REG-Proven Growth & Income VCT plc : Half-year Report <Origin Href="QuoteRef">PGOO.L</Origin>
19/10/2017 17:11
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PROVEN GROWTH AND INCOME VCT PLC
Half-yearly report
For the six months ended 31 August 2017
Financial Summary
31 August 2017 31 August 2016 28 February 2017
Net asset value per share ("NAV") 80.0p 80.2p 82.7p
Dividends paid since class launch (Originally as 'C' Shares) 44.1p 39.6p 41.6p
Total return (NAV plus dividends paid since 'C' Share class launch) 124.1p 119.8p 124.3p
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 2017.
Net asset value
During the six-month period, the net asset value ("NAV") per share decreased
from 82.7p to 80.0p at 31 August 2017. Of the total decline of 2.7p, 2.5p
reflected the dividend paid during the period.
Portfolio activity and valuation
During the six months to 31 August 2017, a total of £4.6 million was
invested. This included £3.1 million into two new investments, Deepcrawl and
Smart Assistant, and £1.5 million into existing portfolio companies to
support their continued growth and development. In addition, shares in Netcall
plc, with a value of £0.3 million, were received as part of the disposal of
MatsSoft.
The period has seen a number of significant disposals with Third Bridge, APM
Healthcare, MatsSoft and Abzena all being fully realised in the six months to
31 August 2017. Aggregate proceeds of £19.7 million, including the value of
Netcall plc shares received as part of the MatsSoft disposal, were generated
on these four disposals. This represented a multiple of over 3.4x the combined
cost of £5.7 million. In addition, the Company's loan balance with Celoxica
was repaid in full in July 2017 and there were further loan repayments from
Skills Matter and Conversity. In August 2017, the Company received a capital
repayment of £3.9 million from Rapid Charge Grid as part of a restructuring
exercise.
The venture capital investment portfolio showed a net unrealised loss for the
six-month period of £3.6 million, predominantly as a result of valuation
decreases for Blis Media and Maplin. These more than offset uplifts for,
amongst others, Chess, Chargemaster and Simplestream.
Further detail on investment activity is provided in the Investment Manager's
Report.
Results and dividends
The total return on ordinary activities after taxation for the six-month
period to 31 August 2017 was £1.5 million.
During the six-month period, a final dividend of 2.5p per share in respect of
the year ended 28 February 2017 was paid on 14 July 2017 following shareholder
approval at the Company's AGM.
On 11 October 2017, the Board declared a special interim dividend of 10.25p
per share which will be paid on 17 November 2017 to shareholders on the
register at 20 October 2017. This dividend arises from the successful
realisations of Third Bridge, APM Healthcare, MatsSoft and Abzena and
represents a cash return of 12.8% on the opening NAV per share at 1 March
2017, adjusted for the dividend paid in July 2017, of 80.2p.
Shareholders are reminded that the Company operates a Dividend Reinvestment
Scheme ("DRIS") for shareholders that wish to have their dividends reinvested
in new shares and obtain further income tax relief on those shares. 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 20 October 2017 to be eligible to receive
the forthcoming dividend as new shares.
Fund raising and share issues
As reported in the Company's annual report, an offer for subscription was
launched in September 2016, which closed on 31 January 2017, raising gross
proceeds of £38.8 million. Following allotments of £7.8 million in the year
ended 28 February 2017, the remaining £31.0 million was allotted during the
period.
The Company also allotted 545,760 shares at 81.5p per share during the period
under the Company's DRIS in respect of the dividend paid on 14 July 2017.
In response to the continuing strong investor demand for VCT share issues, the
Board announced on 11 October 2017 the intention to launch an offer for
subscription for the Sterling equivalent of €5 million (approximately £4.4
million), the maximum amount allowed without the issue of a full prospectus.
Full details will be released in due course but the offer will be available
exclusively to existing shareholders in ProVen VCT plc, ProVen Growth and
Income VCT plc and ProVen Planned Exit VCT plc for an initial period after
launch.
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 707,413 shares at an
average price of 77.3p per share and for aggregate consideration (net of
costs) of £546,913. This represented 0.7% of the shares in issue at the start
of the period. The shares were subsequently cancelled.
Patient Capital Review
In late 2016, HM Treasury announced its intention to conduct a review of the
availability and effectiveness of 'patient capital' investment in the UK. A
consultation paper "Financing growth in innovative firms" was published in
August 2017 and the consultation period closed on 22 September 2017.
The Investment Manager, supported by the Board, has been actively involved in
the recent consultation. It has made a response to the consultation
highlighting the considerable benefits of the VCT scheme to the UK economy and
making suggestions about how the scheme could be improved. It has also
contributed to the responses made by the VCT Association, which comprises a
number of leading VCT Managers, of which it is a member, as well as
contributing to responses made by industry bodies such as the AIC and the
BVCA. The conclusions of the review are expected to be announced as part of
the Budget, scheduled for 22 November 2017.
The recommendations from the consultation may result in material changes to
the VCT scheme. We hope, however, that the significant contribution that VCTs
make to the UK economy by providing patient capital to support the growth of
innovative UK companies will be recognised in any of the Government's
decisions arising from the consultation.
Outlook
It is encouraging to see the level of disposals achieved during the period,
especially at valuations that result in significant gains for the Company.
There are other exciting companies in the portfolio, including some of the
more recent additions, which continue to show good progress and which could
provide shareholders with strong returns in the future. However, it would be
prudent to expect that some portfolio companies may be affected should the
global and UK economy falter. I therefore look forward to the second half of
the year with cautious optimism.
Marc Vlessing
Chairman
19 October 2017
Investment Manager's Report
Introduction
We have pleasure in presenting our half year report for ProVen Growth and
Income VCT plc (the "Company") for the six-month period to 31 August 2017.
Investment activity and portfolio valuation
At 31 August 2017, the Company's investment portfolio comprised 45
investments, of which 43 were unquoted, at a cost of £53.4 million and a
valuation of £52.4 million. This represents an overall unrealised decline on
cost of £1.0 million or 1.9%.
During the period, the Company invested a further £4.6 million, comprising
£3.1 million into two new companies and £1.5 million into four existing
portfolio companies. In addition, shares in Netcall plc, with a value of £0.3
million, were received as part of the disposal of MatsSoft.
The new investments in Smart Assistant (£2.1 million), a provider of
interactive guided selling software that assists the online buying process and
Deepcrawl (£1.0 million), a leading web crawler and search marketing
analytics company, were both completed in July 2017.
The follow-on investments were made into Poq Studio (£875,000), Honeycomb.TV
(£495,000), ContactEngine (£137,000) and Perfect Channel (£22,000) to
support the continued growth and development of these companies.
The Company generated capital proceeds of £23.9 million, predominantly from
the disposals of Third Bridge (£11.8 million), APM Healthcare (£4.1
million), MatsSoft (£2.8 million) and Abzena (£1.0 million). These disposals
resulted in an aggregate gain of over £13 million on the original investment
cost.
Third Bridge has been one of the Company's strongest performing portfolio
companies over recent years, with revenues growing by over 6x during the
Company's four and half year holding period. IK Investment Partners, a
pan-European private equity company, acquired a minority stake in Third
Bridge, allowing the Company to realise its investment in full at a multiple
of over 5.7x cost and an annual rate of return of over 46%.
APM Healthcare's UK network of 18 pharmacies was acquired by Day Lewis Group,
one of the largest independent pharmacy chains in the UK and Europe. The
Company first invested in APM Healthcare in 2011 to support the company's
expansion of its pharmacy network. Over the investment holding period, APM
Healthcare delivered a total return, including loan stock interest, of 3x the
initial investment cost.
The Company was able to take advantage of liquidity in the shares of Abzena
plc, which were received as a result of the initial public offering of
unquoted investment Polytherics Limited in 2014 and sell its remaining holding
of shares.The overall return on the investment, including previous sales, was
43%.
In addition, a capital repayment of £3.9 million was received from Rapid
Charge Grid in August 2017 as part of a restructuring exercise and other loan
note repayments, including the final repayment of the Company's loan balance
with Celoxica, totalled £0.3 million.
Overall, the venture capital investment portfolio showed an unrealised loss of
£3.6 million, equivalent to 2.6p per share over the period. The unrealised
loss was driven predominantly by valuation decreases for Blis Media, which
was adversely impacted by declining advertising spend, Maplin, which faces
challenging market conditions on the high street and from online competition,
and Donatantonio, which has been affected by the depreciation in Sterling
against the Euro.
There was strong performance and valuation increases from a number of
companies, notably Chess, Chargemaster and Simplestream, all of which continue
to show strong revenue growth, but these were insufficient to offset the
valuation decreases.
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 2017, the Company has invested £1.4 million in Been There
Done That Global Limited, a provider of a tech-enabled platform that develops
brand media strategies.
Outlook
We continue to see a healthy flow of new investment opportunities and expect
to complete several of these before the end of the Company's financial year,
together with a number of follow-on investments into existing portfolio
companies. However, we continue to remain highly selective about the
opportunities we pursue and to subject these to thorough due diligence.
As well as submitting our own response to HM Treasury's consultation on
patient capital and providing evidence to support the submissions from key
industry bodies such as the AIC and BVCA, we also joined with a number of
leading VCT managers to form the VCT Association to collate and submit
evidence to demonstrate the effectiveness of the VCT scheme. The VCT
Association will continue its lobbying and engagement to promote the
advantages of VCTs and its work with the Treasury to improve the effectiveness
of the scheme. We will remain a leading contributor to these initiatives, as
well as engaging in our own efforts.
Beringea LLP
19 October 2017
Summary of Investment portfolio
as at 31 August 2017
Cost £'000 Valuation £'000 Valuation movement in period £'000 % of portfolio by value
Top twenty venture capital investments (by value)
Chess Technologies Limited 1,568 5,835 2,777 5.3%
Dryden Holdings Limited 5,000 4,671 (65) 4.2%
Disposable Cubicle Curtains Limited 2,768 3,601 24 3.3%
D30 Holdings Ltd 3,550 3,110 279 2.8%
Sealskinz Holdings Limited 3,116 2,554 (635) 2.3%
Smart Information Systems GmbH (t/a Smart Assistant) 2,048 2,048 - 1.9%
Chargemaster plc 1,079 1,874 472 1.7%
Watchfinder.co.uk Limited 551 1,851 94 1.7%
Infinity Reliance Limited (t/a My 1 (st)Years) 1,845 1,845 - 1.7%
Poq Studio Limited 1,750 1,750 - 1.6%
Whistle Sports, Inc. 1,696 1,696 - 1.5%
Rapid Charge Grid Limited 1,888 1,632 231 1.5%
Response Tap Limited 1,440 1,455 15 1.3%
Monica Vinader Limited 204 1,405 - 1.3%
Litchfield Media Limited 1,420 1,321 (23) 1.2%
Simplestream Limited 690 1,319 342 1.2%
InContext Solutions, Inc. 1,976 1,202 (330) 1.1%
Cogora Group Limited 1,320 1,192 (292) 1.1%
Donatantonio Group Limited 1,003 1,177 (618) 1.1%
Blis Media Limited 1,083 1,112 (3,447) 1.0%
Other venture capital investments 17,365 9,736 (2,414) 8.9%
Total venture capital investments 53,360 52,386 (3,590) 47.7%
Cash at bank and in hand 57,457 52.3%
Total investments 109,843 100.0%
Other venture capital investments at 31 August 2017 comprise: 7Digital Group
plc, Amura Holdings Limited, Buckingham Gate Financial Services Limited,
Charterhouse Leisure Limited, ContactEngine Limited, Conversity Limited,
Deltadot Limited, Dianomi Limited, Duncannon Holdings Limited, Firefly
Learning Limited, Honeycomb.TV Limited, Inskin Media Limited, MEL Topco
Limited (t/a Maplin Electronics), Netcall plc, Network Locum Limited, Perfect
Channel Limited, Omni Dental Sciences Limited, Senselogix Limited, Skills
Matter Limited, Steribottle Global Limited, Thread Inc., TVPlayer Limited,
Utility Exchange Online Limited, Vigilant Applications Limited and Written
Byte Limited (t/a Deepcrawl).
With the exception of 7Digital Group plc and Netcall plc which are quoted on
AIM, all venture capital investments are unquoted.
All of the above investments, with the exception of Amura Holdings Limited,
Deltadot Limited, Dryden Holdings Limited, Duncannon Holdings Limited and Omni
Dental Sciences Limited, were also held by ProVen VCT plc, of which Beringea
LLP is the investment manager.
Blis Media Limited is also held by ProVen Planned Exit VCT plc, of which
Beringea LLP was the Investment Manager until 31 March 2016 when ProVen
Planned Exit VCT plc was placed into Members Voluntary Liquidation. The
liquidator has agreed that Beringea LLP will continue to manage the investment
in Blis Media Limited on behalf of ProVen Planned Exit VCT plc until it is
sold.
All venture capital investments are registered in England and Wales except for
InContext Solutions, Inc., Thread, Inc. and Whistle Sports, Inc. which are
Delaware registered corporations in the United States of America and Smart
Information Systems GmbH, which is registered in Austria.
Summary of investment movements
for the six months ended 31 August 2017
Investment activity during the six months ended 31 August 2017 is summarised
as follows:
Additions Cost
£'000
Smart Information Systems GmbH (t/a Smart Assistant) 2,048
Written Byte Limited (t/a Deepcrawl) 1,012
Poq Studio Limited 875
Honeycomb.TV Limited 495
Netcall plc * 324
ContactEngine Limited 137
Perfect Channel Limited 22
Total 4,913
Disposals Cost Market value at 1 March 2017 Disposal proceeds Gain against cost Realised gain in period
£'000 £'000 £'000 £'000 £'000
Third Bridge Group Limited 2,051 8,142 11,759 9,708 3,617
APM Healthcare Limited 1,731 2,957 4,144 2,413 1,187
Rapid Charge Grid Limited 3,912 3,912 3,912 - -
MatsSoft Limited * 1,140 1,609 2,771 1,631 1,162
Abzena plc 791 652 987 196 335
Skills Matter Limited 170 170 170 - -
Celoxica Limited 118 118 118 - -
Conversity Limited 35 - 38 3 38
Total 9,948 17,560 23,899 13,951 6,339
* MatsSoft Limited was disposed of during the period. As part of the disposal,
the Company received shares in Netcall plc valued at £324,000 on the disposal
date. The Netcall plc shares are shown as an addition and disposal, as part of
the MatsSoft Limited proceeds, in the tables above.
Unaudited Condensed Income Statement
for the six months ended 31 August 2017
(unaudited) Six months ended 31 Aug 2017 (unaudited) Six months ended 31 Aug 2016 (audited) Year ended 28 Feb 2017
Revenue Capital Total Revenue Capital Total Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Income 537 - 537 595 - 595 900
Gains on investments - 2,750 2,750 - 4,994 4,994 11,834
Investment management fee (287) (861) (1,148) (181) (544) (725) (1,525)
Performance incentive fee - (340) (340) - (897) (897) (2,634)
Other expenses (274) (6) (280) (207) (12) (219) (448)
(Loss)/ return on ordinary activities (24) 1,543 1,519 207 3,541 3,748 8,127
before taxation
Tax on ordinary activities - - - - - - -
(Loss)/ return attributable to equity (24) 1,543 1,519 207 3,541 3,748 8,127
shareholders
Basic and diluted (loss)/ return per share (0.0p) 1.1p 1.1p 0.2p 4.0p 4.2p 8.8p
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 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 2017
(unaudited) 31 Aug 2017 £'000 (unaudited) 31 Aug 2016 £'000 (audited) 28 Feb 2017 £'000
Fixed assets
Investments 52,386 62,184 68,624
Current assets
Debtors 530 401 553
Cash at bank and in hand 57,457 10,578 46,450
57,987 10,979 47,003
Creditors: amounts falling due within one year (765) (1,403) (3,283)
Net current assets 57,222 9,576 43,720
Net assets 109,608 71,760 112,344
Capital and reserves
Called up share capital 2,219 1,447 1,594
Capital redemption reserve 1,159 1,136 1,148
Share premium account 64,758 26,030 33,863
Share capital to be issued - - 30,910
Special reserve 24,475 32,048 29,351
Capital reserve - realised 18,064 4,705 5,319
Revaluation reserve (597) 6,719 10,605
Revenue reserve (470) (325) (446)
Total equity shareholders' funds 109,608 71,760 112,344
Basic and diluted net asset value per share 80.0p 80.2p 82.7p
The accompanying notes form an integral part of this announcement.
Unaudited Condensed Statement of Changes in Equity
Six months ended 31 Aug 2017 (unaudited) Called up share capital Capital redemption reserve Share premium account Special reserve Share capital to be issued Capital reserve - realised Revaluation reserve Revenue reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 March 2017 1,594 1,148 33,863 29,351 30,910 5,319 10,605 (446) 112,344
Total comprehensive income - - - - - 12,745 (11,202) (24) 1,519
Issue of new shares 636 - 30,895 - (30,910) - - - 621
Share issue costs - - - (905) - - - - (905)
Share buybacks and cancellation (11) 11 - (550) - - - - (550)
Dividends paid - - - (3,421) - - - - (3,421)
At 31 August 2017 2,219 1,159 64,758 24,475 - 18,064 (597) (470) 109,608
Six months ended 31 Aug 2016 (unaudited) Called up share capital Capital redemption reserve Share premium account Special reserve Share capital to be issued Capital reserve - realised Revaluation reserve Revenue reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 March 2016 1,454 1,121 25,631 35,956 - 4,821 3,062 (174) 71,871
Total comprehensive income - - - - - (116) 3,657 207 3,748
Issue of new shares 8 - 399 - - - - - 407
Share buybacks and cancellation (15) 15 - (688) - - - - (688)
Dividends paid - - - (3,220) - - - (358) (3,578)
At 31 August 2016 1,447 1,136 26,030 32,048 - 4,705 6,719 (325) 71,760
The special reserve, capital reserve - realised and revenue reserve are
distributable reserves. The distributable reserves are reduced by losses of
£372,000 (2016: £372,000) which are included in the revaluation reserve.
Reserves available for distribution therefore amount to £41,697,000 (2016:
£36,056,000).
The accompanying notes form an integral part of this announcement.
Unaudited Condensed Statement of Cash Flows
for the six months ended 31 August 2017
(unaudited) Six months ended 31 Aug 2017 (unaudited) Six months ended 31 Aug 2016 (audited) Year ended 28 Feb 2017
Note £'000 £'000 £'000
Net cash used in operating activities A (3,731) (118) (1,314)
Cashflows from investing activities
Purchase of investments (4,616) (2,780) (9,166)
Sale of investments 23,575 7,265 14,540
Net cash from investing activities 18,959 4,485 5,374
Cashflows from financing activities
Proceeds from share issues 31,087 - 7,754
Share issue costs (905) - (155)
Purchase of own shares (517) (728) (1,328)
Share capital to be issued (30,910) - 30,910
Equity dividends paid (2,976) (3,171) (4,901)
Net cash (used in)/ from financing (4,221) (3,899) 32,280
Increase in cash and cash equivalents B 11,007 468 36,340
Notes to the cash flow statement:
A Cash used in operating activities
Return on ordinary activities before taxation 1,519 3,748 8,127
Gain on investments (2,750) (4,886) (11,834)
Decrease/ (increase) in prepayments, accrued income and other debtors 23 225 (280)
(Decrease)/ increase in accruals and other creditors (2,523) 795 2,673
Net cash used in operating activities (3,731) (118) (1,314)
B Analysis of net funds
Beginning of period /year 46,450 10,110 10,110
Net cash inflows 11,007 468 36,340
End of period/ year 57,457 10,578 46,450
The accompanying notes form an integral part of this announcement.
Notes to the half-yearly report
for the six months ended 31 August 2017
1. Accounting policies
Basis of accounting
The Company has prepared its financial statements under Financial Reporting
Standard 102 ("FRS102") and in accordance with the Statement of Recommended
Practice 'Financial Statements of Investment Trust Companies and Venture
Capital Trusts' (the "SORP") issued by the Association of Investment Companies
("AIC") which was revised in January 2017.
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 28 February 2017.
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 2015, together
with Sections 11 and 12 of FRS102.
Publicly traded investments are measured using bid prices in accordance with
the IPEV Guidelines.
Key judgements and estimates
The valuation methodologies used by the Directors for estimating 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 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.
2. All revenue and capital items in the Unaudited Condensed Income
Statement derive from continuing operations.
3. There are no other items of comprehensive income other than
those disclosed in the Unaudited Condensed Income Statement.
4. 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.
5. The comparative figures are in respect of the year ended 28
February 2017 and the six-month period ended 31 August 2016.
6. Basic and diluted return per share for the period has been
calculated on 135,948,450 shares, being the weighted average number of shares
in issue during the period.
7. Basic and diluted NAV per share for the period has been
calculated on 137,082,823 shares, being the number of shares in issue at the
period end.
8. Dividends
(unaudited) (unaudited) (audited)
Six months ended Six months ended Year ended
31 Aug 2017 31 Aug 2016 28 Feb 2017
Revenue Capital Total Revenue Capital Total Total
Pence £'000 £'000 £'000 £'000 £'000 £'000 £'000
2016 Final 4.0 - - - 358 3,220 3,578 3,578
2017 Interim 2.0 - - - - - - 1,968
2017 Final 2.5 - 3,421 3,421 - - - -
Total dividends paid - 3,421 3,421 358 3,220 3,578 5,546
9. Contingent liabilities, guarantees and financial commitments
The Company has no contingent liabilities, guarantees or financial commitments
at 31 August 2017.
10. Called up share capital
During the six months to 31 August 2017, 38,743,426 shares were issued with an
aggregate nominal value of £627,150 pursuant to the offer for subscription
dated 21 September 2016. The aggregate consideration for the shares was
£31,086,915, which excluded share issue costs of £905,310.
Under the terms of the Company's Dividend Reinvestment Scheme, the Company
allotted 545,760 shares to subscribing shareholders on 14 July 2017. The
aggregate consideration for the shares was £444,794.
During the six months to 31 August 2017, the Company repurchased 707,413
shares for an aggregate consideration (net of costs) of £546,913 being an
average price of 77.3p per share and which represented 0.7% of the Company's
issued share capital at the start of the year. These shares were subsequently
cancelled. Costs relating to the share repurchases amounted to £2,750.
11. 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) 31 Aug 2017 (audited) 28 Feb 2017
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
AIM quoted 333 - - 333 665 - - 665
Loan notes - - 17,813 17,813 - - 24,940 24,940
Unquoted equity - - 21,959 21,959 - - 35,510 35,510
Preference shares - - 12,281 12,281 - - 7,509 7,509
Total 333 - 52,053 52,386 665 - 67,959 68,624
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 2017, £1,148,000 was payable to Beringea LLP
in respect of these services. At the period end the Company owed Beringea LLP
£205,000.
From 13 January 2015 Beringea LLP was appointed Administration Manager of the
Company. Fees paid to Beringea in its capacity as Administration Manager for
the six months ended 31 August 2017 amounted to £26,000 of which £13,000
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 year ending 28
February 2018, a performance incentive fee of £340,000 has been accrued. The
actual performance incentive fee, if any, will only be payable once the full
year results have been finalised. As a result, no performance incentive fee is
payable at 31 August 2017.
Beringea LLP also acted as promoter for the share offer during the period. The
fees in the period amount to £1,229,000 out of which Beringea paid the costs
of the off including initial commission. At the period end, the Company owed
Beringea LLP £nil in respect of these services.
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 and not the Company. In the six-month period to 31 August 2017,
£157,000 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 2017 amounted to £299,000.
During the six months to 31 August 2017, an amount of £62,000 was payable to
the Directors of the Company as remuneration for services provided to the
Company. No amount was outstanding at the period-end.
13. 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. They have
therefore not been delivered to the Registrar of Companies. The figures for
the year ended 28 February 2017 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.
14. 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:
a. 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
b. 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.
15. Risk and uncertainties
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:
(i) investment risk associated with
investing in small and immature businesses;
(ii) 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
(iii) breach of VCT regulations.
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 (iii) to a
minimal level.
16. 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 www.provenvcts.co.uk.
17. Post balance sheet events
Since 31 August 2017, the Company has invested £1.4 million in Been There
Done That Global Limited, a provider of a tech-enabled platform that develops
brand media strategies.
On 11 October 2017, the Board declared an interim dividend of 10.25p per share
which will be paid on 17 November 2017 to shareholders on the register at 20
October 2017.
Also on 11 October 2017, the Board announced the intention to launch an offer
for subscription for the Sterling equivalent of €5 million (approximately
£4.4 million). Full details will be released in due course.
This announcement is distributed by Nasdaq Corporate Solutions on behalf of
Nasdaq 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.
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