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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Proven Growth & Income Vct Plc | LSE:PGOO | London | Ordinary Share | GB00B5B7YS03 | ORD 1.6187P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 49.15 | 47.80 | 50.50 | 49.15 | 49.15 | 49.15 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Finance Services | -19.67M | -23.86M | -0.0783 | -6.28 | 149.69M |
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TIDMPGOO
PROVEN GROWTH AND INCOME VCT PLC
Half-yearly report
For the six months ended 31 August 2020
Financial Summary
31 31 29
August August February
2020 2019 2020
------------------------------------------------------ ------- ------- --------
Net asset value per share ("NAV") 55.30p 63.2p 58.6p
------------------------------------------------------ ------- ------- --------
Dividends paid since class launch (Originally as 'C'
Shares) 66.15p 62.9p 64.4p
------------------------------------------------------ ------- ------- --------
Total return (NAV plus dividends paid since 'C' Share
class launch) 121.45p 126.1p 123.0p
------------------------------------------------------ ------- ------- --------
Net Assets (GBP'000) 123,918 118,881 117,234
------------------------------------------------------ ------- ------- --------
Chairman's Statement
Introduction
I have pleasure in presenting the half year report for ProVen Growth and
Income VCT plc (the "Company") for the six months ended 31 August 2020.
Net asset value
During the six-month period, the net asset value ("NAV") per share
decreased from 58.6p to 55.3p at 31August 2020. This decrease of 3.3p is
largely reflective of the final dividend of 1.75p for the year ended
29February 2020 paid on 28 August 2020, but also the overall loss in the
period. The loss is a result of the standard running costs of the
Company and an overall decrease in valuation of the portfolio.
The Company released a NAV on 23 March 2020 of 54.6 pence per share to
reflect the initial impact of the Coronavirus pandemic on valuations.
The Company has shown signs of recovery, however, with a NAV of 56.2p
per share as at 31 May and a further increase in value since then of
0.85 pence per share before taking into account the final dividend of
1.75p paid in the period.
Portfolio activity and valuation
At 31 August 2020, the Company's investment portfolio comprised 49
investments at a valuation of GBP82.6 million.
During the six-month period, the Company invested GBP4.35million into
three new companies:
-- Commonplace (GBP1.5 million) -- a B2B software company that has
developed a digital community engagement platform enabling developers,
local authorities, transport planners, infrastructure developers and
other large project owners to engage with local communities;
-- Luxury Promise (GBP1.35 million) -- a platform to buy and sell
pre-owned luxury women's handbags and accessories; and
-- Social Value Portal (GBP1.5 million) --provides a platform for
organisations to quantify the 'social value' they themselves or their
supply chain create.
The Company also continued to support the current portfolio during the
period and made follow on investments into Fnatic (GBP0.8million),
Thread (GBP0.4million) and Contactengine (GBP0.125 million).
The investment portfolio showed an overall unrealised loss of GBP873,000
compared to the valuation as at 29 February 2020. The valuation saw a
large decrease in value as a result of the initial impact of the
Coronavirus pandemic. This was reflected in the NAV announced on 23
March 2020 of 54.6 pence per share. Since then the portfolio has shown
good overall recovery from the downturn in valuations to pre-Covid
levels.
There were valuation uplifts across the portfolio in the six months
since 29 February 2020 with Smart Assistant and My 1st Years, in
particular, having significant increases of GBP1.6 million and GBP1.4
million respectively. There are companies, however, where the impact of
the Coronavirus pandemic is having a longer-term adverse effect such as
D3O and Sealskinz which have seen decreases in valuation of GBP1.8
million and GBP1.6 million respectively.
A summary of the top 20 venture capital investments, by value, is
provided in the Summary of Investment Portfolio.
Post period end portfolio activity
Since 31 August 2020, the Company has continued to support the current
portfolio by making follow-on investments into Thread (GBP0.25 million),
Papier (GBP0.31 million), POQ Studio (GBP0.15 million) and DeepCrawl
(net investment of GBP1.5 million after part disposal proceeds
received).
Results and dividends
The total loss on ordinary activities for the six-month period to 31
August 2020 was GBP2,641,000.
During the six-month period, a final dividend of 1.75p per share in
respect of the year ended 29 February 2020 was paid on 28 August 2020 to
Shareholders on the register at 7 August 2020 following Shareholder
approval at the Company's AGM.
The Board has declared an interim dividend of 1.5p per share which will
be paid on 4 December 2020 to Shareholders on the register at 13
November 2020. The dividend represents a cash return of 2.6% on the
opening NAV per share at 1 March 2020, adjusted for the August dividend
of 1.75p per share. The payment of this interim dividend will result in
an equivalent reduction in the Company's NAV per share.
Shareholders are reminded that the Company operates a Dividend
Reinvestment Scheme ("DRIS") for shareholders who wish to have their
dividends reinvested in new shares and obtain further income tax relief
on those shares, subject to the usual restrictions. If you are not
currently registered for the DRIS and wish to have your dividends paid
in the form of new shares, DRIS forms are available from the
www.provenvcts.co.uk website or by contacting Beringea on 020 7845 7820.
Shareholders will need to be registered for the DRIS prior to 7 November
2020 to be eligible to receive the forthcoming dividend as new shares.
Fund raising and share issues
As detailed in the annual report and accounts, the Company launched a
combined offer for subscription with ProVen VCT plc on 27 January 2020
to raise up to a total of GBP10 million per company, with an
overallotment facility of up to a further GBP10 million per company. The
offer closed to new applications on 10 March 2020 with GBP14.2 million
of gross proceeds for the Company.
During the period, the Company allotted 24,518,370 shares at an average
price of 57.9p per share under the Company's offer for subscription. In
the same period, the Company allotted a further 1,102,624 shares at
54.45p per share under the Company's DRIS in respect of the dividend
paid on 28 August 2020.
The Company announced on 7 September 2020 the intention to launch a
combined offer for subscription to raise up to a total of GBP20 million
in each company together with an over-allotment facility of up to a
further GBP10 million in each company. A Prospectus with full details of
the proposed offer will be published shortly.
Share buybacks
The Company continues to operate a policy of purchasing its own shares
as they become available in the market at a discount of approximately 5%
to the latest published NAV.
During the period, the Company completed purchases of 1,871,415 shares
at an average price of 52.9p per share and for aggregate consideration
(net of costs) of GBP989,395. This represented 0.9% of the shares in
issue at the start of the period. The shares were subsequently
cancelled.
Outlook
The pandemic has created commercial disruption and financial challenges
for many businesses in the portfolio, although some companies have been
beneficiaries of increases in demand for their products. however, the
Investment Manager has ensured that portfolio companies are supported as
they adapt to the turbulent context of the pandemic.
The ongoing impact of the pandemic and the UK's departure from the
European Union will create further challenges. Nonetheless, your Board
remains optimistic that the companies in the portfolio can continue to
adapt and grow in the coming months.
We also believe that there continue to be market opportunities for
early-stage businesses, which often demonstrate the agility and
innovation to adapt during a downturn. In particular, the pandemic has
created a shift towards the digital economy, creating opportunities for
technology-enabled companies in the portfolio and the pipeline of
potential investments. The Manager, therefore, continues to seek
investment opportunities in these areas, with three new additions to the
portfolio in the period to 31August and has a strong flow of new
investment opportunities looking further ahead.
The Company is well positioned to harness this healthy pipeline, given
the recent successful fundraising. We do, however, anticipate that
disposal activity will be subdued until there is more clarity about
overall prospects for the economy.
Marc Vlessing OBE
Chairman
29 October 2020
Summary of Investment portfolio
as at 31 August 2020
Valuation
movement % of
Cost Valuation in period portfolio
GBP'000 GBP'000 GBP'000 by value
---------------------- ------------- ------------ ------------ ---------------
Top twenty venture
capital investments
(by value)
Sannpa Limited (t/a
Fnatic) 6,718 6,904 186 5.6%
ContactEngine Limited 2,454 5,355 137 4.3%
Zoovu Limited (t/a
Smart Assistant) 2,455 5,197 1,631 4.2%
Mycs Gmbh 3,031 5,039 936 4.1%
Dryden Holdings
Limited 5,000 4,761 - 3.8%
Infinity Reliance
Limited (t/a My 1st
Years) 2,769 4,526 1,401 3.7%
Thread, Inc. 3,730 3,722 - 3.0%
Papier Ltd 3,150 3,150 - 2.5%
Written Byte Ltd (t/a
DeepCrawl) 1,612 2,922 (255) 2.4%
Our Path Ltd (t/a
Second Nature) 2,800 2,800 - 2.3%
MPB Group Limited 1,489 2,784 936 2.2%
Arctic Shores Limited 2,450 2,450 - 2.0%
Commonplace Digital
Ltd 1,500 2,072 572 1.7%
Response Tap Limited 1,440 1,928 (669) 1.6%
Picasso Labs, Inc. 1,470 1,813 343 1.5%
Been There Done That
Global Limited 1,448 1,752 (291) 1.4%
Blis Media Limited 1,083 1,726 179 1.4%
Aistemos Limited 1,681 1,679 - 1.4%
Litchfield Media
Limited 1,420 1,638 24 1.3%
Disposable Cubicle
Curtains Limited (t/a
Hygenica) 3,286 1,615 415 1.3%
Other venture capital
investments 38,915 18,725 (6,418) 14.9%
---------------------- ------------- ------------ ------------ ---------------
Total venture capital
investments 89,901 82,558 (873) 66.6%
---------------------- ------------- ------------ ------------ ---------------
Cash at bank and in
hand 41,350 33.4%
---------------------- ------------- ------------ ------------ ---------------
Total investments 123,908 100.0%
---------------------- ------------- ------------ ------------ ---------------
Other venture capital investments at 31 August 2020 comprise: Access
Systems, Inc., Buckingham Gate Financial Services Limited, Cogora Group
Limited, Deltadot Limited, Duncannon Holdings Limited, D3O Holdings
Limited, Exonar Limited, Firefly Learning Limited, Festicket Ltd,
Iridium Topco Limited (formerly honeycomb.TV Limited), InContext
Solutions, Inc., Inskin Media Limited, Lantum Limited, Lupa Foods
Limited (formerly Donatantonio Limited), Luxury Promise Limited, Monica
Vinader Limited, Netcall plc, Poq Studio Ltd, Rapid Charge Grid Limited,
Sealskinz Holdings Limited, Senselogix Limited, Simplestream Limited,
Skills Matter Limited, Social Value Portal Ltd, Stylescape Limited (t/a
EDITED), TVPlayer Limited, Utility exchange Online Limited, Vigilant
Applications Limited and Whistle Sports, Inc.
With the exception of Netcall plc which is quoted on AIM, all venture
capital investments are unquoted.
All of the above investments, with the exception of Duncannon Holdings
Limited and Dryden Holdings Limited were also held by ProVen VCT plc, of
which Beringea LLP is the investment manager.
All venture capital investments are registered in England and Wales
except for InContext Solutions, Inc., Picasso Labs, Inc., Thread, Inc.
and Whistle Sports, Inc. which are Delaware registered corporations in
the United States of America, and Mycs Gmbh, which is registered in
Germany.
Summary of investment movements
for the six months ended 31 August 2020
Investment activity during the six months ended 31 August 2020 is
summarised as follows:
Additions Cost
GBP'000
Commonplace Digital Ltd 1,500
Social Value Portal Ltd 1,500
Luxury Promise Limited 1,350
Sannpa Limited (t/a Fnatic) 771
Thread, Inc. 421
ContactEngine Limited 125
Total 5,667
-------
Market value Gain/ (loss) Realised
at 1 March Disposal against gain in
Disposals Cost 2019 proceeds cost period
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Chargemaster
plc - - 72 72 72
MEL Topco
Limited (t/a
Maplin) - - 4 4 4
Total - - 76 76 76
------- ------------ ------------ ------------ ------------
Of the disposals above, Chargemaster plc was realised in a prior period,
but proceeds were recognised in the current period in excess of the
amounts previously accrued.
The proceeds received in respect of MeL Topco Limited (t/a Maplin)
reflect a final distribution in respect of the company's administration
in excess of the amounts previously accrued.
The total disposal proceeds outlined above do not match those recorded
in the statement of cash flows as the cashflow figure represents total
disposal proceeds received in cash in the six-month period to 31 August
2020, elements of which will have been accrued in prior periods.
Unaudited Condensed Income Statement
for the six months ended 31 August 2020
(unaudited) (unaudited)
Six months ended Six months ended (audited)
31 Aug 2020 31 Aug 2019 Year ended 29 Feb 2020
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------- ------- ------- ------- ------- ------- -----------------------
Income (109) - (109) 179 - 179 430
---------------------------- ------- ------- ------- ------- ------- ------- -----------------------
Realised gains on
investments - 76 76 - 337 337 325
---------------------------- ------- ------- ------- ------- ------- ------- -----------------------
Unrealised gains/ (losses)
on investments - (873) (873) - (4,859) (4,859) (10,082)
---------------------------- ------- ------- ------- ------- ------- ------- -----------------------
Investment management fee (304) (912) (1,216) (305) (916) (1,221) (2,430)
---------------------------- ------- ------- ------- ------- ------- ------- -----------------------
Performance incentive fee - - - - - - -
---------------------------- ------- ------- ------- ------- ------- ------- -----------------------
Other expenses (471) (4) (475) (292) (1) (293) (587)
---------------------------- ------- ------- ------- ------- ------- ------- -----------------------
FX Translation - (44) (44) - - - 30
---------------------------- ------- ------- ------- ------- ------- ------- -----------------------
Loss on ordinary activities
before taxation (884) (1,757) (2,641) (418) (5,439) (5,857) (12,314)
---------------------------- ------- ------- ------- ------- ------- ------- -----------------------
Tax on ordinary activities - - - - - - -
---------------------------- ------- ------- ------- ------- ------- ------- -----------------------
Loss attributable to equity
shareholders (884) (1,757) (2,641) (418) (5,439) (5,857) (12,314)
---------------------------- ------- ------- ------- ------- ------- ------- -----------------------
Basic and diluted loss per
share (0.4p) (0.9p) (1.3p) (0.2p) (3.1p) (3.3p) (6.6p)
---------------------------- ------- ------- ------- ------- ------- ------- -----------------------
All revenue and capital items in the above statement derive from
continuing operations. The total column within this statement represents
the Unaudited Condensed Income Statement of the Company.
The loss of GBP109,000 recognised as income is the result of a provision
made against income which had been recognised in a prior period.
The Company has no recognised gains or losses other than the results for
the six-month period as set out above.
The accompanying notes form an integral part of this announcement.
Unaudited Condensed Statement of Financial Position
as at 31 August 2020
(unaudited) (unaudited) (audited)
31 Aug 31 Aug 29 Feb
2020 2019 2020
GBP'000 GBP'000 GBP'000
Fixed assets
Investments 82,558 74,142 77,763
-------------------------------------------- ----------- ----------- ---------
Current assets
Debtors 514 944 829
-------------------------------------------- ----------- ----------- ---------
Cash at bank and in hand 41,350 44,760 39,789
-------------------------------------------- ----------- ----------- ---------
41,864 45,704 40,618
-------------------------------------------- ----------- ----------- ---------
Creditors: amounts falling due within one
year (504) (965) (1,147)
-------------------------------------------- ----------- ----------- ---------
Net current assets 41,360 44,739 39,471
-------------------------------------------- ----------- ----------- ---------
Net assets 123,918 118,881 117,234
-------------------------------------------- ----------- ----------- ---------
Capital and reserves
Called up share capital 3,624 3,044 3,239
-------------------------------------------- ----------- ----------- ---------
Capital redemption reserve 88 32 58
-------------------------------------------- ----------- ----------- ---------
Share premium account 55,152 31,852 40,766
-------------------------------------------- ----------- ----------- ---------
Special reserve 55,688 65,489 61,164
-------------------------------------------- ----------- ----------- ---------
Capital reserve - realised 14,827 18,071 15,667
-------------------------------------------- ----------- ----------- ---------
Revaluation reserve (2,033) 2,583 (1,160)
-------------------------------------------- ----------- ----------- ---------
Revenue reserve (3,428) (2,190) (2,500)
-------------------------------------------- ----------- ----------- ---------
Total equity shareholders' funds 123,918 118,881 117,234
-------------------------------------------- ----------- ----------- ---------
Basic and diluted net asset value per share 55.3p 63.2p 58.6p
-------------------------------------------- ----------- ----------- ---------
The accompanying notes form an integral part of this announcement.
Called
up Capital Share
Six months ended 31 Aug 2020 share redemption premium Special Capital Revaluation Revenue
(unaudited) capital reserve account reserve reserve - realised reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ------- ---------- ------- ------- ------------------- ----------- ------- -------
At 1 March 2020 3,239 58 40,766 61,164 15,667 (1,160) (2,500) 117,234
----------------------------- ------- ---------- ------- ------- ------------------- ----------- ------- -------
Issue of new shares 415 - 14,386 (576) - - - 14,225
----------------------------- ------- ---------- ------- ------- ------------------- ----------- ------- -------
Total comprehensive income - - - - (840) (873) (928) (2,641)
----------------------------- ------- ---------- ------- ------- ------------------- ----------- ------- -------
Share buybacks and
cancellation (30) 30 - (993) - - - (993)
----------------------------- ------- ---------- ------- ------- ------------------- ----------- ------- -------
Dividends paid - - - (3,907) - - - (3,907)
----------------------------- ------- ---------- ------- ------- ------------------- ----------- ------- -------
At 31 August 2020 3,624 88 55,152 55,688 14,827 (2,033) (3,428) 123,918
----------------------------- ------- ---------- ------- ------- ------------------- ----------- ------- -------
Unaudited Condensed Statement of Changes in Equity
Called
up Capital Share
Six months ended 31 Aug 2019 share redemption premium Special Capital Revaluation Revenue
(unaudited) capital reserve account reserve reserve - realised reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ------- ---------- ------- ------- ------------------- ----------- ------- -------
At 1 March 2019 2,331 19 946 70,856 19,050 7,043 (1,772) 98,473
----------------------------- ------- ---------- ------- ------- ------------------- ----------- ------- -------
Issue of new shares 726 - 30,906 (1,149) - - - 30,483
----------------------------- ------- ---------- ------- ------- ------------------- ----------- ------- -------
Total comprehensive income - - - - (580) (4,859) (418) (5,857)
----------------------------- ------- ---------- ------- ------- ------------------- ----------- ------- -------
Transfer of previously
unrealised gains now
realised - - - - (399) 399 - -
----------------------------- ------- ---------- ------- ------- ------------------- ----------- ------- -------
Share buybacks and
cancellation (13) 13 - (540) - - - (540)
----------------------------- ------- ---------- ------- ------- ------------------- ----------- ------- -------
Dividends paid - - - (3,678) - - - (3,678)
----------------------------- ------- ---------- ------- ------- ------------------- ----------- ------- -------
At 31 August 2019 3,044 32 31,852 65,489 18,071 2,583 (2,190) 118,881
----------------------------- ------- ---------- ------- ------- ------------------- ----------- ------- -------
The special reserve, capital reserve - realised and revenue reserve are
distributable reserves. Reserves available for distribution therefore
amount to GBP67,087,000 (2019: GBP81,370,000).
The accompanying notes form an integral part of this half-yearly report.
Unaudited Condensed Statement of Cash Flows
for the six months ended 31 August 2020
(unaudited) (unaudited) (audited)
Six months Six months Year
ended ended ended
31 Aug 31 Aug 29 Feb
2020 2019 2020
Note GBP'000 GBP'000 GBP'000
--------------------------------------------------- ----- ----------- ----------- ---------
Net cash used in operating activities A (1,659) (1,686) (3,115)
--------------------------------------------------- ------ ----------- ----------- ---------
Cashflows from investing activities
--------------------------------------------------- ----- ----------- ----------- ---------
Purchase of investments (5,667) (16,300) (25,616)
----------------------------------------------------------- ----------- ----------- ---------
Sale of investments 107 136 835
----------------------------------------------------------- ----------- ----------- ---------
Net cash used in investing activities (5,560) (16,164) (24,781)
----------------------------------------------------------- ----------- ----------- ---------
Cashflows from financing activities
--------------------------------------------------- ----- ----------- ----------- ---------
Proceeds from share issues 14,200 31,077 39,735
----------------------------------------------------------- ----------- ----------- ---------
Share issue costs (577) (1,151) (1,539)
----------------------------------------------------------- ----------- ----------- ---------
Purchase of own shares (1,537) (574) (1,230)
----------------------------------------------------------- ----------- ----------- ---------
Equity dividends paid (3,306) (3,122) (5,661)
----------------------------------------------------------- ----------- ----------- ---------
Net cash from financing 8,780 26,230 31,305
----------------------------------------------------------- ----------- ----------- ---------
Increase in cash and cash equivalents B 1,561 8,380 3,409
--------------------------------------------------- ------ ----------- ----------- ---------
Notes to the cash flow statement:
A Cash flow from operating activities
Loss on ordinary activities before taxation (2,641) (5,857) (12,314)
----------------------------------------------------------- ----------- ----------- ---------
Loss on investments 797 4,522 9,757
----------------------------------------------------------- ----------- ----------- ---------
Decrease/(increase) in prepayments, accrued income
and other debtors 285 (194) (318)
----------------------------------------------------------- ----------- ----------- ---------
Decrease in accruals and other creditors (100) (157) (240)
----------------------------------------------------------- ----------- ----------- ---------
Net cash used in operating activities (1,659) (1,686) (3,115)
----------------------------------------------------------- ----------- ----------- ---------
B Analysis of net funds
Beginning of period /year 39,789 36,380 36,380
----------------------------------------------------------- ----------- ----------- ---------
Net cash inflows 1,561 8,380 3,409
----------------------------------------------------------- ----------- ----------- ---------
End of period/ year 41,350 44,760 39,789
----------------------------------------------------------- ----------- ----------- ---------
The accompanying notes form an integral part of this announcement.
Notes to the half-yearly report
for the six months ended 31 August 2020
1. Accounting policies
Basis of accounting
The Company has prepared its financial statements under Financial
Reporting Standard 104 ("FRS104") and in accordance with the Statement
of Recommended Practice 'Financial Statements of Investment Trust
Companies and Venture Capital Trusts' (the "SORP") issued by the
Association of Investment Companies ("AIC") in December 2018.
The following accounting policies have been applied consistently
throughout the period. Further details of principal accounting policies
were disclosed in the Annual Report and Accounts for the year ended 29
February 2020. There has been no change to the accounting policies from
those disclosed in the financial statements for the year ended 29
February 2020.
The unaudited financial statements set out herein have not been subject
to review by the auditor and do not constitute statutory accounts within
the meaning of Section 434 of the Companies Act 2006. The figures for
the year ended 29 February 2020 have been extracted from the financial
statements for that period, which have been delivered to the Registrar
of Companies; the Auditor's report on those financial statements was
unqualified.
a) Presentation of Income Statement
In order to better reflect the activities of an investment company and,
in accordance with guidance issued by the AIC, supplementary information
which analyses the Income Statement between items of a revenue and
capital nature has been presented alongside the Income Statement. The
revenue return attributable to equity shareholders is the measure the
Directors believe appropriate in assessing the Company's compliance with
certain requirements set out in Part 6 of the Income Tax Act 2007.
b) Investments
Investments, including equity and loan stock, are recognised at their
trade date and measured at "fair value through profit or loss" due to
investments being managed and performance evaluated on a fair value
basis. A financial asset is designated within this category if it is
both acquired and managed, with a view to selling after a period of time,
in accordance with the Company's documented investment policy. The fair
value of an investment upon acquisition is deemed to be cost.
Thereafter investments are measured at fair value in accordance with
International Private Equity and Venture Capital Valuation Guidelines
("IPEV Guidelines") issued in December 2018, together with Sections 11
and 12 of FRS102.
Publicly traded investments are measured using bid prices in accordance
with the IPEV Guidelines.
Key judgements
The valuation methodologies used by the Directors for estimating the
fair value of unquoted investments are in accordance with the IPEV
guidelines and as follows:
-- where a company is in the early stage of development, the estimate of
fair value is calculated based on market data and assumptions as to the
potential outcomes, benchmarked against alternative valuation
methodologies during this time;
-- where a company is well established after an appropriate period, the
investment may be valued by applying a suitable earnings or revenue
multiple to that company's maintainable earnings or revenue. The
multiple used is based on comparable listed companies or a sector but
discounted to reflect factors such as the different sizes of the
comparable businesses, different growth rates and the lack of
marketability of unquoted shares;
-- where a value is indicated by a material arm's-length transaction by a
third party in the shares of the company, the valuation will normally be
based on this;
-- where alternative methods of valuation, such as net assets of the
business, are more appropriate then such methods may be used; and
-- where repayment of the equity is not probable, redemption premiums will
be recognised.
The methodology applied takes account of the nature, facts and
circumstances of the individual investment and uses reasonable data,
market inputs, assumptions and estimates in order to ascertain fair
value. Methodologies are applied consistently from year to year except
where a change results in a better estimate of fair value.
Where an investee company has gone into receivership or liquidation, or
the loss in value below cost is considered to be permanent, or there is
little likelihood of a recovery from a company in administration, the
loss on the investment, although not physically disposed of, is treated
as being realised.
All investee companies are held as part of an investment portfolio and
measured at fair value. Therefore, it is not the policy for investee
companies to be consolidated and any gains or losses arising from
changes in fair value are included in the Unaudited Condensed Income
Statement for the period as a capital item.
Gains and losses arising from changes in fair value are included in the
Unaudited Condensed Income Statement for the period as a capital item
and transaction costs on acquisition or disposal of the investment are
expensed.
Investments are derecognised when the contractual rights to the cash
flows from the asset expire or the Company transfers the asset and
substantially all the risks and rewards of ownership of the asset to
another entity.
Key estimates
The key estimates involved in determining the fair value of a company
can include:
-- identifying a relevant basket of market comparables;
-- deducing the discount to take on those market comparables;
-- determining reoccurring revenue;
-- determining reoccurring earnings; or
-- identifying surplus cash.
1. All revenue and capital items in the Unaudited Condensed Income Statement
derive from continuing operations.
2. There are no other items of comprehensive income other than those
disclosed in the Unaudited Condensed Income Statement.
3. The Company has only one operating segment as reported to the Board of
Directors in their capacity as chief operating decision makers and
derives its income from investments made in shares, securities and bank
deposits.
4. The comparative figures are in respect of the year ended 29 February 2020
and the six-month period ended 31 August 2019.
5. Basic and diluted return per share for the period has been calculated on
209,645,678 shares, being the weighted average number of shares in issue
during the period.
6. Basic and diluted NAV per share for the period has been calculated on
223,886,810 shares, being the number of shares in issue at the period
end.
7. Dividends
(unaudited) (unaudited) (audited)
Year
Six months ended Six months ended ended
29 Feb
31 Aug 2019 31 Aug 2019 2020
Revenue Capital Total Revenue Capital Total Total
Pence GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- ----- ------------------ ------------------ ------------------ ------- ------- ------- ---------
2019 Final 2.0 - - - - 3,678 3,678 3,678
----------- ----- ------------------ ------------------ ------------------ ------- ------- ------- ---------
2020
Interim 1.5 - - - - - - 3,011
----------- ----- ------------------ ------------------ ------------------ ------- ------- ------- ---------
2020 Final 1.75 - 3,907 3,907 - - - -
----------- ----- ------------------ ------------------ ------------------ ------- ------- ------- ---------
Total
dividends
paid - 3,907 3,907 - 3,678 3,678 6,689
----------- ----- ------------------ ------------------ ------------------ ------- ------- ------- ---------
9. Contingent liabilities, guarantees and financial commitments
Based on the NAV per share at 31 August 2020, before any performance fee
accrual, and cumulative dividends paid and payable ahead of 28 February
2021, no performance fee is currently payable. The performance fee
structure contains certain restrictions to ensure that hurdles are met
before the payment of a performance fee and to encourage the payment of
tax-free dividends. After applying these restrictions, no accrual has
been made for a performance fee at 31 August 2020.
A performance incentive fee, if any, will only be payable once the full
year results have been finalised.
The Company has no contingent liabilities, guarantees or financial
commitments at 31 August 2020.
10. Called up share capital
During the period, the Company issued 24,518,370Ordinary Shares for an
aggregate consideration of GBP14.2million under the combined o er for
subscription with ProVen VCT plc which launched on 27 January 2020.
Share issue costs thereon amounted to GBP577,000.
In the same period, the Company allotted a further 1,102,624 shares at
54.45p per share under the Company's DRIS in respect of the dividend
paid on 28 August 2020.
During the period, the Company completed purchases of 1,871,415 shares
at an average price of 52.9p per share and for aggregate consideration
(net of costs) of GBP989,395. This represented 0.94% of the shares in
issue at the start of the period. The shares were subsequently
cancelled.
1. Financial instruments
Investments are valued at fair value as determined using the measurement
policies described in note 1.
The Company has categorised its financial instruments that are measured
subsequent to initial recognition at
fair value, using the fair value hierarchy as follows:
Level 1 Reflects instruments quoted in an active market.
Level 2 Reflects financial instruments that have been valued using
inputs, other than quoted prices, that are observable.
Level 3 Reflects financial instruments that have been valued using
valuation techniques with unobservable inputs.
(unaudited) (audited)
31 Aug 2020 29 Feb 2020
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ ------------------ ------------------ ------- ------- ------- ------- ------- -------
AIM quoted 214 - - 214 193 - - 193
------------ ------------------ ------------------ ------- ------- ------- ------- ------- -------
Loan notes - - 16,295 16,295 - - 16,295 16,295
------------ ------------------ ------------------ ------- ------- ------- ------- ------- -------
Unquoted
investments - - 66,049 66,049 - - 61,275 61,275
------------ ------------------ ------------------ ------- ------- ------- ------- ------- -------
Total 214 - 82,344 82,558 193 - 77,570 77,763
------------ ------------------ ------------------ ------- ------- ------- ------- ------- -------
There have been no transfers between the three levels outlined above.
12. Controlling party and related party transactions
In the opinion of the Directors there is no immediate or ultimate
controlling party.
Malcolm Moss, a Director of the Company, is also a Partner of Beringea
LLP. Beringea LLP was the Company's Investment Manager during the
period. During the six months ended 31 August 2020, GBP1,216,000 (2019:
GBP1,221,000) was payable to Beringea LLP in respect of these services.
At the period end the Company owed Beringea LLP GBPnil (2019:
GBP219,000).
Beringea LLP was also the Company's Administration Manager during the
period. Fees paid to Beringea in its capacity as Administration Manager
for the six months ended 31 August 2020 amounted to GBP30,000 (2019:
GBP27,000) of which GBPnil (2019: GBP14,000) remained outstanding at the
period end.
As the Company's investment manager, Beringea LLP is also entitled to
receive a performance incentive fee based on the Company's performance
for each financial year to 28 February. The performance incentive fee
arrangements are set out, in detail, in the Annual Report and Accounts.
For the six-month period ended 31 August 2020, no performance incentive
fee has been accrued. The actual performance incentive fee, if any, will
only be payable once the full year results have been finalised.
Beringea LLP may charge arrangement fees, in line with industry practice,
to companies in which it invests. It may also receive directors' fees or
monitoring fees from investee companies. These costs are borne by the
investee company not the Company. In the six-month period to 31 August
2020, GBP309,000 (2019: GBP316,000) was payable to Beringea LLP for
arrangement fees under such arrangements. Directors and monitoring fees
payable to Beringea LLP in the six-month period to 31 August 2020
amounted to GBP167,000 (2019: GBP253,000).
During the six months to 31 August 2020, an amount of GBP74,000 (2019:
GBP60,000) was payable to the Directors of the Company as remuneration
for services provided to the Company. No amount was outstanding at the
period-end.
1. The Directors confirm that, to the best of their knowledge, the
half-yearly financial statements have been prepared in accordance with
Financial Reporting Standard 104 issued by the Financial Reporting
Council and the half-yearly financial report includes a fair review of
the information required by:
2. DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication
of important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties
for the remaining six months of the year; and
3. DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position
or performance of the entity during that period, and any changes in the
related party transactions described in the last annual report that could
do so.
4. Risk and uncertainties
1. investment risk associated with investing in small and immature
businesses;
2. investment risk arising from volatile stock market conditions and
their potential effect on the value of the Company's venture
capital investments and the exit opportunity for those
investments; and
3. breach of VCT regulations.
Under the Disclosure and Transparency Directive, the Board is required
in the Company's half-yearly results, to report on the principal risks
and uncertainties facing the Company over the remainder of the financial
year.
The Board has concluded that the key risks facing the Company over the
remainder of the financial year are as follows:
In the case of (i), the Board is satisfied with the Company's approach.
The Investment Manager follows a rigorous process in vetting and careful
structuring of new investments and, after an investment is made, close
monitoring of the business. In respect of (ii), the Company seeks to
hold a diversified portfolio. However, the Company's ability to manage
this risk is quite limited, primarily due to the restrictions arising
from the VCT regulations.
The Company's compliance with the VCT regulations is continually
monitored by the Administration Manager, who reports regularly to the
Board on the current position. The Company also retains Philip Hare &
Associates 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 an appropriate level.
15. Going concern
The Directors have reviewed the Company's financial resources at the
period end and concluded that the Company is well placed to manage its
business risks.
The Board confirms that it is satisfied that the Company has adequate
resources to continue in business for the foreseeable future. For this
reason, the Board believes 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.
Copies of the unaudited half yearly results will be sent to
shareholders. Further copies can be obtained from the Company's
registered office and will be available for download from
https://www.globenewswire.com/Tracker?data=5U8LasP4k9trRd3E2mfNj0I9_YpngmvNDDt_GPiZj-KrWYY_OYjhfi8MaGzPIhxQRtCJ6JbItoAj7FUJ_Jl2HD50FqUufKDQr35m6isDR4Q=
www.provenvcts.co.uk.
16. Post balance sheet events
Since 31 August 2020, the Company has continued to support the current portfolio by making follow-on investments into Thread (GBP0.25 million), Papier (GBP0.31 million), POQ Studio (GBP0.15 million) and DeepCrawl (net investment of GBP1.5 million after part disposal proceeds received).
(END) Dow Jones Newswires
October 29, 2020 12:57 ET (16:57 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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