession planning for it therefore recommends to Shareholders that BDO be Directors in the course of its work, taking into account re-appointed as Auditor for the forthcoming year. Audit fees the challenges and opportunities facing the Company, a re disclosed in Note 5, on page 67. and what skills and expertise are therefore needed on The Audit Committee safeguards the objectivity and the Board in the future; independence of the Auditor by reviewing the nature and • is responsible for identifying and nominating for the extent of non-audit services supplied by the external Auditor approval of the Board, candidates to fill board vacancies of the Company, seeking to balance objectivity and value for as and when they arise; money, and pre-approves all non-audit work. No non-audit work was completed in the year. • before any appointment is made by the Board, evaluates the balance of skills, knowledge and experience on the The Audit Committee has considered the need for an internal Board, and, in the light of this evaluation prepares a audit function. Given the size and nature of the Company and description of the role and capabilities required for a its relationship with key service providers, the Audit particular appointment. In identifying suitable Committee has recommended to the Board that the candidates the Nomination Committee: oversight of the Audit Committee, together with the processes in place, are sufficiently robust and that no internal – uses open advertising or the services of external audit function is required. advisers to facilitate the search; – considers candidates from a wide range of The Audit Committee terms of reference are available from backgrounds; and www.proveninvestments.co.uk . – 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 ### Remuneration Committee background, and cognitive and personal strengths, The Board has appointed a Remuneration Committee taking care that appointees have enough time available comprising all independent Directors and chaired by Lorna to devote to the position; Tilbian. The Remuneration Committee determines and • ensures that on appointment to the Board, agrees with the Board the framework or broad policy for the non-executive directors receive a formal letter of remuneration of the Company’s non-executive Directors and appointment setting out clearly what is expected of reviews the ongoing appropriateness and relevance of the them in terms of time commitment, committee service remuneration policy. The Committee generally meets once a and involvement outside board meetings. year and at other times as required and has specific terms of reference in order to fulfil its duties in respect of matters The Nomination Committee meets as and when appropriate. relating to remuneration. The Remuneration Committee The Nomination Committee terms of reference are available terms of reference are available from from www.proveninvestments.co.uk . www.proveninvestments.co.uk . ### Diversity ### Nomination Committee When considering a new appointment to the Board, the The Board has appointed a Nomination Committee Nomination Committee’s responsibility is to ensure that comprising all independent Directors and chaired by Neal Shareholders are safeguarded by appointing the most Ransome. The Nomination Committee’s primary function is appropriate person for the position (irrespective of gender or to make recommendations to the Board on all new ethnicity) giving due regard to past and present experience in appointments and also to advise generally on issues relating the sectors in which the Company invests. The Company to the Board composition and balance. therefore does not have a specific diversity policy in place. However, the Nomination Committee regularly reviews the In particular, the Nomination Committee: composition of the Board, including diversity and, when • regularly reviews the structure, size and composition considering new candidates, will take due regard to the (including the skills, knowledge, experience and benefits of diversity on the Board. 43 Annual Report & Accounts 2023 ## Statement of Corporate Governance (cont.) F or the forthcoming financial year ending 29 February 2024, ### Board Performance Evaluation the FCA rules requiring listed companies to report information and disclose against targets on the An evaluation of the performance of the Board, each of its r epresentation of women and ethnic minorities on their committees and of the non-executive Directors was last boards as set out in paragraph 9.8.6R(9) of the Listing Rules conducted in May 2023 using a series of questionnaires. will apply to the Company. These requirements are as A broad range of standard topics was covered including the f ollows: programme of regular Board or Committee business, Board behaviours, culture and strategy. The evaluation will be (i) at least 40% of the individuals on the Board of Directors updated each year to assess the approach to risk, Board are women; training and the Directors’ ability to provide effective (ii) at least one of the senior positions on the Board of challenge. Directors is held by a woman; and Representatives of the Company Secretary were well placed (iii) at least one individual on the Board of Directors is from a to prepare an updated evaluation that i) was relevant and minority ethnic background. appropriate to the Company, ii) was understandable and iii) ensured a full and frank discussion around any concerns The Directors self-reported their gender identities and ethnic raised. backgrounds as part of the formal board evaluation process in May 2023, the result of which are shown in the table The Chair has reviewed the results of the questionnaire and below: followed up relevant matters with each Director. The outcome of the 2023 Board review has confirmed that the Directors Number of Percentage consider the Board to have a good balance of skills and to be Board of the working well. The Board does not undergo an externally As at 1 March 2023 members Board facilitated board evaluation, but will consider the merits of Gender Identity such a review on an annual basis. Male 3 75% ### Investment Manager and Third Party Female 1 25% ### Performance Non-binary –– Not specified/prefer not to The Board conducts a review of the terms and performance say/other –– of all service providers, including the Investment Manager and Administration Manager on at least an annual basis. The Ethnic Background 2023 review did not raise any concerns and the performance White 4 100% of all third party service providers was considered satisfactory. The Board also reviews the terms of the Mixed/Multiple ethnic groups –– investment management agreement with the Investment Asian/Asian British __ Manager immediately before an offer is launched. The Black/African/Caribbean/ investment management agreement sets out the duties and Black British –– responsibilities of the Investment Manager. 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 . 44 Annual Report & Accounts 2023 a dditional controls as appropriate. The Board reviews a Risk ### Relations with Shareholders Register on at least an annual basis. The main aspects of Shareholders have the opportunity to meet the Board at the internal control in relation to financial reporting by the Board Annual General Meeting. The Board is also happy to respond a re as follows: to any written queries made by Shareholders during the • review of quarterly reports from the Investment Manager course of the year, or to meet with major Shareholders if so on the portfolio of investments held, including additions requested. A Shareholder Event for the ProVen VCTs is also and disposals; held each year and Shareholders were invited to attend a hybrid version of this in Autumn 2022. • quarterly reviews by the Board of the Company’s investments, other assets and liabilities, and revenue Separate resolutions are proposed at the Annual General and expenditure and detailed review of unquoted Meeting on each substantially separate issue. The proxy investment valuations; votes are collated and the results (together with the proxy forms) are forwarded to the Company Secretary immediately • quarterly reviews by the Board of compliance with the prior to the Annual General Meeting. In order to comply with venture capital trust regulations to retain status, the UK Corporate Governance Code, proxy votes are including a review of half yearly reports from Philip Hare announced at the Annual General Meeting, except in the & Associates LLP; event of a poll being called. The notice of the next Annual • a separate review of the Annual Report and Accounts General Meeting can be found at the end of the Annual and Half Yearly report by the Audit Committee prior to Report and Accounts. Board approval; and • a review by the Board of all financial announcements ### Articles of Association prior to release. The Company may amend its Articles of Association by The Board is responsible for ensuring that the procedures to special resolution in accordance with section 21 of the be followed by the advisers and themselves are in place, and Companies Act 2006. for monitoring the systems of risk management and internal control. It also reviews the effectiveness of the Manual, ### Risk Management and Internal Control based on the report from the Audit Committee, on an annual basis to ensure that the controls remain relevant and were in The Board has adopted an Internal Control Manual (the operation throughout the year. “Manual”) for which it is responsible, which has been Although the Board is ultimately responsible for safeguarding compiled to comply with the UK Corporate Governance Code the assets of the Company, the Board has delegated, and the AIC Code of Corporate Governance. The Manual is through written agreements, the day-to-day operation of the designed to provide reasonable, but not absolute, assurance Company to external advisers, including Beringea LLP as the against material misstatement or loss, which it achieves by Investment Manager and the Administration Manager. detailing the perceived risks and controls in place to mitigate them. The Board reviews the perceived risks in line with The Board is satisfied that the risk management and internal relevant guidance on an annual basis and implements control systems are effective and has identified no significant problems that warrant disclosure in the Annual Report and Accounts. PAPIER By order of the Board Beringea LLP Company Secretary Charter House 55 Drury Lane London, WC2B 5SQ 9 June 2023 45 Annual Report & Accounts 2023 ## Directors’ ## Remuneration ## Report • the Directors shall be entitled to be repaid all reasonable ### Annual Statement by the Chair of the travel, hotel and other expenses incurred by them ### Remuneration Committee respectively in the performance of their duties as The Remuneration Committee comprises all independent Directors including any expenses incurred in attending members of the Board and is chaired by Lorna Tilbian. An meetings of the Board or of Committees of the Board or increase in Directors’ remuneration in accordance with the General Meetings and if, in the opinion of the Directors, it current remuneration policy was recommended based on a is desirable that any of their number should make any review of similar companies and was effective from 1 March special journeys or perform any special services on 2023. behalf of the Company or its business, such Director or Directors may be paid reasonable additional remuneration and expenses as the Directors may from ### Directors’ Remuneration Policy time to time determine. Shareholders must vote on the Directors’ remuneration The Company’s policy in respect of loss of office payments is policy every three years or sooner if the Company wishes to to consider each situation as it arises on its own merits. make changes to the policy. Shareholders last voted on the remuneration policy on 14 July 2021 and no further changes Under resolution 14 to be proposed to Shareholders at this to the Directors’ remuneration policy are proposed. year's AGM, the Company is proposing to amend its Articles of Association to increase the cap on aggregate service fees The Company’s policy on Directors’ remuneration is to seek to £200,000 per annum. This will allow the Company to to remunerate board members at a level appropriate for the expand the Board in the future in order to plan for time commitment and high level of responsibility borne by succession, as needed. the non-executive Directors and should be broadly comparable with that paid by similar companies. Further details of the resolutions to be proposed at the AGM are set out on pages 80 and 81. 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 Statement of Voting at Annual General Manager). ### Meeting Directors’ remuneration is also subject to the Company’s The Board usually receives feedback from Shareholders from Articles of Association as follows: time to time via direct correspondence, telephone calls, at • the Directors shall be paid out of the funds of the the Annual General Meeting and at the Shareholder Company by way of fees for their services, an aggregate presentation held each year. The Remuneration Committee sum not exceeding £150,000 per annum. The Directors will take account of any comments in respect of the shall also receive by way of additional fees such further remuneration policy when it undertakes its regular review of sums (if any) as the Company in General Meeting may the Company’s policy. 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 46 Annual Report & Accounts 2023 S hareholders’ views in respect of Directors’ remuneration are ### Directors’ Remuneration (Audited) communicated at the Company’s Annual General Meeting Directors’ fees for the year under review were as follows: and are taken into account in formulating the Directors’ | r emuneration policy. At the last Annual General Meeting held | Year ended Year ended | | | --- | --- | --- | | on 20 July 2022, the following votes were received in | 28 Feb 2023 28 Feb 2022 | | | respect of the resolution approving the Directors’ | | ££ | | R emuneration Report: | | | Neal Ransome (Chair) 40,000 40,000 Voting Votes received Percentage Barry Dean 34,000 34,000 Votes for 6,908,463 90.9% Malcolm Moss 15,000 15,000 Votes for – discretion 306,294 4.0% Lorna Tilbian 32,000 32,000 Votes against 388,499 5.1% 121,000 121,000 Votes received 7,603,256 100.0% The remuneration of Malcolm Moss is paid to Beringea LLP. Votes withheld 148,651 No other emoluments or pension contributions were paid by the Company to, or on behalf of, any Director. The Company ### Agreements for Service does not have any share options in place. Each of the Directors has an agreed letter of appointment (which is available for inspection at the Company’s registered ### Directors’ Remuneration for the Year to office) whereby he or she is required to devote such time to ### the affairs of the Company as the Board reasonably requires 29 February 2024 consistent with his or her role as a non-executive Director. The remuneration levels for the forthcoming year are A three month rolling notice applies. expected to be at the following rates: ### Annual Report on Remuneration Expected Annual Expense £ The Board and Remuneration Committee have prepared this Neal Ransome (Chair) 43,000 report in accordance with the requirements of the Barry Dean 37,000 Companies Act 2006. A resolution to approve this report will be put to the members at the Annual General Meeting to be Malcolm Moss 15,000 held on 12 July 2023. Lorna Tilbian 35,000 Under the requirements of Section 497, the Company’s Auditor is required to audit certain disclosures contained 130,000 within the report. These disclosures have been highlighted and the audit opinion thereon is contained within the Independent Auditor’s Report on page 55. 47 ProVen VCT Annual Report & Accounts 2023 # Directors' Remuneration Report (cont.) ## Changes to Directors' Remuneration Over Five Years | Role | Year ended 28 Feb 2023 (£) | Year ended 28 Feb 2018 (£) | Overall Change | Annual 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. There have been no movements in Directors' holdings since the year end. The Company has not set out any formal shareholding guidelines for 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 | - | ## 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: ### Relative Spend on Pay (£'000) ![img-8.jpeg](img-8.jpeg) 48 Annual Report & Accounts 2023 ### Performance Graph The chart above represents the Company’s Ordinary Share appropriate publicly available broad equity market index. The performance over the reporting periods since 28 February series has been rebased to 100 as at 28 February 2008. 2008 and compares the Net Asset Value Total Return and By order of the Board 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 Beringea LLP reinvested in the share class at the Net Asset Value Company Secretary prevailing at the date the dividends/distributions were paid. Charter House Share Price Total Return is calculated in a similar way, but 55 Drury Lane reinvesting dividends at the mid-market share price at the London, WC2B 5SQ date dividends are paid. Numis is not considered to be a 9 June 2023 benchmark for the Company but has been selected as an 49 Annual Report & Accounts 2023 ## Independent ## Auditor’s Report To the members of ProVen VCT plc Accounting Standards, including Financial Reporting ### Opinion on the financial statements Standard 102 The Financial Reporting Standard applicable in In our opinion the financial statements: the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). • 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 Basis for opinion ended; We conducted our audit in accordance with International • have been properly prepared in accordance with United Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our Kingdom Generally Accepted Accounting Practice; responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial • have been prepared in accordance with the statements section of our report. We believe that the audit requirements of the Companies Act 2006. evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit opinion is We have audited the financial statements of ProVen VCT plc consistent with the additional report to the audit committee. (the ‘Company’) for the year ended 28 February 2023 which comprise the Income Statement, the Statement of Changes Independence in Equity, the Statement of Financial Position, the Statement of Cash Flows and notes to the financial statements, Following the recommendation of the audit committee, we including a summary of significant accounting policies. The were appointed by the Board of Directors to audit the financial reporting framework that has been applied in their financial statements for the year ended 29 February 2012 preparation is applicable law and United Kingdom and subsequent financial periods. The period of total ASTERRA 50 Annual Report & Accounts 2023 u ninterrupted engagement including retenders and w hether the Directors considered it appropriate to adopt the reappointments is 12 years, covering the years ended going concern basis of accounting. 29 February 2012 to 28 February 2023. We remain Our responsibilities and the responsibilities of the Directors i ndependent of the Company in accordance with the ethical with respect to going concern are described in the relevant requirements that are relevant to our audit of the financial s ections of this report. statements in the UK, including the FRC’s Ethical Standard a s applied to listed public interest entities, and we have ### Overview fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services prohibited by Valuation of unquoted investments that standard were not provided to the Company. Key audit 2022 3 matters 2021 3 ### Conclusions relating to going concern Company financial statements as a whole In auditing the financial statements, we have concluded that Materiality £2.3m (2022: £2.5m) based on 2% (2022: the Directors’ use of the going concern basis of accounting 2%) of the gross investment value in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the ### An overview of the scope of our audit Company’s ability to continue to adopt the going concern basis of accounting included: Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s • Obtaining the VCT compliance reports prepared by system of internal control, and assessing the risks of material management’s expert during the year and as at year misstatement in the financial statements. We also end and reviewing the calculations therein to check that addressed the risk of management override of internal the Company was meeting its requirements to retain controls, including assessing whether there was evidence of VCT status; bias by the Directors that may have represented a risk of • Consideration of the Company’s expected future material misstatement. compliance with VCT legislation, the absence of bank debt, contingencies and commitments and any market Key audit matters or reputational risks; Key audit matters are those matters that, in our professional • Reviewing the forecasted cash flows that support the judgement, were of most significance in our audit of the Directors’ assessment of going concern, challenging financial statements of the current period and include the assumptions and judgements made in the forecasts, most significant assessed risks of material misstatement and assessing them for reasonableness. In particular, (whether or not due to fraud) that we identified, including we considered the available cash resources relative to those which had the greatest effect on: the overall audit the forecast expenditure which was assessed against strategy, the allocation of resources in the audit, and directing the prior year for reasonableness and considered the efforts of the engagement team. These matters were additional more severe downside scenarios; and addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, • Evaluating the Directors’ method of assessing the going and we do not provide a separate opinion on these matters. concern in light of market volatility and the present uncertainties in economic recovery. Valuation of unquoted investments (Note 1 and Note 10) Based on the work we have performed, we have not identified any material uncertainties relating to events or We consider the valuation of investments to be the most conditions that, individually or collectively, may cast significant audit area as there is a high level of estimation significant doubt on the Company’s ability to continue as a uncertainty involved in determining the unquoted investment going concern for a period of at least twelve months from valuations. when the financial statements are authorised for issue. There is also an inherent risk of management override arising In relation to the Company’s reporting on how it has applied from the unquoted investment valuations being prepared by the UK Corporate Governance Code, we have nothing the Investment Manager, who is remunerated and assessed material to add or draw attention to in relation to the based on the net asset value of the Company. Directors’ statement in the financial statements about 51 51 Annual Report & Accounts 2023 ## Independent Auditor’s Report (cont.) F or these reasons we considered the valuation of unquoted F or investments sampled that were valued using more investments to be a key audit matter. subjective techniques (earnings multiples and revenue multiples) we: How the scope of our audit addressed the key audit • Challenged and corroborated the inputs to the valuation m atter with reference to management information of investee companies, market data and our own understanding and Our sample for the testing of unquoted investments was assessed the impact of the estimation uncertainty stratified according to the value of individual investments. concerning these assumptions and the disclosure of For all Investments in our sample we considered whether the these uncertainties in the financial statements; valuation methodology was the most appropriate in the • Reviewed the historical financial statements and any circumstances under the International Private Equity and recent management information available to support Venture Capital Valuation (“IPEV”) Guidelines and the assumptions about maintainable revenues, earnings or applicable accounting standards. We have recalculated the cash flows used in the valuations; value attributable to the Company, having regard to the application of enterprise value across the capital structures • Considered the revenue or earnings multiples applied of the investee companies. and the discounts applied by reference to observable listed company market data; For investments sampled that were valued using less subjective valuation techniques (price of recent investment • Challenged the consistency and appropriateness of and offer price reviewed for changes in fair value) we: discounts applied to multiples; and • Verified the cost or price of recent investment to • Challenged the consistency and appropriateness of supporting documentation; adjustments made to such market data in establishing the revenue, or earnings multiple applied in arriving at • Considered whether the investment was an arm’s length the valuations adopted by considering the individual transaction through reviewing the parties involved in the performance of investee companies, the market and transaction and checking whether or not they were sector in which the investee company operates and already investors of the investee Company; other factors as appropriate. • Considered whether there were any indications that the Where appropriate, we performed a sensitivity analysis by cost or price of recent investment was no longer developing our own point estimate where we considered that representative of fair value considering, inter alia, the alternative input assumptions could reasonably have been current performance of the investee company; and applied and we considered the overall impact of such • Considered whether the price of recent investment is sensitivities on the portfolio of investments in determining supported by alternative valuation techniques. whether the valuations as a whole are reasonable and free from bias. For a sample of investments valued using less subjective valuation techniques (net asset value) we: Key observations • Agreed the net assets to supporting management Based on the procedures performed we consider the accounts, agreed the cash balances to bank statements investment valuations to be appropriate. 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. 52 materiality level, performance materiality, to determine the ### Our application of materiality extent of testing needed. Importantly, misstatements below We apply the concept of materiality both in planning and these levels will not necessarily be evaluated as immaterial performing our audit, and in evaluating the effect of as we also take account of the nature of identified misstatements. We consider materiality to be the magnitude misstatements, and the particular circumstances of their by which misstatements, including omissions, could occurrence, when evaluating their effect on the financial influence the economic decisions of reasonable users that statements as a whole. are taken on the basis of the financial statements. Based on our professional judgement, we determined In order to reduce to an appropriately low level the probability materiality for the financial statements as a whole and that any misstatements exceed materiality, we use a lower performance materiality as follows: Company financial statements 2023 £ 2022 £ Materiality 2,300,000 2,500,000 Basis for determining 2% of Gross investments materiality Rationale for the benchmark As a VCT, investments are considered to be the key measure of performance. In setting applied 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 75% of materiality performance materiality The level of performance materiality applied was set after having considered a number of Rationale for the percentage factors including the brought forward uncorrected misstatements, known or expected applied for performance misstatements for the current year, management’s attitude towards proposed adjustments materiality and the number of areas of the financial statements subject to estimation uncertainty. 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. 53 Annual Report & Accounts 2023 ## Independent Auditor’s Report (cont.) Y ARDLINK Based on the work undertaken as part of our audit, we have ### Other information concluded that each of the following elements of the The directors are responsible for the other information. The Corporate Governance Statement is materially consistent other information comprises the information included in the with the financial statements or our knowledge obtained Annual Report and Accounts other than the financial during the audit. statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information Going concern • The Directors’ statement with and, except to the extent otherwise explicitly stated in our and longer-term regards to the appropriateness of report, we do not express any form of assurance conclusion viability adopting the going concern basis thereon. Our responsibility is to read the other information of accounting and any material and, in doing so, consider whether the other information is uncertainties identified; and materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise • The Directors’ explanation as to appears to be materially misstated. If we identify such their assessment of the Company’s material inconsistencies or apparent material prospects, the period this misstatements, we are required to determine whether this assessment covers and why the gives rise to a material misstatement in the financial period is appropriate. statements themselves. If, based on the work we have performed, we conclude that there is a material Other Code • Directors’ statement on fair, misstatement of this other information, we are required to provisions balanced and understandable; report that fact. • Board’s confirmation that it has We have nothing to report in this regard. carried out a robust assessment of the emerging and principal risks; ### Corporate governance statement • The section of the annual report that describes the review of The Listing Rules require us to review the Directors’ effectiveness of risk management statement in relation to going concern, longer-term viability and internal control systems; and and that part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of • The section describing the work of the UK Corporate Governance Code specified for our review. the audit committee. 54 Annual Report & Accounts 2023 ### Other Companies Act 2006 reporting Responsibilities of Directors Based on the responsibilities described below and our work As explained more fully in the Directors’ responsibilities performed during the course of the audit, we are required by statement, the Directors are responsible for the preparation the Companies Act 2006 and ISAs (UK) to report on certain of the financial statements and for being satisfied that they opinions and matters as described below. give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation Strategic report In our opinion, based on the work of financial statements that are free from material and Directors’ undertaken in the course of the audit: misstatement, whether due to fraud or error. report • the information given in the In preparing the financial statements, the Directors are Strategic report and the Directors’ responsible for assessing the Company’s ability to continue report for the financial year for as a going concern, disclosing, as applicable, matters related which the financial statements are to going concern and using the going concern basis of prepared is consistent with the accounting unless the Directors either intend to liquidate the financial statements; and Company or to cease operations, or have no realistic • the Strategic report and the alternative but to do so. Directors’ report have been prepared in accordance with ### Auditor’s responsibilities for the audit of applicable legal requirements. ### In the light of the knowledge and the financial statements understanding of the Company and its Our objectives are to obtain reasonable assurance about environment obtained in the course of whether the financial statements as a whole are free from the audit, we have not identified material misstatement, whether due to fraud or error, and to material misstatements in the issue an auditor’s report that includes our opinion. strategic report or the Directors’ report. Reasonable assurance is a high level of assurance, but is not | Directors’ | In our opinion, the part of the Directors’ | a guarantee that an audit conducted in accordance with ISAs | | --- | --- | --- | | remuneration | remuneration report to be audited has | (UK) will always detect a material misstatement when it | | | been properly prepared in accordance | exists. Misstatements can arise from fraud or error and are | | | with the Companies Act 2006. | considered material if, individually or in the aggregate, they | could reasonably be expected to influence the economic | Matters on | We have nothing to report in respect of | decisions of users taken on the basis of these financial | | --- | --- | --- | | which we are | the following matters in relation to | statements. | | required to | which the Companies Act 2006 | | | report by | requires us to report to you if, in our | | Extent to which the audit was capable of detecting exception opinion: irregularities, including fraud • adequate accounting records have not been kept, or returns adequate Irregularities, including fraud, are instances of non- for our audit have not been received compliance with laws and regulations. We design from branches not visited by us; or procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, • the financial statements and the including fraud. The extent to which our procedures are part of the Directors’ remuneration capable of detecting irregularities, including fraud is detailed report to be audited are not in below: agreement with the accounting records and returns; or • certain disclosures of Directors’ Non-compliance with laws and regulations remuneration specified by law are Based on: not made; or • we have not received all the • Our understanding of the Company and the industry in information and explanations we which it operates; require for our audit. 55 Annual Report & Accounts 2023 ## Independent Auditor’s Report (cont.) • Discussion with management and Those Charged With • Review of minutes of meeting of Those Charged With Governance; and Governance for any known or suspected instances of fraud; • Obtaining and understanding of the Company’s policies and procedures regarding compliance with laws and • Discussion amongst the engagement team as to how regulations. and where fraud might occur in the financial statements. We considered the significant laws and regulations to be the Based on our risk assessment, we considered the areas Companies Act 2006, the FCA listing and DTR rules, the most susceptible to fraud to be the valuation of unquoted principles of the UK Corporate Governance Code, industry investments and management override of controls. practice represented by the Statement of Recommended Our procedures in respect of the above included: Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts (“the SORP”) and • Relevant aspects of the procedures set out in the Key updated in 2022 with consequential amendments and the Audit Matters section above; applicable financial reporting framework. We also considered the Company’s qualification as a VCT under UK tax • Obtaining independent evidence to support the legislation. ownership of investments; Our procedures in respect of the above included: • Recalculating investment management fees in total; • Agreement of the financial statement disclosures to • Obtaining independent confirmation of bank balances; underlying supporting documentation; and • Enquiries of management and those charged with • Testing journals which met a defined risk criteria by governance relating to the existence of any non- agreeing to supporting documentation and evaluating compliance with laws and regulations; whether there was evidence of bias by the Investment Manager and Directors that represented a risk of • Obtaining the VCT compliance reports prepared by material misstatement due to fraud. management’s expert during the year and as at year end and reviewing their calculations to check that the We also communicated relevant identified laws and Company was meeting its requirements to retain VCT regulations and potential fraud risks to all engagement team status; and members who were all deemed to have appropriate competence and capabilities and remained alert to any • Reviewing minutes of meeting of those charged with indications of fraud or non-compliance with laws and governance and the general ledger for legal fees regulations throughout the audit. throughout the period for instances of non-compliance with laws and regulations. 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 Fraud misstatement due to fraud is higher than the risk of not We assessed the susceptibility of the financial statement to detecting one resulting from error, as fraud may involve material misstatement including fraud. deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent Our risk assessment procedures included: limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from • Enquiry with management and Those Charged With the events and transactions reflected in the financial Governance regarding any known or suspected statements, the less likely we are to become aware of it. instances of fraud; A further description of our responsibilities is available on the • Obtaining an understanding of the Company’s policies Financial Reporting Council’s website at: and procedures relating to: www.frc.org.uk/auditorsresponsibilities . This description • Detecting and responding to the risks of fraud; and forms part of our auditor’s report. • Internal controls established to mitigate risks related to fraud. 56 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 ProVen VCT Annual Report & Accounts 2023 # Income Statement For the year ended 28 February 2023 | | Note | Year ended 28 February 2023 | | | Year ended 28 February 2022 | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'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 ProVen VCT Annual Report & Accounts 2023 # Statement of Changes in Equity For the year ended 28 February 2023 | | Note | Called up share capital £'000 | Capital redemption reserve £'000 | Special reserve £'000 | Share Premium reserve £'000 | Re-valuation reserve £'000 | Capital reserve-realised £'000 | Revenue reserve £'000 | Total £'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 **ProVen VCT** Annual Report & Accounts 2023 # Statement of Changes in Equity (cont.) For the year ended 28 February 2022 | | Note | Called up share capital £'000 | Capital redemption reserve £'000 | Special reserve £'000 | Share Premium reserve £'000 | Re-valuation reserve £'000 | Capital reserve-realised £'000 | Revenue reserve £'000 | Total £'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 C apital reserve – realised – The following are accounted for below: in this reserve: Called up share capital – The nominal value of shares • gains and losses on realisation of investments; issued, increased for subsequent share issues either via an • permanent diminution in value of investments; offer for subscription or the Company’s dividend reinvestment scheme, or reduced due to shares bought back • transaction costs incurred in the acquisition of by the Company for cancellation. investments; Capital redemption reserve – The nominal value of shares • 75% of the investment manager’s fee expense and bought back and cancelled. 100% of any performance incentive fee payable; and Special reserve – The Company has previously cancelled its • other capital expenses and charges. share premium reserve and capital redemption reserve to create a special reserve that can assist in writing off losses, Dividends that are classified as capital may be paid from this which in turn enhances the ability for a company to make reserve. distributions and implement share buybacks. This is the distributable reserve which is currently used to fund shares Revenue reserve – Income and expenses that are revenue bought back by the Company for cancellation and share in nature are accounted for in this reserve together with the issue costs on shares issued under an Offer for Subscription. related tax effect, as well as dividends paid that are classified Dividends that are classified as capital may be paid from this as revenue in nature. reserve. The special reserve is currently wholly distributable The accompanying notes are an integral part of these as it does not contain any capital arising from shares issued financial statements. 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. 61 ProVen VCT Annual Report & Accounts 2023 # Statement of Financial Position As at 28 February 2023 | | Note | 28 February 2023 Total £'000 | 28 February 2022 Total £'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 Company number: 03911323 The accompanying notes are an integral part of these financial statements. 62 ProVen VCT Annual Report & Accounts 2023 # Statement of Cash Flows For the year ended 28 February 2023 | | Note | Year ended 28 February 2023 Total £'000 | Year ended 28 February 2022 Total £'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 ## Notes to the Accounts Company’s compliance with certain requirements set out in ### For the year ended 28 February 2023 Part 6 of the Income Tax Act 2007. ### 1. Accounting policies Investments Basis of preparation Investments, including equity and loan stock, are recognised a t their trade date and measured at “fair value through profit The Company has prepared its financial statements under or loss” due to investments being managed and Financial Reporting Standard 102 (“FRS102”) and in performance evaluated on a fair value basis. A financial asset accordance with the Statement of Recommended Practice is designated within this category if it is both acquired and ‘Financial Statements of Investment Trust Companies and managed, with a view to selling after a period of time, in Venture Capital Trusts’ (the “SORP”) issued by the accordance with the Company’s documented investment Association of Investment Companies (“AIC”), which was policy. The fair value of an investment upon acquisition is updated in July 2022. deemed to be cost. Thereafter investments are measured at fair value in accordance with International Private Equity and The financial statements are prepared under the historical Venture Capital Valuation Guidelines (“IPEV Guidelines”) cost convention except for the revaluation of certain financial updated in December 2022, together with sections 11 and 12 instruments measured at fair value. of FRS102. The following accounting policies have been applied Publicly traded investments are measured using bid prices in consistently throughout the period. accordance with the IPEV Guidelines. Going concern Key judgements The Directors have, at the time of approving the financial The valuation methodologies used by the Directors for statements, a reasonable expectation that the Company has estimating the fair value of unquoted investments are as adequate resources to continue in operational existence for follows: the twelve months from the date of sign off of these financial statements. In its assessment of the Company’s activities as • where a company is in the early stage of development, a going concern, the Board has reviewed the risks to future the estimate of fair value is based on market data and performance as set out in the Strategic Report on pages 29 assumptions as to the potential outcomes, to 32, and considered the potential impacts of those on the benchmarked against alternative valuation Company’s future ability to continue as a going concern. The methodologies during this time; Company’s cash resources are currently healthy, and the portfolio of investments is diverse and not reliant on any one • where a company is well established after an sector. All significant cash outflows, including dividends, appropriate period, the investment may be valued by share buybacks and investments, are within the Company’s applying a suitable earnings, revenue or transaction control. Therefore, the Board expects that the Company has multiple to that company’s maintainable earnings or sufficient cash resources to withstand any reasonable stress revenue. The multiple used is based on comparable scenario, for example if the Company was unable to raise listed companies, transaction data or a sector but further funds, and believes that it is appropriate to continue to discounted to reflect factors such as the different sizes adopt the going concern basis of accounting in preparing of the comparable businesses, different growth rates these financial statements. and the lack of marketability of unquoted shares; • where a value is indicated by a material arm’s-length Presentation of Income Statement transaction by a third party in the shares of the company the valuation will normally be based on this, whilst also In order to better reflect the activities of an investment being benchmarked against alternative valuation company and, in accordance with guidance issued by the methodologies; AIC, supplementary information which analyses the Income Statement between items of a revenue and capital nature • where alternative methods of valuation, such as net has been presented alongside the Income Statement. The assets of the business, are more appropriate then such revenue return attributable to equity Shareholders is the methods may be used; and measure the Directors believe appropriate in assessing the 64 Annual Report & Accounts 2023 - 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. | Valuation Basis | Range of market comparables | Valuation as at 28 February 2023 £'000 | Range of market comparables when reduced by 15% | Valuation outcome £'000 | Range of market comparables when increased by 15% | Valuation outcome £'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** | 65 Annual Report & Accounts 2023 ## Notes to the Accounts (cont.) F air value T axation F air value is defined as the amount for which an asset could T he tax effects of different items in the Income Statement be exchanged between knowledgeable, willing parties in an are allocated between capital and revenue on the same arm’s length transaction. The Company has categorised its basis as the particular item to which they relate using the f inancial instruments that are measured subsequent to initial C ompany’s effective rate of tax for the accounting period. recognition at fair value, using the fair value hierarchy as Due to the Company’s status as a venture capital trust and follows: the continued intention to meet the conditions required to Level 1: The unadjusted quoted price in an active market for comply with Part 6 of the Income Tax Act 2007, no provision identical assets or liabilities that the entity can access at the for taxation is required in respect of any realised or measurement date. unrealised appreciation of the Company’s investments. Level 2: Inputs other than quoted prices included within Level Deferred taxation, which is not discounted, is provided in full 1 that are observable (i.e., developed using market data) for on timing differences that result in an obligation at the the asset or liability, either directly or indirectly. balance sheet date to pay more tax, or a right to pay less tax, Level 3: Inputs are unobservable (i.e., for which market data is at a future date, at rates expected to apply when they unavailable) for the asset or liability. crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of Income income and expenditure in taxation computations in periods Dividend income from investments is recognised when the different from those in which they are included in the financial shareholders’ rights to receive payment has been statements. Deferred tax assets are recognised to the extent established, normally the ex-dividend date. that it is regarded as more likely than not that they will be recovered. 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 Foreign Exchange collection in the foreseeable future. Income which is not Where a new investment is made in a currency other than capable of being received within a reasonable period of time GBP, its cost is recorded in the accounts at the GBP is reflected in the capital value of the investments. equivalent on the date of purchase and held in GBP for the A provision is made for any fixed income not expected to life of the investment. be received. Share issue costs Expenses Expenses in relation to share issues are deducted from the All expenses are accounted for on an accruals basis. In Special Reserve. 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: Cash • expenses which are incidental to the acquisition of an Cash comprises cash on hand and demand deposits. All investment are deducted from the Capital Account; cash at the year end is held in instant access accounts. • expenses which are incidental to the disposal of an investment are deducted from the disposal proceeds of Debtors the investment; Short term debtors are initially measured at transaction price. • expenses are split and presented partly as capital items Subsequent remeasurement deducts any impairment from where a connection with the maintenance or the transaction price. enhancement of the value of the investments held can be demonstrated. Accordingly, the investment Creditors management fee has been allocated 25% to revenue and 75% to capital in order to reflect the Directors’ Short term trade creditors are initially and subsequently expected long-term view of the nature of the investment measured at the transaction price, and are settled in a short returns of the Company; and time frame. • performance incentive fees are treated as a capital item. 66 ProVen VCT Annual Report & Accounts 2023 ## 2. Income | | 2023 £'000 | 2022 £'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 £'000 | 2022 £'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 £'000 | 2022 £'000 | | --- | --- | --- | | Performance incentive fees | - | 1,018 | Beringea 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. Therefore, no performance incentive fee is accrued in these accounts. ## 5. Other Expenses | | 2023 £'000 | 2022 £'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. 67 ProVen VCT Annual Report & Accounts 2023 # Notes to the Accounts (cont.) ## 7. Taxation on Ordinary Activities | | 2023 £'000 | 2022 £'000 | | --- | --- | --- | | (a) Tax charge for the year | | | | Current year | | | | UK corporation tax (charged to revenue account) | - | - | | Charged to capital expenses | - | - | | Charge for the year | - | - | | (b) 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 | 1 | 6 | | Deferred tax not recognised | 672 | 853 | | | - | - | # (c) 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. 68 **ProVen VCT** **Annual Report & Accounts 2023** ## 8. Dividends | | Pence | Year ended 28 February 2023 | | | Year ended 28 February 2022 | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'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 February 2023 | Year ended 28 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. 69 ProVen VCT Annual Report & Accounts 2023 # Notes to the Accounts (cont.) ## 10. Investments “Fair value through profit or loss” assets | | Investments quoted on AIM £'000 | Unquoted investments £'000 | Total £'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. 70 ProVen VCT Annual Report & Accounts 2023 ## 11. Debtors | | 2023 £'000 | 2022 £'000 | | --- | --- | --- | | Contingent proceeds receivable | 499 | 343 | | Prepayments and accrued income | 241 | 233 | | | 740 | 576 | ## 12. Creditors: Amounts Falling Due Within One Year | | 2023 £'000 | 2022 £'000 | | --- | --- | --- | | Accruals | 448 | 1,306 | | Share buybacks awaiting settlement | 319 | 4 | | Other creditors | 16 | 15 | | | 783 | 1,325 | ## 13. Called Up Share Capital | | 2023 £'000 | 2022 £'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. 71 ProVen VCT Annual Report & Accounts 2023 # Notes to the Accounts (cont.) The 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 | | | --- | --- | --- | --- | --- | --- | --- | | | 2023 | 2022 | Pence per share | Net asset value £'000 | Pence per share | Net asset 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 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. 72 ProVen VCT Annual Report & Accounts 2023 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: | Valuation Basis | Range of market comparables | Valuation as at 28 February 2023 £'000 | Range of market comparables when reduced by 15% | Valuation outcome £'000 | Range of market comparables when increased by 15% | Valuation outcome £'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** | # 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. 73 ProVen VCT Annual Report & Accounts 2023 # Notes to the Accounts (cont.) | | Average interest rate | Average period until maturity | 2023 £'000 | 2022 £'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 £'000 | 2022 £'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 74 **ProVen VCT** **Annual Report & Accounts 2023** 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 the Company's liquidity requirements, the table below shows an analysis of the loan stock, highlighting the length of time that it could take the Company to realise its loan stock assets if it were required to do so. The carrying value of loan stock investments (as opposed to the contractual cash flows) held at 28 February 2023, which is analysed by expected maturity date, is as follows: | As at 28 February 2023 | Not later than 1 Year £'000 | Between 1 and 2 Years £'000 | Between 2 and 3 Years £'000 | Between 3 and 5 years £'000 | More than 5 years £'000 | Total £'000 | | --- | --- | --- | --- | --- | --- | --- | | 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. ![img-9.jpeg](img-9.jpeg) 75 ProVen VCT Annual Report & Accounts 2023 # Notes to the Accounts (cont.) ## Fair Value of Financial Instruments *Fair value measurements recognised in the balance sheet* Investments are valued at fair value as determined using the measurement policies described in note 1. The carrying value of financial assets and financial liabilities recorded at amortised cost, which includes short term debtors and creditors, is considered by the Directors to be equivalent to their fair value. The Company has categorised its financial instruments that are measured subsequent to initial recognition at fair value, using the fair value hierarchy as follows: **Level 1** – Reflects financial instruments quoted in an active market. **Level 2** – Reflects financial instruments that have been valued using inputs, other than quoted prices, that are observable. **Level 3** – Reflects financial instruments that have been valued using valuation techniques with unobservable inputs. | | 2023 | | | | 2022 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'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 £'000 | Unquoted Equity £'000 | Total £'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 | 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. 76 ProVen VCT Annual Report & Accounts 2023 By its nature the Company has an amount of capital which must be invested, and retained, in the relatively high risk asset class of small UK companies broadly within three years of that capital being subscribed. The Company accordingly has limited scope to manage its capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets. Subject to this overall constraint upon the changing capital structure, the Company may adjust the amount of dividends paid to Shareholders, 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 ultimate 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. 77 Annual Report & Accounts 2023 ## Shareholder Information ### Websites Selling shares Latest financial information, including information on recent Shareholders should be aware that they need to hold their investment transactions, newsletters and electronic copies shares for a minimum of five years to retain the income tax of Annual Reports, Half Yearly Financial Statements and relief they received on investment. Selling your shares may Interim Management Statements can be found on the have tax consequences, therefore, you should contact your Company’s website: financial adviser if you have any queries. www.proveninvestments.co.uk The Company’s shares can be bought and sold in the same way as any other company listed on the London Stock Shareholders can also check details of their shareholdings Exchange via a stockbroker. The Company also operates a using Link Group’s website at www.signalshares.com . policy of buying its own shares for cancellation as they become available. The Company is, however, unable to buy ### Dividends back shares direct from Shareholders, so you will need to use a stockbroker to sell your shares. If you are considering Dividends are paid by the Registrar on behalf of the selling your shares or trading in the secondary market, Company. Shareholders who wish to have dividends paid please contact the Company’s Corporate Broker, Panmure directly into their bank account rather than by cheque to their Gordon (UK) Limited (“Panmure”). registered address can complete a mandate form for this purpose (forms can be downloaded from Panmure is able to provide details of close periods (when the www.linkassetservices.com ). company is prohibited from buying in shares) and details of the price at which the VCT has bought in shares. Panmure Shareholders are also reminded that the Company operates can be contacted as follows: a Dividend Reinvestment Scheme (“DRIS”). The DRIS provides Shareholders with the opportunity to reinvest their Chris Lloyd 0207 886 2716 chris.lloyd@panmure.com cash dividends into new shares in the Company at the latest Paul Nolan 0207 886 2717 paul.nolan@panmure.com published NAV per share. New shares allotted via the DRIS attract the same tax reliefs as shares purchased through an ### Key dates offer for subscription. Shareholders who would like to join the | scheme for any future dividends can do so by completing the | | Annual General Meeting 12 July 2023 | | --- | --- | --- | | Dividend Reinvestment Forms located in the Key Documents | | Next dividend payment date 4 August 2023 | | section of the Company’s website at | | Announcement of half year results November 2023 | | www | .proveninvestments.co.uk and returning them to the | Shareholder Event 16 November 2023 | Company Registrar whose details are set out below. Alternatively, Shareholders can update their dividend ### Unsolicited communication with payment preference using the shareholder portal at ### Shareholders www.signalshares.com . Whilst we are not aware of any instances in the last year, we Queries relating to dividends and requests for mandate have in prior years been informed that some Shareholders in forms should be directed to the Company’s Registrar: ProVen VCT plc have received unsolicited telephone calls, Registrar: Link Group e-mails or correspondence concerning investment matters. Tel: 0371 664 0324 (calls are charged at the standard Please note that it is very unlikely that either the Company, geographic rate and will vary by provider) Beringea or the Company registrar, Link Group, would make Email: shareholderenquiries@linkgroup.co.uk unsolicited telephone calls, or send e-mails, to Shareholders. Address: Shareholders can, however, expect official documentation in Link Group connection with the Company and may receive details of 10th Floor investment activity and new VCT offers from the Investment Central Square Manager. Furthermore, please be assured that the Company 29 Wellington Street limits access to the Company’s share register by third parties Leeds, LS1 4DL to the maximum extent permissible under the Companies Act 2006. If you receive either an unexpected telephone call ### Share prices or correspondence about which you have concerns, please contact Beringea LLP, the Company Secretary, on 020 7845 The Company’s share prices can be found on various 7820. financial websites with the following TIDM/EPIC codes ### TIDM/EPIC code “PVN” Notification of change of address Latest share price (7 June 2023): 61.5p per share 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 78 signature of the registered holder. Annual Report & Accounts 2023 Annual Report & Accounts 2023 ## Company Information Company number Registered Office 03911323 Charter House 55 Drury Lane D irectors London WC2B 5SQ Neal Ransome (Chair) Tel: 020 7845 7820 Barry Dean L orna Tilbian A dministration Manager Malcolm Moss Beringea LLP Charter House all of 55 Drury Lane London WC2B 5SQ Charter House Tel: 020 7845 7820 55 Drury Lane www.proveninvestments.co.uk London WC2B 5SQ VCT Status Adviser Investment Manager Philip Hare & Associates LLP Beringea LLP 1 Temple Avenue Charter House London 55 Drury Lane EC4Y 0HA London WC2B 5SQ Tel: 020 7845 7820 Bankers www.proveninvestments.co.uk Royal Bank of Scotland London Victoria Branch Registrars 119/121 Victoria Street Link Group London SW1E 6RA 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 79 ProVen VCT Annual Report & Accounts 2023 # Notice of Annual General Meeting **NOTICE 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 11:00am on Wednesday 12 July 2023. As **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 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 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 or 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; 80 Annual Report & Accounts 2023 and this power, unless previously varied, revoked or renewed, By order of the Board 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. Beringea LLP Company Secretary 13. THAT, the amounts standing to the credit of the share Registered Office: premium account of the Company and the capital Charter House redemption reserve of the Company, as at the date an order 55 Drury Lane is made confirming such cancellation by the Court, be and is London WC2B 5SQ hereby cancelled. 9 June 2023 14. THAT, with effect from the conclusion of the meeting, the Information regarding the Annual General Meeting, articles of association of the Company be amended by including the information required by section 311A of the deleting article 88 and replacing it with the following new Companies Act 2006, is available from article 88: www.proveninvestments.co.uk . “The Directors shall be paid out of the funds of the Company by way of fees for their services an aggregate Note: Please see the notes set out on pages 82 and 83 sum not exceeding £200,000 per annum. The Directors which contain important information about the Annual shall also receive by way of additional fees such further General Meeting. 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.” 81 81 Annual Report & Accounts 2023 ## Notes for Notice of ## Annual General Meeting T he following notes explain your general rights as a w ith the proxy form. For the purposes of determining the time Shareholder and your right to vote at the Annual General for delivery of proxies, no account has been taken of any part Meeting. of a day that is not a working day. 1. To be entitled to vote at the Annual General Meeting (and 7. In the case of joint holders, where more than one of the f or the purpose of the determination by the Company of the j oint holders purports to appoint a proxy, only the number of votes they may cast), Shareholders must be appointment submitted by the most senior holder will be registered in the Register of Members of the Company at accepted. Seniority is determined by the order in which the close of trading on 10 July 2023. Changes to the Register of names of the joint holders appear in the Company’s Register Members after the relevant deadline shall be disregarded in of Members in respect of the joint holding (the first named determining the rights of any person to attend and vote at the being the most senior). Annual General Meeting. 8. A vote withheld is not a vote in law, which means that the 2. Any Shareholder attending the Annual General Meeting vote will not be counted in the calculation of votes for or has the right to ask questions relating to the business being against the resolution. If no voting indication is given, your dealt with at the meeting which, in accordance with proxy will vote or abstain from voting at his or her discretion. section 319A of the Companies Act 2006, the Company Your proxy will vote (or abstain from voting) as he or she must cause to be answered. thinks fit in relation to any other matter which is put before the Annual General Meeting. 3. This year, the Company will also offer Shareholders the option to follow proceedings of the meeting via conference 9. To be valid, any Form of Proxy or other instrument call link. Any Shareholders who wish to listen to the meeting appointing a proxy, must be returned by no later than 11 a.m. remotely, should email info@beringea.co.uk for joining on Monday 10 July 2023 through any one of the following instructions. Please note that Shareholders will not be able to methods: vote or ask questions at the AGM when joining remotely. i) by post, courier or (during normal business hours only) Shareholders who wish to submit questions in advance of hand to the Company’s UK registrar at: the AGM may do so via e-mail to info@beringea.co.uk and the Board will respond to questions raised at the meeting. Link Group PXS1 4. The right to appoint a proxy does not apply to persons 10th Floor Central Square whose shares are held on their behalf by another person and 29 Wellington Street Leeds who have been nominated to receive communications from LS1 4DL; the Company in accordance with Section 146 of the Companies Act 2006 (“nominated persons”). Nominated ii) electronically through the website of the Company’s UK persons may have a right under an agreement with the registrar at www.signalshares.com ; or member who holds the shares on their behalf to be iii) in the case of shares held through CREST, via the CREST appointed (or to have someone else appointed) as a proxy. system (see notes below); Alternatively, if nominated persons do not have such a right, or do not wish to exercise it, they may have a right under We strongly recommend voting electronically at such an agreement to give instructions to the person holding www.signalshares.com as your vote will automatically be the shares as to the exercise of voting rights. counted. 5. We recommend that all Shareholders appoint the Chair of 10. If you return more than one proxy appointment, either by the meeting as proxy. This will ensure that your vote is paper or electronic communication, the appointment counted even if attendance at the meeting is restricted or received last by the Registrar before the latest time for the you or any other proxy you might appoint are unable to attend receipt of proxies will take precedence. You are advised to in person. The return of a completed proxy will not prevent a read the terms and conditions of use carefully. Electronic member attending the Annual General Meeting and voting in communication facilities are open to all Shareholders and person if the member wishes to do so. those who use them will not be disadvantaged. 6. In the case of a Shareholder which is a company, the 11. CREST members who wish to appoint a proxy or proxies proxy form must be executed under its common seal or through the CREST electronic proxy appointment service signed on its behalf by an officer of the company or an may do so for the Annual General Meeting (and any attorney for the company. Any power of attorney or any other adjournment of the Annual General Meeting) by using the authority under which the proxy form is signed (or a duly procedures described in the CREST Manual (available from certified copy of such power or authority) must be included www.euroclear.com/site/public/EUI ). CREST Personal 82 ProVen VCT 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, Shareholders 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. 83 Beringea LLP 55 Drury Lane London WC2B 5SQ T. 020 7845 7820 E. info@beringea.co.uk www.beringea.co.uk Managed by 84