REG - Sure Ventures PLC - Annual Report for the year ended 31 March 2022
19/07/2022 12:30
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RNS Number : 9938S Sure Ventures PLC 19 July 2022
Sure Ventures
plc
Annual Report and Audited Financial Statements
For the year ended 31 March 2022
Company Number: 10829500
Table of Contents
1 Investment Objective, Policy and Performance Summary (#_Toc479530438) 1
2 Chairman's
Statement..........................................................................
3 (#_Toc479530448)
3 Investment Manager's
Report..............................................................
(#_Toc479530448) 7
4 (#_Toc479530449) (#_Toc479530449) (#_Toc479530449) Strategic
Report.................................................................................
(#_Toc479530449) 11
Business Review (#_Toc479530443) 12
Principal Risks and Uncertainties (#_Toc479530447) 14
Key Performance Indicators (#_Toc479530447) 6
Promoting the Success of the Company
5 (#_Toc479530449) (#_Toc479530449) (#_Toc479530449) Directors'
Report (#_Toc479530449) (#_Toc479530449) 8
Board of Directors (#_Toc479530450) 9
Statutory Information (#_Toc479530451) 20
Corporate Governance Statement (#_Toc479530452) (#_Toc479530452) 5
Report of the Audit Committee (#_Toc479530453) 32
Statement of Directors' Responsibilities (#_Toc479530453) 5
Directors' Remuneration Report (#_Toc479530455) 6
6 Independent Auditor's
Report............................................................
(#_Toc479530448) 39
7 (#_Toc479530457) (#_Toc479530457) (#_Toc479530457) Financial
Statements (#_Toc479530457) 6
Income Statement (#_Toc479530458) (#_Toc479530458) 7
Statement of Financial Position (#_Toc479530459) 8
Statement of Changes in Equity (#_Toc479530460) 9
Statement of Cash Flows (#_Toc479530461) 50
Notes to the Financial Statements (#_Toc479530462) 1
8 Alternative Performance Measures (APMs)
9 Glossary
10 (#_Toc479530463) (#_Toc479530463) (#_Toc479530463) Shareholders'
Information (#_Toc479530463) 8
Directors, Portfolio Manager and Advisers (#_Toc479530464) 69
11 (#_Toc479530463) (#_Toc479530463) (#_Toc479530463) Investment Policy
(#_Toc479530463) 70
1 Investment Objective, Policy and Performance Summary
Investment Objective
The investment objective of the Company is to achieve capital growth for
investors.
Investment Policy
The Company's Investment Policy can be found at page 70 of this Annual Report.
Performance Summary
31 March 2022 31 March 2021
Number of ordinary shares in issue 6,013,225 5,350,725
Market capitalisation
- Ordinary shares (in sterling) 6,133,500 5,618,000
Net asset value ("NAV") attributable to ordinary shareholders
- Ordinary shares £7,751,596 £4,925,764
NAV per share attributable to ordinary shareholders
- Ordinary shares (in sterling) 128.91p 92.06p
Ordinary share price (bid price)
in sterling 102.00p 105.00p
Ordinary share price (deficit)/premium to NAV
in sterling (20.87%) 14.06%
Investments held at fair value through profit and loss £7,516,667 £3,724,611
Cash and cash equivalents £282,178 £1,255,199
Dividend History
There were no dividends paid during the period (2021 - None).
Listing Information
The Company's shares are admitted to trading on the Specialist Fund Segment
(SFS) of the London Stock Exchange.
The ISIN number for the GBP shares is GB00BYWYZ460, Ticker: SURE.
Website
The Company's website address is http://www.sureventuresplc.com
(http://www.sureventuresplc.com) .
2 Chairman's Statement
Chairman's Statement
Dear Shareholders.
On behalf of my fellow directors, I am delighted to present the annual results
of Sure Ventures plc (the 'Company') for the year ended 31 March 2022.
FINANCIAL PERFORMANCE
The Company's performance for the year to 31 March 2022 exceeded expectations,
returning an impressive net asset value ('NAV') total return per share of
+40.03% (2021: -0.58%). This is extremely encouraging for our Investors with
positive implications for the future. We outline below the investment activity
that has contributed to this success.
The most notable aspect of the Company's performance since inception to date
is that none of the direct investments, or underlying investment in Fund I,
have yet failed. Those investments which have not yet completed a follow-on
funding round at an uplifted valuation, still have a reasonable prospect of
doing so. This is unusual for an early-stage investment company such as
ourselves and is a real credit to the Company's investment team who have
demonstrated proven ability to pick winners with their investment strategy. We
can look forward to the future with confidence.
2021 witnessed further gains in global markets and the UK and Europe
technology sector became a significant beneficiary from pandemic-related
stimulus measures which fuelled record-breaking investments in private
technology transactions. The pent-up demand in private market deals that was
forecast in early 2021 was evident in both the value of new investments in the
sector and deal count. The prior accounting period to 31 March 2021 was a
consolidation year from which follow-on funding rounds were able to contribute
to steady growth in the Company's NAV as unrealised gains. This consolidation
set the scene for substantial uplifts in the current year. Several of the
investee companies including; VividQ, Admix, CameraMatics and Getvisibility
enjoyed strong gains. In a further exciting development during the year, the
Company announced its commitment to a new investment vehicle. This commitment
will be alongside the British Business Bank in a second Sure Valley Ventures
fund, as further described below. The early months of 2022 have seen some
value erosion in global large cap technology stocks and so whilst the
Company's performance has been particularly solid, it is conscious of the
investment environment and the need to maintain its rigorous investment
process as global markets tackle the threat of inflation and rising interest
rates.
In the year to 31 March 2022, the Company's NAV attributable to shareholders
grew by £2.83m to £7.75m through a combination of NAV performance and new
subscriptions.
In common with the current market trend of listed trusts, the Company's share
price now trades at a discount to its last published NAV, currently around
20%. However, in June 2022 the Company was able to validate its share price by
raising new subscriptions through a private placing at the mid-market share
price.
PORTFOLIO UPDATE - FUND I
The Company holds 25.9% in Sure Valley Ventures Fund I ('SVV'), the first
Sub-Fund of Suir Valley Funds ICAV ('Fund I'). The total commitment in this
first Fund was €7m (increasing its initial commitment from €4.5m in
September 2019), of which €5.6m (80%) has been drawn down as at 31 March
2022.
The Company also holds direct investments outside of Fund I in Immotion Group
plc ('Immotion'), a listed immersive virtual reality ('VR") entertainment
group and VividQ Limited, a privately owned deep technology company pioneering
the application of holography in augmented reality ('AR') and VR. The Fund I
portfolio also includes one listed entity, ENGAGE XR Holdings plc (formerly VR
Education Holdings plc) 'ENGAGE' a developer of VR software and immersive
experiences with a specific focus on education. As at the year end, the
Company through its holding in Fund I, has a further fourteen privately held
companies in the AR, VR, internet of things ('IoT') and artificial
intelligence ('AI') space. The Company has, with its investment in Artomatix,
concluded its first successful portfolio company exit in 2019 for x5 return of
the original investment.
During the year, Fund I announced the following additional investment:
· SmartTech247 (June 2021), a global AI based cyber security cloud
business that protects enterprises as they migrate to cloud-based IT
operations, with over 100 technology partners and more than 50 clients based
in Europe and US.
The year also featured an £11m seed extension round for VividQ led by UTokyo,
the venture investment arm of the University of Tokyo. The funding round
closed in June 2021 and the uplift was a significant contributor to the Q2 21
NAV given the Company's investment in VividQ held through the Fund I portfolio
and also its direct holding of VividQ, representing an unrealised gain of 59%
on the Company's initial investment.
In October 2021 Admix announced a US$25m Series B round representing a
substantial uplift from the Company's initial investment in Admix in 2018,
that has now successfully raised US$37million to date.
In December 2021 CameraMatics completed a €3.9m Series B funding round in
which SVV contributed alongside the existing investors Enterprise Ireland and
Puma, achieving a 90% increase in valuation from January 2021.
Finally, in March 2022 Getvisibility announced a €10m funding round in which
SVV followed-on alongside new investors Alpha Intelligence Capital and Fortino
Capital, creating a 4x uplift and unrealised gain from the Company's initial
investment.
The Company's listed investment holdings, Immotion and ENGAGE, had a mixed
year with both share prices trading relatively flat across the year. However,
the investment holdings in both listed companies have been reduced gradually
to levels that are less impactful of the Company's NAV, creating lower
volatility through dilution of these holdings.
PORTFOLIO UPDATE - FUND II
In March 2022 the Company announced its commitment of £5m to the Sure Valley
Ventures Enterprise Capital Fund. This is a £85m first close of a total £95m
UK software technology fund, investing in AR, VR and the Metaverse, including
AI, IoT and Cybersecurity in investee companies throughout the UK ('Fund II').
The British Business Bank is the £50m cornerstone investor through its
Enterprise Capital Funds programme and it is envisaged that investment in up
to 25 software companies will be made during the investment period.
As at the year end, the first portfolio Fund II investment of £1m has been
made in Retinize, a Belfast-based creative tech company developing an
Animotive software, harnessing VR technology to transform the 3D animation
production process.
Further information on the investment portfolio is provided in the report of
the Investment Manager which follows this statement.
COMMITMENTS AND FUNDING
As previously mentioned, in 2019 the Company announced an increase in
subscription to Fund I of €2.5m taking its total commitment to €7m,
thereby increasing its share in the Fund from 21.6% to 25.9%. This commitment
was made shortly before the Fund closed to new subscribers validating the
Company's belief that the Fund I portfolio is at a mature stage and, with a
number of investee companies preparing for further funding rounds, there is
demonstrable potential for further uplifts to occur from initial valuations.
Several new funding rounds occurred in this financial year and with others
still at the negotiation stage the Company expects further positive Fund I
uplifts to occur in the coming year.
The Company's commitment to Fund II is £5m over the duration of the fund's
investment period and the forecast capital calls throughout the investment
period was a key consideration prior to agreeing to the Company's commitment
to Fund II.
The Company believes that it will have sufficient access to funding to meet
its remaining commitments to Fund I and to its anticipated commitments to Fund
II over the terms of each Funds' investment cycle, through a combination of
available cash, anticipated subscriptions and access to undrawn facilities.
INVESTMENT ENVIRONMENT
The Company continues to be pleased by how the Investment Manager has grown
the investment portfolio of Fund I with other complimentary businesses in
diverse sectors. The anticipated new funding rounds and subsequent portfolio
uplifts throughout the year have contributed to a particularly impressive
portfolio performance and the potential of the Fund I portfolio is now
starting to be rewarded as new funding rounds are completed. It is also
noteworthy that, to date, not one of these early-stage investee companies has
required any valuation reduction or impairment which is testament to the
rigorous investment process adopted by the Investment Manager. The Company is
very excited to be an investor in Fund II, alongside the British Business
Bank, as cornerstone investor who, after a lengthy competitive process,
selected Sure Valley Ventures to participate in their very attractive
Enterprise Capital programme. In a post-pandemic world of rising inflation and
higher interest rates, as well as other geopolitical implications of the
conflict in Ukraine, the Company is conscious that the due diligence carried
out on its investment opportunity pipeline requires greater scrutiny than ever
before to produce a portfolio as robust as the Fund I portfolio.
DIVIDEND
During the year to 31 March 2022, the Company has not declared a dividend (31
March 2021: £Nil). Pursuant to the Company's dividend policy the directors
intend to manage the Company's affairs to achieve shareholder returns through
capital growth rather than income. The Company does not expect to receive a
material amount of dividends or other income from its direct or indirect
investments. It should not be expected that the Company will pay a significant
annual dividend, if any.
GEARING
The Company may deploy gearing of up to 20% of NAV (calculated at the time of
borrowing) to seek to enhance returns and for the purposes of capital
flexibility and efficient portfolio management. The Company's gearing is
expected to primarily comprise bank borrowings but may include the use of
derivative instruments and such other methods as the Board may determine.
During the period to 31 March 2022 the Company did not employ any borrowing
(31 March
2021: £Nil).
The Board will continue to review the Company's borrowing, in conjunction with
the Investment Manager on a regular basis pursuant with the Company's overall
cash management and investment strategy.
CAPITAL RAISING
On 8 June 2021, the Company announced a placing of 662,500 ordinary shares
that were admitted to trading on the Specialist Fund Segment of the London
Stock Exchange on 14 June 2021, under the existing ISIN: GB00BYWYZ460, taking
the total shares in admission as at 31 March 2022 to 6,013,225.
Post year end, on 1 June 2022, the Company announced a further placing of
441,860 ordinary shares that were admitted to trading on the Specialist Fund
Segment of the London Stock Exchange on 10 June 2022, under the existing
ISIN: GB00BYWYZ460, taking the total shares in
admission as at 10 June 2022 to 6,455,085.
The Investment Manager's Report following this Statement gives further detail
on the affairs of the Company. The Board is confident of the long-term
prospects for the Company in pursuit of its investment objectives.
OUTLOOK
The portfolio construction of Fund I is almost complete, save for the likely
addition of a final investment as Fund I becomes fully seasoned. Follow-on
rounds in the past year have been extremely positive and the investment
management team expects future follow-on rounds will continue at equally
positive valuations. The Investment Manager will explore routes to market and
potential exits of Fund I investee companies, as well as continuing to
identify suitable key additions for Fund II. We fully expect the year ahead to
be another year of transformation reflected through NAV appreciation, and the
Company is confident that there will be more positive developments to announce
for both Fund I and for Fund II.
Perry Wilson
Chairman
18 July 2022
3 Investment Manager's Report
Investment Manager's Report
The company
Sure Ventures plc (the "Company") was established to enable investors to gain
access to early stage technology companies in the four exciting and expansive
market verticals of augmented reality and virtual reality (AR/VR), artificial
intelligence (AI), Cybersecurity and the Internet of Things (IoT).
The Company gains access to deal flow ordinarily reserved for venture capital
funds and ultra-high net worth angel investors, establishing a diversified
software-centric portfolio with a clear strategy. Listing the fund on the
London Stock Exchange offers investors:
· Relative liquidity
· A quoted share price
· A high level of corporate governance.
It is often too expensive, too risky and too labour intensive for investors to
build a portfolio of this nature themselves. We are leveraging the diverse
skillsets of an experienced management team who have the industry network to
gain access to quality deal flow, the expertise to complete extensive due
diligence in target markets and the entrepreneurial skills to help these
companies to mature successfully. Those investing in the Company will get
exposure to Sure Valley Ventures which in turn makes direct investments in the
above sectors in the UK & Ireland.
Augmented Reality & Virtual Reality
The Immersive Technologies market has had a significant growth boost during
COVID-19 (Netflix or video games for example) and AR/VR is no exception. The
AR/VR market was valued at $14.84 billion in 2020 by Allied Market Research
and is projected to reach $454.73 billion by 2030, registering a Compound
Annual Growth Rate ("CAGR") of 40.7%. Growth of the mobile gaming industry and
increase in internet connectivity act as the key drivers of the global AR and
VR market. In addition, increased use of consumer electronic devices is
expected to fuel the global AR/VR market growth. Meta a key player in VR, has
had great success with its Quest 2 VR headset and plans to launch a new
high-end metaverse headset in Q2 this year, along with Apple which is expected
to launch an AR and VR headset before the end of the year, both of which will
help accelerate growth in the market even further.
Internet of Things
MarketsandMarkets also forecasts that the post-COVID-19 global IoT market size
is expected to grow from US$ 300.3 billion in 2021 to US$ 650.5 billion by
2026, at a CAGR of 16.7% from 2021 to 2026. The major factors fueling the IoT
market include access to low-cost, low-power sensor technology, availability
of high-speed connectivity, increase in cloud adoption, and Increasing use of
data processing and analytics. Moreover, increase in smart city initiatives
worldwide, increase in connected devices to drive the growth of IoT, and
emerging 5G technology to help IoT adoption, globally would provide lucrative
opportunities for IoT vendors.
Cybersecurity
Grand View Research reports that the global cybersecurity market size was
valued at US$ 184.93 billion in 2021 and is expected to expand at a CAGR of
12.0% from 2022 to 2030. The increasing number of cyber-attacks with the
emergence of e-commerce platforms, deployment of cloud solutions, and
proliferation of smart devices are some of the factors driving the market
growth. Cyber threats are anticipated to evolve with the increase in usage of
devices with intelligent and IoT technologies. As such, organisations are
expected to adopt and deploy advanced cyber security solutions to detect,
mitigate, and minimize the risk of cyber-attacks, thereby driving the market
growth.
Artificial Intelligence
MarketsandMarkets forecasts the global artificial intelligence (AI) market
size to grow US$ 58.3 billion in 2021 to US$ 309.6 billion by 2026, at a CAGR
of 39.7% during the forecast period. Various factors such as growth of
data-based AI and advancement in deep learning and need to achieve robotic
autonomy to stay competitive in a global market are expected to drive the
adoption of the AI solutions and services.
The benefit of investing in companies in these four key sectors at a Seed
stage are that:
· Sure Valley Ventures can invest in these companies at attractive
valuations of between £2m to £8m and get up to 20% of the company for
initial investment amounts of between £0.75m to £1.25m.
· The investment sectors (AR/VR, IoT, AI, and Cybersecurity) have
massive growth potential ahead of them which creates a tailwind behind the
companies that are creating these new markets.
· These sectors are also ones that have the potential of creating
the next big European Companies and build on Europe's existing technology
strengths.
· These companies have the potential to get to exponential growth
and of achieving an IPO or being acquired by one of the Silicon Valley giants
who are all investing in these sectors.
· The Sure Valley Ventures Platform and Network can help fast-track
the development of these companies across the chasm to the Series A investment
round, which in turn increases the potential for an outsized return and also
reduces the risk of the failure of a portfolio company.
In summary, Sure Ventures plc can gain exposure to all of these benefits
through its participation in the Sure Valley Ventures Funds, as further
outlined below.
PORTFOLIO BREAKDOWN
On 6 February 2018 the Company entered into a €4.5m commitment to Sure
Valley Ventures ("Fund I"), the sole sub-fund of Suir Valley Funds ICAV and
its investment was equalised into Fund I at that date. On 31 August 2019 a
further €2.5m was committed to Fund I, taking the total investment in Sure
Valley Ventures to €7m. The first drawdown was made on 5 March 2018 and as
at 31 March 2022, a total of €5,583,987 had been drawn down against this
commitment.
On 26 April 2019 the Company made a direct investment of £500,000 into VividQ
Limited, a deep tech start-up with world leading expertise in 3D holography.
This investment represents the second direct investment of the Company,
alongside Immotion Group PLC, which was announced on 24th April 2018.
On 25 February 2022, Sure Ventures plc committed to invest £5m into the
second fund of Sure Valley Ventures ("Fund II"). Fund II
completed an £85m first close of a £95m UK software technology fund, which
aims to increase the supply of equity capital to high-potential, early-stage
UK companies. As detailed in the Statement of Position included in the
following financial statements, these two Sure Valley Ventures Fund
investments alongside the two direct investments, represent the entire
portfolio of Sure Ventures plc as at 31 March 2022.
On 8 June 2021, the Company announced a placing of 662,500 ordinary shares.
The ordinary shares were admitted to trading on the Specialist Fund Segment of
the London Stock Exchange on 14 June 2021, under the existing ISIN:
GB00BYWYZ460, taking the total shares in admission as at 31 March 2022 to
6,013,225.
suir valley Funds ICAV
Suir Valley Funds ICAV (the ''ICAV'') is a close-ended Irish collective
asset-management vehicle with segregated liability between sub-funds
incorporated in Ireland pursuant to the Irish Collective Asset-management
Vehicles Acts 2015 and 2020 and constituted as an umbrella fund insofar as the
share capital of the ICAV is divided into different series with each series
representing a portfolio of assets comprising a separate sub-fund.
The ICAV was registered on 18 October 2016 and authorised by the Central Bank
of Ireland as a qualifying investor alternative investment fund ("QIAIF") on
10 January 2017. The initial sub-fund of the ICAV is Sure Valley Ventures, or
Fund I, which had an initial closing date of 1 March 2017. Fund I invests in a
broad range of software companies with a focus on companies in the AR/VR, AI
and IoT sectors.
As at 31 March 2022 Fund I had commitments totaling €27m and had made
sixteen direct investments into companies spanning the AR/VR, AI and IoT
sectors. One of these investments was sold in 2019, giving Fund I its first
realised gain on exit of around 5X return on investment. On 12 March 2018,
Immersive VR Education Limited, Fund I's first investment, completed a
flotation on the London Stock Exchange (AIM) and the Dublin Stock Exchange
(ESM). The public company is now called ENGAGE XR Holdings PLC - ticker EXR
(Formally VR Education Holdings PLC - VRE). EXR was the first software company
to list on the ESM since that market's inception. In July 2020, following an
improvement in share price, Fund I decided to sell sufficient shares to
recover its initial investment. This resulted in a realised gain of €73k
being payable to Sure Ventures plc, along with its share of the initial
investment, and some Escrow funds from the aforementioned exit. The final
Escrow payment from the sale was settled in July 2021, seeing another €151k
flowing to the plc. Total distributions from the Fund I to the plc as at 31
March 2022 were €1,759,630.
suir valley VENTURES ENTERPRISE CAPITAL FUND
Sure Valley Ventures Enterprise Capital Fund is a close-ended UK based GP/LP
Fund which completed its first close on 1 March 2022. The total commitments
for this first close were £85m, with potential for a further £10m to be
raised in a secondary close. The British Business Bank are the cornerstone
investor of this Fund, committing £50m of the initial £85m, with Sure
Ventures plc committing a total of £5m.
Fund II will have a similar investment strategy to the first Fund, being a
seed capital investor in high growth software companies that are focused on
bringing a disruptive innovation to market. It plans to invest into 25
software companies from across the UK through its new fund. Currently based in
London, Dublin, and Cambridge, the Sure Valley team will also be opening an
office in Manchester to help access deals in the significant and exciting
innovation clusters that have developed around creative technologies in the
North of England and in the Metaverse and AI opportunities in cities such as
Manchester, Leeds, Sheffield and Newcastle.
As at 31 March 2022 the Fund had drawn down a total of £1.62m and has made
its first investment into a Belfast based company called Retinize, for an
amount of £1m. The total invested capital to date for Sure Ventures plc was
£95,000.
Performance
In the year to 31 March 2022 the Company's performance continued to improve,
as it returned a net asset value of £1.29/unit, representing a 40% uplift
from the audited March-21 NAV of 92p. The NAV improvement is largely a result
of the ICAV NAV seeing similar gains, as more portfolio companies complete
follow-on funding rounds at increased valuations, and hence large unrealised
gains being booked. The two direct investments have have mixed results, with
Immotion Group PLC, closing the year at 4.7p, down slightly from 5.05p at the
previous year end, whilst VividQ closed a new funding round to give Sure
Ventures plc an unrealised gain of 59% on its initial holding. Given the lack
of revenue to support the ongoing operational costs of the plc, these
unrealised gains are key to maintaining a steady NAV, until the point that we
see more exits and realised gains.
FutuRe Investment OUTLOOK
Fund I has achieved one very positive realised gain, recovered its full
investment in its listed portfolio company, as well as seeing a number of
unrealised gains across the portfolio. The portfolio of current investments is
continuing to mature, with more companies completing series A funding rounds,
which has started to provide the NAV growth that was set out to achieve from
inception. As the investment period of this Fund draws to a close, there is
one more potential investment to be made, with all remaining capital being
allocated to follow-on funding of existing investments as these companies
continue to grow.
We remain confident in the future outlook of the Company in the forthcoming
financial year and in line with the prospectus, particularly with the launch
of the new Enterprise Capital Fund, whilst also reserving the right to make
further direct investments provided there is sufficient working capital to do
so.
Shard Capital AIFM LLP
Investment Manager
18 July 2022
4 Strategic Report
Business Review
The strategic report on pages 11 to 17 has been prepared to help shareholders
assess how the Company operates and how it has performed. The strategic report
has been prepared in accordance with the requirements of Section 414 A-D of
the Companies Act 2006 (the "Act") and best practice. The business review
section of the strategic report discloses the Company's risks and
uncertainties as identified by the board, the key performance indicators used
by the board to measure the Company's performance, the strategies used to
implement the Company's objectives, the Company's environmental, social and
ethical policy and the Company's future developments.
PrincipaL activity
The Company carries on business as an investment trust and its principal
activity is to invest in companies in accordance with the Company's investment
policy with a view to achieving its investment objective.
Strategic and investment policy
Investment Policy
The Company's Investment Policy can be found at page 70 of this Annual Report.
Future developments
While the future performance of the Company is dependent, to a large degree,
on the performance of the Fund which, in turn, is subject to many external
factors, the board's intention is that the Company will continue to pursue its
stated investment objective as outlined on page 2. The Company's future
developments and outlook are discussed in more detail in the Chairman's
Statement on page 4 and the Investment Manager's Report on page 7 - 10.
Premium/Discount management
The board closely monitors the premium or discount at which the Company's ordinary shares trade in relation to the Company's underlying net asset value and takes action accordingly. Throughout the period under review the Company's ordinary shares traded at both a premium and discount to its underlying net asset value. The board is of the view that an increase of the Company's ordinary shares in issue provides benefits to shareholders, including a reduction in the Company's administrative expenses on a per share basis and increased liquidity in the Company's shares.
Whilst the board believes that it is in the shareholders' best interests to
prevent the Company's shares trading at a discount to net asset value as
shareholders will be unable to realise the full value of their investments,
the current trend is for listed investment trusts to trade at a discount to
net asset value. Notwithstanding this current discount to net asset value, the
Company may from time to time acquire its own shares, should there be
sufficient liquidity to do so.
Corporate and operational structure
Operational and portfolio management
The Company has outsourced its operations and portfolio management to various
service providers as detailed below:
· Shard Capital AIFM LLP is appointed as the Company's manager (the
"Manager" or "Investment Manager") and Alternative Investment Fund Manager
("AIFM") for the purposes of the Alternative Investment Fund Managers
Directive ("AIFMD");
· Apex Fund Services (Ireland) Limited is appointed to act as the
Company's administrator;
· Apex Secretaries LLP (formerly Throgmorton Secretaries LLP) is
appointed as the Company's secretary.
· INDOS Financial Limited is appointed as the Company's depositary;
· Computershare Investor Services plc is appointed as the Company's share
registrar;
· Shard Capital Partners LLP is appointed to act as the Company's placing
agent; and
· PKF Littlejohn LLP is appointed to act as the Company's auditors.
Alternative Investment Fund Managers Directive
In accordance with the AIFMD, the Company has appointed Shard Capital AIFM LLP
to act as the Company's AIFM for the purposes of the AIFMD. The AIFM ensures
that the Company's assets are valued appropriately in accordance with the
relevant regulations and guidance. In addition, the Company has appointed
INDOS Financial Limited as depositary, to provide depositary services to the
Company as required by the AIFMD.
Donations
The Company made no political or charitable donations during the period under
review to organisations either within or outside the EU (2021 - none).
Environment, human rights, employee, social and community issues
The Company is required by law to provide details of environmental matters
(including impact of the Company's business on the environment), employee,
human rights, social and community issues (including information about any
policies it has in relation to these matters and the effectiveness of those
policies). The Company does not have any employees and the board comprises
non-executive directors. As an investment trust, its activities do not have a
direct impact on the environment. The Company aims to minimise any detrimental
effect that its actions may have by adhering to applicable social legislation,
and as a result does not maintain specific policies in relation to these
matters.
The Company has no operations and therefore no greenhouse gas emissions to
report nor does it have responsibility for any other emissions producing
sources under the Companies Act 2006 (Strategic Report and Directors Reports)
Regulations 2013, including those within its underlying investment
portfolio. However, the Company believes that high standards of corporate
social responsibility such as the recycling of paper waste will support its
strategy and make good business sense.
In carrying out its investment activities and in relationships with suppliers,
the Company aims to conduct itself responsibly, ethically and fairly.
Modern slavery
Due to the nature of the Company's business, the board does not consider the
Company to be directly within the scope of modern slavery regulations. The
board considers the Company's supply chains, being with professional service
providers within the UK or the EU to be low risk in relation to this matter.
Anti-bribery and corruption
It is the Company's policy to conduct its business in an ethical manner. The
Company takes a zero tolerance approach to bribery and corruption and is
committed to acting professionally, fairly and with integrity in its business
dealings.
Principal Risks and Uncertainties
The board has carried out a robust assessment of its risks and controls as
detailed below. The day-to-day risk management functions of the Company have
been delegated to Shard Capital AIFM LLP (the 'Manager'), which reports to the
board.
OperationaL Risks
Third Party Service Providers
The Company has no employees and the directors have all been appointed on a
non-executive basis. Whilst the Company has taken all reasonable steps to
establish and maintain adequate procedures, systems and controls to enable it
to comply with its obligations, the Company is reliant upon the performance of
third-party service providers for its executive function. In particular, the
Manager, Depositary, Administrator and Registrar amongst others, will be
performing services which are integral to the day-to-day operation, including
IT, of the Company.
The termination of service provision by any service provider, or failure by
any service provider to carry out its obligations to the Company, or to carry
out its obligations to the Company in accordance with the terms of its
appointment, could have a material adverse effect on the Company's operations
and its ability to meet its investment objective.
Mitigation
Day-to-day oversight of third-party service providers is exercised by the
Manager and reported to the board on a quarterly basis. As appropriate to the
function being undertaken, each of the service providers is subject to regular
performance and compliance monitoring. The performance of Shard Capital AIFM
LLP in its duties to the Company is subject to ongoing review by the board on
a quarterly basis as well as formal annual review by the Company's management
engagement committee.
The appointment of each service provider is governed by agreements which
contain the ability to terminate each of these counterparties with limited
notice should they continually or materially breach any of their obligations
to the Company.
Reliance on key individuals
The Company will rely on key individuals at the Manager to identify and select
investment opportunities and to manage the day-to-day affairs of the
Company. There can be no assurance as to the continued service of these key
individuals at the Manager. The departure of key individuals from the Manager
without adequate replacement may have a material adverse effect on the
Company's business prospects and results of operations. Accordingly, the
ability of the Company to achieve its investment objective depends heavily on
the experience of the Manager's team, and more generally on the ability of the
Manager to attract and retain suitable staff.
Mitigation
The interests of the Manager are closely aligned with the performance of the
Company through the management and performance fee structures in place and
direct investment by certain key individuals of the Manager. Furthermore,
investment decisions are made by a team of professionals, mitigating the
impact loss of any single key professional within the Manager's organisation.
The performance of the Manager in its duties to the Company is subject to
ongoing review by the board as well as formal annual review by the management
engagement committee.
Fluctuations in the market price of Issue Shares
The market price of the issued shares may fluctuate widely in response to
different factors and there can be no assurance that the issued shares will be
repurchased by the Company even if they trade materially below their net asset
value. Similarly, the shares may trade at a premium to net asset value
whereby the shares can trade on the open market at a price that is higher than
the value of the underlying assets. There can be no assurance, express or
implied, that shareholders will receive back the amount of their investment in
the issued shares.
Mitigation
The Manager and the board closely monitor the level of discount or premium at
which the shares trade on the open market. Subject to shareholders' approval,
and compliance with the relevant companies legislation, the Company may
purchase the shares in the market with the intention of enhancing the net
asset value per ordinary share, however there can be no assurance that any
purchases will take place or that any purchases will have the effect of
narrowing any discount to net asset value at which the ordinary shares may
trade. When the shares trade at a premium the Company may issue shares to
reduce the premium at which shares trade. As at 31 March 2022 the shares were
trading at a discount to net asset value.
Investments
Achievement of the Investment Objective
There can be no assurance that the Manager will continue to be successful in
implementing the Company's investment objective.
Mitigation
The Company's investment decisions are delegated to the Manager. Performance
of the Company against its investment objectives is closely monitored on an
ongoing basis by the Manager and the board and is reviewed in detail at each
board meeting. Any action required to mitigate underperformance is taken as
deemed appropriate by the Manager.
Borrowing
The Company may use borrowings in connection with its investment activities
including, where the Manager believes that it is in the interests of
shareholders to do so, for the purposes of seeking to enhance investment
returns. Such borrowings may subject the Company to interest rate risk and
additional losses if the value of its investments falls. Whilst the use of
borrowings should enhance the net asset value of the issued shares when the
value of the Company's underlying assets is rising, it will have the opposite
effect where the underlying asset value is falling. In addition, in the
event that the Company's income falls for whatever reason, the use of
borrowings will increase the impact of such a fall on the Company's return and
accordingly will have an adverse effect on the Company's ability to pay
dividends to shareholders.
Mitigation
The Manager and the board closely monitor the level of gearing of the Company.
The Company has a maximum limitation on borrowings of 20% of net asset value
(calculated at the time of borrowing) which the Manager may affect at its
discretion. As at the date of this report, the Company had no borrowings
outstanding.
Liquidity of Investments
The Company expects to have a material level of exposure to unquoted companies
that are aligned with the Company's strategy and that present opportunities to
enhance the Company's return on its investments. Such investments, by their
nature, involve a higher degree of valuation and performance uncertainties and
liquidity risks than investments in listed and quoted securities and they may
be more difficult to realise. The illiquidity of such investments may make it
difficult for the Company to sell them if the need arises and may result in
the Company realising significantly less than the value at which it had
previously recorded such investments. Investments in unlisted equity
securities, by their nature, involve a higher degree of valuation and
performance uncertainties and liquidity risks than investments in listed
securities and therefore may be more difficult to realise.
Mitigation
The Company has established investment restrictions on the extent to which it
can invest up to 15% of net asset value in a single investment. However, this
restriction does not apply to investments in the Fund or any Further Funds or
collective investment vehicles managed by third parties. Compliance with
these restrictions is monitored by the Manager and by the board on an ongoing
basis.
Regulations
Tax
Any changes in the Company's tax status or in taxation legislation could
affect the value of investments held by the Company, affect the Company's
ability to provide returns to shareholders and affect the tax treatment for
shareholders of their investments in the Company.
Mitigation
The Company intends at all times to conduct its affairs so as to enable it to
qualify as an investment trust for the purposes of Chapter 4 of Part 24 of the
Corporation Tax Act 2010. Both the board and the Manager are aware of the
requirements which are to be fulfilled in any accounting period for the
Company to maintain its investment trust status. Adherence to the conditions
required to satisfy the investment trust criteria are monitored by the
compliance function of the Manager and reviewed by the board on a regular
basis.
Breach of applicable legislative obligations
The Company and its third-party service providers are subject to various
legislation and regulations, including, but not limited to The Data Protection
Act 2018 and the General Data Protection Regulation. Any breach of applicable
legislative obligations could have a negative impact on the Company and impact
returns to shareholders.
Mitigation
The Company engages only with third party service providers which hold the
appropriate regulatory approvals for the function they are to perform, and can
demonstrate that they can adhere to the regulatory standards required of
them. Each appointment is governed by agreements which contain the ability
to terminate each of these counterparties with limited notice should they
continually or materially breach any of their legislative obligations, or
their obligations to the Company more broadly. Additionally, each of the
counterparties is subject to regular performance and compliance monitoring by
the Manager, as appropriate to their function, to ensure that they are acting
in accordance with applicable regulations and are aware of any upcoming
regulatory changes which may affect the Company. Performance of third party
service providers is reported to the board on a quarterly basis, whilst the
performance of the Manager in its duties to the Company is subject to ongoing
review by the board on a quarterly basis as well as formal annual review by
the management engagement committee.
Key Performance Indicators
The board monitors success in implementing the Company's strategy against a
range of key performance indicators ("KPIs"), which are viewed as significant
measures of success over the longer term. Although performance relative to the
KPIs is also monitored over shorter periods, it is success over the long term
that is viewed as more important, given the inherent volatility of short-term
investment returns. The principal KPIs are set out below:
KPI Performance
Year ended 31 March 2022 Year ended 31 March 2021
Movement in net asset value per ordinary share Increased by 40.03% Decreased by 0.58%
Premium/discount (after deducting borrowings at fair value) Traded at a discount of 20.87% at the year end Traded at a premium of 14.05% at the year end
Movement in the share price Decreased by 2.9% Decreased by 0.12%
The Company does not currently follow any benchmark. Similarly, Sure Valley
Ventures (the "Fund") does not follow any benchmark. Accordingly, the
portfolio of investments held by the Company and Sure Valley Ventures will not
mirror the stocks and weightings that constitute any particular index or
indices, which may lead to the Company's shares failing to follow either the
direction or extent of any moves in the financial markets generally (which may
or may not be to the advantage of shareholders).
Promoting the success of the Company
Under Section 172 of the Companies Act 2006, the board has a duty to promote
the long-term success of the Company for the benefit of its shareholders as a
whole and, in doing so, have regard to the likely consequences of its
decisions in the long-term upon the Company's other stakeholders and the
environment.
The Company's objective is to achieve capital growth for investors through
exposure to early stage technology companies, with a focus on software-centric
businesses in its chosen target markets.
The board believes that the values of integrity, accountability and
transparency form the basis of the Company's corporate culture and promote
good standards of governance.
The board has identified the Company's main stakeholders to be its
shareholders, Investment Manager and other key service providers. The board
seeks to understand the priorities of its stakeholders and engages with them
through the communication and governance processes that it has put in place.
Shareholders
The board believes that transparent communication with shareholders is
important. In addition to the Annual Report and the Half-yearly Report, the
Company publishes quarterly portfolio updates which are available on the
Company's website together with other information that the board believes
shareholders will find useful. The board welcomes feedback from shareholders
and the Investment Manager provides such feedback to the board on a regular
basis.
During the year, the Company issued 662,500 new ordinary shares in response to
investor demand. The board believes that share issues are in the interests of
shareholders as a whole as they provide additional finance for investment
opportunities, enable the Company's fixed costs to be spread over a wider base
and provide a source of liquidity in the Company's shares.
Investment Manager
The Investment Manager has a fundamental role in promoting the long-term
success of the company. The board regularly reviews the performance of the
investment portfolio at quarterly board meetings and performs a formal annual
evaluation of the performance of the Investment Manager. This contact enables
constructive regular dialogue between the Investment Manager and the board.
Other key service providers
The board believes that strong relationships with its other key service
providers (Company Secretary, Administrator, Depositary and Registrar) are
also important for the long-term success of the Company. There is regular
contact between the board and the Company's other key service providers. The
board performs an annual review of the services provided by the Company
Secretary, Administrator, Depositary and Registrar to ensure that these are in
line with the Company's requirements.
Environmental, Social and Governance ("ESG")
The board and the Investment Manager recognise the importance of the impact of
the Company's decisions and ESG factors are integrated in the investment
process.
Approval
The Strategic Report was approved by the board of directors on 18 July 2022
and signed on its behalf by:
Perry Wilson
Chairman
5 Directors' Report
Board of Directors
Perry Wilson
Chairman of the board and the management engagement committee and a member of
the audit committee.
Perry Wilson (Chairman) (independent)
Perry Wilson is a financial services professional with over 25 years'
experience in investment banking and fund management, responsible for running
portfolio risk positions in global markets. He started his career in
accountancy before joining the asset trading group at Lazard in 1987, focusing
on illiquid credit and structured products and going on to become a director
of the bank.
In 2003 Mr Wilson joined Argo Capital as executive director, an AIM listed
alternative investment fund management firm and was part of a small team of
portfolio managers that oversaw the group's fiftyfold AUM growth to US$1.3bn
at it's height. After leaving Argo in 2010 Mr Wilson joined Integra Capital to
implement a liquid credit strategy before setting up a fixed income sales and
trading operation for a Central Asian investment bank, Visor Capital in 2013.
Since 2015 Mr Wilson has been on the board of a number of UK and offshore
financial services firms and investment funds, as independent non-executive
director, and also acted as chair of trustees for a UK pension plan, providing
corporate governance and oversight utilising his extensive financial markets
background and experience.
St. John Agnew
St. John Agnew
St. John trained as a solicitor and was an in-house Commercial and Banking
Counsel for TSB Bank. His responsibilities included drafting and negotiating
legal documentation in relation to all Bank lending and commercial
arrangements. This included many types of commercial contracts and involved a
close working relationship with the technology team who required advice on a
steady flow of technology contracts.
He became an Investment Manager in 2000 and set up a fund in the Cayman
Islands in 2004 based on Technical Analysis which he successfully operated and
closed in late 2007. He continues to advise on investment and is currently an
Investment Manager registered with Credo Capital with his own private clients.
St.John has also served as Trustee on a Pension fund for a Charity and, using
his legal and investment knowledge, he helped to restructure the board to
allow it to recognise and meet its extensive ongoing Pension obligations. He
is also currently a non-executive director of a food company, The Big Prawn
Company, where he uses his knowledge and experience to help guide this
company.
gareth burchell
Gareth Burchell
Gareth Burchell began his career in the insurance industry and spent three
years at RBS Insurance prior to beginning his career in investment advice and
management. Mr. Burchell is currently Head of Shard Capital Stockbrokers and
chairs an investment committee that specialises in providing funding for both
listed and unlisted small companies. Mr Burchell has had a focus on the small
cap arena for 15 years and he and his team have provided £90 million of
funding across 221 companies. He has an in-depth knowledge of the UK listing
process of various small cap exchanges.
Statutory information
Board members, and directors' and officers' insurance
The names and biographical details of the board members who served on the
board as at the year end can be found on page 19.
During the year under review the Company's directors' and officers' liability
insurance for its directors and officers as permitted by section 233 of the
Companies Act 2006 was covered and maintained by Shard Capital AIFM LLP.
Status of the Company
The Company is an investment company within the meaning of section 833 of the
Companies Act 2006.
The Company operates as an investment trust in accordance with Chapter 4 of
Part 24 of the Corporation Tax Act 2010 and the Investment Trust (Approved
Company) (Tax) Regulations 2011. The Company has obtained its initial approval
as an investment trust from HM Revenue & Customs. In the opinion of the
directors, the Company has conducted its affairs since its initial approval as
an investment trust in order that it is able to maintain its status as an
investment trust.
The Company is an externally managed closed-ended investment company with an
unlimited life and has no employees.
Internal controls and risk management
Details of the Company's principal risks and uncertainties can be found in the
Strategic Report on pages 11 to 17 inclusive of details of the Company's
internal controls. Details of the Company's application of hedging
arrangements, if any, are set out on page 72, the Investment Policy section of
these financial statements.
Share capital - voting and dividend
As at 31 March 2022, the Company had 6,013,225 (2021: 5,350,725) ordinary
shares in issue. There are no other classes of shares in issue and no shares
are held in treasury.
The maximum number of shares which can be admitted to trading on the LSE
without the publication of a prospectus is 20% of the ordinary shares in issue
on a rolling 12 month basis at the time of admission of the shares.
During the year under review a total of 662,500 (2021: 480,769) ordinary
shares were issued as detailed below:
Shares issued Price paid per share (pence) Premium to net asset value (%) ((1))
14 June 2021 662,500 100.00 8.63%
(1) Last published NAV at time of issue
As at 31 March 2022 there were 6,013,225 ordinary shares of 1p in issue. Since
the year end a further 441,860 ordinary shares have been issued.
The ordinary shares carry the right to receive dividends and have one voting
right per ordinary share. There are no shares which carry specific rights with
regard to the control of the Company. The shares are freely transferable.
There are no restrictions or agreements between shareholders on the voting
rights of any of the ordinary shares or the transfer of shares.
The Company has been incorporated with an unlimited life.
On a winding up or a return of capital by the Company, the ordinary
shareholders are entitled to the capital of the Company.
No final dividend is being recommended. The Company's policy is to pay
dividends, if any, on an annual basis, as set out in the Company's prospectus
dated 17 November 2017 and the supplementary prospectus dated 2 January 2018
(the "Prospectus"). There were no dividends paid in respect of the year ended
31 March 2022 (2021 - None).
The Company will pay out such dividends as are required for it to maintain its
investment trust status.
Substantial share interests
The Company has received the following notification in accordance with the
Disclosure and Transparency Rule 5.1.2R of an interest in the voting rights
attaching to the Company's issued share capital.
The Company received a notification on 8 March 2021 that Pires Investments plc
had acquired an interest in 1,500,000 ordinary shares in the Company,
representing 25.0% of the Company's ordinary shares in issue at 31 March 2022.
Independent auditor
The Company's independent auditor, PKF Littlejohn LLP ("PKF"), was appointed
by the members on 16 April 2018 and has expressed its willingness to continue
to act as the Company's auditor for the forthcoming financial year. The audit
committee has carefully considered the auditor's appointment, as required in
accordance with its terms of reference, and, having regard to its
effectiveness and the services it has provided the Company during the period
under review, has recommended to the board that the independent auditor be
appointed at the forthcoming Annual General Meeting ("AGM"). At the AGM
resolutions will be proposed for the appointment of the independent auditor
and to authorise the directors to agree its remuneration for the forthcoming
financial year. In reaching its decision, the audit committee considered the
points detailed on pages 32 to 34 of the Audit Committee's report.
Audit information
As required by section 418 of the Companies Act 2006, the directors who held
office at the date of this report each confirm that, so far as they are aware,
there is no relevant audit information of which the Company's auditor is
unaware and each director has taken all the steps required of a director to
make themselves aware of any relevant audit information and to establish that
the Company's auditor is aware of that information.
Articles of Association
Any amendments to the Company's articles of association must be made by
special resolution.
brexit
The broader impacts of Brexit may have an effect on the financial statements
and operations in the future, though it is not possible to quantify likely
impacts at this stage, any effects will be reflected in the Company's
underlying investments future price movements. The board and all relevant
parties continue to monitor the implications for the Company and implement
certain internal controls to mitigate any risks that may arise in the future.
COVID-19 Pandemic
During the year and subsequent to the year end, the COVID-19 pandemic is
ongoing and causing significant financial market and social dislocation. The
ultimate extent of the effect of this on the Company is uncertain. The
directors are continuing to monitor developments relating to COVID-19 and the
Company continues to coordinate its operational response based on existing
business continuity plans and ongoing guidance from global health
organisations, relevant governments, and general pandemic response best
practices.
Going concern
The directors have reviewed the financial projections of the Company from the
date of this report, which shows that the Company will be able to generate
sufficient cash flows in order to meet its liabilities as they fall due.
Accordingly, the directors are satisfied that the going concern basis remains
appropriate for the preparation of the financial statements. The Company also
has detailed policies and processes for managing the risks, set out in the
Investment Policy on pages 71 to 72.
Viability statement
In accordance with the revised Association of Investment Companies Code of
Corporate Governance published in February 2019 and revised UK Corporate
Governance Code, published by the Financial Reporting Council in July 2018,
the directors have assessed the prospects of the Company over a three-year
period ending March 2025. The board believes this period to be appropriate
taking into account the current trading position and the potential impact of
the principal risks that could affect the viability of the Company. At 31
March 2022, the Company had cash balances of £233,329 (2021: £1,201,153) in
excess of all liabilities. There are therefore limited risks to the viability
of the Company.
Analysis to assess viability has focused on the risks in delivery of the
growth of the business and a series of projections have been considered
changing funding levels and the performance of the assets acquired.
The analysis demonstrates that, the Company would be able to withstand the
impact of the risks identified. Based on the robust assessment of the
principal risks, prospects and viability of the Company, the board confirms
that they have reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due over the
three-year period ending March 2025.
Management and administration
Company Secretary
Apex Secretaries LLP (formerly Throgmorton Secretaries LLP) (the "Company
Secretary") is the company secretary of the Company.
Administrator
Apex Fund Services (Ireland) Ltd (the 'Administrator'), is the administrator
of the Company. The Administrator provides the day-to-day administration of
the Company. The Administrator is also responsible for the Company's general
administrative functions, such as the calculation of the net asset value and
maintenance of the Company's accounting records.
Under the terms of the administration agreement, the Administrator is entitled
to an annual administration fee equal to the greater of: (i) €28,000 per
annum; and (ii) an amount equal to 0.08% of the portion of NAV up to and
including €100 million, 0.06% of the portion of NAV between €100 million
and €200 million and 0.05% of the portion of NAV above €200 million
(exclusive of VAT and out of pocket expenses). The Administrator is also
entitled to reimbursement of all reasonable out of pocket expenses incurred by
it in connection with the performance of its duties. The administration
agreement can be terminated by either party by providing 90 days' written
notice.
Manager
Shard Capital AIFM LLP (the 'Manager'), a UK-based company authorised and
regulated by the Financial Conduct Authority, is the Company's manager and
alternative investment fund manager ("AIFM") for the purposes of the
Alternative Investment Fund Managers Directive ("AIFMD"). The Manager is
responsible for the discretionary management of the Company's assets and
ensures that these are valued appropriately in accordance with the relevant
regulations and guidance.
Under the terms of the management agreement, the Manager is entitled to a
management fee and a performance fee together with reimbursement of reasonable
expenses incurred by it in the performance of its duties. From the period from
first admission, the management fee payable was based on 1.25% of the NAV. The
Manager is also entitled to receive a performance fee equal to 15% of any
excess returns over a high watermark, subject to achieving a hurdle rate of 8%
in respect of each performance period. Further details on the management fee
and the performance fee can be found in Note 4 to the financial statements.
The management agreement can be terminated by either party providing twelve
months' written notice.
Depositary
The Company's depositary is INDOS Financial Limited (the "Depositary"), a
company authorised and regulated by the Financial Conduct Authority. Under the
terms of the depositary services agreement the Depositary is entitled to a
monthly depositary fee equal to the greater of: (i) £2,000 and £2,917 per
month (depending on the activity of the Company); and (ii) an amount equal to
1/12 of 0.03% of NAV (exclusive of VAT and out of pocket expenses). The
depositary services agreement can be terminated by either party by providing
90 days' written notice.
Change of control
There are no agreements which the Company is party to that might be affected
by a change of control of the Company.
Subsequent events
Following the year end, Sure Ventures plc raised gross proceeds of £475,000
by way of a private placing. The ordinary shares were issued at 107.5p per
share, representing the closing mid-price on 31 May 2022.
Future developments
Indications of likely future developments in the business of the Company are
set out in the Strategic Report on pages 11-17.
regulatory disclosures
The disclosures below are made in compliance with the requirements of Listing
Rule 9.8.4.
Listing Rule
9.8.4 (1) - capitalised interest The Company has not capitalised any interest in the year under review.
9.8.4(2) - unaudited financial information The Company has not published any unaudited financial information in either a
class 1 circular or a prospectus or in respect of any profit forecast or
profit estimate in accordance with listing rule 9.2.18.
9.8.4 (3) - deleted This provision has been deleted.
9.8.4 (4) - incentive schemes The Company has no long-term incentive schemes in operation.
9.8.4 (5) and (6) - waiver Gareth Burchell has agreed to waive his director's fee.
9.8.4 (7), (8) and (9) During the year under review, the Company issued a total of 662,500 (2021:
480,769) ordinary shares with a nominal value of £0.01 and an average price
of 100 pence per share for a total consideration of £662,500 (2021:
£475,000) excluding commission and issue costs. Further details can be found
on page 47.
9.8.4 (8) and 9.8.4 (9) - relate to companies that are part of a group of The Company is not part of a group of companies. These particular Listing
companies Rules therefore, do not apply.
9.8.4 (10) - contract of significance During the year under review, there were no contracts of significance
subsisting to which the Company is a party and in which a director of the
Company is or was materially interested or between the Company and a
controlling shareholder.
9.8.4 (11) The Company is not party to any contracts for the provision of services to the
Company by a controlling shareholder.
9.8.4 (12) and (13) - During the year under review, there were no arrangements under which a
shareholder has waived or agreed to waive any dividends or future dividends.
waiving dividends
9.8.4 (14) As set out in the prospectus dated 17 November 2017, the Company has not
voluntarily adopted Listing Rule 9.8.4(14).
By order of the board
Apex Secretaries LLP
Company Secretary
Date: 18 July 2022
Corporate Governance Statement
The corporate governance statement explains how the board has sought to
protect shareholders' interests by protecting and enhancing shareholder value.
The directors are ultimately responsible for the stewardship of the Company
and this section explains how they have fulfilled their corporate governance
responsibilities. This corporate governance statement forms part of the
directors' report.
As set out in the Prospectus, the Company has adopted certain key provisions
of the UK Listing Rules in accordance with the London Stock Exchange (LSE)
listings. Pursuant to the Listing Rules as voluntarily adopted by the Company,
companies must "comply or explain" against each of the provisions of the UK
Corporate Governance Code (the "UK Code") published by the Financial Reporting
Council ("FRC"). The board is committed to high standards of corporate
governance. The Listing Rules and the Disclosure Guidance and Transparency
Rules ("DTR") require companies to disclose how they have applied the
principles and provisions of the UK Code. A copy of the UK Code is available
from the website of the Financial Reporting Council at
https://www.frc.org.uk/directors/corporate-governance-and-stewardship/uk-corporate-governance-code
(https://www.frc.org.uk/directors/corporate-governance-and-stewardship/uk-corporate-governance-code)
.
The Association of Investment Companies ("AIC") has published its own Code on
Corporate Governance (the "AIC Code"). The FRC has confirmed that AIC member
companies who report against the AIC Code will be meeting their obligations in
relation to the UK Code and the associated disclosure requirements of the DTR.
The AIC Code is available from the AIC's website at www.theaic.co.uk.
The board has considered the principles and provisions of the AIC Code. The
AIC Code addresses the principles and provisions set out in the UK Code, as
well as setting out additional principles and provisions on issues that are of
specific relevance to the Company.
The board considers that voluntarily reporting against the principles and
provisions of the AIC Code, which has been endorsed by the Financial Reporting
Council, provides more relevant information to shareholders.
Statement of compliance
The Company has complied with the recommendations of the AIC Code and the
relevant provisions of the UK Code, except as set out below.
The UK Code includes provisions relating to:
· The role of the chief executive;
· Executive directors' remuneration;
· The appointment of a senior independent director; and
· The need for an internal audit function.
The board considers these provisions are not relevant to the Company, being an
externally managed investment company with no executive directors. In
particular, all of the Company's day-to-day management and administrative
functions are outsourced to third parties. As a result, the Company has no
executive directors, employees or internal operations. The Company has
therefore not reported further in respect of these provisions.
In addition, the board does not, at present, consider that separate nomination
and remuneration committees would be appropriate given the board's size, being
three members in total. Currently, decisions concerning the board's
remuneration, nomination and board appraisals are undertaken by the board as a
whole. However, the need for separate nomination and remuneration committees
and an internal audit function will be kept under review.
The Board of Directors
The board consists of three directors, all of whom are non-executive
directors. Biographies of the directors are shown on page 19 and demonstrate
the wide range of skills and experience that they bring to the board. The
directors possess business and financial expertise relevant to the direction
of the Company and consider themselves to be committing sufficient time to the
Company's affairs.
None of the directors has a service contract with the Company, nor are any
such contracts proposed. Each director has been appointed pursuant to a
letter of appointment entered into with the Company. The directors'
appointment can be terminated in accordance with the articles of association
and without compensation. There are no agreements between the Company and any
director which provide for compensation for loss of office in the event that
there is a change of control of the Company.
Copies of the letters of appointment will be available at the AGM.
The Chairman, Perry Wilson, is independent and considers himself to have
sufficient time to commit to the Company's affairs. The Chairman's other
commitments are detailed in his biography on page 19.
The directors have determined that the size of the Company's board does not
warrant the appointment of a senior independent director at this time. All of
the directors are available to address shareholder queries or engage in
consultation as required.
The operation of the Board
The board of directors meets at least four times a year and more often if
required.
The table below sets out the directors' attendance at board and audit
committee meetings held in the financial year ended 31 March 2022, against the
number of meetings each board or audit committee member was eligible to
attend.
Director Board Audit Committee
Perry Wilson 7/7 2/2
Gareth Burchell 7/7 2/2
St. John Agnew 7/7 2/2
No individuals other than the committee or board members are entitled to
attend the relevant meetings unless they have been invited to attend by the
board or relevant committee.
Directors are provided with a comprehensive set of papers for each board or
committee meeting, which equips them with sufficient information to prepare
for the meetings.
The board has a formal schedule of matters specifically reserved to it for
decision to ensure effective control of strategic, financial, operational and
compliance issues, which includes:
· The Company's structure including share issues and setting a
discount/premium management programme;
· Risk management
· Appointing the Manager and other service providers and setting their
fees;
· Approving board changes including the audit committee and management
engagement committee;
· Considering and authorising board conflicts of interest;
· Approving the Company's annual accounts and half yearly accounts
including accounting policies;
· Approving the Company's level of gearing;
· The approval of terms of reference and membership of board committees;
and
· Approving liability insurance.
There is a procedure in place for the directors to take independent
professional advice at the expense of the Company. No such professional
advice has been taken by the directors during the period under review.
The directors' and officers' liability insurance covered by Shard Capital AIFM
LLP shall be maintained for the full term of each director's appointment.
Division of Responsibilities
The Chairman leads the board and is responsible for its overall effectiveness
in directing the Company. He ensures that the directors' views are taken into
consideration as part of the board's decision making process. The Chairman
promotes a culture of openness and debate at the Company's board meetings and
ensures that an appropriate amount of time is devoted to each matter on the
agenda for the board's consideration. He ensures that the board receives
accurate, timely and clear information in order for the directors to discharge
their duties. The Chairman is also available to facilitate the board's
relations with shareholders and the Company's other stakeholders.
The Company has established audit and management engagement committees which
deal with matters determined by terms of reference issued by the board.
The board ensures that an appropriate amount of time is spent on board
matters. The board receives papers ahead of board meetings, which are reviewed
by the directors to enable them to participate effectively and efficiently at
meetings. Other information is received by the board between meetings and
input is provided by board members as required.
Independence of Directors
Each of Perry Wilson and St. John Agnew were considered, on appointment, to be
independent of Shard Capital AIFM LLP and free from any business or other
relationship that could materially interfere with the exercise of his
independent judgement and remained so throughout the financial year under
review.
Gareth Burchell is a member of the Shard Capital AIFM LLP investment committee
and is therefore not considered to be independent. Mr. Burchell is also
currently Head of Shard Capital Stockbrokers and chairs an investment
committee that specialises in providing funding for both listed and unlisted
small companies. The board believes that having Mr. Burchell on the board is
beneficial to the board as it provides the board with added insight on the
Company's investment portfolio. Mr. Burchell does not participate in
discussions on, or vote on, matters where there would be a conflict or
potential conflict of investment, including but not limited, the evaluation of
the Investment Manager.
There are no other relationships or circumstances relating to the Company that
are likely to affect the judgement of any of the directors.
Composition
The board believes that during the year ended 31 March 2022, its composition
was appropriate for an investment company of the Company's nature and size.
Care will be taken at all times to ensure that the board is composed of
members who, as a whole, have the required knowledge, abilities and experience
to properly fulfil their role and are sufficiently independent.
Directors' interests
No director holds shares in the Company.
Board evaluation
The most recent board evaluation was completed in July 2022. The results of
the evaluation were reviewed by the Chairman and discussed with the board. The
conclusions from the board evaluation demonstrated that the directors showed
the necessary commitment for effective fulfilment of their duties.
Board training and induction
The Company Secretary, the board or the Manager upon request of the board or
any director individually, will offer induction training to new directors
about the Company, its key service providers, the directors' duties and
obligations and other matters as may be relevant from time to time.
The board members are encouraged to keep up to date and attend training
courses on matters which are directly relevant to their involvement with the
Company.
Board appointment, election and tenure
The rules concerning the appointment and replacement of directors are
contained in the Company's articles of association and the Companies Act 2006.
The board takes into account the requirements of the AIC Code with regards to
tenure. The board recognises the benefits to the Company of having longer
serving directors together with progressive refreshment of the board. None of
the directors consider length of service as an impediment to independence or
good judgement but, if they felt that this had become the case, the relevant
director would stand down. The Company was incorporated in June 2017,
therefore no director has served for more than nine years. The board is
currently developing a succession plan.
The directors of the Company and their biographies are set out on page 19. At
the forthcoming AGM, in accordance with the AIC Code, all members of the board
will put themselves forward for re-election.
The board considers that all of the current directors contribute effectively
to the operation of the board and the strategy of the Company. The board has
considered each board member's independence of the Company and Manager. As
such the board believes that it is in the best interests of shareholders that
each of the directors be re-elected.
Basis of Directors' appointment
Consideration is given to the recommendations of the AIC Code on diversity.
The board seeks to appoint new directors on the basis of merit as a primary
consideration, with the aim of bringing an appropriate range of skills,
diversity and experience together.
Management agreement and continuing appointment
Details of the Manager's agreement and fees are set out in note 4 to the
financial statements.
The board keeps the performance of the Manager under continual review through
the Company's management engagement committee. The most recent evaluation of
the Manager was completed on July 2022, following which the board has
concluded that due to its specialist knowledge of the sectors in which the
Company invests and the Company's performance to date, the continuing
appointment of the Manager is in the best interests of shareholders as a
whole.
Conflicts of interest
The articles of association provide that the directors may authorise any
actual or potential conflict of interest that a director may have, with or
without imposing any conditions that they consider appropriate on the
director. Directors are not able to vote in respect of any contract,
arrangement or transaction in which they have a material interest, and, in
such circumstances, they are not counted in the quorum at the relevant board
meeting. A process has been developed to identify any of the directors'
potential or actual conflicts of interest. This includes declaring any
potential new conflicts before the start of each board meeting.
Audit Committee
The board has delegated certain responsibilities to its audit committee. The
committee comprises two or more independent directors. The Chairman of the
board may be a member of the committee and due to the size of the board, the
Chairman of the board, Perry Wilson acts as chairman of the Audit Committee.
The board has established formal terms of reference for the audit committee
which are available from the Company Secretary upon request. An outline of the
remit of the audit committee and its activities during the year are set out
below.
The audit committee is chaired by Perry Wilson and meets at least twice a
year. It is responsible for ensuring that the financial performance of the
Company is properly reported and monitored and provides a forum through which
the Company's external auditor may report to the board. The audit committee
reviews and recommends to the board the annual and half-yearly reports and
financial statements, financial announcements, internal control systems, risk
metrics, decisions requiring a significant element of judgement and procedures
and accounting policies of the Company.
Further details on the work of the audit committee can be found in the report
of the audit committee on pages 32 - 34.
Management Engagement Committee
The Chairman of the Company acts as chairman of the management engagement
committee. The management engagement committee meets once a year. Its
principal duties are to formally review the actions and judgements of the
Manager, the terms of its management agreement and to review the performance
and services of the Company's other key service providers. The committee
reports to the board on its proceedings after it's meeting.
The most recent evaluation of the Manager and other key service providers was
completed July 2022.
The terms of reference of the committee are available from the Company
Secretary.
Company secretary
The board has direct access to the advice and services of the Company
Secretary, which is responsible for ensuring that the board and Committee
procedures are followed, and that applicable rules and regulations are
complied with. The Company Secretary is also responsible for ensuring good
information flows between all parties.
Review of shareholder profile
The board reviews reports provided by qualified independent industry
consultants and Shard Capital Partners LLP on the Company's shareholder base
and its underlying beneficial owners. The Manager and Shard Capital Partners
LLP disclose any concerns raised by shareholders to the board.
Stewardship responsibilities and the use of voting rights
The Financial Reporting Council (FRC) introduced a Stewardship Code which sets
out the responsibilities of institutional shareholders in respect of investee
companies. Under the Stewardship Code, Managers should:
· Publicly disclose their policy on how they will discharge their
stewardship responsibilities to their clients;
· Disclose their policy on managing conflicts of interest;
· Monitor their investee companies;
· Establish clear guidelines on how they escalate evaluation;
· Be willing to act collectively with other investors where appropriate;
· Have a clear policy on proxy voting and disclose their voting record;
and
· Report to clients.
The Company recognises that with respect to its equity assets one of the
important obligations that it has as a shareholder is the right to vote on
issues submitted to shareholders. These issues may include the election of
directors and other important matters that affect the structure of the
investee company. The Manager acts on behalf of the Company in these matters
and will exercise its voting rights, supported by independent providers, if
considered appropriate.
Relations with shareholders
The notice of Annual General Meeting ("AGM") will be sent out separately in
due course. The notice of the AGM, which is sent out at least 21 clear days
in advance of the AGM, sets out the business of the meeting and any item not
of an entirely routine nature is explained in the directors' report. Separate
resolutions are proposed in respect of each substantive issue.
Any questions that shareholders wish to raise at the AGM can be emailed to
info@sureventuresplc.com and the board and/or the Manager will respond as
appropriate.
Proxy voting figures will be published on the Company's website following the
AGM.
The Manager holds regular discussions with major shareholders, the feedback
from which is provided to and greatly valued by the board. The directors are
available to enter into dialogue and correspondence with shareholders
regarding the progress and performance of the Company. Further information
about the Company can be found on the Company's website
http://www.sureventuresplc.com (http://www.sureventuresplc.com) .
Internal control review
The board has elected not to have an internal audit function as the Company
delegates its operations to third-party service providers and does not employ
any staff. Instead it has been agreed that the Company will rely on the
internal controls which exist within its third-party providers.
The Administrator, Depositary and Manager have established internal control
frameworks to provide reasonable assurance on the effectiveness of the
internal controls operated on behalf of their clients. The Manager, the
Administrator, the Depositary and the Company Secretary will report on any
breaches of law or regulation, if and when they arise, periodically in
scheduled board reports. The audit committee considers annually whether there
is any need for an internal audit function, and it has agreed that it is
appropriate for the Company to rely on the internal audit controls which exist
within its third-party providers.
The board keeps under review the effectiveness of the Administrator and the
Manager's systems of internal control and risk management. During the period
under review, the board has not identified any significant failings or
weaknesses in the internal control systems of its service providers. Details
of the Company's risks can be found on pages 14 to 16 of the Strategic Report,
together with an explanation of the controls that have been established to
manage each risk. The risk matrix provides a basis for the audit committee and
the board to regularly monitor the effective operation of the controls and to
update the matrix when new risks are identified.
The system of internal control and risk management is designed to meet the
Company's particular needs and the risks to which it is exposed. The board
recognises that these control systems can only be designed to manage, rather
than eliminate, the risk of failure to achieve business objectives and to
provide reasonable, but not absolute, assurance against material misstatement
or loss.
Alternative Investment Fund Management Directive Disclosure
Quantitative remuneration disclosure
In accordance with 3.3.5 (5) of the Financial Conduct Authority's Investment
Funds Sourcebook ("FUND") and in accordance with the Financial Conduct
Authority's Finalised guidance - General guidance on the AIFM Remuneration
Code (SYSC 19B) ('the Guidelines'), dated January 2014, the total amount of
remuneration paid by or paid to Shard Capital AIFM LLP, for the financial
period to the 31 March 2022 in respect of the Company was £87,219. The Shard
Capital AIFM LLP out of its own resources decided to pay rebates out of the
management fee. For the financial period to the 31 March 2022, the Company
incurred rebate income from Shard Capital AIFM LLP £87,219. There was no
performance fee payable in respect of the year ended 31 March 2022. Shard
Capital AIFM LLP does not consider that any individual member of staff or
partner of Shard Capital AIFM LLP has the ability to materially impact the
risk profile of the Company.
Other disclosures
The AIFMD requires that Shard Capital AIFM LLP ensures that certain other
matters are actioned and or reported to investors. Each of these is set out
below:
· Provision and content of an annual report (FUND 3.3.2 and 3.3.5). The
publication of the annual report and accounts of the Company satisfies these
requirements.
· Material change of information. The AIFMD requires certain information
to be made available to investors in the Company before they invest and
requires that material changes to this information be disclosed in the annual
report.
Periodic disclosure (FUND 3.2.5 and 3.2.6)
There are no assets subject to special arrangements due to their illiquid
nature and no new arrangements for the managing of the liquidity of the
Company.
There is no change to the arrangements, as set out in the Prospectus, for
managing the Company's liquidity.
The current risk profile of the Company is set out in the Strategic Report:
Principal Risks and Uncertainties on pages 14 to 16 and in note 15 of the
Financial Statements, 'Financial Risk Management'.
The Company is permitted to be leveraged and the table below sets out the
current maximum permitted and actual leverage.
As a percentage of net asset value Gross method Commitment method
Maximum level of leverage 100% 150%
Leverage as at 31 March 2022 97% 101%
There have been no breaches of the permitted leverage limits within the
reporting period and no changes to maximum level of leverage employed by the
Company.
Other matters
Shard Capital AIFM LLP has confirmed that all required reporting to the
Financial Conduct Authority has been undertaken in accordance with FUND 3.4.
Approval
This Report was approved by the board of directors on 18 July 2022.
On behalf of the board
Perry Wilson
Chairman
Report of the Audit Committee
As chairman of the audit committee I am pleased to present the audit committee
report for the year ended 31 March 2022.
Membership of the Audit Committee
As the board is small with only three members, St. John Agnew and Perry Wilson
are both appointed members of the audit committee. As chairman of the audit
committee, I can confirm that I have relevant financial experience to fulfil
my obligations in this capacity.
The role of the Audit Committee
The role of the audit committee is defined in its terms of reference, which
can be obtained from the Company Secretary.
In summary, the role of the audit committee includes the following:
· To monitor the financial reporting process;
· To review and monitor the integrity of the half-year and annual
financial statements and review and challenge where necessary the accounting
policies and judgements of the Manager and Administrator;
· To review the adequacy and effectiveness of the Company's internal
financial and internal control and risk management systems;
· To make recommendations to the board on the re-appointment or removal
of the external auditor and to approve its remuneration and terms of
engagement;
· To review and monitor the external auditor's independence and
objectivity; and
· To review and consider on an annual basis the need for an internal
audit function.
Matters considered during the year
The audit committee has met twice during the year under review and considered
the following items:
· The Company's audit plan with the external auditor;
· The policy on non-audit services; and
· The dividend policy.
The Audit Committee also reviewed the following items:
· Whether there was a requirement for an internal audit function;
· The Company's risk matrix and the internal controls implemented to
manage those risks; and
· The appropriateness of the Company's accounting policies and whether
appropriate estimates and judgements have been made.
UK non-audit services
In relation to non-audit services, the audit committee has reviewed and
implemented a policy on the engagement of the auditor to supply non-audit
services and this is reviewed on an annual basis. All requests or applications
for other services to be provided by the auditor are submitted to the audit
committee and will include a description of the services to be rendered and an
anticipated cost. The Company's policy follows the requirements of the
Financial Reporting Council's Revised Ethical Standard 2019. The policy
specifies a number of prohibited services which it is not permitted for the
auditor to provide under the revised Ethical Standard.
For the year ended 31 March 2022, there were no non-audit services rendered to
the Company and none for the year ended 31 March 2021.
The audit committee reviewed the level of non-audit services and were
satisfied that the auditors maintained their independence.
Significant accounting matters
The audit committee met on 14 July 2022 to review the report and accounts for
the year to 31 March 2022. The audit committee considered the following
significant issues, including principal risks and uncertainties in light of
the Company's activities and issues communicated by the auditors during their
review, all of which were satisfactorily addressed:
Issues considered How the issue was addressed
Retention of investment trust status The audit committee received assurance from the Company's Investment Manager
that the Company has remained compliant with the requirements to maintain its
investment trust status. The directors regularly review the investments and
their mix to ensure they remain diversified, its retained income levels to
ensure sufficient distributions are made and the Company's shareholdings to
determine if the Company has become a close company.
Risk of misappropriation of assets and ownership of investments The audit committee reviews reports from its service providers on key controls
over the assets of the Company. Any significant issues are reported to the
board by the Manager and/ or the Company's Depositary. The Manager has put
in place procedures to ensure that investments can only be made to the extent
that the appropriate contractual and legal arrangements are in place to
protect the Company's assets. The Company's Depositary issues a quarterly
report on the status of the assets to the directors for review.
The risk that income is overstated, incomplete or inaccurate through failure The board regularly reviews income forecasts. The external audit includes
to recognise proper income entitlements or to apply the appropriate accounting checks on the completeness and accuracy of income and also checks that this
treatment for recognition of income. has been recognised in accordance with stated accounting policies.
The risk that valuation of the Investments held may be not be correct. The audit committee receives assurance from the Company's Administrators and
Manager that the Company's valuation policy is followed at all times.
External auditor
The Company's external auditor, PKF Littlejohn LLP ("PKF"), was appointed
pursuant to the engagement letter dated 11 May 2022. The audit committee
intends to re-tender within the timeframe set by the Financial Reporting
Council.
The individual at PKF who acts as the Company's appointed audit partner is Ian
Cowan, whose appointment is reviewed annually. In accordance with UK
legislation, the audit partner must rotate at least every five years. As this
is Ian Cowan's fifth year as audit partner, he will be due to rotate out of
this role following the completion of the audit for the year ended 31 March
2022.
The audit fees for the period under review can be found in note 5 to the
financial statements on page 55.
The audit committee monitors the auditor's objectivity and independence on an
ongoing basis. In determining PKF's independence, the audit committee has
assessed all relationships with PKF and received confirmation from PKF that it
is independent and that no issues of conflicts arose during the period. The
audit committee is therefore satisfied that PKF is independent.
The audit committee monitors and reviews the effectiveness of the external
audit process on an annual basis and makes recommendations to the board on its
re-appointment, remuneration and terms of engagement of the auditor. The
audit committee has met with the audit partner and assessed PKF's performance
to date and to discuss the Company's audit and other matters concerning the
Company. I can confirm that Ian Cowan did not raise any issues of concern
during our meeting. The review has involved an examination of the auditor's
remuneration, the quality of its work including the quality of the audit
report, the quality of the audit partner and audit team, the expertise of the
audit firm and the resources available to it, the identification of audit
risk, the planning and execution of the audit and the terms of engagement.
The audit committee has direct access to the Company's auditor and provides a
forum through which the auditor reports to the board. Representatives of PKF
attend the audit committee meetings at least twice annually.
Internal audit
The audit committee believes that the Company does not require an internal
audit function, principally because the Company delegates its day-to-day
operations to third parties, which are monitored by the audit committee, and
which provide control reports on their operations at least annually.
This report was approved by the audit committee on 14 July 2022.
Perry Wilson
Chairman of the Audit Committee
Statement of Directors' Responsibilities
The directors are responsible for preparing the Annual Report, the directors'
remuneration report and the financial statements in accordance with applicable
law and regulations.
Applicable law requires the directors to prepare financial statements for each
financial year. As such the directors have prepared the financial statements
in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006. 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 of the Company and of the 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 judgements and accounting estimates that are reasonable and
prudent;
· state whether applicable international 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 are responsible for the maintenance and integrity of the
Company's website. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in other
jurisdictions.
The directors consider that the Annual Report and financial statements, taken
as a whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess a company's performance, business model
and strategy.
Each of the directors, whose names and functions are listed in the directors'
report, confirms that, to the best of their knowledge:
· the financial statements, which have been prepared in accordance with
international accounting standards in conformity with the requirements of the
Companies Act 2006, give a true and fair view of the assets, liabilities,
financial position and profit of the Company;
· the Strategic Report 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;
· so far as the director is aware, there is no relevant audit information
of which the Company's auditors are unaware; and
· they have taken all the steps that they ought to have taken as a
director in order to make themselves aware of any relevant audit information
and to establish that the Company's auditors are aware of that information.
Directors' Remuneration Report
Statement from the Chairman
I am pleased to present the directors' remuneration report for the year ended
31 March 2022, prepared in accordance with The Large and Medium-sized
Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 and
the Companies Act 2006. The Company's auditor is required to verify certain
information within this report subject to statutory audit by the Companies Act
2006. Where information set out below has been audited it is indicated as
such.
We are required to seek shareholder approval of the directors' remuneration
policy at least every third year and the remuneration report annually. Any
changes to the directors' remuneration policy will require shareholder
approval. The Company's remuneration policy is set out below and was last
approved by shareholders at the AGM held in September 2020. An ordinary
resolution to approve the directors' remuneration policy will be put to
shareholders at least once every three years. At the AGM, shareholders will
also be asked to consider an advisory resolution on the contents of the
directors' remuneration report.
As at 31 March 2022, the board comprised three non-executive directors, two of
whom are independent of the Manager.
Given the size of the board, and as the Company has no employees, it is not
considered appropriate for the Company to establish separate remuneration and
nomination committees. It is, therefore, the Company's practice for the board
to consider and approve directors' remuneration. Post incorporation of the
Company, Directors' fees are set at the rate of £26,100 per director per
annum for Perry Wilson and St. John Agnew. Prior to the Company's
incorporation, Directors' fees were set at the rate of £24,000 per director
per annum for Perry Wilson. Gareth Burchell has agreed to waive his director's
fee.
As the board's fees were considered prior to its listing as an investment
company, the appointment of external remuneration consultants was not
considered necessary. Furthermore, the board took the decision not to revise
the board's fees because they did not feel it was appropriate, given the
Company's short existence. Many parts of the Large and Medium-sized
Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 do
not apply to the Company as the board is comprised entirely of non-executive
directors and the Company has no employees.
Directors' remuneration policy
The remuneration policy was approved at the Company's Annual General Meeting
held on 15 September 2021, with all shareholders present voting in favour of
the resolution on a show of hands.
The maximum fees for the board as a whole are limited by the Company's
Articles of Association to £300,000 per annum. Subject to this limit, the
board's policy is that remuneration of non-executive directors should reflect
the experience of the board member and the time commitment required by board
members to carry out their duties, and is determined with reference to the
appointment of directors of similar investment companies. The level of
remuneration has been set with the aim of promoting the future success of the
Company. With this in mind the board considers remuneration in order to
attract individuals of a calibre appropriate to promote the long-term success
of the Company and to reflect the specific circumstances of the Company and
its field of investment, the duties and responsibilities of the directors and
the value and amount of time commitment required of directors to the Company's
affairs.
Due regard is taken of the board's requirement to attract and retain
individuals with suitable knowledge and experience and the role that
individual directors fulfil. There are no specific performance-related
conditions attached to the remuneration of the board and the board members are
not eligible for bonuses, pension benefits, share options, long-term incentive
schemes or other non-cash benefits or taxable expenses. No other payments
are made to directors other than reasonable out-of-pocket expenses which have
been incurred as a result of attending to the affairs of the Company.
In addition to the board's remuneration, board members are entitled to such
fees as they may determine in respect of any extra or special services
performed by them, having been called upon to do so. Such fees would only be
incurred in exceptional circumstances. An example of such a circumstance would
be if the Company was to undertake a corporate action, which would require the
board to dedicate additional time to review associated documents and to attend
additional meetings. Such fees would be determined at the board's absolute
discretion and would be set at a similar rate to other comparable investment
companies who have undertaken equivalent activities. The fees would be set
with the Company's long-term success in mind and the interests of the
Company's members as a whole would be considered prior to the setting of such
fees.
The directors are entitled to be paid all expenses properly incurred by them
in attending meetings with shareholders or other directors or otherwise in
connection with the discharge of their duties as directors. Shareholders have
the opportunity to express their views in respect of directors' remuneration
at the Company's AGM. The Company has not sought shareholder views on its
remuneration policy. Any comment volunteered by shareholders on the
remuneration policy will be carefully considered and appropriate action taken.
No communications have been received from shareholders on the Company's
remuneration policy.
The Company's remuneration policy and its implementation are reviewed by the
board as a whole on an annual basis. Directors do not vote on their own
fees. Reviews are based on third parties' information on the fees of other
similar investment trusts.
None of the directors has a service contract with the Company, nor are any
such contracts proposed. Instead, directors are appointed pursuant to a
letter of appointment entered into with the Company. There is no notice period
specified in the letters of appointment or articles of association for the
removal of directors. Directors are not appointed for a specific term. Copies
of the directors' letters of appointment are available at each of the
Company's AGMs.
The directors are not entitled to exit payments and are not provided with any
compensation for loss of office.
As with most investment trusts there is no chief executive officer and no
employees. The Company's remuneration policy will apply to new board members,
who will be paid the equivalent amount of fees as current board members
holding similar roles.
Voting at 15 September 2021
As stated above an ordinary resolution for the approval of the proposed
directors' remuneration policy was last approved by shareholders at the AGM
held in September 2021.
The directors' remuneration report, including the implementation of the
directors' remuneration policy, is subject to an annual advisory vote via an
ordinary resolution. An advisory vote is a non-binding resolution. At the
Meeting of the Company held on 15 September 2021, the vote to approve the
Directors' Remuneration Report was passed with all shareholders presented
voted in favour of the relation by a show of hand and the resolution was
passed.
Directors' fees (audited)
Single total aggregate directors' remuneration for the year under review was
£52,200 (2021 £52,200). The directors who served during the year under
review received the following emoluments:
Director Fees paid during the Taxable Non-taxable Total year to
year under review
benefits
benefits
31 March 2022
(1 April 2021 to 31 March 2022)
St. John Agnew £26,100 £- £- £26,100
Perry Wilson (Chair) £26,100 £- £- £26,100
Total £52,200 £- £- £52,200
Director Fees paid during the Taxable Non-taxable Total year to
year under review
benefits
benefits
31 March 2021
(1 April 2020 to 31 March 2021)
St. John Agnew £26,100 £- £- £26,100
Perry Wilson (Chair) £26,100 £- £- £26,100
Total £52,200 £- £- £52,200
No payments were made to past directors for loss of office. In the absence of
further major increases in the workload and responsibility involved, the board
does not expect fees to increase significantly over the next three years. The
overall remuneration of each director will continue to be monitored by the
board, taking into account those matters referred to in the annual statement
above. The Company did not pay any other benefits including bonuses, pension
benefits, share options, long-term incentive schemes or other non-cash
benefits or taxable benefits.
The Company has not made any loans to the directors, nor has it ever provided
any guarantees for the benefit of any director or the directors collectively
nor does it intend to.
Company Performance
The board is responsible for the Company's investment strategy and
performance, although day-to-day management of the Company's affairs,
including the management of the Company's portfolio, has been delegated to
third-party service providers. An explanation of the performance of the
Company is given in the Chairman's statement and the Investment Manager's
report on pages 4 and 10.
Expenditure by the Company on Directors' remuneration compared with distributions to shareholders
The following table is provided in accordance with The Large and Medium-sized
Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 which
sets out the relative importance of spend on pay in respect of the year ended
31 March 2022. The table shows the remuneration paid to directors for the
period under review, compared to the distribution payments to shareholders.
Year from
1 April 2021 to 31 March 2022
Total remuneration paid to Directors £52,200
Shareholder distribution - dividends or share buybacks £-
Year from
1 April 2020 to 31 March 2021
Total remuneration paid to Directors £52,200
Shareholder distribution - dividends or share buybacks £-
Directors' interests (audited)
The Company does not have any requirement for any director to own shares in
the Company.
As at 31 March 2022, the directors do not hold shares in the Company.
There have been no changes to any holdings between 31 March 2022 and the date
of this report.
The Annual Report on remuneration was approved by the board on 18 July 2022
and signed on its behalf by:
Perry Wilson
Chairman
6 Independent Auditor's Report
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SURE VENTURES PLC
Opinion
We have audited the financial statements of Sure Ventures plc (the 'company')
for the year ended 31 March 2022 which comprise the Income Statement, the
Statement of Financial Position, the Statement of Changes in Equity, the
Statement of Cash Flows and notes to the financial statements, including
significant accounting policies. The financial reporting framework that has
been applied in their preparation is applicable law and UK-adopted
international accounting standards.
In our opinion, the financial statements:
· give a true and fair view of the state of the company's affairs
as at 31 March 2022 and of its profit for the year then ended;
· have been properly prepared in accordance with UK-adopted
international accounting standards; and
· have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the company in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the FRC's Ethical
Standard as applied to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the company's ability to continue to adopt the going concern
basis of accounting included:
a. reviewing management's assessment of going concern, including
reviewing and challenging any management assessment immediately following the
approval of the financial statements. Our review focussed on the levels of
expenditure and anticipated investor commitments over the twelve months
following the approval of the financial statements and whether the Directors
had demonstrated that the Company has sufficient funds available to meet these
obligations.;
b. reviewing the impact of external factors such as the continuing
Covid-19 pandemic and the Ukraine crisis and we have not noted any significant
impact to the business to date.;
c. determining if all relevant information was included in
management's assessment of going concern; and
d. reviewing the company's ongoing maintenance of its investment trust
status.
In relation to the entity's reporting on how they have applied the UK
Corporate Governance Code, we have nothing material to add or draw attention
to in relation to the directors' statement in the financial statements about
whether the director's considered it appropriate to adopt the going concern
basis of accounting.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the company's ability to continue
as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Our application of materiality
We define materiality as the magnitude of misstatement, including omission,
either individually or in aggregate, that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or
influenced. Importantly, misstatements below this level will not necessarily
be evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstance of their occurrence, when
evaluating their effect on the financial statements. We use materiality both
in planning the scope of our audit work and in evaluating the results of our
work.
Based on our professional judgement, we determine materiality
for the financial statements as a whole as follows:
Year ended 31 March 2022 Year ended 31 March 2021
Materiality £77,000 £49,250
Basis for determining materiality Materiality was determined on the basis of 1% of net assets in both years.
Rationale for the benchmark applied In both years, we used net assets as the benchmark for materiality given the
nature of the business, which is asset focused, particularly in respect of the
following:
· the value of the invested assets;
· the level of judgement inherent in the valuation; and
· the range of reasonable alternative valuations.
We believe that using a materiality based on this benchmark reflects the
critical underlying measures of the company given net assets is the critical
element of the business.
We also determine a level of performance materiality which we use to assess
the extent of testing needed to reduce to an acceptably low level the
probability that the aggregate of uncorrected and undetected misstatements
exceeds materiality for the financial statements as a whole. Performance
materiality is set based on the audit materiality as adjusted for the
judgements made as to the entity risk and our evaluation of the specific risk
of each audit area having regards to the internal control environment. In this
respect, performance materiality was set to 70% of the above materiality
levels, to £53,900 (2021: £34,475).
There were no revisions in materiality during the course of the audit.
We agreed with the Audit Committee that we would report to the Committee all
audit differences in excess of £3,850 (2021: £2,462) as well as differences
below that threshold that, in our view, warranted reporting on qualitative
grounds. We also report to the Audit Committee on disclosure matters that we
identified when assessing the overall presentation of the financial
statements.
Our approach to the audit
Our audit approach was developed by obtaining and understanding of the
company's activities and the overall control environment. Based on this
understanding, we assessed those aspects of the company's transactions and
balances which were most likely to give rise to a material misstatement and
were most susceptible to irregularities including fraud or error. We looked at
areas involving significant accounting estimates and judgement by the
directors, being the valuation of investments held at fair value through
profit or loss, as detailed within our Key Audit Matter, and considered future
events that are inherently uncertain. We also addressed the risk of management
override of internal controls, including evaluating whether there was evidence
of bias by the directors that represented a risk of material misstatement due
to fraud. We identified what we considered to be key audit matters in the next
section and planned our audit approach accordingly.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key Audit Matter How the scope of our audit addressed this matter
The valuation of investments held at fair value through profit or loss (Note Our work in this area included:
8)
· Considering the design and implementation of controls in place
The valuation of investments at 31 March 2022 was £7,516,667 (2021: over the valuation of investments.
£3,724,611) consisting of a portfolio of listed, unlisted and fund
investments. · Reviewing the assumptions and underlying evidence supporting the
year-end valuations to ensure that they were in line with UK-adopted
international accounting standards.
The valuation of the assets held in the investment portfolio is the key driver · Obtaining an understanding of the valuation process applied by
of the company's net asset value. Incorrect investment valuations could the company.
materially affect the overall investment portfolio valuation and subsequently
the return generated for the shareholders. · Agreeing the value of the company's investment in the Sure Valley
Ventures Fund to the Fund's audited financial statements for the year ended 31
March 2022.
The investments valued at fair value through profit or loss in the company's · Reviewing the valuation methodology applied for each investment
non-current assets at the year-end are largely driven by the audited Net Asset and considered whether it was appropriate based on the investment's individual
Value ('NAV') of the investee Fund's portfolio. circumstances and not inconsistent with observed industry best practice and
the provisions of the International Private Equity and Venture Capital
Valuation Guidelines.
The Investee Fund has holdings in private equity companies, being Level 3 · Agreeing all inputs which drive the overall valuation to source
investments that are valued according to a specific investment methodology. documentation.
· Considering the adequacy, appropriateness and relevance of
disclosures in accordance with IFRS 9 and IFRS 13.
As the investments are material to the overall performance of the company and
significant judgement is applied in valuing these, there is a risk that the
underlying investments are inappropriately valued.
Based on the procedures performed, we concluded that the valuations
attributable to the company's investments were reasonable.
Other information
The other information comprises the information included in the annual report,
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors' remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the strategic report and the directors'
report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
· the strategic report and the directors' report have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its
environment obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not visited by us;
or
· the financial statements and the part of the directors'
remuneration report to be audited are not in agreement with the accounting
records and returns; or
· certain disclosures of directors' remuneration specified by law
are not made; or
· we have not received all the information and explanations we
require for our audit.
Corporate governance statement
We have reviewed the directors' statement in relation to going concern,
longer-term viability and that part of the Corporate Governance Statement
relating to the company's compliance with the provisions of the UK Corporate
Governance Code specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each
of the following elements of the Corporate Governance Statement is materially
consistent with the financial statements or our knowledge obtained during the
audit:
· Directors' statement with regards the appropriateness of adopting
the going concern basis of accounting and any material uncertainties
identified set out on page 22;
· Directors' explanation as to their assessment of the entity's
prospects, the period this assessment covers and why the period is appropriate
set out on page 22;
· Directors' statement on whether they have a reasonable
expectation that the company will be able to continue in operation and meet
its liabilities set out on page 22;
· Directors' statement that they consider the annual report and the
financial statements, taken as a whole, to be fair, balanced and
understandable set out on page 35;
· Board's confirmation that it has carried out a robust assessment
of the emerging and principal risks set out on page 14;
· The section of the annual report that describes the review of
effectiveness of risk management and internal control systems set out on page
30; and
· The section describing the work of the audit committee set out on
page 32.
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the company or
to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
· We obtained an understanding of the company and the sector in
which it operates to identify laws and regulations that could reasonably be
expected to have a direct effect on the financial statements. We obtained our
understanding in this regard through discussions with management, industry
research, application of cumulative audit knowledge and experience of listed
entities and the investment trust sector.
· We determined the principal laws and regulations relevant to the
company in this regard to be those arising from Companies Act 2006, the
Listing Rules, UK-adopted international accounting standards, the Company's
qualification as an investment trust under section 1158 of the Corporation Tax
Act 2010, UK tax law, UK Corporate Governance Code and Disclosure and
Transparency Rules.
· We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by the company
with those laws and regulations. These procedures included, but were not
limited to:
o Reviewing the financial statement disclosures and testing to supporting
documentation to assess compliance with the relevant laws and regulations
discussed above;
o Using appropriate checklists and application of cumulative audit knowledge
and experience of the sector to assess the company's compliance with the
relevant laws and regulations discussed above;
o Reviewing minutes of meetings of those charged with governance;
o Reviewing RNS announcements; and
o Reviewing any legal or regulatory correspondence.
All engagement team members were briefed on relevant laws and regulations and
potential fraud risks at the planning stage of the audit and reconsidered
these throughout the audit and at the completion stage. However, the primary
responsibility for the prevention and detection of fraud rests with those
charged with governance of the company.
· We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to the
non-rebuttable presumption of a risk of fraud arising from management override
of controls, that the potential for management bias which could materially
impact the financial statements existed in the following areas:
o Valuation of the investments held at fair value through profit or loss;
and
o Revenue recognition.
We addressed the risk of bias by challenging the key assumptions and
judgements made by management in each of the above noted areas.
o As in all of our audits, we addressed the risk of fraud arising from
management override of controls by performing audit procedures which included,
but were not limited to: the testing of journals; reviewing accounting
estimates for evidence of bias; and evaluating the business rationale of any
significant transactions that are unusual or outside the normal course of
business.
Because of the inherent limitations of an audit, there is a risk that we will
not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation.
This risk increases the more that compliance with a law or regulation is
removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of
non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) . This description forms part
of our auditor's report.
Other matters which we are required to address
We were appointed by the members on 16 April 2018 to audit the financial
statements for the period ending 31 March 2018 and subsequent financial
periods. Our total uninterrupted period of engagement is five years, covering
the periods ending 31 March 2018 to 31 March 2022.
The non-audit services prohibited by the FRC's Ethical Standard were not
provided to the company and we remain independent of the company in conducting
our audit.
Our audit opinion is consistent with the additional report to the audit
committee.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we
are required to state to them in an auditor's report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone, other than the company and the company's members as
a body, for our audit work, for this report, or for the opinions we have
formed.
Ian Cowan (Senior Statutory Auditor)
15 Westferry Circus
For and on behalf of PKF Littlejohn
LLP
Canary Wharf
Statutory
Auditor
London E14 4HD
18 July 2022
7 Financial Statements
Income Statement
For the year ended 31 March 2022
2022 2021
Notes Revenue Capital Total Revenue Capital Total
£
£
£
£
£ £
Income
Gains on disposal of investments - 128,800 128,800 - 79,883 79,883
Other net changes in fair value on financial assets at fair value through - 2,359,478 2,359,478 - 178,793 178,793
profit or loss
Rebate management fee 87,219 - 87,219 63,311 - 63,311
Total net income 87,219 2,488,278 2,575,497 63,311 258,676 321,987
Expenses
Management fee 4 (84,576) (2,643) (87,219) (47,869) (15,442) (63,311)
Custodian, secretarial and administration fees (106,458) - (106,458) (98,625) - (98,625)
Other expenses 5 (185,363) - (185,363) (195,456) - (195,456)
Total operating expenses (376,397) (2,643) (379,040) (341,950) (15,442) (357,392)
Profit/(loss) before taxation and after finance costs (289,178) 2,485,635 2,196,457 (278,639) 243,234 (35,405)
Taxation 6 - - - - - -
Profit/(loss) after taxation (289,178) 2,485,635 2,196,457 (278,639) 243,234 (35,405)
Earnings/(deficit) per share 7 (4.92) 42.28 37.36 (5.26) 4.60 (0.67)
The total column of this statement represents the Income statement prepared in
accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006. The supplementary revenue return and
capital return columns are both prepared under guidance issued by the
Association of Investment Companies. All items in the above statement derive
from continuing operations.
The Company does not have any income or expense that is not included in the
income statement for the year. Accordingly, the net profit/(loss) for the year
is also the Total Comprehensive Income for the year, as defined in IAS 1
(revised).
The notes on pages 51 to 64 form an integral part of the financial statements.
Statement of Financial Position
As at 31 March
2022
Company No. 10829500
Notes 31 March 2022 31 March 2021
£
£
Non-current assets
Investments held at fair value through profit or loss 8 7,516,667 3,724,611
7,516,667 3,724,611
Current assets
Receivables 9 1,600 -
Cash and cash equivalents 282,178 1,255,199
283,778 1,255,199
Total assets 7,800,445 4,979,810
Current liabilities
Other payables 10 (48,849) (54,046)
(48,849) (54,046)
Total assets less current liabilities 7,751,596 4,925,764
Total net assets 7,751,596 4,925,764
Shareholders' funds
Ordinary share capital 11 60,132 53,507
Share premium 5,768,780 5,146,030
Revenue reserves (1,315,688) (1,026,510)
Capital reserves 3,238,372 752,737
Total shareholders' funds 7,751,596 4,925,764
Net asset value per share 12 128.91p 92.06p
The notes on pages 51 to 64 form an integral part of the financial statements.
The financial statements on pages 46 to 64 were approved by the board of
directors and authorised for issue on 18 July 2022.
They were signed on its behalf by:
Perry Wilson, Chairman
Statement of Changes in Equity
For the year ended 31 March 2022
Ordinary Share Revenue Capital Total Total
Share Premium Reserves Reserves Reserves Equity
Capital £ £ £ £ £
£
Balance at 1 April 2021 53,507 5,146,030 (1,026,510) 752,737 (273,773) 4,925,764
Ordinary shares issued 6,625 655,875 - - - 662,500
Ordinary shares issue costs - (33,125) - - - (33,125)
Profit/(loss) after taxation - - (289,178) 2,485,635 2,196,457 2,196,457
Dividends paid in the year - - - - - -
Balance at 31 March 2022 60,132 5,768,780 (1,315,688) 3,238,372 1,922,684 7,751,596
For the year ended 31 March 2021
Ordinary Share Revenue Capital Total Total
Share Premium Reserves Reserves Reserves Equity
Capital £ £ £ £ £
£
Balance at 1 April 2020 48,699 4,699,588 (747,871) 509,503 (238,368) 4,509,919
Ordinary shares issued 4,808 470,192 - - - 475,000
Ordinary shares issue costs - (23,750) - - - (23,750)
(Loss)/profit after taxation - - (278,639) 243,234 (35,405) (35,405)
Dividends paid in the year - - - - - -
Balance at 31 March 2021 53,507 5,146,030 (1,026,510) 752,737 (273,773) 4,925,764
As at 31 March 2022 the Company had distributable revenue reserves of £Nil
(2021: £Nil). The distributable reserves are the capital reserves £881,667
(2021: £572,154).
The notes on pages 51 to 64 form an integral part of the financial statements.
Statement of Cash Flows
For the year ended 31 March 2022
Notes For the year ended For the year ended
31 March 2022 31 March 2021
£
£
Cash flows from operating activities:
Profit/(loss) after taxation 2,196,457 (35,405)
Adjustments for:
Gain on sale on investment (128,800) (79,883)
(Increase)/decrease in receivables (1,600) 18,620
Decrease in payables 10 (5,197) (233,816)
Unrealised loss on foreign exchange 8 50,284 119,496
Net changes in fair value on financial assets at fair value through profit or 8 (2,409,762) (298,289)
loss
Net cash (outflow) from operating activities (298,618) (509,277)
Cash flows from investing activities:
Purchase of investments 8 (1,693,939) (534,171)
Sales of investments 8 390,161 146,796
Net cash (outflow) from investing activities (1,303,778) (387,375)
Cash flows from financing activities*:
Proceeds from issue of ordinary shares 662,500 475,000
Share issue costs (33,125) (23,750)
Net cash inflow from financing activities 629,375 451,250
Net change in cash and cash equivalents (973,021) (445,402)
Cash and cash equivalents at the beginning of the year 1,255,199 1,700,601
Net cash and cash equivalents 282,178 1,255,199
*The Company has no borrowings or liabilities from financing activities.
The notes on pages 51 to 64 form an integral part of the financial statements.
Notes to the Financial Statements
1) Principal Accounting Policies
Basis of accounting
The financial statements of Sure Ventures plc (the "Company") have been
prepared in accordance with UK-adopted international accounting standards in
accordance with the requirements of the Companies Act 2006.
The principal accounting policies adopted by the Company are set out below.
Where presentational guidance set out in the Statement of Recommended Practice
('SORP') for investment trusts issued by the Association of Investment
Companies ('AIC') in October 2019 is consistent with the requirements of the
applicable international accounting standards, the directors have sought to
prepare the financial statements on a basis compliant with the recommendations
of the SORP.
The financial statements have been prepared on a going concern basis under
the historical cost convention, as modified by the inclusion of investments
and financial instruments at fair value through profit or loss.
All values are rounded to the nearest pound unless otherwise indicated.
Foreign Currency
The presentation currency of the Company is pounds sterling ("£"), the
financial statements are prepared in this currency in accordance with the
Company's prospectus. The Company is required to nominate a functional
currency, being the currency in which the Company predominantly operates. The
board has determined that sterling is the Company's functional currency.
Foreign exchange gains and losses relating to the financial assets and
liabilities carried at fair value through profit or loss are presented in the
income statement within 'other net changes in fair value on financial assets
and financial liabilities at fair value through profit or loss'.
Presentation of Income statement
In order to better reflect the activities of an investment trust 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.
Income
Dividend income from investments is recognised when the Company's right to
receive payment has been established, normally the ex-dividend date.
Interest income in profit or loss in the income statement includes bank
interest. Interest income is recognised on an accruals basis.
Capital distributions and all changes in fair value of investments held at
fair value through profit or loss are recognised in the capital column of the
income statement.
Expenses
All expenses are accounted for on the 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:
Transaction costs which are incurred on the purchases or sales of investments
designated as fair value through profit or loss are expensed to capital in the
income statement under other expenses.
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 management fee for the financial year
has been allocated 96.97% (2021: 75.61%) to revenue and 3.03% (2021: 24.39%)
to capital, in order to reflect the directors' long term view of the nature of
the expected investment returns of the Company.
Capital Reserves
Increases and decreases in the valuation of investments and
realised/unrealised foreign exchange gain/(loss) held at the year end are
accounted for in the capital reserves. This reserve includes the proportion of
expenses that have been presented as capital items in the Income Statement.
Taxation
In line with the recommendations of the SORP, the allocation method used to
calculate tax relief on expenses presented against capital returns in the
supplementary information in the income statement is the 'marginal basis'.
Under this basis, if taxable income is capable of being entirely offset by
expenses in the revenue column of the income statement, then no tax relief is
transferred to the capital return column.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit and is accounted for using the statement of financial position
liability method. Deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised. Deferred tax is
charged or credited in the revenue return column of the Income statement,
except when it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity.
Investment trusts which have approval under Part 24, Chapter 4 of the
Corporation Tax Act 2010 are not liable for taxation on capital gains.
Classification
Financial assets and financial liabilities
In accordance with international accounting standards and in conformity with
the requirements of the Companies Act 2006., the Company has designated its
investments as financial assets at fair value through profit or loss.
i) Financial assets at fair value through profit or loss
The Company has designated all of its investments upon initial recognition as
"financial assets at fair value through profit or loss". Their performance is
evaluated on a fair value basis, in accordance with the risk management and
investment strategies of the Company.
ii) Financial assets at amortised cost
Financial assets that are classified as "financial assets at amortised cost"
include cash and cash equivalents and receivables.
iii) Financial liabilities at fair value through profit or loss
Financial liabilities that are not at fair value through profit or loss
include other payables.
Derecognition
Financial assets are derecognised when the rights to receive cash flows from
the financial assets have expired or where the group has transferred
substantially all risks and rewards of ownership. If substantially all the
risks and rewards have been neither retained nor transferred and the group has
retained control, the assets continue to be recognised to the extent of the
group's continuing involvement. Financial liabilities are derecognised when
they are extinguished.
Investments
All investments held by the Company are held at fair value through profit or
loss ("FVPL") but are also described in these financial statements as
investments held at fair value, and are valued in accordance with the
International Private Equity and Venture Capital Valuation Guidelines
('IPEVCV') issued in December 2018 as endorsed by the British Private Equity
and Venture Capital Association.
Purchases and sales of unlisted investments are recognised when the contract
for acquisition or sale becomes unconditional.
Receivables
Receivables do not carry any interest and are short term in nature. They are
initially stated at their nominal value and reduced by appropriate allowances
for estimated irrecoverable amounts (if any).
Cash and cash equivalents
Cash and cash equivalents (which are presented as a single class of asset on
the Statement of Financial Position) comprise cash at bank and in hand and
deposits with an original maturity of three months or less. The carrying value
of these assets approximates to their fair value.
Payables
Payables are non-interest bearing.
Dividends
Interim dividends are recognised in the year in which they are paid. Final
dividends are recognised when they have been approved by shareholders.
New standards, amendments and interpretations effective from 1 April 2021
New or amended accounting standards and interpretations that have been issued
and are effective from 1 April 2021
Up to the date of issue of these financial statements, the IASB has issued new
and amended accounting standards and interpretations which are effective for
the year beginning 1 April 2021 and which have been adopted in these financial
statements.
Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS
7, IFRS 4 and IFRS 16)
The amendments address reform of an interest rate benchmark, including the
effects of changes to contractual cash flows or hedging relationships arising
from the replacement of an interest rate benchmark with an alternative
benchmark rate. The amendments provide practical relief from certain
requirements in IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 relating to:
- changes in the basis for determining contractual cash flows of financial
assets, financial liabilities and lease liabilities; and
- hedge accounting.
There was no impact of adopting these amendments for the Company.
New or revised accounting standards and interpretations that have been issued
but not yet effective for the year ended 31 March 2022
The following new standards, amendments to standards and interpretations have
been issued to date and are not yet effective for the year ended 31 March 2022
and have not been applied nor early adopted, where applicable in preparing
these financial statements.
Effective for accounting period beginning on or after
Amendments to IFRS 3 - Business Combinations: Reference to the Conceptual 1 January 2022
Framework
Amendments to IAS 37 - Provisions, Contingent Liabilities and Contingent
Assets: Onerous contracts - cost of fulfilling a contract
1 January 2022
Annual improvements to IFRS Standards 2018-2020 1 January 2022
Amendments to IAS 1 - Presentation of Financial Statements and Practice
Statement 2: Disclosure of accounting policies
1 January 2023
Amendments to IAS 8 - Accounting Policies, Changes in Accounting Estimates and 1 January 2023
Errors: Definition of accounting estimate
The Directors of the Company anticipate that the adoption of these new
standards, interpretations and amendments that were in issue at the date of
authorisation of these financial statements will have no material impact on
the financial statements in the year of initial application.
CAPITAL STRUCTURE
Share Capital
Ordinary shares are classed as equity. The ordinary shares in issue have a
nominal value of one penny and carry one vote each.
Share Premium
This reserve represents the difference between the issue price of shares and
the nominal value of shares at the date of issue, net of related issue costs.
Capital Reserve
Unrealised gains and losses on investments held at the year end arising from
movements in fair value, and realised gains and losses on disposal of
investments are taken to the capital reserve. This reserve includes the
proportion of expenses that have been presented as capital items in the Income
Statement.
Revenue Reserve
Net revenue profits and losses of the Company.
2) Significant Accounting Judgements, Estimates and Assumptions
The preparation of financial statements in conformity with international
accounting standards in conformity with the requirements of the Companies Act
2006. requires the Company to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported amounts of
assets and liabilities at the date of the financial statements and the
reported amounts of income and expenses during the reporting year. Although
these estimates are based on the directors' best knowledge of the amount,
actual results may differ ultimately from those estimates.
The areas requiring a higher degree of judgement or complexity and areas where
assumptions and estimates are significant to the financial statements are in
relation to investments at fair value through profit or loss described below.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimates are revised and in any future periods affected.
Equity Investments
The unquoted equity assets are valued on a periodic basis using techniques
including a market approach, costs approach and/or income approach. The
valuation process is collaborative, involving the finance and investment
functions within the Manager with the final valuations being reviewed by the
Manager's valuation committee.
Shareholders should note that increases or decreases in any of the inputs in
isolation may result in higher or lower fair value measurements. Changes in
fair value of all investments held at fair value are recognised in the income
statement as a capital item. On disposal, realised gains and losses are also
recognised in the income statement.
3) Segmental Reporting
The Company's board and the Investment Manager consider investment activity in
selected equity assets as the single operating segment of the Company, being
the sole purpose for its existence. No other activities are performed.
The directors are of the opinion that the Company is engaged in a single
segment of business and operations of the Company are wholly in the United
Kingdom.
4) Management and Performance Fee
Management Fee
The management fee is payable quarterly in advance at a rate equal to 1/4 of
1.25% per month of net asset value (the ''Management Fee''). The aggregate fee
payable on this basis must not exceed 1.25% of the net assets of the Company
in any year.
During the year the Company incurred £87,219 (2021: £63,311) of fees and at
31 March 2022, there was £Nil (2021: £Nil)
payable to the Manager.
Management fee is allocated to revenue and capital expenses in order to
reflect the directors' long term view of the nature of the expected investment
returns of the Company. The revenue expense is the percentage of investment
held at fair value through profit or loss to the net asset value of the
Company. The management fee for the financial year has been allocated 96.97%
(2021: 75.61%) to revenue and 3.03% (2021: 24.39%) to capital. During the year
the Company incurred £87,219 (2021: £63,311) Management fee rebate.
Performance Fee
The Manager is entitled to a performance fee, which is calculated in respect
of each twelve month period starting on 1 April and ending on 31 March in each
calendar year ('Calculation Period'), and the final Calculation Period shall
end on the day on which the management agreement is terminated or, if earlier,
the business day immediately preceding the day on which the Company goes into
liquidation.
The Manager is entitled to receive a performance fee equal to 15% of any
excess returns over a high watermark, subject to achieving a hurdle rate of 8%
in respect of each performance period. There is no performance fee charged
during the year ended 31 March 2022 (2021: £Nil).
5) Other Expenses
For the year For the year
ended ended
31 March 2022 31 March 2021
£
£
Auditor's remuneration - audit fees 22,800 22,700
Directors' fees 52,200 52,200
VAT Expense 30,843 26,954
Legal and other professional 22,890 19,039
Listing fees 37,671 50,689
Service fee expense 8,556 8,987
Other expenses 10,403 14,887
Total Other expenses 185,363 195,456
All expenses are inclusive of VAT where applicable. Further details on
directors' fees can be found in the directors' remuneration report on page 36.
6) Taxation
As an investment trust the Company is exempt from corporation tax on capital
gains. The Company's revenue income is subject to tax, but offset by any
interest distribution paid, which has the effect of reducing that corporation
tax to Nil (2021: Nil). This means the interest distribution may be
taxable in the hands of the Company's shareholders.
Any change in the Company's tax status or in taxation legislation generally
could affect the value of investments held by the Company, affect the
Company's ability to provide returns to shareholders, lead the Company to lose
its exemption from UK Corporation tax on chargeable gains or alter the
post-tax returns to shareholders. It is not possible to guarantee that the
Company will remain a non-close company, which is a requirement to maintain
status as an investment trust, as the ordinary shares are freely transferable.
The Company, in the event that it becomes aware that it is a close company, or
otherwise fails to meet the criteria for maintaining investment trust status,
will as soon as reasonably practicable, notify shareholders of this fact.
The Company has obtained initial approval of investment trust status from HM
Revenue & Customs and the directors believe that the Company has met the
ongoing investment trust requirements since the date of initial approval.
Factors affecting taxation charge for the year
The taxation charge for the year is lower than the standard rate of UK
corporation tax of 19.00% (2021: 19.00%). A reconciliation of the taxation
charge based on the standard rate of UK corporation tax to the actual taxation
charge is shown below.
31 March 2022 Revenue Capital Total
£
£
£
Return on ordinary activities before taxation (289,178) 2,485,635 2,196,457
Return on ordinary activities before taxation multiplied by the standard rate (54,944) 472,271 417,327
of UK corporation tax of 19.00%
Effects of:
Excess management expenses (utilised)/ not utilised 54,944 (472,271) (417,327)
Total tax charge in income statement - - -
31 March 2021 Revenue Capital Total
£
£
£
Return on ordinary activities before taxation (278,639) 243,234 (35,405)
Return on ordinary activities before taxation multiplied by the standard (52,941) 46,214 (6,727)
rate of UK corporation tax of 19.00%
Effects of:
Excess management expenses not utilised 52,941 (46,214) 6,727
Total tax charge in income statement - - -
Overseas taxation
The Company may be subject to taxation under the tax rules of the
jurisdictions in which it invests, including by way of withholding of tax from
interest and other income receipts. Although the Company will endeavour to
minimise any such taxes this may affect the level of returns to shareholders.
Factors that may affect future tax charges
At 31 March 2022, the Company had unrelieved losses of £1,389,993 (2021:
£1,098,173) available to offset future taxable revenue. A deferred tax asset
of £347,498 (2021: £208,653) has not been recognised because the Company is
not expected to generate sufficient taxable income in future periods in excess
of the available deductible expenses and accordingly, the Company is unlikely
to be able to reduce future tax liabilities through the use of existing
surplus losses.
The 2022 deferred tax asset not recognised has been calculated at 25% (2021:
19%), being the substantively enacted corporation tax rate expected to be
applicable at the date of reversal of the Company's unrelieved losses, should
this reversal occur. Due to historic reallocations of income statement items
between those of a revenue nature and a capital nature, the comparative
unrelieved losses and deferred tax asset not recognised have been restated.
Deferred tax is not provided on capital gains and losses arising on the
revaluation or disposal of investments because the Trust meets (and intends to
continue for the foreseeable future to meet) the conditions for approval as an
Investment Trust company.
7) Earnings per Share
For the financial year ended 31 March 2022 Revenue Capital Total
pence
pence
pence
Earnings per ordinary share (4.92p) 42.28p 37.36p
The calculation of the above is based on revenue returns of (£289,178),
capital returns of £2,485,635 and total returns of £2,196,457 and the
weighted average number of ordinary shares of 5,878,910 as at 31 March 2022.
For the financial period ended 31 March 2021 Revenue Capital Total
pence
pence
pence
Earnings per ordinary share (5.26p) 4.60p (0.67p)
The calculation of the above is based on revenue returns of (£278,639),
capital returns of £243,234 and total returns of (£35,405) and the weighted
average number of ordinary shares of 5,293,033 as at 31 March 2021.
8) Fair Value Measurements
(a) Movements in the year
As of 31 March 2022 As of 31 March 2021
£
£
Opening cost
Opening fair value 3,724,611 3,078,560
Purchases at cost 1,693,939 534,171
Sale (261,361) (66,913)
Realised gain/(loss) 2,773 (1,790)
Unrealised gain 2,406,989 300,079
Unrealised (loss) on foreign exchange (50,284) (119,496)
Closing fair value at 31 March 2022 and 2021 7,516,667 3,724,611
(b) Accounting classifications and fair values
IFRS 13 requires the Company to classify its financial instruments held at
fair value using a hierarchy that reflects the significance of the inputs used
in the valuation methodologies. These are as follows:
· Level 1 - quoted prices in active markets for identical investments;
· Level 2 - other significant observable inputs (including quoted prices
for similar investments, interest rates, prepayments, credit risk, etc.); and
· Level 3 - significant unobservable inputs (including the Company's own
assumptions in determining the fair value of investments).
The following sets out the classifications used as at 31 March 2022 in valuing
the Company's investments:
Carrying amount Fair value
31 March 2022 Mandatorily at FVTPL Financial assets at amortised cost Other financial liabilities Total carrying amount Level 1 Level 2 Level 3 Total
£ £ £ £ £ £ £ £
Investments in quoted equity assets 183,841 - - 183,841 183,841 - - 183,841
Investments in unquoted equity assets 7,332,826 - - 7,332,826 - - 7,332,826 7,332,826
7,516,667 - - 7,516,667 183,841 - 7,332,826 7,516,667
Financial assets not measured at fair value
Cash and cash equivalents - 282,178 - 282,178
Receivables - 1,600 - 1,600
- 283,778 - 283,778
Financial liabilities not measured at fair value
Other payables - - 48,849 48,849
- - 48,849 48,849
Carrying amount Fair value
31 March 2021 Mandatorily at FVTPL Financial assets at amortised cost Other financial liabilities Total carrying amount Level 1 Level 2 Level 3 Total
£ £ £ £ £ £ £ £
Investments in quoted equity assets 406,172 - - 406,172 406,172 - - 406,172
Investments in unquoted equity assets 3,318,439 - - 3,318,439 - - 3,318,439 3,318,439
3,724,611 - - 3,724,611 406,172 - 3,318,439 3,724,611
Financial assets not measured at fair value
Cash and cash equivalents - 1,255,199 - 1,255,199
- 1,255,199 - 1,255,199
Financial liabilities not measured at fair value
Other payables - - 54,045 54,045
- - 54,045 54,045
9) Receivables
31 March 2022 31 March 2021
£
£
Prepayments 1,600 -
Total receivables 1,600 -
The above receivables do not carry any interest and are short term in nature.
The directors consider that the carrying values of these receivables
approximate their fair value.
10) Other Payables
31 March 2022 31 March 2021
£
£
Accruals and deferred income 48,849 54,046
Total other payables 48,849 54,046
The above payables do not carry any interest and are short term in nature. The
directors consider that the carrying values of these payables approximate
their fair value.
11) Ordinary Share Capital
The table below details the issued share capital of the Company as at the date
of the Financial Statements.
Issued and allotted No. of shares No. of shares £
31 March 2022
31 March 2021
£
Ordinary shares of 1 penny each 6,013,225 60,132 5,350,725 53,507
The following table details the subscription activity for the year ended 31
March 2022.
31 March 2022 31 March 2021
Balance as at 1 April 2021 5,350,725 4,869,956
Ordinary shares issued 662,500 480,769
Balance as at 31 March 2022 6,013,225 5,350,725
During the year ended 31 March 2022 and 2021, all proceeds from this issue
were received.
12) Net Asset Value per Ordinary Share
Year ended 31 March 2022 Year ended 31 March 2021
Year ended 31 March 2022 Net asset Net assets Net asset Net assets
value per
attributable
value per
attributable
ordinary share
£
ordinary share
£
Pence
Pence
Ordinary shares of 1 penny each 128.91p 7,751,596 92.06p 4,925,764
The net asset value per ordinary share is based on net assets at the year
ended of £7,751,596 (2021: £4,925,764) and on 6,013,225 (2021: 5,350,725)
ordinary shares in issue at the year end.
13) Contingent Liabilities and Capital Commitments
The Company may invest in Sure Valley Ventures, Sure Valley Ventures Enterprise Capital LP or other collective investment vehicles, subscriptions to which are made on a commitment basis. The Company will be expected to make a commitment that may be drawn down, or called, from time to time at the discretion of the Manager of the other collective investment vehicle. The Company will usually be contractually obliged to make such capital call payments and a failure to do so would usually result in the Company being treated as a defaulting investor by the collective investment vehicle.
The Company has to satisfy capital calls on its commitments and will do through a combination of reserves, and where applicable the realisation of Cash and Cash Equivalents and Liquid Investments (as each expression is defined in the prospectus dated 17 November 2017), anticipated future cash flows to the Company, the use of borrowings and, potentially, further issues of Shares.
As of 31 March 2022, the Company had outstanding commitments in relation to the Sure Valley Ventures in the amount of €1.4 million (2021: €3.3 million) and for Sure Valley Ventures Enterprise Capital LP in the amount of £4.9 million (2021: £Nil)
14) Related Party Transactions and Transactions with the Manager
Directors - The remuneration of the directors is set out in the directors'
remuneration report on page 36. There were no contracts subsisting during or
at the end of the year in which a director of the Company is or was interested
and which are or were significant in relation to the Company's business.
There were no other transactions during the year with the directors of the
Company. The directors do not hold any ordinary shares of the Company.
At 31 March 2022, there was £1,445 (2021: £1,441) payable to the Her
Majesty's Revenue and Customs ("HMRC") for taxes on the Directors' fees and
expenses.
Manager - Shard Capital AIFM LLP (the 'Manager'), a UK-based company
authorised and regulated by the Financial Conduct Authority, has been
appointed the Company's manager and authorised Investment Fund Manager for the
purposes of the Alternative Investment Fund Managers Directive. Details of the
services provided by the manager and the fees paid are given in Note 4.
During the year the Company incurred £87,219 (2021: £63,311) of fees and at
31 March 2022, there was £Nil (2021: £Nil) payable to the Manager.
During the year the Company paid £33,125 (2021: £23,750) of placement fees
to Shard Capital Partners LLP.
The Company paid Corporate broking retainer fees of £12,000 (2021:£12,000)
(excluding VAT) to Shard Capital Partners LLP during the year ended 31 March
2022.
The Company has an investment in Sure Valley Ventures, the sub-fund of Suir
Valley Funds ICAV and Sure Valley Ventures Enterprise Capital LP, amounting to
£6,443,656 and £95,000 respectively.
15) Financial Risk Management
The Company's investment objective is to achieve capital growth for investors
pursuant to the investment policy outlined in the prospectus, this involves
certain inherent risks. The main financial risks arising from the Company's
financial instruments are market risk, credit risk and liquidity risk. The
board reviews and agrees policies for managing each of these risks as
summarised below.
Market risk
Market risk is the risk that the fair value of future cash flows of a
financial instrument will fluctuate. Market risk comprises three types of
risk, price risk, interest rate risk and currency risk.
· Price risk - the risk that the fair value or future cash flows of
financial instruments will fluctuate because of changes in market prices
(other than those arising from interest rate risk or currency risk);
· Interest rate risk - the risk that the fair value or future cash flows
of financial instruments will fluctuate because of changes in market interest
rates; and
· Currency risk - the risk that the fair value or future cash flows of
financial instruments will fluctuate because of changes in foreign exchange
rates.
The Company's exposure, sensitivity to and management of each of these risks
is described below. Management of market risk is fundamental to the Company's
investment objective. The investment portfolio is continually monitored to
ensure an appropriate balance of risk and reward within the parameters of the
investment restrictions outlined in the prospectus.
(a) Price risk
Price risk arises mainly from uncertainty about future prices of financial
instruments used in the Company's business. It represents the potential loss
the Company might suffer through holding market positions in the face of price
movements (other than those arising from interest rate risk or currency risk)
specifically in equity investments purchased in pursuit of the Company's
investment objective, held at fair value through the profit and loss.
As at 31 March 2022 the Company held two direct private equity investments in
the participating shares of Sure Valley Ventures (formerly Suir Valley
Ventures), a sub-fund of Suir Valley Funds ICAV and VividQ Limited. (2021: the
Company held two direct private equity investments in the participating shares
of Sure Valley Ventures (formerly Suir Valley Ventures), a sub-fund of Suir
Valley Funds ICAV and VividQ Limited).
As at 31 March 2022 and 2021 the investment in Sure Valley Ventures (formerly
Suir Valley Ventures) is valued at the net asset value of the sub-fund, as
calculated by its administrator. As at 31 March 2022 and 2021, the investment
in VividQ Limited is valued at the last round of investment.
At 31 March 2022, had the fair value of investments strengthened by 10% with
all other variables held constant, net assets attributable to holders of
participating shares would have increased by £751,667 (2021: £372,461). A
10% weakening of the market value of investments against the above would have
resulted in an equal but opposite effect on the above financial statement
amounts to the amounts shown above, on the basis that all other variables
remain constant. Actual trading results may differ from this sensitivity
analysis and the difference may be material.
(b) Interest rate risk
Interest rate risk arises from the possibility that changes in interest rates
will affect future cash flows or the fair values of financial instruments.
The Company currently employs no borrowings.
The Company finances its operations mainly through its share capital and
reserves, including realised gains on investments.
Exposure of the Company's financial assets and liabilities to floating
interest rates (giving cash flow interest rate risk when rates are reset) and
fixed interest rates (giving fair value risk) as at 31 March 2022 and 31 March
2021 is shown below:
31 March 2022 31 March 2021
Financial instrument Floating Rate Fixed or Total Floating Rate Fixed or Total
£
Administered Rate
£
£
Administered Rate
£
£
£
Cash and cash equivalents - 282,178 282,178 - 1,255,199 1,255,199
Total exposure - 282,178 282,178 - 1,255,199 1,255,199
An administered rate is not like a floating rate, movements in which are
directly linked to LIBOR. The administered rate can be changed at the
discretion of the counterparty.
(c) Currency risk
As at 31 March 2022 the Company's largest investment is denominated in Euros
whereas its functional and presentation currency is Pounds sterling.
Consequently, the Company is exposed to risks that the exchange rate of its
currency relative to Euros may change in a manner that has an adverse effect
on the fair value of the Company's assets.
At the reporting date the carrying value of the Company's financial assets and
liabilities held in individual foreign currencies as a percentage of its net
assets were as follows:
Foreign currency exposure as a percentage of net assets 31 March 2022 31 March 2021
Euros 83% 57%
Sensitivity analysis
If the Euro exchange rates increased/decreased by 10% against Pounds sterling, with all other variables held constant, the increase/decrease in the net asset attributable to the Company arising from a change financial assets at fair value through profit or loss, which are denominated in Euros, would have been +/- £644,366 (2021: +/- £281,844).
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.
The Company's credit risks arise principally through cash deposited with banks, which is subject to risk of bank default.
The Company ensures that it only makes deposits with institutions with
appropriate financial standing.
Due to the low credit risk of the financial assets at amortised cost, the
expected credit loss ("ECL") was determined to be immaterial and no impairment
was recognised on the Fund in the year ended 31 March 2022.
Liquidity risk
Liquidity risk is the risk that the Company will have difficulty in meeting its obligations in respect of financial liabilities as they fall due.
The Company manages its liquid resources to ensure sufficient cash is available to meet its expected contractual commitments. It monitors the level of short-term funding and balances the need for access to short-term funding, with the long-term funding needs of the Company.
Capital Management
The Company's capital is represented by ordinary shares and reserves.
The Company's primary objectives in relation to the management of capital are:
· to maximise the long-term capital growth for its shareholders pursuant to its investment objective;
· to ensure its ability to continue as a going concern.
The Company manages its capital structure and liquidity resources to meet its
obligations as described above.
Borrowing limits
Pursuant to the prospectus dated 17 November 2017 the Company can deploy gearing up to 20% of the net asset value of the Company (calculated at the time of borrowing) to seek to enhance returns and for the purpose of capital flexibility and efficient portfolio management. During the year ended 31 March 2022 and 2021 the Company employed no gearing.
16) Ultimate Controlling Party
It is the opinion of the directors that there is no ultimate controlling
party.
17) Events after the Reporting Period
Subsequent to the year end up till the date of signing these financial
statements, the Company had the following significant events:
· Following the year end, Sure Ventures plc raised gross proceeds
of £475,000 by way of a private placing. The ordinary shares were issued at
107.5p per share, representing the closing mid-price on 31 May 2022.
8 Alternative Performance Measures (APMs)
APMs are often used to describe the performance of investment companies
although they are not specifically defined under UK-adopted international
accounting standards. Calculations for APMs used by the Company are shown
below.
Ongoing charges
A measure expressed as a percentage of average net assets, of the regular,
recurring annual costs of running an investment company, calculated in
accordance with the AIC methodology.
Year ended 31 March 2022 Page
Average NAV (£'000) a not applicable £6,959
Recurring costs (£'000) b 47 £294
b/a 4.23%
Year ended 31 March 2021 Page
Average NAV (£'000) a not applicable £5,059
Recurring costs (£'000) b 47 £231
b/a 4.60%
Premium
The amount, expressed as a percentage, by which the share price is more than
the NAV per share.
As at 31 March 2022 Page
NAV per ordinary share a not applicable 128.91p
Share price b not applicable 102p
(b-a)/a (20.88%)
As at 31 March 2021 Page
NAV per ordinary share a not applicable 92.06p
Share price b not applicable 105p
(b-a)/a 14.06%
Total return
A measure of performance that includes both income and capital returns. This
takes into account capital gains and reinvestment of any dividends paid out by
the Company, with reinvestment on ex-dividend date
Year ended 31 March 2022 Page NAV Share price
Opening as at 1 April 2021 (p) a 2 92.06 105.00
Closing at 31 March 2022 (p) b 2 128.91 102.00
Dividend reinvestment factor c n/a 1 1
Adjusted closing (d = b x c ) d 128.91 102.00
Total return (d-a) / a 40.03% (2.90%)
Year ended 31 March 2021 Page NAV Share price
Opening as at 1 April 2020 (p) a 2 92.61 105.13
Closing at 31 March 2021 (p) b 2 92.06 105.00
Dividend reinvestment factor c n/a 1 1
Adjusted closing (d = b x c ) d 92.06 105.00
Total return (d-a) / a (0.59%) (0.12%)
9 Glossary
AIC Association of Investment Companies
Alternative Investment Fund or An investment vehicle under AIFMD. Under AIFMD (see below) Sure Ventures plc
is classified as an AIF.
"AIF"
Alternative Investment Fund A European Union directive which came into force on 22 July 2013 and has been
implemented in the UK.
Managers Directive or "AIFMD"
Annual General Meeting or "AGM" A meeting held once a year which shareholders can attend and where they can
vote on resolutions to be put forward at the meeting and ask directors
questions about the company in which they are invested.
the Company Sure Ventures plc
Custodian An entity that is appointed to safeguard a company's assets.
Discount The amount, expressed as a percentage, by which the share price is less than
the net asset value per share.
Depositary Certain AIFs must appoint depositaries under the requirements of AIFMD. A
depositary's duties include, inter alia, safekeeping of a company's assets and
cash monitoring. Under AIFMD the depositary is appointed under a strict
liability regime.
Dividend Income receivable from an investment in shares.
Ex-dividend date The date from which you are not entitled to receive a dividend which has been
declared and is due to be paid to shareholders.
Financial Conduct Authority or The independent body that regulates the financial services industry in the UK.
"FCA"
Gearing effect The effect of borrowing on a company's returns.
Index A basket of stocks which is considered to replicate a particular stock market
or sector.
Investment company A company formed to invest in a diversified portfolio of assets.
Investment trust An investment company which is based in the UK and which meets certain tax
conditions which enables it to be exempt from UK corporation tax on its
capital gains. The Company is an investment trust.
Liquidity The extent to which investments can be sold at short notice.
Net assets or net asset value ('NAV') An investment company's assets less its liabilities
NAV per Ordinary Share Net assets divided by the number of Ordinary Shares in issue (excluding any
shares held in treasury)
Ordinary Shares The Company's ordinary shares in issue.
Portfolio A collection of different investments held in order to deliver returns to
shareholders and to spread risk.
Relative performance Measurement of returns relative to an index.
Share buyback A purchase of a company's own shares. Shares can either be bought back for
cancellation or held in treasury.
Share price The price of a share as determined by a relevant stock market.
Treasury shares A company's own shares which are available to be sold by a company to raise
funds.
Volatility A measure of how much a share moves up and down in price over a period of
time.
10 Shareholders' Information
Directors, Portfolio Manager and Advisers
Directors Administrator
Perry Wilson Apex Fund Services (Ireland) Limited
Gareth Burchell 2nd Floor, Block 5
St. John Agnew Irish Life Centre
Abbey Street Lower
Dublin 1
DO1 P767
Ireland
Registered Office Company Secretary
International House Apex Secretaries LLP (formerly Throgmorton Secretaries LLP)
36-38 Cornhill Bastion House, 6th Floor
London EC3V 3NG 140 London Wall
England London EC2Y 5DN
England
Manager and AIFM Registrar
Shard Capital AIFM LLP Computershare Investor Services PLC
23(rd) Floor The Pavilions, Bridgewater Road
20 Fenchurch Street Bristol BS99 6ZZ
London EC3M 3BY England
England
Placing Agent Depositary
Shard Capital Partners LLP INDOS Financial Limited
23rd Floor 27-28 Clements Lane
20 Fenchurch Street London EC4N 7AE
London EC3M 3BY United Kingdom
England
Website Independent Auditor
http://www.sureventuresplc.com PKF Littlejohn LLP
15 Westferry Circus
Canary Wharf
London E14 4HD
Share Identifiers England
ISIN: GB00BYWYZ460
Sedol: BYWYZ46
Ticker: SURE
11 Investment Policy
Investment Policy
Asset allocation
The investment policy of the Company is to seek exposure to early stage
technology companies, with a focus on software-centric businesses in four
chosen target markets:
* Augmented reality and virtual reality (AR/VR)
* Financial technology (FinTech)
* The internet of things (IoT)
* Artificial Intelligence (AI)
The Company may invest directly in investee companies or obtain exposure to
such companies through investment in collective investment vehicles, including
Sure Valley Ventures and any further funds, which have investment policies
that are complementary to that of the Company. Investments may be made using
such instruments as the Company in conjunction with Shard Capital AIFM LLP
("SCAIFM") may determine but are expected to predominantly comprise equities
and equity-linked securities (including shares, preference shares, convertible
debt instruments, payment-in-kind notes, debentures, warrants and other
similar securities) and may include derivative instruments, contractual rights
and other similar interests that grant the Company rights equivalent or
similar to those conferred by equity and equity-linked securities.
The Company may implement its investment policy by investing in class A shares
of the Fund and by investing in any further funds and collective investment
vehicles managed by third parties. The Company will have discretion as to how
to make investments, although it is anticipated that investments in the Fund
will represent between 10% and 100%. of the Company's portfolio at any given
time, and that investments in any further funds and collective investment
vehicles managed by third parties may similarly constitute a material
proportion of the Company's net asset value subject to the Company's
investment restrictions.
Diversification
The Company will seek to hold a diversified portfolio of investments and, once the assets of the Company, the Fund and any other collective investment vehicles through which the Company invests are each fully invested, expects to have a direct or indirect holding of between 20 and 30 investments. It is intended that the Company would ordinarily acquire a significant interest, consisting generally of between 20% and 50% of an investee company's equity capital. The Company does not envisage taking management control of a portfolio company other than in exceptional circumstances and on a temporary basis, and only if it is considered that such action would be necessary to secure the interests of the Company. The Company has the option to invest directly in quoted companies. Furthermore, a portfolio company may seek a flotation in which case: (i) the Company may continue to hold such investments without restriction; and (ii) the Company may make follow-on investments in such portfolio companies.
The Company's investments will not be constrained by geographical limits.
However, it is expected that the Company's portfolio will predominantly be
exposed to companies that have their principal operations in the UK, Republic
of Ireland or elsewhere in the EEA. In addition, the Company will aim to
satisfy the following guideline criteria for its portfolio:
• no more than 15% of the Company's NAV in a single
investment no more than 60% of the Company's NAV invested in a further fund
or collective investment vehicle managed by a third party
• invest in a further fund or collective investment vehicle
managed by a third party only if such further fund or collective investment
vehicle has an investment policy that is consistent with the investment policy
of the Company
• no investment in companies whose primary business is
acquisition or development of real estate
• no investments in real estate assets
• no more than 15% of the Company's NAV to a counterparty in
relation to the utilisation of derivatives (including for investment and
hedging purposes)
Borrowing
The Company may borrow (through bank or other facilities) a maximum of 20% of
net asset value in aggregate (calculated at the time of borrowing) to seek to
enhance returns and for the purpose of capital flexibility and efficient
portfolio management. The Company's gearing is expected to primarily comprise
bank borrowings but may include the use of derivative instruments and such
other methods as the board may determine. The board will review the Company's
borrowing policy, in conjunction with Shard Capital AIFM LLP, on a regular
basis.
Hedging
Fluctuations in interest rates are influenced by factors outside the Company's
control, and can adversely affect the Company's results and profitability in a
number of ways. The Company's investment in the Fund will be denominated in
euros. The Company may use derivatives, including forward foreign exchange
contracts and contracts for difference, to seek to hedge against any currency
risk between the currency of the Company's investment in the Fund and
sterling, the base currency of the Company. Shareholders should note that
there is no guarantee that such hedging arrangements will be utilised or, if
so, will be successful.
Cash management
The Company may hold cash on deposit and may invest in cash equivalent
investments, including short-term investments in money market type funds,
tradeable debt securities and government bonds and securities (''cash and cash
Equivalents''). There is no restriction on the amount of cash and cash
equivalents that the Company may hold and there may be times when it is
appropriate for the Company to have a significant cash or cash equivalent
position instead of being fully or near fully invested. In order to
efficiently allocate all of the Company's available funds, the Company may
make short and medium term investments in relatively liquid assets that are in
accordance with the Company's investment policy (''Liquid Investments''). Such
Liquid Investments may include shares, bonds and other debt instruments issued
by companies as well as shares, units or other interests in collective
investment schemes, other investment funds, exchange traded funds and fixed
income investments. Prior to the full drawdown of the Company's commitment to
the Fund, the cash held by the Company will be utilised in accordance with the
Company's stated investment policy and cash management policy. The directors,
on advice from the Manager, consider that it is the interests of shareholders
for the cash held by the Company in respect of its commitment to the Fund to
potentially be available for investment in suitable investment opportunities
pending drawdown by the Fund.
Website
The Company's website can be found at http://www.sureventuresplc.com. The site
provides visitors with Company information and literature downloads.
The Company's profile is also available on third-party sites such
morningstar.co.uk.
Annual report
Copies of the annual report may be obtained from the Company Secretary or by
visiting www.sureventuresplc.com.
Share prices and net asset value information
The Company's ordinary shares of 1p each are quoted on the London Stock
Exchange:
· SEDOL number: BYWYZ46
· ISIN number: GB00BYWYZ460
· EPIC code: SURE
The codes above may be required to access trading information relating to the
Company on the internet.
Electronic communications with the Company
The Company's Annual Report and Accounts, half-yearly reports and other formal
communications are available on the Company's website. To reduce costs the
Company's half-yearly accounts are not posted to shareholders but are instead
made available on the Company's website.
Whistleblowing
As the Company has no employees, the Company does not have a whistleblowing
policy. The Audit Committee reviews the whistleblowing procedures of the
manager and administrator to ensure that the concerns of their staff may be
raised in a confidential manner.
Warning to shareholders - share fraud scams
Fraudsters use persuasive and high-pressure tactics to lure investors into
scams. They may offer to sell shares that turn out to be worthless or
non-existent, or to buy shares at an inflated price in return for an upfront
payment. While high profits are promised, if you buy or sell shares in this
way, you will probably lose your money.
How to avoid share fraud
· Keep in mind that firms authorised by the Financial Conduct Authority
are unlikely to contact you out of the blue with an offer to buy or sell
shares.
· Do not get into a conversation, note the name of the person and firm
contacting you and then end the call.
· Check the Financial Services Register from www.fca.org.uk to see if the
person and firm contacting you is authorised by the Financial Conduct
Authority.
· Beware of fraudsters claiming to be from an authorised firm, copying
its website or giving you false contact details.
· Use the firm's contact details listed on the register maintained by the
Financial Conduct Authority if you want to call it back.
· Call the Financial Conduct Authority on 0800 111 6768 if the firm does
not have contact details on the register or you are told they are out of date.
· Search the list of unauthorised firms to avoid at www.fca.org.uk/scams.
· Consider that if you buy or sell shares from an unauthorised firm you
will not have access to the Financial Ombudsman Service or Financial Services
Compensation Scheme.
· Think about getting independent financial and professional advice
before you hand over any money
· Remember: if it sounds too good to be true, it probably is.
5,000 people contact the Financial Conduct Authority about share fraud each
year, with victims losing an average of £20,000.
Report a scam
If you are approached by fraudsters, please tell the FCA using the share fraud
reporting form at fca.org.uk /scams, where you can find out more about
investment scams.
You can also call the FCA Consumer Helpline on 0800 111 6768.
If you have already paid money to share fraudsters, you should contact Action
Fraud on 0300 123 2040.
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