ProVen Plnd Ex VCT Proven Planned Exit Vct Plc : Annual Financial Report

 
TIDMPPE 
 
 
   PROVEN PLANNED EXIT VCT PLC 
 
   ANNUAL FINANCIAL REPORT 
 
   YEAR ENDED 31 JANUARY 2014 
 
   Financial summary 
 
 
 
 
Ordinary Shares              31 January 2014  31 January 2013  31 January 2012 
Net asset value per share              77.2p            80.8p            88.7p 
("NAV") 
Dividends paid since launch            15.0p             9.0p             3.0p 
Total return (NAV plus                 92.2p            89.8p            91.7p 
dividends paid since 
launch) 
Mid market share price                 75.5p            85.0p            97.0p 
 
 
 
 
'A' Shares                   31 January 2014  31 January 2013  31 January 2012 
Net asset value per share               0.1p             0.1p             0.1p 
("NAV") 
Dividends paid since launch                -                -                - 
Total return (NAV plus                  0.1p             0.1p             0.1p 
dividends paid since 
launch) 
Mid market share price                  0.1p             0.1p             0.1p 
 
 
   Dividend history for Ordinary Shares (since launch) 
 
 
 
 
Ordinary Share dividends paid since inception          pence per share 
For the period ended 31 January 2012 
 
 --    Interim dividend paid 21 December 2011                      3.0 
 
 --    Final dividend paid 6 June 2012                             3.0 
For the year ended 31 January 2013 
                                                                   3.0 
 --    Interim dividend paid 9 November 2012 
                                                                   3.0 
 --    Final dividend paid 24 July 2013 
For the year ended 31 January 2014 
                                                                   3.0 
 --    Interim dividend paid 20 November 2013 
                                                                   3.0 
 --    Proposed final dividend payable 18 June 2014 
Cumulative dividends paid and proposed to date                    18.0 
 
 
   Chairman's Statement 
 
   Introduction 
 
   I have pleasure in presenting the third annual report for ProVen Planned 
Exit VCT plc (the "Company") to Shareholders for the year ended 31 
January 2014. 
 
   Results 
 
   The profit on activities after taxation for the year was GBP112,000 
(2013: GBP90,000 loss), comprising a revenue profit of GBP72,000 (2013: 
GBP46,000 loss) and a capital profit of GBP40,000 (2013: GBP44,000 
loss). The net asset value total return, comprising net asset value and 
dividends paid since launch, was 92.2p per Ordinary Share (2013: 89.8p) 
and 0.1p per 'A' Share (2013: 0.1p). This represents an uplift of 2.9% 
on the opening net asset value at the beginning of the year after 
adjustment for dividends paid during the year. 
 
   Dividends 
 
   In accordance with the terms of the Offer, the Directors intend that the 
Company pays two dividends per year of 3p each, subject to the 
availability of sufficient cash reserves and distributable reserves. 
 
   The Company paid an interim dividend for the year ended 31 January 2014 
of 3p per Ordinary Share on 20 November 2013 to Ordinary Shareholders on 
the register as at 8 November 2013. 
 
   The Company is proposing a final dividend for the year ended 31 January 
2014 of 3p per Ordinary Share which will be subject to approval by 
Shareholders at the Annual General Meeting of the Company on 11 June 
2014. The dividend will, subject to this approval, be paid on 18 June 
2014 to Ordinary Shareholders on the register as at 6 June 2014. 
 
   Portfolio activity and valuation 
 
   At 31 January 2014, the Company's venture capital investment portfolio 
comprised seven venture capital investments at a cost of GBP3.06 million 
(2013: GBP1.20 million) and a valuation of GBP3.13 million (2013: 
GBP1.20 million). In addition, the Company had net current assets, 
predominantly in cash, of GBP592,000. 
 
   The Company made five new investments during the year in Fjordnet 
Limited, Blis Media Limited, Donatantonio Limited, Cogora Group Limited 
and SPC International Limited. The investment in Fjordnet Limited was 
then disposed of in full in May 2013, when the company was acquired. 
 
   These investments ensured that the Company surpassed the necessary VCT 
qualifying investment levels by 31 January 2014. 
 
   Share buybacks 
 
   The Directors intend that, in the five years following the first 
allotment of shares, the Company will operate a policy of buying back 
its own shares for cancellation at a zero discount to net asset value. 
It should be noted, however, that a disposal of VCT shares within five 
years from allotment may result in the loss of the initial income tax 
relief. Given the intended life of the Company, it is not intended that 
any shares will be bought back after the fifth anniversary of the first 
allotment of shares. 
 
   No shares were purchased by the Company during the year. 
 
   VCT legislation 
 
   The period under review has seen the emergence of various pieces of 
actual and proposed legislation relating to the governance and 
management of venture capital trusts. I am pleased to report that where 
appropriate, the Board and Manager have been involved in the 
consultation process relating to the legislation, both directly and 
through the network of industry groups that represent the interests of 
VCTs. It is pleasing to note that none of the proposed or enacted 
legislation will have an adverse impact on the Company. 
 
   In 2013, HMRC and HM Treasury launched a consultation exercise on the 
use of so called "enhanced share buybacks" ("ESB"). These allow 
shareholders to liquidate an investment in a VCT which has been held for 
more than 5 years and reinvest the proceeds in the same VCT at a small 
discount, thereby allowing the benefit of a further round of upfront 
income tax relief (although subject to the usual restrictions 
surrounding a new investment in a VCT).  The Government has now 
confirmed that, for shares issued after 5 April 2014, VCT income tax 
relief will not be available where either: 
 
 
   -- there is a link between the subscription of share in a VCT and a disposal 
      of VCT shares; or 
 
   -- an investor subscribes for shares in a VCT and disposes of shares in the 
      same VCT within six months (whether before or after subscription). If the 
      subscription exceeds the amount of the disposal proceeds, the excess will 
      still qualify for income tax relief. Dividend reinvestment schemes are 
      not affected by this rule. 
 
 
   In the case of your Company, the intended fixed life of the VCT meant 
that an ESB was never intended. Shareholders are, however, advised to 
consult their financial adviser if they think they may be impacted by 
the legislation. The same consultation has also led, indirectly, to 
restrictions on the payments of capital dividends for funds raised after 
6 April 2014 but this, again, does not impact your Company. 
 
   At a European level, the Alternative Investment Fund Managers Directive 
("AIFMD"), an EU Directive that regulates the managers of alternative 
investment funds, came into effect in the UK in 22 July 2013 although 
there are transitional arrangements in place until 22 July 2014. The 
Board and Manager have considered the impact of this Directive on the 
Company. As a result Beringea will be regarded as the AIFM for the 
Company and is currently working through the necessary additional 
registration process. A small amendment may be necessary to the 
Company's investment management agreement with the Manager but not so as 
to affect the key financial and non-financial terms. 
 
   Annual General Meeting 
 
   The Annual General Meeting ("AGM") of the Company will be held at 39 
Earlham Street, London WC2H 9LT at 3.00 pm on 11 June 2014. 
 
   Shareholder presentation 
 
   I was pleased to meet a number of the Company's Shareholders at the 
ProVen VCTs' annual shareholder presentation which was held at the 
British Museum in central London in November and I look forward to this 
year's event which will be held in the autumn. Further details will be 
sent to Shareholders in due course. 
 
   The Board is always pleased to hear comments from Shareholders outside 
the AGM and shareholder event and can be contacted through the Company's 
registered office at 39 Earlham Street, London WC2H 9LT. 
 
   Outlook 
 
   I am pleased to report that the Company has reached the necessary 
qualification levels under the VCT regulations. 
 
   Given the intended fixed life and the small size of the Company, it is 
not expected that there will be any further material additions to the 
investment portfolio and so the focus will be on the management of the 
existing portfolio to generate the highest possible returns to 
Shareholders. The portfolio companies are all well known to the 
Investment Manager, being part of the investment portfolio in other VCTs 
which they manage. This provides an element of portfolio de-risking 
compared to a completely new investment. 
 
   Additionally the Company's investment ranks ahead of most, if not all, 
of the other investments by third parties in these companies. This, 
together with an improving wider economic environment for UK smaller 
companies, provides grounds for cautious optimism for future returns to 
Shareholders. 
 
   Peter L R Hewitt 
 
   Chairman 
 
   Investment Manager's Review 
 
   Introduction 
 
   We have pleasure in presenting our report for ProVen Planned Exit VCT 
plc (the "Company") for the year to 31 January 2014. 
 
   Beringea LLP is a specialist venture capital management company which 
traces its origins back nearly 30 years. It currently manages over 
GBP100 million of VCT funds through three VCTs and has managed VCTs 
since their inception in 1996. This established investment portfolio and 
experience has directly provided investment opportunities for the 
Company which would not have been available to a smaller standalone VCT. 
 
   Investment activity and portfolio valuation 
 
   As at 31 January 2014, the Company's venture capital investment 
portfolio comprised six VCT qualifying investments at a cost of GBP2.86 
million and valuation of GBP2.93 million and one non-VCT qualifying 
investment with a cost and valuation of GBP200,000. In addition, the 
Company had cash of GBP622,000. 
 
   The Company made five investments totalling GBP2.41 million during the 
year. In addition, the Company realised one of these investments at a 
small profit. 
 
   In February 2013, the Company completed a VCT qualifying investment of 
GBP550,000, in a combination of equity and loan notes, into Fjordnet 
Limited, an established digital design agency which works across many 
sectors. Fjordnet was acquired by Accenture Holdings B.V., a subsidiary 
of Accenture (NYSE: ACN) three months later resulting in a small overall 
profit. 
 
   In April 2013, the Company provided a working capital facility of 
GBP500,000, made up of equity and loan notes, to Campden Media Limited. 
The company has since rebranded as Cogora Group Limited and provides a 
range of publishing titles and events in the health sector. 
 
   Both the Fjordnet and Cogora investments were reported last year, having 
being completed shortly prior to the Report and Accounts being 
finalised. The Company completed a further three investments in the 
second half of the current financial year: 
 
 
   -- Blis Media Limited - in August 2013, the Company provided a financing 
      facility to Blis Media, a mobile marketing specialist featuring a roster 
      of blue-chip clients.  It was one of the first technology companies in 
      the UK to specialise in location based media. 
 
   -- Donatantonio Limited - in November 2013, the Company provided combined 
      equity and loan funding to Donatantonio, an importer and wholesaler of 
      Mediterranean foods. The company is a long established family business in 
      which the Beringea managed VCTs first invested in 2007. Under the 
      guidance of an experienced management team, the Company has developed its 
      customer offering including the recent launch of its own branded product 
      line, "Lupa". 
 
   -- SPC International Limited - SPC repairs and refurbishes electronic 
      equipment through its UK and overseas service centres. The Company 
      finalised an equity and loan investment in January 2014 as part of a 
      financial restructuring of the company. 
 
 
   Cross Solar PV, Long Eaton Healthcare and Eagle-i Music, which were the 
Company's first investments, continue to perform satisfactorily. 
 
   The Company's investment portfolio is focussed on lower risk 
opportunities with a running yield, capital preservation and security 
taking precedence over potential significant equity growth, consistent 
with the overall aims of the Company. The loan funding provided to 
investments typically has a redemption premium and ranks ahead of other 
sources of financing in the event of a disposal. The majority of 
investment returns are therefore likely to come from this loan financing, 
in the form of interest and the repayment of capital. While there is 
also the potential for some uplift in the equity held in the portfolio, 
this has been largely discounted in the valuation with the majority of 
the investments being valued at cost. 
 
   Post year end portfolio activity 
 
   In April, Eagle Rock Entertainment Group Limited, Eagle-i Music's parent 
company, was sold to Universal Media Group. As part of this transaction, 
Eagle-i Music Limited was spun out as a standalone company and provided 
with further funds by both ProVen VCT and ProVen Growth and Income VCT. 
 
   Outlook 
 
   The Company has met the investment targets under the VCT regulations. We 
do not expect the Company to make any further material investments and 
our focus will now be on managing these investments to a successful exit 
to deliver the targeted returns to Shareholders, whilst at the same time 
maintaining the Company's VCT qualification status. We continue to be 
pleased with the overall performance of the Company. 
 
   Beringea LLP 
 
   Investment Portfolio 
 
   as at 31 January 2014 
 
   The following investments were held at 31 January 2014: 
 
 
 
 
                                                                              % of 
                  Cost     Valuation                                        portfolio 
                 GBP'000    GBP'000    Valuation movement in year GBP'000   by value 
Venture 
capital 
investments 
Cross Solar PV 
 Limited(1)          600         643                                   43       17.1% 
Donatantonio 
 Limited(1)          550         550                                    -       14.7% 
SPC 
 International 
 Limited(1,2)        530         530                                    -       14.1% 
Cogora Group 
 Limited(1)          500         500                                    -       13.3% 
Long Eaton 
 Healthcare 
 Limited(1)          400         435                                   35       11.6% 
Blis Media 
 Limited(1)          275         275                                    -        7.3% 
Eagle-i Music 
 Limited(3)          200         200                                    -        5.3% 
Total venture 
 capital 
 investments       3,055       3,133                                   78       83.4% 
Cash at bank 
 and in hand                     622                                            16.6% 
Total 
 investments                   3,755                                           100.0% 
 
 
   All venture capital investments are unquoted unless otherwise stated. 
 
   (1.) Cross Solar PV Limited, Donatantonio Limited, SPC International 
Limited, Cogora Group Limited, Long Eaton Healthcare Limited and Blis 
Media Limited are also held by ProVen VCT plc and ProVen Growth and 
Income VCT plc. 
 
   (2.) SPC International Limited is a partially qualifying and partially 
non-qualifying investment. 
 
   (3.) Eagle-i Music Limited is also held by ProVen Growth and Income VCT 
plc. ProVen VCT plc and ProVen Growth and Income VCT plc also held an 
investment in Eagle Rock Entertainment Group Limited which is a 
significant shareholder in Eagle-i Music Limited, which was sold in 
April 2014. 
 
   The relationship between the VCTs managed by Beringea is covered by a 
co-investment agreement. 
 
   All venture capital investments held at the year end are registered in 
England and Wales. 
 
   Strategic Report 
 
   Introduction 
 
   The Directors present the Strategic Report for ProVen Planned Exit VCT 
plc (the "Company") for the year ended 31 January 2014. Its purpose is 
to inform the members of the Company and help them to assess how the 
Directors have performed their duty to promote the success of the 
Company, in accordance with Section 172 of the Companies Act 2006. 
 
   Principal activity and status 
 
   The Directors initially obtained provisional approval for the Company to 
act as a Venture Capital Trust from HM Revenue & Customs at formation. 
The Directors consider that the Company has conducted its affairs in a 
manner to enable it to continue to comply with s274 of the Income Tax 
Act 2007.  The principal activity of the Company is to invest in a 
diversified portfolio of smaller companies in order to generate income 
and capital growth. 
 
   Business review and developments 
 
   The Company delivered a total return for the year of GBP112,000, 
equivalent to 2.3p per Ordinary Share (2013: GBP90,000 loss; (1.9p)). 
This takes into account the reduction in the Investment Manager's fee by 
GBP3,000 to GBP56,000 as a result of the operation of the 3.5% cap on 
annual expenses (excluding trail commission).  The total expense ratio 
at the year end compared to net assets, taking into account the expense 
cap, was 3.5%. 
 
   The Company paid two dividends of 3p each to Ordinary Shareholders 
during the period. The Company is proposing a further final dividend for 
the year ended 31 January 2014 of 3p per Ordinary Share which will be 
subject to approval by Shareholders at the Annual General Meeting of the 
Company on 11 June 2014. 
 
   The Company is now effectively fully invested and does not expect to 
make any further significant investments. The Company's investments will 
be managed over the remainder of the intended 6 year life of the 
Company. 
 
   Further detail on the Company's activity during the year is provided in 
the Chairman's Statement and the Investment Manager's Review. 
 
   Investment objectives 
 
   The Company aims to (a) provide investors with an attractive tax-free 
return of at least 8.4% per annum over the life of the Company, on the 
net investment after initial tax relief of 70p per share, (b) pay 
dividends of 6p per share per annum, and (c) have a lower risk profile 
than traditional VCTs, by investing in a portfolio of Qualifying 
Investments, primarily being in UK unquoted companies with substantial 
assets or having reliable revenue streams from financially sound 
customers; and a portfolio of low-risk non-Qualifying Investments 
including cash deposits, money market funds, fixed interest securities 
and secured loans. 
 
   The Company is currently meeting objective (b) having paid dividends of 
15p per Ordinary Share to date, with a further dividend of 3p per 
Ordinary Share, being payable on 18 June 2014, subject to shareholder 
approval. The Directors regard the investment portfolio as lower risk 
than traditional VCTs, objective (c), given the priority ranking of a 
number of the portfolio company investment instruments. The returns to 
investors over the life of the Company, objective (a), will clearly only 
be known in future years but the Board regularly monitors progress 
against this stated target and the Company is well positioned to achieve 
this. 
 
   Investment policy 
 
   The Company's investment policy covers several aspects as follows: 
 
   Qualifying Investments 
 
   The Company will seek to build a diversified portfolio of investments in 
unquoted, primarily UK based companies, which has a lower risk profile 
than traditional VCTs.  The Qualifying Investments will be made in 
companies that have a substantial asset base or which have reliable 
revenues from financially sound customers that can be used to provide 
the Company with security for its investment. Other key elements of the 
investment strategy for Qualifying Investments are: 
 
 
   -- to invest in companies across several industries; 
 
   -- to maximise the use of secured loans, within the conditions imposed on 
      all VCTs; 
 
   -- to target returns on each Qualifying Investment which are consistent with 
      achieving the overall investment objectives of the Company; 
 
   -- to have a clearly defined exit route for the Company's investment. 
 
   Non-Qualifying Investments 
 
   The funds not employed in Qualifying Investments may be invested in 
non-Qualifying Investments which are consistent with the Company's 
objective of being a lower risk VCT.  These investments may include cash 
deposits, fixed income securities, structured products, OEICs and 
secured loans.  Fixed income securities will consist of bonds issued by 
the UK Government, major companies and institutions, liquidity funds or 
similar securities of A rating or better.  Secured loans will be secured 
on assets held by investee companies. 
 
   Asset Allocation 
 
   The intention at launch was that the Company would invest approximately 
75% of its funds in Qualifying Investments. Initially, whilst suitable 
Qualifying Investments were being identified, the funds were to be 
invested in a portfolio of low-risk non-Qualifying Investments. The 
non-Qualifying investments have been held mainly in cash which has 
reduced as new Qualifying Investments have been made. 
 
   The Company's Qualifying Investments stand at 72% under the VCT 
legislation. Whilst it is not intended to make further material 
qualifying investments, this percentage may fluctuate due to cash 
movements within the Company. 
 
   Risk Diversification 
 
   The structure of the Company's funds and its investment strategy have 
been designed to reduce risk as much as possible. 
 
   The main risk management features include: 
 
 
   -- asset backing/reliable income - each investee company will have a 
      substantial asset base or reliable revenue streams from financially sound 
      customers; 
 
   -- portfolio of investee companies - the Company will invest in a number of 
      different companies, thereby reducing the potential impact of poor 
      performance by any individual investment; 
 
   -- monitoring of investee companies - the Investment Manager will closely 
      monitor the performance of all the investments made by the Company in 
      order to identify any issues and to enable necessary corrective action to 
      be taken; 
 
   -- control over key decisions by investee companies - the Investment Manager 
      will negotiate detailed legal agreements with each investee company 
      giving it significant influence over the development of the business. 
      Generally, one of Beringea's investment managers will be appointed to the 
      board of each investee company;  and 
 
   -- rigorous investment process - Beringea has established rigorous 
      procedures for reviewing and approving potential investments, aimed at 
      ensuring a high standard of investment decision-making. 
 
 
   Gearing 
 
 
 
 
 
 
 
   It is not the Company's intention to have any borrowings, although it 
has the ability to borrow up to 15% of its net asset value. 
 
   Change in investment policy 
 
   A material change in the investment policy of the Company will only be 
effected with the prior approval of the Company's Shareholders in 
accordance with the Listing Rules. 
 
   VCT regulations 
 
   In continuing to maintain its VCT status, the Company complies with a 
number of regulations as set out in Section 274 of the Income Tax Act 
2007.  The Company's compliance with these regulations is set out in the 
section "Key performance indicators" below: 
 
   Key performance indicators 
 
   The Board considers the main key performance indicators ("KPIs") for the 
Company are: 
 
 
   -- Net Asset Value Total Return (NAV plus cumulative dividends paid to date) 
 
   -- Dividends per share. 
 
   -- Compliance with the VCT regulations 
 
 
   In addition, the Board considers the Company's performance in relation 
to other VCTs. 
 
   These KPIs are monitored by the Board at each Board meeting, and are 
also kept under review by the Investment Manager. 
 
   The Net Asset Value Total Return has progressed satisfactorily given the 
lower risk focus of the Company and the low interest rates available on 
cash awaiting investment. The Company has to date delivered the targeted 
dividend payments of 6p per Ordinary Share per annum. 
 
   The Company retains PricewaterhouseCoopers LLP ("PwC") to advise it on 
compliance with VCT requirements, including evaluation of investment 
opportunities from a VCT qualification perspective as appropriate. 
 
   Compliance with the main VCT regulations as at 31 January 2014 and for 
the year then ended, is summarised as follows: 
 
 
 
 
                                                             Complied (72.3%) 
 --    70% of its investments in qualifying companies 
                                                             Complied (36.2%) 
 --    at least 30% of the Company's qualifying investments 
       in "eligible shares" 
                                                             Complied 
 --    at least 10% of each investment held in "eligible 
       shares" 
                                                             Complied 
 --    no investment constitutes more than 15% of the 
       Company's portfolio 
                                                             Complied 
 --    income is derived wholly or mainly from shares and 
       securities; 
                                                             Complied 
 --    no more than 15% of the income from shares and 
       securities is retained; 
                                                             Complied 
 --    the Company's ordinary capital has throughout the 
       period been listed on a regulated European market 
                                                             Complied 
 --    the Company has not made an investment since 16 July 
       2012 which causes a breach of the GBP5 million 
       investment limits condition. 
 
   Principal risks and uncertainties 
 
   The principal financial risks faced by the Company, which include market 
risks, credit risks and liquidity risks are disclosed within note 4 of 
this announcement. 
 
   In addition to these financial risks the Board also considers the 
following to be risks to the Company: 
 
   Investment risk 
 
   This is the risk of investment in poor quality assets which reduce the 
capital and income returns to Shareholders and negatively impact on the 
Company's reputation. By nature, smaller unquoted businesses, such as 
those that qualify for venture capital trust purposes, are more fragile 
than larger, long-established businesses. 
 
   To reduce the risk, the Board places reliance upon the skills and 
expertise of the Investment Manager and its track record. In addition, 
the Investment Manager operates a formal and structured 
 
   investment process, which includes a formal investment committee. 
Investments are actively and regularly monitored by the Investment 
Manager and the Board receives detailed reports on each investment as 
part of the Investment Manager's report at regular Board meetings. 
 
   Compliance risk 
 
   As a VCT, and a fully listed company on the London Stock Exchange, the 
Company operates in a complex regulatory environment and, therefore, 
faces a number of related risks. A breach of the VCT regulations could 
result in the loss of VCT status and consequent loss of tax reliefs 
currently available to Shareholders and the Company being subject to 
capital gains tax. Serious breaches of other regulations, such as the 
UKLA Listing Rules and the Companies Act 2006, could lead to suspension 
from the London Stock Exchange and damage to the Company's reputation. 
 
   The Company's compliance with the VCT regulations is continually 
monitored by the Investment Manager, who reports regularly to the Board 
on the current position. The Company also retains PwC to provide regular 
reviews and advice in this area. The Board considers that this approach 
reduces the risk of a breach of the VCT regulations to a minimal level. 
Board members have considerable experience of operating at senior levels 
within quoted and unquoted businesses. The Company employs Beringea LLP 
as Company Secretary to ensure that compliance with UK Listing Rules is 
maintained and seeks legal and regulatory advice from appropriate 
third-party experts when required. 
 
   The Board reviews and agrees policies for managing each of these risks. 
It receives quarterly reports from the Investment Manager, which monitor 
the compliance of these risks, and places reliance on the Investment 
Manager to give updates in the intervening period.  These policies have 
remained unchanged since the beginning of the year. 
 
   Environmental, social and human rights policies 
 
   The Company does not have specific environmental, social and human 
rights policies but generally seeks to conduct its affairs responsibly. 
Where appropriate, the Board and the Investment Manager take 
environmental, social and human rights factors into consideration when 
making investment decisions. There were no issues or matters of note in 
respect of these during the period under review. 
 
   Directors and senior management 
 
   The Company does not have any employees, including senior management, 
other than the Board of three non executive directors. The Board 
comprises three male directors, two of whom are independent of the 
Investment Manager. 
 
   Whilst the Board has delegated the day to day operation of the Company 
to the Investment Manager, it retains the responsibility of planning, 
directing and controlling the activities of the Company. 
 
   Future strategy 
 
   The Board and the Investment Manager intend to maintain the strategic 
policies set out above for the year ending 31 January 2015 as they 
believe they are in the best interests of Shareholders. 
 
   On behalf of the Board 
 
   Peter LR Hewitt 
 
   Chairman 
 
   Directors' Responsibilities Statement 
 
   The Directors are responsible for preparing the Strategic Report, Report 
of the Directors, the Directors' Remuneration Report and the financial 
statements in accordance with applicable law and regulations. 
 
   Company law requires the Directors to prepare financial statements for 
each financial year. Under that law the directors have elected to 
prepare the financial statements in accordance with United Kingdom 
Generally Accepted Accounting Practice (United Kingdom Accounting 
Standards and applicable laws). 
 
   Under company law the Directors must not approve the financial 
statements unless they are satisfied that they give a true and fair view 
of the state of affairs and profit or loss of the Company for that year. 
 
   In preparing these financial statements, the Directors are required to: 
 
 
   -- select suitable accounting policies and then apply them consistently; 
 
   -- make judgments and accounting estimates that are reasonable and prudent; 
 
   -- state whether UK Accounting Standards have been followed, subject to any 
      material departures disclosed and explained in the financial statements; 
      and 
 
   -- prepare the financial statements on the going concern basis unless it is 
      inappropriate to presume that the Company will continue in business. 
 
 
   The Directors are responsible for keeping adequate accounting records 
that are sufficient to show and explain the Company's transactions and 
disclose with reasonable accuracy at any time the financial position of 
the Company and enable them to ensure that the financial statements and 
the Directors' Remuneration Report comply with the Companies Act 2006. 
They are also responsible for safeguarding the assets of the Company and 
hence for taking reasonable steps for the prevention and detection of 
fraud and other irregularities. 
 
   The Directors confirm that: 
 
 
   -- so far as each director is aware there is no relevant audit information 
      of which the Company's auditor is unaware; and 
 
   -- the Directors have taken all steps that they ought to have taken as 
      directors to make themselves aware of any relevant audit information and 
      to establish that the auditor is aware of that information. 
 
 
   The Directors are responsible for preparing the annual report and 
financial statements in accordance with applicable law and regulations. 
Having taken advice from the Audit Committee, the Directors consider the 
annual report and financial statements taken as a whole provide the 
information necessary for shareholders to assess the Company's 
performance, business model and strategy and is fair, balanced and 
understandable. 
 
   The Directors are responsible for the maintenance and integrity of the 
corporate and financial information included on the Company's website. 
Legislation in the United Kingdom governing the preparation and 
dissemination of financial statements may differ from legislation in 
other jurisdictions. 
 
   Directors' statement pursuant to the Disclosure and Transparency Rules 
 
   Each of the Directors confirms that, to the best of his or her 
knowledge: 
 
 
   -- the financial statements, which have been prepared in accordance with 
      United Kingdom Generally Accepted Accounting Practice, give a true and 
      fair view of the assets, liabilities, financial position and profit/loss 
      of the Company; and 
 
   -- the management report contained in the Chairman's Statement, Investment 
      Manager's Review, Strategic Report and Report of the Directors includes a 
      fair review of the development and performance of the business and the 
      position of the Company, together with a description of the principal 
      risks and uncertainties that it faces. 
 
 
   On behalf of the Board 
 
   Peter LR Hewitt 
 
   Chairman 
 
   Income Statement 
 
   for the year ended 31 January 2014 
 
 
 
 
                                    2014                       2013 
                          Revenue  Capital   Total   Revenue  Capital   Total 
                          GBP'000  GBP'000  GBP'000  GBP'000  GBP'000  GBP'000 
 
Income                        172        -      172       66        -       66 
Gains on investments            -       82       82        -        -        - 
                              172       82      254       66        -       66 
 
Investment management 
 fees                        (14)     (42)     (56)     (15)     (44)     (59) 
Other expenses               (86)        -     (86)     (97)        -     (97) 
Profit/(losses) on 
 ordinary activities 
 before tax                    72       40      112     (46)     (44)     (90) 
Tax on ordinary 
activities                      -        -        -        -        -        - 
Profit / (losses) 
 attributable to equity 
 Shareholders                  72       40      112     (46)     (44)     (90) 
Basic and diluted 
 earnings / (loss) per 
 share                       1.5p     0.8p     2.3p   (1.0p)   (0.9p)   (1.9p) 
 
 
   All revenue and capital items in the above statement derive from 
continuing operations. The total column within the Income Statement 
represents the profit and loss account of the Company. 
 
   The Company has no recognised gains or losses other than the results for 
the year as set out above. 
 
   Reconciliation of Movements in Shareholders' Funds 
 
 
 
 
                                                  2014     2013 
                                                 GBP'000  GBP'000 
 
Opening Shareholders' funds                        3,902    4,281 
Total recognised profits/(losses) for the year       112     (90) 
Dividends paid                                     (289)    (289) 
Closing Shareholders' funds                        3,725    3,902 
 
   Balance Sheet 
 
   as at 31 January 2014 
 
 
 
 
                                                  2014     2013 
                                                 GBP'000  GBP'000 
Fixed assets 
Investments                                        3,133    1,200 
 
Current assets 
Debtors                                               27      563 
Investments                                            -    1,003 
Cash at bank and in hand                             622    1,198 
                                                     649    2,764 
Creditors: amounts falling due within one year      (57)     (62) 
 
Net current assets                                   592    2,702 
 
Net assets                                         3,725    3,902 
 
 
Capital and reserves 
Called up Ordinary Share capital                       5        5 
Called up 'A' Share capital                            7        7 
Share premium account                                  -        - 
Special distributable reserve                      3,822    4,111 
Capital reserve - realised                         (127)     (90) 
Capital reserve - unrealised                          77        - 
Revenue reserve                                     (59)    (131) 
Total equity Shareholders' funds                   3,725    3,902 
 
Basic and diluted net asset value per share 
Ordinary Share                                     77.2p    80.8p 
'A' Share                                           0.1p     0.1p 
 
 
   These financial statements were approved by the Board of Directors on 7 
May 2014 and were signed on its behalf by: 
 
   Peter L R Hewitt 
 
   Chairman 
 
   Company number: 7333086 
 
   Cash Flow Statement 
 
   for the year ended 31 January 2014 
 
 
 
 
                                                      Year ended   Year ended 
                                                       31 January   31 January 
                                                          2014         2013 
                                                        GBP'000      GBP'000 
 
Net cash inflow/(outflow) from operating activities           561        (663) 
 
Capital expenditure: 
Purchase of investments                                   (2,405)      (1,000) 
Sale of investments                                           554          250 
Net cash outflow from capital expenditure                 (1,851)        (750) 
 
Equity dividends paid                                       (289)        (289) 
 
Management of liquid resources: 
Purchase of current investments held as liquidity 
 funds                                                          -        (623) 
Withdrawal from liquidity funds                             1,003            - 
Net cash inflow/(outflow) from liquid resources             1,003        (623) 
 
Net cash outflow before financing                           (576)      (2,325) 
 
Net cash inflow from financing                                  -            - 
 
Decrease in cash                                            (576)      (2,325) 
 
   Notes to the Accounts 
 
   for the year ended 31 January 2014 
 
   1.             Accounting policies 
 
 
   Basis of accounting 
 
   The Company has prepared its financial statements under UK Generally 
Accepted Accounting Practice ("UK GAAP") and in accordance with the 
Statement of Recommended Practice "Financial Statements of Investment 
Trust Companies and Venture Capital Trusts" revised January 2009 
("SORP"). 
 
   The Company's accounting policies remain unchanged from the prior year. 
The financial statements are prepared under the historical cost 
convention except for certain financial instruments measured at fair 
value. 
 
   In accordance with "Going Concern and Liquidity Risk: Guidance for 
Directors of UK Companies 2009", issued by the Financial Reporting 
Council, the Board has assessed the Company's operation as a going 
concern. The Company has considerable financial resources both at the 
year end and at the date of this report comprising cash and fixed asset 
investments.  As a consequence, the Directors believe that the Company 
is well placed to manage its business risks successfully despite the 
current uncertain economic outlook. The Directors have a reasonable 
expectation that the Company has adequate resources to continue in 
operational existence for the foreseeable future. For this reason they 
believe that the Company continues to be a going concern and that it is 
appropriate to apply the going concern basis in preparing the financial 
statements. 
 
   The Company implements new Financial Reporting Standards ("FRS") issued 
by the Accounting Standards Board when required. 
 
   Presentation of Income Statement 
 
   In accordance with the SORP, supplementary information which analyses 
the Income Statement between items of a revenue and capital nature has 
been presented alongside the Income Statement. The net revenue is the 
measure the Directors believe appropriate in assessing the Company's 
compliance with certain requirements set out in S274 of the Income Tax 
Act 2007. 
 
 
   Fixed assets investments 
 
   Investments, including equity and loan stock, are designated as "fair 
value through profit or loss" assets due to investments being managed 
and performance evaluated on a fair value basis.   A financial asset is 
designated within this category if it is both acquired and managed, with 
a view to selling after a period of time, in accordance with the 
Company's documented investment policy.  The fair value of an investment 
upon acquisition is deemed to be cost.  Thereafter investments are 
measured at fair value in accordance with International Private Equity 
and Venture Capital Valuation Guidelines ("IPEVCVG") issued in September 
2009 together with FRS26. 
 
   The valuation methodologies used by the Directors for assessing the fair 
value of unquoted investments are as follows: 
 
 
   -- investments are usually retained at cost for an appropriate period 
      following investment, except where a company's performance against plan 
      is significantly below the expectations on which the investment was made 
      in which case a provision against cost is made as appropriate; 
 
   -- where a company is in the early stage of development it will normally 
      continue to be held at cost, reviewed for impairment on the basis 
      described above; 
 
   -- where a company is well established after an appropriate period, the 
      investment may be valued by applying a suitable earnings or revenue 
      multiple to that company's maintainable earnings or revenue.  The 
      multiple used is based on comparable listed companies or a sector but 
      discounted to reflect factors such as the different sizes of the 
      comparable businesses, different growth rates and the lack of 
      marketability of unquoted shares; 
 
   --  where a value is indicated by a material arms-length transaction by a 
      third party in the shares of the company, the valuation will normally be 
      based on this, reviewed for impairment as appropriate; 
 
   --  where alternative methods of valuation, such as net assets of the 
      business or the discounted cash flows arising from the business are more 
      appropriate, then such methods may be used; and 
 
   --  where repayment of the equity is not probable, redemption premiums will 
      be recognised, and have been included in the valuation of investments. 
 
 
   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 
there is little likelihood of a recovery from a company in 
administration, the loss on the investment, although not physically 
disposed of, is treated as being realised. 
 
   Gains and losses arising from changes in fair value are included in the 
Income Statement for the year as a capital item. 
 
 
 
   It is not the Company's policy to exercise either significant or 
controlling influence over investee companies.  Therefore the results of 
these companies are not incorporated into the Income Statement except to 
the extent of any dividends or interest accrued.  This is in accordance 
with the SORP that does not require portfolio investments to be 
accounted for using the equity method of accounting. 
 
   Current asset investments 
 
   Current asset investments, which comprise investments in liquidity funds 
with AAA rating, are held at fair value through profit or loss and are 
marked-to-market. Liquidity funds are mutual funds that invest in high 
quality short-term money market instruments enabling investors to access 
a highly diversified and liquid portfolio. These assets are purchased 
and redeemed under a contract and the assets are recognised and 
derecognised on the trade date. These assets are initially measured at 
fair value which equates to cost and subsequently continue to be valued 
at fair value, being the closing price of the fund as issued by the 
provider. 
 
 
   Income 
 
   Dividend income from investments is recognised when the shareholder's 
right to receive payment has been established, normally the ex dividend 
date. 
 
   Interest income is accrued on a time apportioned basis, by reference to 
the principal outstanding and at the effective interest rate applicable 
and only where there is reasonable certainty of collection. 
 
   Expenses 
 
   All expenses are accounted for on an accruals basis. In respect of the 
analysis between revenue and capital items presented within the Income 
Statement, all expenses have been presented as revenue items except as 
follows: 
 
 
   -- expenses which are incidental to the acquisition of an investment are 
      deducted from the Capital Account; 
 
   -- expenses which are incidental to the disposal of an investment are 
      deducted from the disposal proceeds of the investment; and 
 
   -- expenses are split and presented partly as capital items where a 
      connection with the maintenance or enhancement of the value of the 
      investments held can be demonstrated and accordingly the investment 
      management fee has been allocated 25% to revenue and 75% to capital, in 
      order to reflect the Directors' expected long-term view of the nature of 
      the investment returns of the Company. 
 
   Taxation 
 
   The tax effects on different items in the Income Statement are allocated 
between capital and revenue on the same basis as the particular item to 
which they relate, using the Company's effective rate of tax for the 
accounting period. 
 
   Due to the Company's status as a Venture Capital Trust and the continued 
intention to meet the conditions required to comply with S274 of the 
Income Tax Act 2007, no provision for taxation is required in respect of 
any realised or unrealised appreciation of the Company's investments 
which arises. 
 
   Deferred taxation is provided in full on timing differences that result 
in an obligation at the balance sheet date to pay more tax, or a right 
to pay less tax at a future date, at rates expected to apply when they 
crystallise based on current tax rates and law. Timing differences arise 
from the inclusion of items of income and expenditure in taxation 
computations in periods different from those in which they are included 
in the accounts.  Deferred tax would be recognised on an undiscounted 
basis in respect of all timing differences that have originated but not 
reversed at the balance sheet date or where transactions or events have 
occurred at that date that will result in an obligation to pay more, or 
a right to pay less, tax. 
 
   Cash 
 
   Cash, for the purposes of the cash flow statement, comprises cash in 
hand and deposits repayable on demand. 
 
   Debtors 
 
   The Company's debtors are initially recognised at fair value and 
subsequently measured at amortised cost using the effective interest 
method. 
 
   Liabilities 
 
   The Company's financial liabilities are initially recognised at fair 
value and subsequently measured at amortised cost using the effective 
interest method. 
 
   Issue costs 
 
   Issue costs in relation to share issues have been deducted from the 
share premium account. 
 
   2.             Return/(loss) per share 
 
 
 
 
                             Revenue                           Capital 
                             return                            return 
                  Weighted      /                                 / 
                   average   (loss)                            (loss) 
                  number of    per                               per 
                  shares in   share   Revenue return / (loss)   share   Capital return / (loss) 
                    issue    (pence)          GBP'000          (pence)          GBP'000 
Year ended 31 
 January 2014: 
Ordinary Shares   4,818,237     1.5p                       72      0.8                       40 
'A' Shares        7,227,354        -                        -        -                        - 
Year ended 31 
 January 2013: 
Ordinary Shares   4,818,237   (1.0p)                     (46)   (0.9p)                     (44) 
'A' Shares        7,227,354        -                        -        -                        - 
 
 
   3.             Net asset value per share 
 
 
 
 
 
 
                                                         2014 Net  2013 Net 
              2014       2013       2014       2013         asset    asset 
            Shares in  Shares in  Pence per  Pence per      value    value 
              issue      issue      share      share      GBP'000   GBP'000 
 
Ordinary 
 Shares     4,818,237  4,818,237       77.2       80.8      3,718      3,895 
'A' Shares  7,227,352  7,227,352        0.1        0.1          7          7 
Net assets                                                  3,725      3,902 
 
 
   The Directors allocate the assets and liabilities of the Company between 
the Ordinary Shares and 'A' Shares such that each share class has 
sufficient net assets to represent its dividend and return of capital 
rights. 
 
   4.             Principal financial risks and management objectives 
 
   The Company's investment activities expose the Company to a number of 
risks associated with financial instruments and the sectors in which the 
Company invests. The principal financial risks arising from the 
Company's operations are: 
 
 
   -- market risks; 
 
   -- credit risk; and 
 
   -- liquidity risk. 
 
 
   The Board regularly reviews these risks and the policies in place for 
managing them. There have been no significant changes to the nature of 
the risks that the Company is exposed to over the year and there have 
also been no significant changes to the policies for managing those 
risks during the year. 
 
   The risk management policies used by the Company in respect of the 
principal financial risks and a review of the financial instruments held 
at the year end are provided below: 
 
   Market risks 
 
   As a VCT, the Company is exposed to market risks in the form of 
potential losses and gains that may arise on the investments it holds. 
The key market risk to which the Company is exposed is market price 
risk.  The Company has undertaken sensitivity analysis on its financial 
instruments, split into the relevant component parts, taking into 
consideration the economic climate at the time of review in order to 
ascertain the appropriate risk allocation. 
 
   Market price risk 
 
   Market price risk arises from uncertainty about the future prices of 
financial instruments held in accordance with the Company's investment 
objectives.  It represents the potential loss that the Company might 
suffer through changes in the fair value of unquoted investments. 
 
   It is not the Company's policy to use derivative instruments to mitigate 
market risk, as the Board believes that the effectiveness of such 
instruments does not justify the cost involved. 
 
   The sensitivity analysis below assumes that each of the sub categories 
of financial instruments (ordinary shares, preference shares, loan 
stocks and liquidity funds) held by the Company produces an overall 
movement of 20%.  Shareholders should note that equal correlation 
between these sub categories is unlikely to be the case in reality, 
particularly in the case of loan stock instruments.  This is because the 
loan stock instruments would not share in the impact of any increase in 
share prices to the same extent as the equity instruments, as the 
returns are set by reference to interest rates and premiums agreed at 
the time of the initial investment.  Similarly, where share prices are 
falling, the equity instrument could fall in value before the loan stock 
instrument.  It is not considered practical to assess the sensitivity of 
the loan stock instruments to market price risk in isolation. 
 
 
 
 
Sensitivity               2014 - 20% fall                          2013 - 20% fall 
                                              Impact                                   Impact 
                                              on NAV                                   on NAV 
                                               per                                      per 
                Risk                         Ordinary    Risk                         Ordinary 
              exposure       Impact on        Share    exposure       Impact on        Share 
              GBP'000    net assets GBP'000   Pence    GBP'000    net assets GBP'000   Pence 
 
Venture 
 capital 
 investments     3,133                (627)   (13.0p)     1,200                (240)    (4.9p) 
Liquidity 
 funds               -                    -         -     1,003                (201)    (4.1p) 
                 3,133                (627)   (13.0p)     2,203                (441)    (9.0p) 
 
   Credit risk 
 
   Credit risk is the risk that a counterparty to a financial instrument is 
unable to discharge a commitment made under that instrument. The Company 
is exposed to credit risk through its holdings of investments in loan 
stock, liquidity funds, cash deposits and debtors. 
 
   The Company's exposure to credit risk is summarised as follows: 
 
 
 
 
                                             2014     2013 
                                            GBP'000  GBP'000 
 
Investments in loan stock                     2,059      867 
Investments in liquidity funds                    -    1,003 
Cash and cash equivalents                       622    1,198 
Interest, dividends and other receivables        27      563 
                                              2,708    3,631 
 
 
   Credit risk in respect of loan stock is managed with a similar approach 
as described under 'market risks' above. 
 
   Cash is held by HSBC Bank plc and Bank of Scotland plc which are AA- and 
A rated (Fitch & Standard Poors) financial institutions respectively. 
Consequently, the Directors consider that the risk profile associated 
with cash deposits is low. 
 
   Liquidity risk 
 
   Liquidity risk is the risk that the Company encounters difficulties in 
meeting obligations associated with its financial liabilities. As the 
Company only ever has a low level of creditors and no borrowings, the 
Board believes that the Company's exposure to liquidity risk is minimal, 
given the current large cash balance. 
 
   5.             Post balance sheet events 
 
   There have been no material events after the balance sheet date. 
 
   Announcement based on audited accounts 
 
   The financial information set out in this announcement does not 
constitute the Company's statutory financial statements in accordance 
with section 434 Companies Act 2006 for the year ended 31 January 2014, 
but has been extracted from the statutory financial statements for the 
year ended 31 January 2014, which were approved by the Board of 
Directors on 7 May 2014 and will be delivered to the Registrar of 
Companies following the Company's Annual General Meeting.  The 
Independent Auditor's Report on those financial statements was 
unqualified and did not contain any emphasis of matter nor statements 
under s 498(2) and (3) of the Companies Act 2006. 
 
   The statutory accounts for the year ended 31 January 2013 have been 
delivered to the Registrar of Companies and received an Independent 
Auditors report which was unqualified and did not contain any emphasis 
of matter nor statements under S237(2) or (3) of the Companies Act 1985. 
 
   A copy of the full annual report and financial statements for the year 
ended 31 January 2014 will be printed and posted to shareholders 
shortly. Copies will also be available to the public at the registered 
office of the Company at 39 Earlham Street, London, WC2H 9LT and will be 
available for download from www.provenvcts.co.uk. 
 
   -End- 
 
   This announcement is distributed by NASDAQ OMX Corporate Solutions on 
behalf of NASDAQ OMX Corporate Solutions clients. 
 
   The issuer of this announcement warrants that they are solely 
responsible for the content, accuracy and originality of the information 
contained therein. 
 
   Source: ProVen Planned Exit VCT plc via Globenewswire 
 
   HUG#1783976