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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Proven | LSE:PPE | London | Ordinary Share | GB00B517XC78 | ORD SHS OF 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 10.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMPPE
PROVEN PLANNED EXIT VCT PLC
ANNUAL FINANCIAL REPORT
YEAR ENDED 31 JANUARY 2015
FINANCIAL SUMMARY
Ordinary Shares 31 January 2015 31 January 2014 31 January 2013
Net asset value per share 76.6p 77.2p 80.8p
("NAV")
Dividends paid since launch 24.0p 15.0p 9.0p
Total return (NAV plus 100.6p 92.2p 89.8p
dividends paid since
launch)
Mid market share price 69.5p 75.5p 85.0p
'A' Shares 31 January 2015 31 January 2014 31 January 2013
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
-- Final dividend paid 18 June 2014
For the year ended 31 January 2015
6.0
-- Interim dividend paid 19 November 2014
3.0
-- Proposed final dividend payable 26 June 2015
Cumulative dividends paid and proposed to date 27.0
Chairman's Statement
Introduction
I have pleasure in presenting the fourth annual report for ProVen
Planned Exit VCT plc (the "Company") to Shareholders for the year ended
31 January 2015.
Results
I am pleased to report that the profit on activities after taxation for
the year was GBP404,000 (2014: GBP112,000), comprising a revenue profit
of GBP124,000 (2014: GBP72,000) and a capital profit of GBP280,000
(2014: GBP40,000). The net asset value total return, comprising net
asset value and dividends paid since launch, was 100.6p per Ordinary
Share (2014: 92.2p) and 0.1p per 'A' Share (2014: 0.1p). This represents
an uplift of 10.9% on the opening net asset value at the beginning of
the year, after adjustment for dividends paid during the year.
Dividends
The original intention when the Offer was launched in 2010 was that your
Company would pay two dividends per year of 3p each, subject to the
availability of sufficient cash reserves and distributable reserves.
I am delighted to report that your Company paid an interim dividend for
the year ended 31 January 2015 of 6p per Ordinary Share on 19 November
2014 to Ordinary Shareholders on the register as at 7 November 2014.
Your board is proposing a final dividend for the year ended 31 January
2015 of 3p per Ordinary Share which, subject to approval at the Annual
General Meeting of the Company on 22 June 2015, will be paid on 26 June
2015 to Ordinary Shareholders on the register as at 5 June 2015.
These dividends will take the total cash distributions to Shareholders
since launch to 27p per Ordinary Share or circa. 39% of the original net
cost of the investment, after initial income tax relief.
Portfolio activity and valuation
At 31 January 2015, your Company's venture capital investment portfolio
comprised seven venture capital investments at a cost of GBP2.81 million
(2014: GBP3.06 million) and a valuation of GBP3.20 million (2014:
GBP3.13 million). In addition, the Company had net current assets, of
GBP484,000, predominantly in cash.
In September, Blis Media Limited refinanced the Company's loan note
investment through a new banking facility. As a result the Company was
repaid 90% of its original investment, as well as receiving interest
income, but still participates in the potential further growth of Blis
Media through its equity investment.
The valuations of Cross Solar PV Limited and Long Eaton Healthcare
Limited were increased to reflect the continued development of the
businesses. The remaining investments continue to be valued at a level
equivalent to the original investment cost.
In May 2015, the Company realised its investment in Long Eaton
Healthcare Limited through a sale to a third party at the 31 January
2015 carrying value.
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 Venture Capital Trust
("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.
The Company purchased 13,579 Ordinary Shares of 0.1p at a price of 69.0p
per share on 29 January 2015. This represented 0.28% of the Ordinary
Shares in issue. The shares have been cancelled.
VCT legislation
In my Chairman's Statement of last year, I remarked on the various
pieces of legislation potentially affecting venture capital trusts. New
consultations are in progress at the time of writing this year with the
dual aims of ensuring that VCTs (and indeed other tax advantaged venture
capital schemes) continue to meet the needs of investors and SMEs and
that they continue to secure EU State Aid approval. I am pleased to
report that your Board again believes that the outcome of these ongoing
discussions will not have an adverse impact on the Company.
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 22 June 2015. I look
forward to seeing you at this meeting if you are able to attend.
I should also like to draw your attention to the ProVen VCTs' annual
shareholder presentation, which is usually held in the Autumn and
provides an opportunity for Shareholders to meet portfolio companies,
the Directors and the other shareholders. Further details of the 2015
event will be sent to Shareholders in due course.
Your Board is always pleased to hear comments from Shareholders at any
time during the year and can be contacted through the Company's
registered office at 39 Earlham Street, London WC2H 9LT.
Outlook
The Company's investments continue to perform well as a result of
Beringea's good management of the underlying portfolio companies and the
higher ranking nature of the Company's investments in those companies.
At launch, the Company was targeting a 5-6 year life. The last shares
were issued to Shareholders in September 2011 which means a target
windup of late 2017. Both your Board and the Investment Manager are
focussed on working towards this goal.
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 2015.
Beringea LLP is a specialist venture capital management company which
traces its origins back nearly 30 years. It currently manages over
GBP130 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 2015, the Company's venture capital investment
portfolio comprised six VCT qualifying investments at a cost of GBP2.41
million and valuation of GBP2.80 million and two non-VCT qualifying
investments with a cost of GBP397,000 and valuation of GBP401,000 (one
investment, SPC International Limited, is partly qualifying and partly
non-qualifying). In addition, the Company had cash of GBP487,000.
There were no new investments during the year under review. In September,
Blis Media Limited refinanced the Company's loan note investment through
a new banking facility. As a result the Company was repaid 90% of its
original investment, as well as receiving interest income. The Company
has a residual equity investment and so still shares in any further
growth in the value of Blis Media.
The other investments continue to perform broadly to the original
investment plan. With the exception of Cross Solar PV Limited and Long
Eaton Healthcare Limited, the value of these investments are equivalent
to the original investment cost.
Cross Solar PV Limited's trading continues to be strong, benefitting
from the attractive government subsidies provided for solar power
generation. The market opportunity is attractive to longer term
investors who need or require investments with a regular, reliable
income stream and we remain optimistic that we can secure a profitable
exit through a sale to such investors.
Post year end portfolio activity
In May 2015, prior to the finalisation of the Company's accounts, Long
Eaton Healthcare Limited was sold to a private individual realising a
capital profit of GBP150,000 on the initial investment cost. The Company
also received an attractive rate of interest on its loan note investment
during the holding period. In total, the investment generated an overall
IRR of 18.7%. The investment valuation at 31 January 2015 reflected the
offer valuation.
Outlook
We are pleased with the overall performance and positioning of the
Company's investment portfolio and are now focussed on maximising value
with the aim of winding up the VCT in accordance with the original
launch plan, in 2017.
Beringea LLP
Investment Portfolio
as at 31 January 2015
The following investments were held at 31 January 2015:
Valuation % of
Valuation movement in portfolio by
Cost GBP'000 GBP'000 year GBP'000 value
Venture capital
investments
Cross Solar PV
Limited(1) 600 833 190 22.6%
Donatantonio
Group
Limited(1) 550 550 - 14.9%
Long Eaton
Healthcare
Limited(1) 400 550 115 14.9%
SPC
International
Limited(1,2) 530 536 6 14.5%
Cogora Group
Limited(1) 500 500 - 13.6%
Eagle-i Music
Limited(1,3) 200 200 - 5.4%
Blis Media
Limited(1) 28 33 6 0.9%
Total venture
capital
investments 2,808 3,202 317 86.8%
Cash at bank
and in hand 487 13.2%
Total
investments 3,689 100.0%
All venture capital investments are unquoted unless otherwise stated.
(1.) Blis Media Limited, Cogora Group Limited, Cross Solar PV Limited,
Donatantonio Group Limited, Eagle-i Music Limited and Long Eaton
Healthcare 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 and is held by ProVen VCT plc.
(3.) Eagle-i Music Limited is a non-qualifying investment.
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 2015. 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 GBP404,000,
equivalent to 8.4p per Ordinary Share (2014: GBP112,000, equivalent to
2.3p per Ordinary Share).
The Company paid two dividends totalling 9.0p to Ordinary Shareholders
during the year. The Board is proposing a further final dividend for the
year ended 31 January 2015 of 3p per Ordinary Share which will be
subject to approval by Shareholders at the Annual General Meeting of the
Company on 22 June 2015.
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 5 to 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.
Business model and 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 objectives (b) and (c). 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, Open-Ended
Investment Companies and secured loans. Fixed income securities will
consist of bonds issued by the UK Government, major companies and
institutions, 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 80.7% at 31 January 2015
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;
-- 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.
During the year, the Company engaged a specialist tax consultancy,
Robertson Hare LLP, to advise it on compliance with VCT requirements.
Compliance with the main VCT regulations as at 31 January 2015 and for
the year then ended, is summarised as follows:
Complied (80.7%)
-- 70% of its investments in qualifying companies
Complied (37.6%)
-- 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 made 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 venture capital trust, 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 engages Robertson Hare LLP 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 2016 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 have the
information necessary to assess the Company's performance, business
model and strategy. The Directors consider the annual report and
accounts, taken as a whole, 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 as at 31 January
2015 and profit of the Company for the year ended 31 January 2015; 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 2015
2015 2014
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 228 - 228 172 - 172
Gains on
investments - 317 317 - 82 82
228 317 545 172 82 254
Investment
management
fees (12) (37) (49) (14) (42) (56)
Other
expenses (92) - (92) (86) - (86)
Profit on
ordinary
activities
before tax 124 280 404 72 40 112
Tax on
ordinary
activities - - - - - -
Profit for
the year 124 280 404 72 40 112
Basic and
diluted 2.6p 5.8p 8.4p 1.5p 0.8p 2.3p
earnings per
share
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
2015 2014
GBP'000 GBP'000
Opening Shareholders' funds 3,725 3,902
Profit for the year 404 112
Dividends paid (434) (289)
Purchase of own shares (9) -
Closing Shareholders' funds 3,686 3,725
Balance Sheet
as at 31 January 2015
2015 2014
GBP'000 GBP'000
Fixed assets
Investments 3,202 3,133
Current assets
Debtors 53 27
Cash at bank and in hand 487 622
540 649
Creditors: amounts falling due within one year (56) (57)
Net current assets 484 592
Net assets 3,686 3,725
Capital and reserves
Called up Ordinary Share capital 5 5
Called up 'A' Share capital 7 7
Special distributable reserve 3,379 3,822
Capital reserve - realised (164) (127)
Capital reserve - unrealised 394 77
Revenue reserve 65 (59)
Total equity Shareholders' funds 3,686 3,725
Basic and diluted net asset value per share
Ordinary Share 76.6p 77.2p
'A' Share 0.1p 0.1p
These financial statements were approved by the Board of Directors and
authorised for issue on 15 May 2015 and were signed on its behalf by:
Peter L R Hewitt
Chairman
Company number: 7333086
Cash Flow Statement
for the year ended 31 January 2015
Year ended Year ended
31 January 31 January
2015 2014
GBP'000 GBP'000
Net cash inflow from operating activities 60 561
Capital expenditure and financial investments:
Purchase of investments - (2,405)
Sale of investments 248 554
Net cash inflow/(outflow) from capital expenditure
and financial investments 248 (1,851)
Equity dividends paid (434) (289)
Management of liquid resources:
Withdrawal from liquidity funds - 1,003
Net cash inflow from liquid resources - 1,003
Net cash outflow before financing (126) (576)
Financing:
Purchase of own shares (9) -
Net cash outflow from financing (9) -
Decrease in cash (135) (576)
Notes to the Accounts
for the year ended 31 January 2015
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 of cash and fixed
asset investments. 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 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 twelve months 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 as the best estimate of fair value, 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.
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.
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, as 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 per share
Weighted
average Revenue Capital
number of return per return per
shares in share Revenue return share Capital return
issue (pence) GBP'000 (pence) GBP'000
Year ended
31 January
2015:
Ordinary
Shares 4,818,125 2.6p 124 5.8p 280
'A' Shares 7,227,354 - - - -
Year ended
31 January
2014:
Ordinary
Shares 4,818,237 1.5p 72 0.8p 40
'A' Shares 7,227,354 - - - -
3. Net asset value per share
2014
2015 2014 Net
2014 Pence Pence asset
2015 Shares in Shares in per per 2015 value
issue issue share share Net asset value GBP'000 GBP'000
Ordinary
Shares 4,804,658 4,818,237 76.6 77.2 3,679 3,718
'A' Shares 7,227,352 7,227,352 0.1 0.1 7 7
Net assets 3,686 3,725
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 and loan
stocks held by the Company produces an overall movement of 20%.
Shareholders should note that equal correlation between these sub
categories is unlikely to be the case in reality, particularly in the
case of loan stock instruments. 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 2015 - 20% fall 2014 - 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 3,202 (640) (13.3p) 3,133 (627) (13.0p)
3,202 (640) (13.3p) 3,133 (627) (13.0p)
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, cash deposits and debtors.
The Company's exposure to credit risk is summarised as follows:
2015 2014
GBP'000 GBP'000
Investments in loan stock 1,867 2,059
Cash and cash equivalents 487 622
Interest, dividends and other receivables 53 27
2,407 2,708
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
The Company realised its investment in Long Eaton Healthcare Limited
after the year end at the year end carrying value. There have been no
other 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 2015,
but has been extracted from the statutory financial statements for the
year ended 31 January 2015, which were approved by the Board of
Directors on 15 May 2015 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 2014 have been
delivered to the Registrar of Companies and received an Independent
Auditors report which was unqualified and did not contain any emphasis
of matter nor statements under s498(2) or (3) of the Companies Act 2006.
A copy of the full annual report and financial statements for the year
ended 31 January 2015 will be made available 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#1921913
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