REG - Sure Ventures PLC - Sure Ventures plc - Interim Results
20/12/2023 07:00
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RNS Number : 3421X Sure Ventures PLC 20 December 2023
Sure Ventures
plc
Unaudited Interim Report and Financial Statements
For the six months ended 30 September 2023
Company Number: 10829500
Table of Contents
1 (#_Toc529542791) (#_Toc529542791) Chairman's Statement
2 (#_Toc529542793) (#_Toc529542793) Investment Manager's Report
(#_Toc529542793) 6
3 (#_Toc529542793) (#_Toc529542793) Interim Management Report
(#_Toc529542793) 11
4 (#_Toc529542793) (#_Toc529542793) Alternative Performance Measures
("APMs") (#_Toc529542793) 3
5 (#_Toc529542795) (#_Toc529542795) Financial Statements
(#_Toc529542795) 15
Condensed Statement of Comprehensive Income (#_Toc529542796) 16
Condensed Statement of Financial Position (#_Toc529542797) (#_Toc529542797)
Condensed Statement of Changes in Equity (#_Toc529542798) (#_Toc529542798)
Condensed Statement of Cash Flows (#_Toc529542799) (#_Toc529542799)
Notes to the Condensed Interim Financial Statements (#_Toc529542800)
1 Chairman's Statement
Chairman's Statement
Dear Shareholders,
On behalf of my fellow Directors, I am delighted to present Sure Ventures
plc's (the "Company") interim results for the six months ended 30 September
2023.
FINANCIAL PERFORMANCE
For the six-month period to 30 September 2023, the Company reported a net
asset value ("NAV") total return per share of -6.66% (30 September 2022:
-3.73%), broadly in line with our expectations. The performance for this
period remained largely unchanged, providing a similar return to the full year
results to 31 March 2023 (-6.86%). This result was due to limited changes in
the valuation of our portfolio of unlisted investee companies.
Since our incorporation in 2017, we have created a balanced portfolio of
early-stage technology companies in rapidly evolving sectors of Artificial
Intelligence ("AI"), Augmented Reality ("AR") Virtual Reality ("VR"), the
Internet of Things ("IoT"), and Cybersecurity. In the current economic
climate, our portfolio investments in AI have shown resilience, benefitting
from the corporate need for cost savings. Goldman Sachs estimates up to 300
million full-time jobs could be impacted by generative AI and Microsoft
continues to make substantial investments in this space, evident in its $10bn
partnership with OpenAI, creators of ChatGPT. In cybersecurity, we are seeing
an increased use of generative AI for more complex threat identification.
In AR and VR, major developments such as the expected launch of Apple's Apple
Vision Pro headset in March 2024 are poised to change the landscape. This
product could bring AR/VR into mainstream consumer use. UBS and Bank of
America predict the new Apple headset will generate significant revenue in
2024, which should positively impact our AR/VR focused investee companies
within the portfolio. Additionally, a joint venture between Samsung, Google,
and Qualcomm is set to release a mixed reality headset in 2024, expected to be
a strong competitor to the Apple version.
The Company is confident that its portfolio is well positioned to realise
further gains in all of its investment themes. During 2023 we have seen
further geopolitical tensions that have impacted valuations in public and
private markets. Higher interest rates restrict available debt financing and
has led to fewer leveraged acquisitions in 2023.
The investment portfolio for Fund I (as further defined below) is now
complete, and no new investments will be made, with the remaining capital
allocated to follow-on rounds of the fourteen investee companies in the
portfolio. By contrast, Fund II (also defined below) is in the early stages of
investment origination, and to date investments have been made in just three
companies.
In the period to 30 September 2023, the Company's NAV attributable to
shareholders declined by £30k to £7.94m 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
30%. However, in May 2023 and August 2023, the Company was able to validate
its share price by raising new subscriptions through private placements at the
mid-market share price.
PORTFOLIO UPDATE FUND I
The Company's first fund investment in Sure Valley Ventures Sub-Fund of Suir
Valley Funds ICAV ("Fund I") is a substantial part of our investment strategy.
We ensured our investments in Fund I were not diluted by making a total
commitment of €7m. As at 30 September 2023, €6,594,579 has been drawn down
against this commitment.
The Company holds two direct investments outside of Funds I & II in VividQ
Limited, a pioneering company in AR and VR holography and a small residual
holding in Let's Explore Group (formerly Immotion Group plc). The portfolio of
Fund I also includes two listed entities; ENGAGE XR Holdings plc, a developer
of VR software and immersive experiences focusing on education, and
Smarttech247, a leader in security operations utilizing AI and cybersecurity
cloud technologies. Both companies closed broadly flat in the six months to 30
September 2023.
As at 30 September 2023, the Company, through its investment in Fund I, has a
further twelve privately held companies in the AR, VR, IoT and AI space. In
2019, the Company achieved its first successful portfolio company exit via the
Fund I exit of Artomatix for x5 return of the Company's original investment.
PORTFOLIO UPDATE FUND I (continued)
The first write downs since inception occurred in the year ended 31 March
2023, for Buymie and NDRC@Arclabs. Buymie was acquired in the year ended 31
March 2023 and the Company took the prudent approach to the transaction to
write the investment down to zero. The investment in NDRC was an incubator and
accelerator programme that had concluded and was the rationale behind writing
off the full value of this investment.
PORTFOLIO UPDATE FUND II
In March 2022, the Company announced its commitment of £5m to the Sure Valley
Ventures Enterprise Capital LP (Fund II), a £95m UK software technology fund.
Fund II focuses on AR, VR, the Metaverse, AI, IoT, and cybersecurity. The
British Business Bank is the £50m cornerstone investor through its Enterprise
Capital Funds program. Fund II aims to invest in up to 25 software companies
during its investment period.
As at 30 September 2023, the first portfolio investments of Fund II have been
made. These include Retinize, a Belfast-based creative tech company developing
animotive software for VR technology. Investments were also made in Jaid, a
technology company offering AI-powered human communication solutions, and
Captur, a London-based company that has built an enterprise AI platform for
real-time, rules-based image recognition.
COMMITMENTS AND FUNDING
In 2019, the Company increased its subscription to Fund I by €2.5m, raising
its total commitment to €7m. This increase enhanced our share in Fund I from
21.6% to 25.9%, with approximately €405k remaining to be funded. We continue
to believe in the potential for further uplifts in valuations from our initial
investments.
The Company's commitment to Fund II is £5m over Fund II's investment period.
The forecast capital calls throughout the investment period were a key
consideration before making this commitment. The Company believes it has
sufficient access to funding to meet its remaining commitments to both Fund I
and Fund II. This confidence is supported by our available cash, liquid
investments, anticipated subscriptions, and access to loans and equity
subscription facilities.
INVESTMENT ENVIRONMENT
The Company is confident and pleased with the investments in Fund I and their
potential for delivering higher valuations and negotiated exits in the next
one to two years. The pace of technological change is rapid, and our diverse
portfolio is well-positioned to benefit from these developments. The initial
investments for Fund II and the varied deal pipeline are also promising.
DIVIDEND
During the six months ending 30 September 2023, the Company did not declare a
dividend (30 September 2022: £nil). In line with our dividend policy, we
focus on achieving shareholder returns through capital growth rather than
income. The Company does not expect to receive significant dividends or other
income from its investments. While the Company does not anticipate paying an
annual dividend, there may be potential for the payment of one-off dividends
at the Directors' discretion, should the circumstances and liquidity allow.
GEARING
The Company may use gearing of up to 20% of NAV to enhance returns and for
liquidity, capital flexibility, and efficient portfolio management. Our
primary form of gearing includes bank borrowings but may also involve the use
of derivative instruments and other methods as determined by the Directors. As
at 30 September 2023, the Company had borrowings of £200,000 drawn from a
£1,000,000 loan facility with Shard Merchant Capital Limited. After this
period, on 9 November 2023, the Company borrowed an additional £200,000 under
the loan facility, bringing total borrowings to £400,000. The Directors, in
conjunction with the Investment Manager, regularly review the Company's
borrowing in line with our overall cash management and investment strategy.
CAPITAL RAISING
On 5 May 2023, the Company announced a placing of 200,000 ordinary shares on
the Specialist Fund Segment of the London Stock Exchange. A further placing of
205,128 ordinary shares was announced on 21 August 2023, under the existing
ISIN: GB00BYWYZ460. This increased our total shares in admission to 7,051,600.
The Investment Manager's Report that follows this statement provides more
details on the Company's operations and prospects. The Directors remain
confident in the long-term prospects of the Company in achieving its
investment objectives.
OUTLOOK
The portfolio construction of Fund I is complete and is now at the realisation
stage. Several companies are attracting interest from potential acquirers,
with some engaged in ongoing discussions for several months. Others are
preparing for follow-on funding rounds, with the potential for higher
valuations. Fund II is in the early stages of the investment cycle, and the
investment team is encouraged by the quality of its initial investments and
the developing deal pipeline.
The Company's performance has been stable in a challenging economic
environment, marked by higher inflation, higher interest rates, and
geopolitical tensions. These factors continue to impact public and private
markets and have slowed private market deal activity. However, the Company
believes its investment portfolio is well positioned for significant returns
in breakthrough technology sectors. The Investment Manager will be actively
exploring exits for Fund I in 2024.
Perry Wilson,
Chairman
12 December 2023
2 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 Company 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 and Ireland.
Augmented Reality and Virtual Reality
The Immersive Technologies market has had a significant growth boost during
the COVID-19 pandemic, with people looking for new ways to connect and
entertain themselves. In 2022, the Global AR/VR market size surpassed $22.53
billion and by 2030, it is projected to reach $134.18 billion, registering a
Compound Annual Growth Rate (CAGR) of 22.46%. There are a number of factors
driving the growth of the AR/VR market. One is the growth of the mobile gaming
industry. Mobile gaming is a major driver of AR/VR adoption, as it allows
users to experience immersive games and experiences without having to purchase
expensive hardware. Another factor driving the growth of the AR/VR market is
the increase in internet connectivity. As internet speeds and availability
improve, AR/VR applications become more feasible. This is leading to increased
adoption of AR/VR in a variety of industries, including education, healthcare,
and manufacturing.
The increasing use of consumer electronic devices is also driving the growth
of the AR/VR market. As more and more people own smartphones, tablets, and
other devices that can be used to access AR/VR content, the market for AR/VR
headsets and other hardware is expected to grow.
Some recent developments in the AR/VR market include:
· Meta launching their new Meta Quest 3 headset at their Meta
Connect event on 27 September 2023, with the product hosting a number of
significant improvements in comparison to its predecessor such as screen
resolution and stronger processing power.
· Apple continuing with the development of the Vision Pro,
maintaining the view that it will be likely be released in early 2024 at a
price point of $3,500.
· The European council publishing their strategy for web 4.0
strengthening the viewpoint that the shift towards the virtual world is
further becoming a reality and must be prepared for.
· Further rumours surrounding Google future VR Headset have
emerged, suggesting that their device, supposedly being created in partnership
with Samsung and Qualcomm, is due to be released in Summer 2024 to compete
with the Vision Pro.
These developments are expected to help accelerate growth in the AR/VR market
even further.
In addition, the AR/VR market is expected to be further boosted by the
development of the metaverse. The metaverse is a virtual world that is created
by the convergence of AR, VR, and other technologies. It is expected to be a
major driver of growth in the AR/VR market, as it will provide a new platform
for gaming, entertainment, education, and work. The metaverse is still in its
early stages of development, but it has the potential to be a major disruptive
force in the tech industry. As it continues to develop, it is likely to have a
significant impact on the AR/VR market.
Internet of Things
The IoT market is expected to grow significantly in the coming years.
According to a report by Fortune Business Insights, the global IoT market size
is predicted to grow from $662.21 billion in 2023 and to reach $3,352.97
billion by 2030, exhibiting a CAGR of 26.1% during the forecast period
(2023-2030). The growth of the IoT market is being driven by a number of
factors, including the increasing demand for connected devices, the growth of
the cloud computing market, and the development of new IoT technologies. The
increasing demand for connected devices is one of the key drivers of the IoT
market. Connected devices are used in a variety of applications, including
smart homes, smart cities, and industrial automation.
Internet of Things (continued)
The growth of the cloud computing market is also contributing to the growth of
the IoT market. Cloud computing provides a platform for storing and processing
data from IoT devices. Furthermore, the development of new IoT technologies is
also contributing to the growth of the market. These new technologies include
5G, AI, and machine learning. 5G will enable faster and more reliable
connections between IoT devices. AI and machine learning will be used to
analyse data from IoT devices and make predictions.
Cybersecurity
The global AI in cybersecurity market size is valued at $22.4 billion in 2023
and is expected to hit around $60.6 billion by 2028, growing at a CAGR of
21.9% from 2023-2028. The growth of the cyber security market is being driven
by a number of factors, including the increasing number of cyber-attacks, the
growing adoption of cloud computing, and the increasing use of IoT devices.
Cyber-attacks are becoming more sophisticated and targeted, and they are
causing significant financial and reputational damage to organisations. The
growing adoption of cloud computing is also contributing to the growth of the
cyber security market. Cloud computing provides a new attack surface for cyber
criminals, and it is important for organisations to have the right security
measures in place to protect their data. The increasing use of IoT devices is
also contributing to the growth of the market. IoT devices are often connected
to the internet, which makes them vulnerable to cyber-attacks. It is important
for organisations to secure their IoT devices to protect their data and
systems. The future prediction for growth of the cyber security market is very
positive. The market is expected to continue to grow at a significant rate in
the coming years. This growth will be driven by the increasing number of
cyber-attacks, the growing adoption of cloud computing, and the increasing use
of IoT devices.
Artificial Intelligence
The global AI market size was valued at $428.00 billion in 2022. The market is
projected to grow from $515.31 billion in 2023 to $2,025.12 billion by 2030,
exhibiting a CAGR of 21.6% during the forecast period. AI is the simulation of
human intelligence processes using various machines by means of creating
intelligent software and hardware capable of replicating human behaviour such
as learning and problem-solving. The report covers Al-based solutions such as
AWS Chatbots, OpenAl Codex, Azure Al, and others. The global market is set to
grow drastically with the surge in AI applications, increased number of
relevant partnerships and collaborations, rise in small-scale Al providers,
changing complexities of business structure, and hyper-personalised service
demands. Additionally, government initiatives and investments in Al
technologies for enterprises and end users create benefits.
Recent developments within the AI Space include:
· Open AI announcing a plethora of future new features within their
August and September blog updates, suggesting that voice conversations and
unique customizability features will be arriving imminently onto their
platform.
· Mid journey introducing "Vary Region", the companies unique
answer to Adobe Photoshop, allowing for users to edit specific parts of an
image with AI prompts and for specific editing solely through describing any
desired changes via text box.
· Google allowing early access to their conversational AI software
Gemini, for a small number of companies. This marks the beginning of Google
intention to compete directly with Open AI's GPT-4, which has seen significant
attention over recent months. Similar to Open AI's offering, at launch Gemini
is likely to be able to read, summarise and generate original text, as well as
help users perform actions like generating images or writing code.
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 building on Europe's existing
technological 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 Sure Valley Ventures, as further outlined
overleaf.
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 30 September 2023, a total of €6,594,579 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. VividQ Limited completed an additional funding round in May 2021
which saw the valuation of this investment rise to £794k, representing a 59%
unrealised gain.
Sure Ventures plc also holds a direct investment in a UK-based immersive
entertainment group; Let's Explore Group, Inc (formerly Immotion Group plc),
as announced on 24 April 2018. In May 2023, Let's Explore Group, Inc announced
it had entered into a conditional sale and purchase agreement, for the sale of
its Location Based Entertainment business (collectively; Immotion Studios
Limited, Immotion VR Limited and C.2K Entertainment Inc.), to LBE BidCo, Inc.
for an enterprise value of $25,211,739 on a cash free/debt free basis.
Further to this news, a tender offer for 65% of shares held was made by the
acquirer at 4.75p a share, which the Shard Capital AIFM LLP team took up. In
addition to this, due to the unknown nature of the acquirer, the decision was
made to sell down the remaining 35% of the holding, as liquidity in the share
permitted. As at 30 September 2023, Sure Ventures plc has sold the majority of
its holding in this listed entity, with only a small residual position
remaining.
On 25 February 2022, Sure Ventures plc committed to investing £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. The
first drawdown was made on 23 February 2022 and as at 30 September 2023, a
total of £445,500 had been drawn down against this commitment.
As detailed in the Condensed Statement of Financial Position included in the
following financial statements, these two Sure Valley Ventures investments
alongside the two direct investments, represent the entire portfolio of Sure
Ventures plc as at 30 September 2023.
On 5 May 2023, the Company announced a placing of 200,000 ordinary shares,
followed by a further placing of 205,128 ordinary shares, announced on 21
August 2023. The ordinary shares were admitted to trading on the Specialist
Fund Segment of the London Stock Exchange on 12 May 2023 and 25 August 2023
respectively, under the existing ISIN: GB00BYWYZ460, taking the total shares
in admission as at 30 September 2023 to 7,051,600.
SUIR VALLEY FUNDS ICAV
Suir Valley Funds ICAV (the "ICAV") is a closed-ended Irish Collective
Asset-management Vehicle with segregated liability between sub-funds
incorporated in Ireland pursuant to the Irish Collective Asset-management
Vehicles Act 2015 to 2021 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 2023, Fund I had commitments totaling €27m and had made 17
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 Sure Ventures
plc. Total distributions from Fund I to Sure Ventures plc as at 30 September
2023 were €1,759,630.
SURE VALLEY VENTURES ENTERPRISE CAPITAL LP
Sure Valley Ventures Enterprise Capital LP is a closed-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 the potential for a further £10m to be
raised in a secondary close. The British Business Bank are the cornerstone
investor of Sure Valley Ventures Enterprise Capital LP, committing £50m of
the initial £85m, with Sure Ventures plc committing a total of £5m.
Fund II has 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. As well as being
based in London, Dublin, and Cambridge, the Sure Valley team has recently
opened 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 30 September 2023, Sure Valley Ventures Enterprise Capital LP had drawn
down a total of £7.53m and has made its first three investments into a
Belfast based company called Retinize, for an amount of £1m in March 2022; a
London based company called Jaid (t/a Opsmatix Limited) for £1m in November
2022 plus a further £350k in May 2023; and finally a London based company
called Captur, which Sure Valley Ventures Enterprise Capital LP invested
£1.5m in September 2023. The total invested capital to date for Sure Ventures
plc was £445,500.
Performance
In the period to 30 September 2023, the Company's performance remained strong,
in a backdrop of economic uncertainty, as it returned a Net Asset Value
("NAV") of £1.13/unit, representing a 6.66% decline from the audited March
2023 NAV of £1.20p. The NAV remains largely unchanged as a result of minimal
fluctuations in valuation of any of the portfolio companies from the year end,
against a backdrop of the usual cost base. Regarding the two direct
investments, Let's Explore Group, Inc which has been acquired, closed the
period at 2.7p, down from 3.6p at the year end; indicative of a tough few
months in the public markets and wider economy. However, as mentioned above,
Sure Ventures plc has materially exited this position at higher levels than
the current share price. VividQ Limited remains unchanged, having closed a new
funding round to give Sure Ventures plc an unrealised gain of 59% on its
initial holding in the previous financial year. Given the lack of revenue to
support the ongoing operational costs of Sure Ventures 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 number a 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 Fund I has now closed, there are no
more new investments to be made, with all remaining capital being allocated to
follow-on funding of existing investments, as these companies continue to grow
and provide Fund I with opportunities to exit.
In addition to this, having more exposure to the UK market for early-stage
high growth software companies through the commitment into the Sure Valley
Ventures Enterprise Capital LP will yield exciting opportunities as Sure
Valley Ventures Enterprise Capital LP continues to deploy capital across the
landscape with a view to generating significant returns for investors
throughout its lifecycle.
We remain confident in the future outlook of the Company for the rest of the
financial year, particularly with the launch of Sure Valley Ventures
Enterprise Capital LP and the increasing maturity of the Sure Valley Ventures
portfolio. Whilst the Funds provide great exposure to a wealth of expertise
and a larger suite of portfolio companies, we also reserve the right to make
further direct investments provided there is sufficient working capital to do
so.
Shard Capital AIFM LLP
Investment Manager
22 November 2023
3 Interim Management Report
Interim Management Report
The report below together with the Chairman's Statement, Investment Manager's
Report, and related party disclosures in the notes to the financial statements
constitute the Interim Management Report of Sure Ventures plc (the "Company")
for the six months ended 30 September 2023.
Principal risks and uncertainties
The principal risks and uncertainties associated with the Company's business
are divided into the following main areas:
· Operational risks, including risks associated with reliance on
third party service providers, reliance on key individuals at the Investment
Manager and fluctuations in the market price of the Company's shares;
· Investment risks, including risks associated with the investment
objective, borrowing and liquidity of investments; and
· Regulatory risks, including risks associated with maintenance of
investment trust status and compliance with applicable legislative
obligations.
The above risks are described further in the Company's Annual Report for the
year ended 31 March 2023 together with measures that have been put in place to
mitigate and manage those risks.
In the view of the Directors, the principal risks and uncertainties reported
in the latest Annual Report for the year ended 31 March 2023 remain unchanged
and will be applicable to the remaining six months of the financial year.
Going concern
The Board of Directors and the Investment Manager believe that the operational
viability and going concern status of the Company remains intact and will
continue for the next financial 12 months ahead and foreseeable future. The
Board of Directors has no concerns in regard to the ongoing existence of the
Company.
The Board of Directors is also satisfied that the key service providers have
the ability to continue to operate efficiently in a remote or virtual working
environment.
Statement of Directors' Responsibilities
The Directors confirm that, to the best of their knowledge that:
a) the condensed set of unaudited financial statements contained within
the half-yearly financial report have been prepared in accordance with
International Accounting Standard ("IAS") 34, Interim Financial Reporting as
required by the Disclosure and Transparency Rule 4.2.4R, and give a true and
fair view of the assets, liabilities, and financial position of the Company;
b) the Interim Management Report includes a fair review, as required by
Disclosure and Transparency Rule 4.2.7R, of important events that have
occurred during the first six months of the financial year, their impact on
the condensed set of unaudited financial statements, and a description of the
principal risks and perceived uncertainties for the remaining six months of
the financial year; and
c) the Interim Management Report includes a fair review of the
information concerning related parties' transactions as required by Disclosure
and Transparency Rule 4.2.8R.
For and on behalf of the board of directors
Perry Wilson
Chairman
12 December 2023
4 Alternative Performance Measures ("APMs")
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 Asset Value ("NAV"), of the
regular, recurring annual costs of running an investment company, calculated
in accordance with the Association of Investment Companies ("AIC")
methodology.
For the six months ended 30 September 2023
Average NAV (£'000) a £7,922
Recurring costs (£'000) b £364
b/a 4.60%
PREMIUM/DISCOUNT
The amount, expressed as a percentage, by which the share price is more than
the NAV per ordinary share.
As at 30 September 2023
NAV per ordinary share a 112.67p
Share price b 94p
(b-a)/a (16.57%)
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.
For the six months ended 30 September 2023 NAV Share price
Opening as at 31 March 2023 (p) a 119.81 95
Closing as at 30 September 2023 (p) b 112.67 94
Dividend reinvestment factor c 1 1
Adjusted closing (d = b x c) d 112.67 94
Total return (d-a) / a (5.96%) (1.05%)
5 Financial Statements
Condensed Statement of Comprehensive Income
For the six months ended 30 September 2023 (unaudited)
Note Revenue Capital Total
£
£
£
Income
Loss on sale of investments 7 - (83,570) (83,570)
Other net changes in fair value on financial assets at fair value through 7 - (136,107) (136,107)
profit or loss
Rebate management fee 9 49,456 - 49,456
Other Income 10 - 10
Total net income/(loss) 49,466 (219,677) (170,211)
Expenses
Management fee 9 (74,456) - (74,456)
Custodian, secretarial and administration fees (57,494) - (57,494)
Other expenses (91,284) - (91,284)
Total operating expenses (223,234) - (223,234)
Finance costs
Interest expense (7,978) - (7,978)
Total finance costs (7,978) - (7,978)
Loss before taxation and after finance costs (181,746) (219,677) (401,423)
Taxation - - -
Loss after taxation (181,746) (219,677) (401,423)
Deficit per share 6 (2.66) (3.22) (5.88)
For the six months ended 30 September 2022 (unaudited)
Revenue Capital Total
£
£
£
Income
Other net changes in fair value on financial assets at fair value through - (12,816) (12,816)
profit or loss
Rebate management fee 50,694 - 50,694
Total net income/(loss) 50,694 (12,816) 37,878
Expenses
Management fee (50,628) (66) (50,694)
Custodian, secretarial and administration fees (54,714) - (54,714)
Other expenses (125,036) - (125,036)
Total operating expenses (230,378) (66) (230,444)
Loss before taxation and after finance costs (179,684) (12,882) (192,566)
Taxation - - -
Loss after taxation (179,684) (12,882) (192,566)
Deficit per share (2.87) (0.21) (3.08)
The total comprehensive income and expense for the period is attributable to
shareholders of the Company. The accompanying notes on pages 20 to 22 form
part of these condensed interim financial statements.
Condensed Statement of Financial Position
As at 30 September
2023
Note 30 September 2023 31 March 2023
(unaudited) (audited)
£
£
Non-current assets
Investments held at fair value through profit or loss 7 8,266,919 8,196,153
8,266,919 8,196,153
Current assets
Receivables 218 2,240
Subscription receivable 1,000 -
Cash and cash equivalents 75,520 36,697
76,738 38,937
Total assets 8,343,657 8,235,090
Non-current liabilities
Interest payable (15,123) (7,145)
Loans payable (200,000) (200,000)
(215,123) (207,145)
Current liabilities
Capital call payable 9 (117,500) -
Other payables (66,250) (64,738)
(183,750) (64,738)
Total liabilities (398,873) (64,738)
Total net assets 7,944,784 7,963,207
Shareholders' funds
Ordinary share capital 8 70,515 66,464
Share premium 6,782,646 6,403,697
Revenue reserves (1,826,824) (1,645,078)
Capital reserves 2,918,447 3,138,124
Total shareholders' funds 7,944,784 7,963,207
Net asset value per share 112.67p 119.81p
The accompanying notes on pages 20 to 22 form part of these condensed interim
financial statements.
The financial statements on pages 16 to 19 were approved by the Board of
Directors and authorised for issue on 12 December 2023. The financial
statements were signed on its behalf by:
Perry Wilson
Chairman
Condensed Statement of Changes in Equity
For the six months ended 30 September 2023 (unaudited)
Ordinary Share Revenue Capital Total Total
Share Premium Reserves Reserves Reserves Equity
Capital
£ £ £ £ £ £
As at 31 March 2023 66,464 6,403,697 (1,645,078) 3,138,124 1,493,046 7,963,207
Ordinary shares issued 4,051 395,949 - - - 400,000
Ordinary shares issue costs - (17,000) - - - (17,000)
Loss after taxation - - (181,746) (219,677) (401,423) (401,423)
Dividends paid in the period - - - - - -
Balance as at (1,826,824) 2,918,447
30 September 2023
70,515
6,782,646
1,091,623
7,944,784
For the six months ended 30 September 2022 (unaudited)
Ordinary Share Revenue Capital Total Total
Share Premium Reserves Reserves Reserves Equity
Capital
£ £ £ £ £ £
As at 31 March 2022 60,132 5,768,780 (1,315,688) 3,238,372 1,922,684 7,751,596
Ordinary shares issued 4,750 470,250 - - - 475,000
Ordinary shares issue costs - (23,750) - - - (23,750)
Loss after taxation - - (179,684) (12,882) (192,566) (192,566)
Dividends paid in the period - - - - - -
Balance as at 64,882 6,215,280 (1,495,372) 3,225,490 1,730,118 8,010,280
30 September 2022
The accompanying notes on pages 20 to 22 form part of these condensed interim
financial statements.
Condensed Statement of Cash Flows
For the six months ended 30 September 2023
Note 30 September 2023 30 September 2022
(unaudited) (unaudited)
£ £
Cash flows from operating activities:
Loss after taxation (401,423) (192,566)
Adjustments for:
Decrease in receivables 2,022 1,600
Increase in payables 1,512 24,456
Increase in capital call payable 9 117,500 -
Loss on sale of investment 7 83,570 -
Unrealised loss/(profit) on foreign exchange 7 79,953 (200,393)
Net changes in fair value on financial assets at fair value through profit or 7 56,154 213,208
loss
Net cash (outflow) from operating activities (60,712) (153,695)
Cash flows from investing activities:
Purchase of investments 7 (441,990) (496,335)
Sale of investments 7 151,547 -
Net cash (outflow) from investing activities (290,443) (496,335)
Cash flows from financing activities:
Proceeds from issue of ordinary shares 399,000 475,000
Interest expense 7,978 -
Ordinary share issue costs (17,000) (23,750)
Net cash inflow from financing activities 389,978 451,250
Net change in cash and cash equivalents 38,823 (198,780)
Cash and cash equivalents at the beginning of the period 36,697 282,178
Net cash and cash equivalents 75,520 83,398
The accompanying notes on pages 20 to 22 form part of these condensed interim
financial statements.
Notes to the Condensed Interim Financial Statements
1) General information
Sure Ventures plc (the "Company") is a company incorporated in England and
Wales (registration number: 10829500) on 21 June 2017 and commencing trading
on 19 January 2018 upon listing. The registered office of the Company is
International House, 36-38 Cornhill, London, EC3V 3NG, United Kingdom.
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. In the opinion of the Directors, the Company
has conducted its affairs so that it is able to maintain its status as an
investment trust. Approval of the Company's application for approval as an
investment trust was received from Her Majesty's Revenue and Customs ("HMRC")
on 22 November 2018, applicable from the accounting period commencing 1 April
2018.
The Company is an externally managed closed-ended investment company with an
unlimited life and has no employees.
The information set out in these unaudited condensed interim financial
statements for the period ended 30 September 2023 does not constitute
statutory accounts as defined in section 435 of Companies Act 2006. The
Statement of Financial Position comparative figures and the comparative
figures stated in the notes to the condensed interim financial statements as
at 31 March 2023 are derived from the audited financial statements for that
year. The financial statements for the year ended 31 March 2023 have been
delivered to the Registrar of Companies and contain an unqualified audit
report and did not contain a statement under emphasis of matter or statements
under section 498(2) or (3) of the Companies Act 2006. The financial
statements of the Company for the year ended 31 March 2023 are available upon
request from the Company's registered office.
2) Basis of accounting
The financial statements of the Company have been prepared in accordance with
UK-adopted international accounting standards in accordance with the
requirements of the Companies Act 2006. They do not include all the
information required for the full annual financial statements and should be
read in conjunction with the annual financial statements of the Company for
the year ended 31 March 2023. The principal accounting policies adopted in the
preparation of the financial information in these unaudited condensed interim
financial statements are unchanged from those used in the Company's financial
statements for the year ended 31 March 2023. This report does not itself
contain sufficient information to comply with IFRS.
3) Estimates
The preparation of the unaudited condensed interim financial statements
requires management to make judgements, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets and
liabilities, income, and expenses. Actual results may differ from these
estimates.
In preparing these unaudited condensed interim financial statements, the
significant judgement made by management in applying the Company's accounting
policies and the key sources of estimation were the same as those that applied
to the Company financial statements as at and for the year ended 31 March
2023.
4) Financial risk management
The Company's financial risk management objectives and policies are consistent
with those disclosed in the Company's financial statements as at and for the
year ended 31 March 2023.
5) 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. This means the interest distribution may be taxable in the hands
of the Company's shareholders.
6) Earnings per Share
For the six months period ended 30 September 2023 Revenue Capital Total
(pence)
(pence)
(pence)
Earnings per ordinary share (2.66p) (3.22p) (5.88p)
For the financial year ended 31 March 2023
Earnings per ordinary share (5.14p) (1.56p) (6.70p)
The calculation of the above is based on revenue returns of (£181,746) (31
March 2023: (£329,390)), capital returns of (£219,677) (31 March 2023:
(£100,248)) and total returns of (£401,423) (31 March 2023: (£427,988)) and
weighted average number of ordinary shares of 6,825,287 (31 March 2023:
6,413,341) as at 30 September 2023.
7) INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
As at 30 September 2023 As at 31 March 2023
£ £
Opening cost
Opening fair value 8,196,153 7,516,667
Purchases at cost 441,990 779,734
Sales (151,547) -
Realised loss (83,570) -
Unrealised loss (56,154) (304,393)
Unrealised (loss)/gain on foreign exchange (79,953) 204,145
Closing fair value 8,266,919 8,196,153
8) 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 Ordinary Share Capital Ordinary Share Capital
31 March
30 September
30 September 31 March
2023
2023
2023 2023
£ £
Ordinary shares of 1 penny each 7,051,600 6,646,472 70,515 66,464
On incorporation, the issued share capital of the Company was £0.01
represented by one ordinary share of £0.01. Redeemable preference shares of
50,000 were also issued with a nominal value of £1 each, of which 25% were
paid. The redeemable shares were issued to enable the Company to obtain a
certificate of entitlement to conduct business and to borrow under section 761
of the Companies Act 2006. The redeemable shares were redeemed on listing from
the proceeds of the issue of the new ordinary shares upon admission on 19
January 2018.
The following table details the subscription activity for the period ended 30
September 2023.
30 September 2023 31 March 2023
Opening balance as at 1 April 6,646,472 6,013,225
Ordinary shares issued 405,128 633,247
Closing balance as at period/year end 7,051,600 6,646,472
During the period ended 30 September 2023, there was £1,000 subscription
receivable (31 March 2023: all proceeds from this issue were received).
9) Related Party Transactions and Transactions with the Manager
Directors - There were no contracts subsisting during or at the end of the
period in which a Director of the Company is or was interested in and which
are or were significant in relation to the Company's business. There were no
other transactions during the period with the Directors of the Company. The
Directors do not hold any ordinary shares of the Company.
As at 30 September 2023, there was £1,292 (31 March 2023: £1,239) payable to
HMRC for the 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 as 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 the
Prospectus dated 17 November 2017.
During the period the Company incurred £74,456 (30 September 2022; £50,628)
of management fees and as at
30 September 2023, there was £25,000 (31 March 2023: £12,500) payable to the
Manager. During the period the Company received a rebate of £49,456 (30
September 2022; £50,694) on management fees.
During the period the Company paid £27,000 (30 September 2022: £23,750) of
placement fees to Shard Capital Partners LLP (the "Placing Agent").
During the period the Company paid £3,280 (30 September 2022: £6,110)
(excluding VAT) of corporate broking retainer fees to the Placing Agent.
The Company has an investment in Sure Valley Ventures Fund, the sub-fund of
Suir Valley Funds ICAV and Sure Valley Ventures Enterprises Capital LP,
amounting to £7,212,710 and £255,931 as at 30 September 2023 (31 March 2023:
£7,139,802 and £121,367) respectively. These funds are also managed by the
Manager.
Capital call payable as at 30 September 2023 of £117,500 (31 March 2023:
£Nil) relates to the Sure Valley Ventures Enterprises Capital LP capital call
on 21 September 2023.
10) SubsequENT EVENTS
There were no subsequent events which would require disclosure in the
financial statements.
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