ProVen Growth and Income VCT plc: Half-yearly report
PROVEN GROWTH AND INCOME
VCT PLC
Half-yearly reportFor the six months
ended 31 August 2022
Financial Summary
|
31 August 2022 |
31 August 2021 |
28 February 2022 |
Net asset value per Ordinary share (“NAV”) |
57.7p |
63.4p |
67.3p |
Dividends paid since class launch (Originally as ‘C’ Shares) |
73.9p |
69.15p |
70.7p |
Total return (net asset value plus dividends paid since ‘C’ Share
class launch) |
131.6p |
132.55p |
138.0p |
Net Assets (£’000) |
168,515 |
160,668 |
169,564 |
Chair’s Statement
Introduction
I have pleasure in presenting the half year report for ProVen
Growth and Income VCT plc (the “Company” or “Fund”) for the six
months ended 31 August 2022.
Net asset value
During the six-month period, the net asset value (“NAV”) per
share decreased from 67.3p to 57.7p at 31 August 2022 which, after
adjusting for the dividends paid of 3.25p per share in early
August, results in a net fall of 6.35p per share or 9.4% of the
opening NAV. This decrease has been largely driven by a fall in
unrealised valuations, resulting from a decline in comparable
market multiples, together with significant write-downs in the
value of three investments, as described below.
Portfolio activity and valuation
At 31 August 2022, your Fund’s investment portfolio comprised 52
investments at a valuation of £117.2 million.
During the six-month period, your Fund invested £7.9 million
into three new companies:
- WS Holdco, PBC (t/a WiredScore) (£3.5
million) – assesses, certifies and improves digital connectivity
and smart technology in homes and offices on a global scale.
www.wiredscore.com
- Chattermill Analytics Limited (£2.2
million) - a cloud-based customer experience management solution
that helps businesses collect, manage and analyse customer feedback
across chats, emails, app store reviews, surveys, social
interactions and other channels. www.chattermill.com
- Not Another Beer Co Ltd (t/a Lucky
Saint) (£2.2 million) – an award-winning alcohol- free beer
company. www.luckysaint.com
ProVen Growth and Income VCT plc also made follow-on investments
during the period in Picasso Labs, Inc. (£1.2 million), Second
Nature (£1.0 million), Social Value Portal (£1.0 million),
DeepCrawl (£734,000) and MYCS (£551,000).
In March 2022, there was a part disposal of the Company’s
holding in Zoovu. The Company received proceeds of £17.5 million, a
return of 5.1x against the cost of the shares sold. Having
performed well since the initial investment by the Company in
August 2017, Zoovu had been exploring options for additional
fundraising. It agreed on an offer which saw the Company sell 70%
of its holding and roll over its remaining shares. Zoovu also
raised additional primary capital to fund further expansion as part
of the transaction. In June 2022, the Company disposed of its
entire holding in Blis Media for proceeds of £6.7 million, in a
transaction with Lloyds Development Capital. This resulted in a
return against cost of 6.2x.
There have been significant write-downs to the value of three
portfolio companies in the period. Festicket, an online platform
which packages festival tickets together with travel, accommodation
and add-ons to provide complete festival experiences, was badly
impacted by the COVID-19 pandemic, leaving the company with a
weakened balance sheet. An erratic reopening of the festival market
in 2021, followed by the failure of several festivals in 2022,
resulted in highly challenging cash-flow dynamics for Festicket.
This led to the company entering administration shortly after the
period end.
MYCS was also adversely impacted by market conditions, as a
consequence of loan providers introducing new lending caps in March
2022 and a sharp decline of consumer confidence in the company’s
markets. These factors prompted the company to enter into a merger
with another private equity-backed business. As part of this
transaction, the Company disposed of its interest in MYCS for the
nominal value of the Company’s holding with potential for some
contingent proceeds should the buyer secure a future sale for the
enlarged group.
The value of Thread was written down by £4.1 million during the
period. Thread has been pursuing a high growth strategy, including
a recent entry into the US market, which has delivered a
significant increase in revenues since your Company invested.
Following the recent economic turmoil, however, Thread has been
unable to raise further capital to fund its high growth strategy,
which in turn has had a material negative impact on the value of
the business.
The profits and write-downs referred to above reflect the
early-stage, high-growth profile of the investments in your
Company’s portfolio. Early-stage businesses carry inherent risk,
meaning that some will be very successful and some will fail. The
risk of individual investments is balanced by your Company’s
diversified portfolio of more than fifty companies. Historically,
the successes in the Company’s portfolio have always significantly
outweighed the losses over the medium term, although past
performance is not a guide to the future.
Market comparables fell significantly in the six-month period
which adversely affected the valuations of several other portfolio
companies. However, there were also some valuation uplifts in the
portfolio. Luxury Promise and Been There Done That, in particular,
saw significant increases of £3.0 million and £0.9 million
respectively due to strong trading performance.
A summary of the top 20 venture capital investments, by value,
is provided in the Summary of Investment Portfolio.
Post period end portfolio activity
Since 31 August 2022, the Company has made a follow-on
investment of £0.1 million into Plum Guide.
Results and dividends
The total loss on ordinary activities for the six-month period
to 31 August 2022 was £17.8 million.
During the six-month period, final and special dividends of 1.5p
and 1.75p per share respectively were paid on 5 August 2022 to
Shareholders on the register at 15 July 2022. These dividends were
paid in respect of the year ended 28 February 2022.
The Board has declared an interim dividend of 1.5p per share
which will be paid on 2 December 2022 to Shareholders on the
register at 11 November 2022. The dividend represents a cash return
of 2.3% on the opening NAV per share at 1 March 2022, adjusted for
the August dividends of 3.25p per share. The payment of this
interim dividend will result in an equivalent reduction in the
Company’s NAV per share.
Shareholders are reminded that the Company operates a Dividend
Reinvestment Scheme (“DRIS”) for Shareholders who wish to have
their dividends reinvested in new shares and obtain further income
tax relief on those shares, subject to the usual restrictions. If
you are not currently registered for the DRIS and wish to have your
dividends paid in the form of new shares, DRIS forms are available
from the www.proveninvestments.co.uk website or by contacting
Beringea on 020 7845 7820. Shareholders will need to be registered
for the DRIS prior to 11 November 2022 to be eligible to receive
the forthcoming dividend as new shares.
Fundraising and share issues
As detailed in the Annual Report and Accounts, the Company
launched a combined Offer for Subscription with ProVen VCT plc on
11 January 2022 to raise up to a total of £20 million per company,
with an overallotment facility of up to a further £20 million per
company. The Offer closed to new applications on 12 August 2022
with £29 million of gross proceeds for your Fund.
During the period, the Company allotted 42,981,001 shares at an
average price of 68.3p per share under the Company’s Offer for
Subscription. In the same period, the Company allotted a further
2,309,547 shares at 60.95p per share under the Company’s DRIS in
respect of the dividends paid on 5 August 2022.
In July 2022, the Company announced its intention to launch a
new Offer for Subscription for tax years 2022/23 and 2023/24 later
this year. A prospectus with full details of the proposed Offer
will be published in due course.
Share buybacks
ProVen Growth and Income VCT plc continues to operate a policy
of purchasing its own shares as they become available in the market
at a discount of approximately 5% to the latest published NAV.
During the period, the Company completed purchases of 5,347,916
shares at an average price of 62.1p per share and for aggregate
consideration (net of costs) of £3,320,000. This represented 2.12%
of the shares in issue at the start of the period. The shares were
subsequently cancelled.
Shareholder event
The Company’s Annual Shareholder Event continues to be well
received and provides an important opportunity for Shareholders to
hear from the Investment Manager on topics such as performance and
investment activity, as well as receiving insights and updates from
our portfolio companies. For your Board and the Investment Manager,
it is also a vital platform for gathering and discussing the views
of our Shareholders.
In order to ensure the safety and wellbeing of our Shareholders,
employees and portfolio companies, we hosted our second fully
digital shareholder day in Autumn 2021, using an online platform to
deliver our assessment of fund performance and market conditions,
as well as providing an opportunity for you to ask questions of the
investment team and hear from portfolio companies.
Given the success of these virtual events, as well as the desire
to hold a physical event, there will be a hybrid event in 2022,
allowing the maximum number of Shareholders to attend either in
person or virtually. This has been scheduled for 10am on Wednesday
16 November 2022 at the IET London on Savoy Place, and we would
encourage you to join us for the session. If you have not received
an invitation, then please contact the Beringea team at
info@beringea.co.uk.
Regulatory Developments
The Company welcomes the Government’s commitment to extending
the VCT scheme beyond 2025, which was announced in September 2022.
Shareholders may have been aware that in 2015, owing to EU rules in
relation to notified state aid, the Government was required to
introduce a sunset clause into the VCT legislation. Unless
legislation to extend or remove the sunset clause was enacted,
income tax relief would have no longer been given to VCT
subscriptions made on or after 6 April 2025. While it is good news
that the sunset clause has been extended, we still await further
details. Therefore, the industry will continue to promote the
benefits of the VCT scheme to MPs, civil servants and other opinion
formers, in order to ensure that VCTs are able to continue their
support for early stage UK companies, which has done so much to
stimulate UK economic growth, employment and innovation since the
VCT scheme was first introduced nearly 30 years ago.
Outlook
The past two years have been marked by economic turbulence,
political upheaval and commercial disruption, which have inevitably
had an impact upon the investment landscape and the portfolio
companies of the Company. Brexit, the COVID-19 pandemic, the
invasion of Ukraine by Russia and rising inflation have all
contributed to a challenging environment for the Company and its
portfolio companies. These factors have had, and will almost
certainly continue to have, an impact on portfolio companies
through declining consumer and business confidence, and higher
costs.
Despite this backdrop, your Company has continued to see
profitable disposals from the portfolio, as well as a consistent
flow of interesting new investment opportunities. The additional
resources generated in the most recent fundraising will allow the
Company to take advantage of these. As noted above, the Manager
made three additions to the portfolio in the first half of the
year. The Manager continues to take a disciplined approach to
evaluating new opportunities and will only invest where they it
believes that the pricing will allow the Company to achieve a good
return on the investment.
Looking ahead, your Board anticipates that the
next twelve months will be challenging. However, we remain
confident in the medium-term prospects for the portfolio and the
Company’s ability to deliver the target returns to Shareholders
over the coming years.
Marc Vlessing OBEChair12 October 2022
Summary of Investment portfolioas at 31 August
2022
|
Cost£’000 |
Valuation£’000 |
Valuation movement in
period£’000 |
% of portfolio by value |
Top twenty venture capital investments
(by value) |
|
|
|
|
|
|
|
|
|
Luxury Promise Limited |
6,020 |
12,734 |
2,990 |
7.6% |
Picasso Labs, Inc. (t/a
CreativeX) |
4,546 |
12,511 |
381 |
7.4% |
Papier Ltd |
4,703 |
6,389 |
(3,838) |
3.8% |
Zoovu Limited (t/a
SmartAssistant) |
847 |
5,339 |
304 |
3.2% |
Been There Done That Global
Limited |
3,149 |
4,521 |
886 |
2.7% |
Social Value Portal Ltd |
2,542 |
4,249 |
690 |
2.5% |
Sannpa Limited (t/a Fnatic) |
6,718 |
4,149 |
(2,745) |
2.5% |
Infinity Reliance Limited (t/a My
1st Years) |
2,769 |
4,010 |
(609) |
2.4% |
Second Nature Healthy Habits
Ltd |
3,842 |
3,979 |
(43) |
2.4% |
WS HoldCo, PBC. (t/a
WiredScore) |
3,494 |
3,722 |
228 |
2.2% |
MPB Group Limited |
1,194 |
3,635 |
(588) |
2.2% |
DeepCrawl Holding Company,
Inc. |
4,033 |
3,573 |
(787) |
2.1% |
Sealskinz Holdings Limited |
3,116 |
3,116 |
- |
1.8% |
Utilis Israel Ltd (t/a
Asterra) |
2,144 |
2,808 |
560 |
1.7% |
Lupa Foods Limited |
931 |
2,649 |
738 |
1.6% |
Stylescape Limited (t/a
EDITED) |
1,500 |
2,632 |
740 |
1.6% |
Arctic Shores Limited |
2,450 |
2,450 |
- |
1.5% |
Litchfield Media Limited |
1,420 |
2,427 |
807 |
1.4% |
Monica Vinader Limited |
204 |
2,342 |
(694) |
1.4% |
Yardlink Ltd |
2,319 |
2,319 |
- |
1.4% |
Other venture capital investments |
52,188 |
27,686 |
(9,382) |
16.4% |
Total venture capital investments |
110,129 |
117,240 |
(10,362) |
69.3% |
Cash at bank and in hand |
|
52,004 |
|
30.7% |
Total investments |
|
169,244 |
|
100.0% |
Other venture capital investments at 31 August 2022 comprise:
Access Systems, Inc. (t/a Access Pay), Aistemos Limited, Andcrafted
Ltd (t/a Plank Hardware), Buckingham Gate Financial Services
Limited, CG Hero Ltd, Chattermill Analytics Limited, Cogora Group
Limited, Commonplace Digital Limited, Dealroom.co B.V., DeepStream
Technologies Limited, Disposable Cubical Curtains Limited (t/a
Hygenica), Dryden Holdings Limited, Duncannon Holdings Limited, EMS
Operations (UK) Ltd (t/a Archdesk), Enternships Limited (t/a
Learnerbly), Festicket Ltd, Firefly Learning Limited, InContext
Solutions, Inc., Honeycomb.TV Limited, Lantum Limited, Litta App
Limited, Moonshot CVE Holdings Ltd, Not Another Beer Co Ltd (t/a
Lucky Saint), Poq Studio Ltd, Plu&m Limited (t/a Plum Guide),
Rapid Charge Grid Limited, Senselogix Limited, Simplestream
Limited, Skills Matter Limited, Thread, Inc., Vigilant Applications
Limited and Whistle Sports, Inc.
All venture capital investments are unquoted.
All of the above investments, with the exception of Dryden
Holdings Limited were also held by ProVen VCT plc, of which
Beringea LLP is the investment manager.
All venture capital investments are registered in England and
Wales except for Access Systems, Inc., DeepCrawl Holding Company,
Inc., InContext Solutions, Inc., Picasso Labs, Inc., Thread, Inc.,
WS Holdco, PBC and Whistle Sports, Inc. which are Delaware
registered corporations in the United States of America, Utilis
Israel Ltd (t/a Asterra), which is registered in Israel, and
Dealroom.co B.V., which is registered in the Netherlands.
Summary of investment movements for the six
months ended 31 August 2022
Investment activity during the six months ended 31 August 2022
is summarised as follows:
Additions |
Cost |
|
£’000 |
WS HoldCo, PBC (t/a
WiredScore) |
3,494 |
Not Another Beer Co Ltd (t/a
Lucky Saint) |
2,202 |
Chattermill Analytics
Limited |
2,199 |
Picasso Labs, Inc. (t/a
CreativeX) |
1,185 |
Second Nature Healthy Habits
Ltd |
1,042 |
Social Value Portal Ltd |
1,042 |
DeepCrawl Holding Company,
Inc. |
734 |
Mycs GmbH |
551 |
Total |
12,449 |
Disposals |
Cost |
Market value at 1 March
2022 |
Disposal proceeds |
Gain/ (loss) against cost |
Realised (oss) / gain in period |
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Zoovu Limited (t/a
SmartAssistant) |
3,449 |
17,471 |
17,464 |
14,015 |
(7) |
Blis Global Ltd (formerly Blis
Media Limited) |
1,083 |
6,138 |
6,685 |
5,602 |
547 |
Netcall plc |
324 |
336 |
279 |
(45) |
(57) |
Rapid Charge Grid Limited* |
220 |
220 |
220 |
- |
- |
Lupa Foods Limited* |
72 |
93 |
93 |
21 |
- |
Response Tap Limited |
- |
- |
79 |
79 |
79 |
ContactEngine Limited |
- |
- |
70 |
70 |
70 |
D30 Holdings Limited |
|
|
35 |
35 |
35 |
Mycs GmbH |
5,038 |
6,001 |
(3) |
(5,041) |
(6,004) |
Exonar Limited** |
1,602 |
- |
- |
(1,602) |
- |
Total |
11,788 |
30,259 |
24,922 |
13,134 |
(5,337) |
*Loan repayment
**As mentioned in the Annual Report for year ended 28 February
2022, Exonar had its value written off by the Company during the
year due to a failure to secure some key new contracts. After the
Company’s year end, the business was sold to NowVertical Group Inc.
in return for shares in the acquiror. Nil value is being attributed
to these shares.
Of the disposals above, Response Tap Limited, ContactEngine
Limited and D30 Holdings Limited were realised in a prior period,
but proceeds were recognised in the current period in excess of the
amounts previously accrued.
The total disposal proceeds outlined above do not match those
recorded in the statement of cash flows as the cash flow figure
represents total disposal proceeds received in cash in the
six-month period to 31 August 2022, elements of which will have
been accrued in prior periods. Furthermore, the disposal proceeds
figure above includes accruals in excess of amounts already
received in cash.
Unaudited Condensed Income Statementfor the six
months ended 31 August 2022
|
(unaudited)Six months ended 31 Aug 2022 |
(unaudited)Six months ended31 Aug 2021 |
(audited)Year ended 28 Feb 2022 |
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
Total |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
Income |
85 |
– |
85 |
55 |
– |
55 |
122 |
Realised (losses) / gains on investments |
– |
(5,337) |
(5,337) |
– |
1,818 |
1,818 |
5,113 |
Unrealised (losses) / gains on investments |
– |
(10,362) |
(10,362) |
– |
9,309 |
9,309 |
23,340 |
Investment management fee |
(467) |
(1,400) |
(1,867) |
(409) |
(1,227) |
(1,636) |
(3,256) |
Performance incentive fee |
– |
– |
– |
– |
(319) |
(319) |
(2,130) |
Other expenses |
(360) |
– |
(360) |
(356) |
– |
(356) |
(749) |
FX Translation |
– |
– |
– |
– |
– |
– |
– |
(Loss)/return on ordinary
activitiesbefore taxation |
(742) |
(17,099) |
(17,841) |
(710) |
9,581 |
8,871 |
22,440 |
Tax on ordinary activities |
– |
– |
– |
– |
– |
– |
– |
(Loss)/return
attributable to
equityshareholders |
(742) |
(17,099) |
(17,841) |
(710) |
9,581 |
8,871 |
22,440 |
Basic and diluted (loss)/return
per share |
(0.3p) |
(5.9p) |
(6.2p) |
(0.3p) |
4.0p |
3.7p |
9.4p |
All revenue and capital items in the above statement derive from
continuing operations. The total column within this statement
represents the Unaudited Condensed Income Statement of the
Company.
The Company has no recognised gains or losses other than the
results for the six-month period as set out above.
The accompanying notes form an integral part of this
announcement.
Unaudited Condensed Statement of Financial
Position as at 31 August 2022
|
(unaudited)31 Aug2022£'000 |
(unaudited)31 Aug2021£'000 |
(audited)28 Feb2022£'000 |
|
|
|
|
Fixed
assets |
|
|
|
Investments |
117,240 |
109,400 |
145,410 |
|
|
|
|
Current
assets |
|
|
|
Debtors |
734 |
931 |
746 |
Cash at bank and in hand |
52,004 |
51,336 |
25,890 |
|
52,738 |
52,267 |
26,636 |
Creditors: amounts falling due within one
year |
(1,463) |
(999) |
(2,482) |
|
|
|
|
Net current assets |
51,275 |
51,268 |
24,154 |
|
|
|
|
Net assets |
168,515 |
160,668 |
169,564 |
|
|
|
|
|
|
|
|
Capital and
reserves |
|
|
|
Called up share capital |
4,727 |
4,103 |
4,081 |
Capital redemption reserve |
277 |
153 |
190 |
Share premium account |
106,235 |
75,650 |
76,198 |
Special reserve |
26,222 |
45,436 |
40,200 |
Capital reserve - realised |
26,940 |
16,897 |
15,206 |
Revaluation reserve |
9,904 |
22,752 |
38,737 |
Revenue reserve |
(5,790) |
(4,323) |
(5,048) |
|
|
|
|
Total equity shareholders' funds |
168,515 |
160,668 |
169,564 |
|
|
|
|
Basic and diluted net asset value per share |
57.7p |
63.4p |
67.3p |
The accompanying notes form an integral part of this
announcement.
Unaudited Condensed Statement of
Changes in Equity
Six months ended 31
Aug 2022(unaudited) |
Called up share capital |
Capital redemption reserve |
Share premium account |
Special reserve |
Capital reserve -
realised |
Revaluation reserve |
Revenue reserve |
Total |
|
£’000 |
£’000 |
£’000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
At 1 March 2022 |
4,081 |
190 |
76,198 |
40,200 |
15,206 |
38,737 |
(5,048) |
169,564 |
Issue of new shares |
733 |
– |
30,037 |
(1,277) |
– |
– |
– |
29,493 |
Total comprehensive income |
– |
– |
– |
– |
(6,737) |
(10,362) |
(742) |
(17,841) |
Transfer of previously unrealised gains now realised |
– |
– |
– |
– |
18,471 |
(18,471) |
– |
– |
Share buybacks and cancellation |
(87) |
87 |
– |
(3,336) |
– |
– |
– |
(3,336) |
Dividends paid |
– |
– |
– |
(9,365) |
– |
– |
– |
(9,365) |
At 31 August 2022 |
4,727 |
277 |
106,235 |
26,222 |
26,940 |
9,904 |
(5,790) |
168,515 |
|
|
|
|
|
|
|
|
|
Six months ended 31 Aug
2021(unaudited) |
Called up share capital |
Capital redemption reserve |
Share premium account |
Special reserve |
Capital reserve -
realised |
Revaluation reserve |
Revenue reserve |
Total |
|
£’000 |
£’000 |
£’000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
At 1 March 2021 |
3,598 |
129 |
55,656 |
50,992 |
13,605 |
16,463 |
(3,613) |
136,830 |
Issue of new shares |
529 |
– |
19,994 |
(899) |
– |
– |
– |
19,624 |
Total comprehensive income |
– |
– |
– |
– |
272 |
9,309 |
(710) |
8,871 |
Transfer of previously unrealised gains now realised |
– |
– |
– |
– |
3,020 |
(3,020) |
– |
– |
Share buybacks and cancellation |
(24) |
24 |
– |
(862) |
– |
– |
– |
(862) |
Dividends paid |
– |
– |
– |
(3,795) |
– |
– |
– |
(3,795) |
At 31 August 2021 |
4,103 |
153 |
75,650 |
45,436 |
16,897 |
22,752 |
(4,323) |
160,668 |
|
|
|
|
|
|
|
|
|
The special reserve, capital reserve - realised and revenue
reserve are distributable reserves. Reserves available for
distribution therefore amount to £47,372,000 (2021:
£58,010,000).
The accompanying notes form an integral part of this
announcement.
Unaudited Condensed Statement of
Cash Flows for the six
months ended 31 August 2022
|
|
|
(unaudited)Six monthsended31 Aug 2022 |
(unaudited)Six monthsended31 Aug 2021 |
|
(audited)Year ended 28 Feb2022 |
|
Note |
|
£'000 |
£'000 |
|
£'000 |
Net cash used in operating activities |
A |
|
(4,079) |
(1,589) |
|
(3,721) |
|
|
|
|
|
|
|
Cash flows from investing
activities |
|
|
|
|
|
|
Purchase of investments |
|
|
(12,449) |
(7,998) |
|
(32,663) |
Sale of investments |
|
|
24,816 |
9,041 |
|
15,310 |
Net cash from/(used
in) investing
activities |
|
|
12,367 |
1,043 |
|
(17,353) |
|
|
|
|
|
|
|
Cash flows from financing
activities |
|
|
|
|
|
|
Proceeds from share issues |
|
|
29,363 |
19,955 |
|
19,955 |
Share issue costs |
|
|
(1,202) |
(899) |
|
(899) |
Purchase of own shares |
|
|
(2,378) |
(616) |
|
(2,293) |
Equity dividends paid |
|
|
(7,957) |
(3,227) |
|
(6,468) |
Net cash from financing
activities |
|
|
17,826 |
15,213 |
|
10,295 |
|
|
|
|
|
|
|
Increase/(decrease) in
cash and cash equivalents |
B |
|
26,114 |
14,667 |
|
(10,779) |
|
|
|
|
|
|
|
Notes to the cash flow
statement: |
|
|
|
|
|
|
A Cash
flows used in
operating activities |
|
|
|
|
|
|
(Loss) / return on ordinary activities before taxation |
|
|
(17,841) |
8,871 |
|
22,440 |
Loss / (gain) on investments |
|
|
15,698 |
(11,127) |
|
(28,453) |
Decrease in prepayments, accrued income and other debtors |
|
|
118 |
258 |
|
140 |
(Decrease) / increase in accruals and other creditors |
|
|
(2,054) |
409 |
|
2,152 |
Net cash used in operating activities |
|
|
(4,079) |
(1,589) |
|
(3,721) |
|
|
|
|
|
|
|
B
Analysis of net funds |
|
|
|
|
|
|
Beginning of period/year |
|
|
25,890 |
36,669 |
|
36,669 |
Net cash inflows / (outflows) |
|
|
26,114 |
14,667 |
|
(10,779) |
End of period/year |
|
|
52,004 |
51,336 |
|
25,890 |
The accompanying notes form an integral part of this
announcement.
Notes to the half-yearly report
for the six months ended 31 August 2022
1. Accounting
policiesBasis of accountingThe Company has prepared its
financial statements under Financial Reporting Standard 104
(“FRS104”) and in accordance with the Statement of Recommended
Practice ‘Financial Statements of Investment Trust Companies and
Venture Capital Trusts’ (the “SORP”) issued by the Association of
Investment Companies (“AIC”), as updated in July 2022.
The following accounting policies have been applied consistently
throughout the period. Further details of principal accounting
policies were disclosed in the Annual Report and Accounts for the
year ended 28 February 2022. There has been no change to the
accounting policies from those disclosed in the financial
statements for the year ended 28 February 2022.
The unaudited financial statements set out herein have not been
subject to review by the auditor and do not constitute statutory
accounts within the meaning of Section 434 of the Companies Act
2006. The figures for the year ended 28 February 2022 have been
extracted from the financial statements for that period, which have
been delivered to the Registrar of Companies; the Auditor’s report
on those financial statements was unqualified.
Presentation of Income StatementIn order to better reflect the
activities of an investment company and, in accordance with
guidance issued by the AIC, supplementary information which
analyses the Income Statement between items of a revenue and
capital nature has been presented alongside the Income Statement.
The revenue return attributable to equity shareholders is the
measure the Directors believe appropriate in assessing the
Company’s compliance with certain requirements set out in Part 6 of
the Income Tax Act 2007.
InvestmentsInvestments, including equity and loan stock, are
recognised at their trade date and measured at “fair value through
profit or loss” due to investments being managed and performance
evaluated on a fair value basis. A financial asset is designated
within this category if it is both acquired and managed, with a
view to selling after a period of time, in accordance with the
Company’s documented investment policy. The fair value of an
investment upon acquisition is deemed to be cost. Thereafter
investments are measured at fair value in accordance with
International Private Equity and Venture Capital Valuation
Guidelines (“IPEV Guidelines”) issued in December 2018, together
with Sections 11 and 12 of FRS102.
Publicly traded investments are measured using bid prices in
accordance with the IPEV Guidelines.
Key judgementsThe valuation methodologies used by the Directors
for estimating the fair value of unquoted investments are in
accordance with the IPEV guidelines and as follows:
- where a company is in the early stage of development, the
estimate of fair value is calculated based on market data and
assumptions as to the potential outcomes, benchmarked against
alternative valuation methodologies during this time;
- where a company is well established after an appropriate
period, the investment may be valued by applying a suitable
earnings or revenue multiple to that company’s maintainable
earnings or revenue. The multiple used is based on comparable
listed companies or a sector but discounted to reflect factors such
as the different sizes of the comparable businesses, different
growth rates and the lack of marketability of unquoted shares;
- where a value is indicated by a material arm’s-length
transaction by a third party in the shares of the company, the
valuation will normally be based on this;
- where alternative methods of valuation, such as net assets of
the business, are more appropriate then such methods may be used;
and
- where repayment of the equity is not probable, redemption
premiums will be recognised.
The methodology applied takes account of the nature, facts and
circumstances of the individual investment and uses reasonable
data, market inputs, assumptions and estimates in order to
ascertain fair value. Methodologies are applied consistently from
year to year except where a change results in a better estimate of
fair value.
Where an investee company has gone into receivership or
liquidation, or the loss in value below cost is considered to be
permanent, or there is little likelihood of a recovery from a
company in administration, the loss on the investment, although not
physically disposed of, is treated as being realised.
All investee companies are held as part of an investment
portfolio and measured at fair value. Therefore, it is not the
policy for investee companies to be consolidated and any gains or
losses arising from changes in fair value are included in the
Unaudited Condensed Income Statement for the period as a capital
item.
Gains and losses arising from changes in fair value are included
in the Unaudited Condensed Income Statement for the period as a
capital item and transaction costs on acquisition or disposal of
the investment are expensed.
Investments are derecognised when the contractual rights to the
cash flows from the asset expire or the Company transfers the asset
and substantially all the risks and rewards of ownership of the
asset to another entity.
Key estimatesThe key estimates involved in determining the fair
value of a company can include:
- identifying a relevant basket of market comparables;
- deducing the discount to take on those market comparables;
- determining reoccurring revenue;
- determining reoccurring earnings; or
- identifying surplus cash.
2. All revenue and
capital items in the Unaudited Condensed Income Statement derive
from continuing
operations.3. There are no
other items of comprehensive income other than those disclosed in
the Unaudited Condensed Income
Statement.4. The Company
has only one operating segment as reported to the Board of
Directors in their capacity as chief operating decision makers and
derives its income from investments made in shares, securities and
bank deposits.5. The
comparative figures are in respect of the year ended 28 February
2022 and the six-month period ended 31 August 2021.
6. Basic and diluted return
per share for the period has been calculated on 287,309,948 shares,
being the weighted average number of shares in issue during the
period.7. Basic and diluted
NAV per share for the period has been calculated on 292,033,361
shares, being the number of shares in issue at the period
end.8. Dividends
|
|
(unaudited) |
(unaudited) |
(audited) |
|
|
Six months ended |
Six months ended |
Year ended |
|
|
31-Aug-22 |
31-Aug-21 |
28-Feb-22 |
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
Total |
|
Pence |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
2021
Final |
1.50 |
– |
– |
– |
|
3,795 |
3,795 |
3,795 |
2022
Interim |
1.50 |
– |
– |
– |
– |
– |
– |
3,803 |
2022
Final |
1.50 |
– |
4,323 |
4,323 |
– |
– |
– |
– |
2022
Special |
1.75 |
– |
5,042 |
5,042 |
– |
– |
– |
– |
Total dividends paid |
|
– |
9,365 |
9,365 |
– |
3,795 |
3,795 |
7,598 |
9. Contingent
liabilities, guarantees and financial commitmentsBased on
the NAV per share at 31 August 2022, before any performance fee
accrual, and cumulative dividends paid and payable ahead of 28
February 2023, no performance fee is currently payable by the
Manager in respect of the period.
The Company has no other contingent liabilities, guarantees or
financial commitments at 31 August 2022.
10. Called up
share capitalDuring the period, the Company issued
42,981,001 Ordinary Shares for an aggregate consideration of £29.4
million under the combined offer for subscription with ProVen VCT
plc which launched on 11 January 2022. Share issue costs thereon
amounted to £1.3 million.
In the same period, the Company allotted a further 2,309,547
shares at 60.95p per share under the Company’s DRIS in respect of
the dividend paid on 5 August 2022.
During the period, the Company completed purchases of 5,347,916
shares at an average price of 62.1p per share and for aggregate
consideration (net of costs) of £3,319,626. This represented 2.12%
of the shares in issue at the start of the period. The shares were
subsequently cancelled.
11. Financial
instruments Investments are valued at fair value as
determined using the measurement policies described in note 1.
The Company has categorised its financial instruments that are
measured subsequent to initial recognition at fair value, using the
fair value hierarchy as follows:
Level
1 Reflects
instruments quoted in an active market.
Level
2 Reflects financial
instruments that have been valued using inputs, other than quoted
prices, that are
observable. Level
3 Reflects
financial instruments that have been valued using valuation
techniques with unobservable inputs.
|
(unaudited)31 Aug 2022 |
(audited)28 Feb 2022 |
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
Level 1 |
Level 2 |
Level 3 |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
AIM quoted |
– |
– |
– |
– |
337 |
– |
– |
337 |
Loan notes |
– |
– |
11,228 |
11,228 |
– |
– |
11,000 |
11,000 |
Unquoted investments |
– |
– |
106,012 |
106,012 |
– |
– |
134,073 |
134,073 |
Total |
– |
– |
117,240 |
117,240 |
337 |
– |
145,073 |
145,073 |
There have been no transfers between the three levels outlined
above.
12. Controlling
party and related party transactionsIn the opinion of the
Directors there is no immediate or ultimate controlling party.
Malcolm Moss, a Director of the Company, is also a Partner of
Beringea LLP. Beringea LLP was the Company’s Investment Manager
during the period. During the six months ended 31 August 2022,
£1,867,000 (2021: £1,636,000) was payable to Beringea LLP in
respect of these services. At the period end the Company owed
Beringea LLP £nil (2021: £nil).
Beringea LLP was also the Company’s Administration Manager
during the period. Fees paid to Beringea in its capacity as
Administration Manager for the six months ended 31 August 2022
amounted to £31,000 (2021: £30,000) of which £nil (2021: £nil)
remained outstanding at the period end.
As the Company’s investment manager, Beringea LLP is also
entitled to receive a performance incentive fee based on the
Company’s performance for each financial year to 28 February. The
performance incentive fee arrangements are set out, in detail, in
the Annual Report and Accounts. In respect of the year ending 28
February 2023, no performance incentive fee has been accrued. The
actual performance incentive fee, if any, will only be payable once
the full year results have been finalised.
Beringea LLP may charge arrangement fees, in line with industry
practice, to companies in which it invests. It may also receive
directors’ fees or monitoring fees from investee companies. These
costs are borne by the investee company not the Company. In the
six-month period to 31 August 2022, £90,000 (2021: £185,000) was
payable to Beringea LLP for arrangement fees under such
arrangements. Directors’ and monitoring fees payable to Beringea
LLP in the six-month period to 31 August 2022 amounted to £234,000
(2021: £261,000).
During the six months to 31 August 2022, an amount of £66,000
(2021: £66,000) was payable to the Directors of the Company as
remuneration for services provided to the Company. No amount was
outstanding at the period end.
As part of the combined offer for subscription with ProVen VCT
plc launched on 11 January 2022, Beringea LLP received £640,000 in
promoter’s fees. Out of this promoter fee, the Manager is
responsible for paying all the costs on the offer, including
professional fees and marketing expenses. The £640,000 above formed
part of the £1,277,000 offer issue costs referenced elsewhere in
these financial statements. The remainder of this amount was paid
to financial advisers, as agreed between them and their respective
clients. All offer allotments are made net of fees. The fees
outlined above do not therefore impact the NAV of the Company.
13. The Directors
confirm that, to the best of their knowledge, the half-yearly
financial statements have been prepared in accordance with
Financial Reporting Standard 104 issued by the Financial Reporting
Council and the half-yearly financial report includes a fair review
of the information required by:
- DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of financial statements, and a description of the principal
risks and uncertainties for the remaining six months of the year;
and
- DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period, and any changes in the related party transactions
described in the last annual report that could do so.
14. Risk and
uncertainties
Under the Disclosure and Transparency Directive, the Board is
required in the Company’s half-yearly results, to report on the
principal risks and uncertainties facing the Company over the
remainder of the financial year.
The Board has concluded that the key risks facing the Company
over the remainder of the financial year are as follows:
(i) investment risk associated with
investing in small and immature businesses;
(ii) investment risk arising from volatile
stock market conditions and their potential effect on the value of
the Company’s venture capital investments and the exit opportunity
for those investments; and(iii) breach of
VCT regulations.In the case of (i), the Board is satisfied with the
Company’s approach. The Investment Manager follows a rigorous
process in vetting and careful structuring of new investments and,
after an investment is made, close monitoring of the business. In
respect of (ii), the Company seeks to hold a diversified portfolio.
However, the Company’s ability to manage this risk is quite
limited, primarily due to the restrictions arising from the VCT
regulations.
The Company's compliance with the VCT regulations is continually
monitored by the Administration Manager, who reports regularly to
the Board on the current position. The Company also retains Philip
Hare & Associates LLP to provide regular reviews and advice in
this area. The Board considers that this approach reduces the risk
of a breach of the VCT regulations to an appropriate level.
15. Going
concern
The Directors have reviewed the Company’s financial resources at
the period end and concluded that the Company is well placed to
manage its business risks.
The Board confirms that it is satisfied that the Company has
adequate resources to continue in business for the foreseeable
future. For this reason, the Board believes that the Company
continues to be a going concern and that it is appropriate to apply
the going concern basis in preparing the financial statements.
Copies of the unaudited half yearly results will be sent to
shareholders. Further copies can be obtained from the Company’s
registered office and will be available for download from
www.proveninvestments.co.uk.
16. Post balance
sheet events
Since 31 August 2022, the Company has made a follow-on
investment of £0.1 million into Plum Guide.
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