TIDMPPE
PROVEN PLANNED EXIT VCT PLC
ANNUAL FINANCIAL REPORT
YEAR ENDED 31 JANUARY 2013
Financial summary
Ordinary Shares 31 January 2013 31 January 2012
Net asset value per share ("NAV") 80.8p 88.7p
Dividends paid since launch 9.0p 3.0p
Total return (NAV plus dividends paid since 89.8p 91.7p
launch)
Mid market share price 85.0p 97.0p
'A' Shares 31 January 2013 31 January 2012
Net asset value per share ("NAV") 0.1p 0.1p
Dividends paid since launch - -
Total return (NAV plus dividends paid since 0.1p 0.1p
launch)
Mid market share price 0.1p 0.1p
Chairman's Statement
Introduction
I have pleasure in presenting the second annual report for ProVen
Planned Exit VCT plc (the "Company") to Shareholders for the year ended
31 January 2013.
Results
The loss on activities after taxation was GBP90,000 (2012: GBP131,000),
comprising a revenue loss of GBP46,000 (2012: GBP85,000) and a capital
loss of GBP44,000 (2012: GBP46,000). The net asset value total return,
comprising net asset value and dividends paid since launch, was 89.8p
per Ordinary Share (2012: 91.7p) and 0.1p per 'A' Share (2012: 0.1p).
Dividends
In accordance with the terms of the Offer, the Directors intend that the
Company pays two dividends per year of 3p each, subject to the
availability of sufficient cash reserves and distributable reserves.
The Company paid an interim dividend for the year ended 31 January 2013
of 3p per Ordinary Share on 21 November 2012 to Ordinary Shareholders on
the register as at 9 November 2012.
The Company is proposing a final dividend for the year ended 31 January
2013 of 3p per Ordinary Share which will be subject to approval by
Shareholders at the Annual General Meeting of the Company on 17 July
2013. The dividend will, subject to this approval, be paid on 24 July
2013 to Ordinary Shareholders on the register as at 12 July 2013.
Portfolio activity and valuation
At 31 January 2013, the Company's venture capital investment portfolio
comprised three venture capital investments at a cost of GBP1.2 million
and a valuation of GBP1.2 million (2012: GBP0.45 million and GBP0.45
million respectively). In addition, the Company held cash and other
liquid funds of GBP2.2 million.
After the year end, an investment of GBP550,000 was made into Fjordnet
Limited and GBP500,000 into Campden Media Limited. The investment into
Fjordnet Limited was then repaid in full in May, when the company was
acquired.
Share buybacks
The Directors intend that, in the five years following the first
allotment of shares, the Company will operate a policy of buying back
its own shares for cancellation at a zero discount to net asset value.
It should be noted, however, that a disposal of VCT shares within five
years from allotment may result in the loss of the initial income tax
relief. Given the intended life of the Company, it is not intended that
any shares will be bought back after the fifth anniversary of the first
allotment of shares.
No shares were purchased by the Company during the year.
Annual General Meeting
The Annual General Meeting ("AGM") of the Company will be held at 39
Earlham Street, London WC2H 9LT at 3.00 pm on 17 July 2013.
Shareholder presentation
I was pleased to meet a number of the Company's Shareholders at the
Investment Manager's annual shareholder presentation held on 22 October
2012 at the Royal College of Surgeons in central London. The event
provided an opportunity for Shareholders to hear directly from, and meet,
portfolio companies, the Investment Manager, VCT directors and other
Shareholders. The feedback from the event was positive and the board
looks forward to this year's presentation in the autumn. Further details
of the event will be communicated to Shareholders in due course.
The Board is always pleased to hear comments from Shareholders outside
the AGM and shareholder event and can be contacted through the Company's
registered office at 39 Earlham Street, London WC2H 9LT.
Outlook
The Company continues to seek out lower risk investment opportunities in
accordance with its investment mandate. Whilst investments are being
targeted, the Company has kept its assets in lower risk cash and liquid
fund investments. Whilst it is still early in the Company's life, the
investments are developing as planned and the Board therefore remains
optimistic about meeting the stated objective for Shareholders.
Peter L R Hewitt
Chairman
Investment Manager's Review
Introduction
We have pleasure in presenting our report for ProVen Planned Exit VCT
plc (the "Company" or "PPE") for the year to 31 January 2013.
Beringea LLP is a specialist venture capital management company which
traces its origins back over 25 years. It currently manages over GBP100
million of VCT funds through four VCTs and has managed VCTs since their
inception in 1996. This experience gives Beringea access to interesting
and potentially larger investment opportunities which may not be
available to a smaller standalone VCT. The recent investment in Fjordnet
Limited, completed shortly after the year end, resulted from our
established relationship with the company and the ability through the
VCTs to provide a flexible funding package which met its requirements.
The Company made two investments totalling GBP1 million in qualifying
venture capital companies during the year ended 31 January 2013.
Subsequent to the year end, the Company has completed another two VCT
qualifying investments totalling GBP1.05 million and disposed of a VCT
qualifying investment for a small profit.
Investment activity and portfolio valuation
As at 31 January 2013, the Company's venture capital investment
portfolio comprised two VCT qualifying investments with a cost and
valuation of GBP1 million and one non-VCT qualifying investment with a
cost and valuation of GBP200,000. In addition, the Company had a further
committed investment of GBP550,000, included in debtors, and held cash
and other liquid funds of GBP2.2 million.
In February 2012, the Company completed an investment comprising a
combination of equity and loan notes totalling GBP600,000 into Cross
Solar PV Limited ("Cross Solar"). Cross Solar is a solar energy company
which owns a portfolio of solar installations on the residential
rooftops, over which it has a 25-year lease. This entitles Cross Solar
to receive payments under the Government backed "feed-in tariff" scheme
for the generation of renewable energy. Cross Solar is managed by one of
the most experienced teams in this sector in the UK. PPE invested
alongside ProVen VCT plc and ProVen Growth and Income VCT plc as part of
a total investment by Beringea-managed VCTs of GBP2.6 million. The
investment has been structured to provide an attractive yield, security
against the assets of Cross Solar and a redemption premium on the loan
notes. Cross Solar is performing in line with expectations and the
investment has been valued at cost.
In April 2012, the Company completed a GBP400,000 investment in Long
Eaton Healthcare Limited ("LEH"). LEH provides pharmacy services in an
existing GP centre in Long Eaton, near Nottingham and is managed by APM
Healthcare, in which other Beringea-managed VCTs have invested. APM
Healthcare, through its subsidiary Community Pharmacies (UK) Limited, is
establishing a number of practice-based pharmacies in conjunction with
local GPs with expert support and guidance from a centralised head
office. The loan element of the investment is secured over LEH's assets.
The investment is valued at cost.
In April 2012, the Company's GBP250,000 loan to Campden Media Limited
was repaid in full, in accordance with the original investment plan. The
loan facility provided an attractive yield relative to the interest
rates available on cash alternatives.
Eagle-i Music Limited ("Eagle-i"), in which the Company invested in
January 2012, manages music publishing properties. Eagle-i has continued
to add to the properties it manages throughout the year. The majority of
the investment is in the form of a loan at an attractive interest rate.
Eagle-i is valued at cost.
Post year end portfolio activity
In February 2013, the Company completed a VCT qualifying investment of
GBP550,000, in a combination of equity and loan notes, into Fjordnet
Limited. Fjordnet is an established digital design agency which works
across many sectors, including telecommunications, media, finance and
healthcare. It has worked on market leading flagship projects -
including projects for the BBC, Nokia, Orange, Swisscom and Yahoo!.
Fjordnet was instrumental in bringing the hugely successful
award-winning BBC iPlayer to mobile. The company has offices in London,
Helsinki, Berlin, Paris, Madrid, Stockholm, New York, San Francisco and
Istanbul. Although it was a new investment for the Company, Fjordnet
Limited has had previous rounds of funding from ProVen VCT plc and
ProVen Growth and Income VCT plc since December 2008, amounting to GBP3
million. This latest round of funding took the total invested by all
Beringea-managed VCTs to GBP4.5million.
Fjordnet was acquired by Accenture Holdings B.V., a subsidiary of
Accenture (NYSE: ACN) on 22 May 2013. This resulted in the full
repayment of the loan notes and generated a small profit for the
Company.
In April 2013, the Company provided a working capital facility of
GBP500,000, made up of equity and loan notes, to Campden Media Limited,
a magazine publisher and event organiser. The Company first invested in
Campden Media in December 2011, with this funding being subsequently
repaid in April 2012. The new loan facility provides an attractive yield
relative to the interest rates available on cash alternatives.
Outlook
In the year to the date of this review, we have made good progress
towards our goal of meeting the investment targets under the VCT
legislation. The Company has until 31 January 2014 to invest, broadly,
70% of the funds raised from the initial fundraising after adjusting for
net expenses and distributions. The reluctance of banks to lend to
businesses is providing opportunities for alternative funders such as
VCTs. In addition, the existing portfolios of the Beringea managed VCTs
have provided attractive opportunities to PPE which would not be
available to other VCTs. We will continue to be selective about the
opportunities in which we invest with the aim of building up an
attractive and robust portfolio to deliver the targeted returns to
investors.
Beringea LLP
Investment Portfolio
as at 31 January 2013
The following investments were held at 31 January 2013:
Valuation % of
Valuation movement in portfolio by
Cost GBP'000 GBP'000 year GBP'000 value
Venture capital
investments
Cross Solar PV
Limited(1) 600 600 - 15.2%
Long Eaton
Healthcare
Limited(2) 400 400 - 10.1%
Eagle-i Music
Limited(3) 200 200 - 5.1%
Total venture
capital
investments 1,200 1,200 - 30.4%
HSBC liquidity
fund 503 12.7%
Insight
liquidity
fund 500 12.7%
Cash at bank
and in hand 1,198 30.3%
Other
debtors(4) 550 13.9%
Total
investments 3,951 100.0%
All venture capital investments are unquoted unless otherwise stated.
1. Cross Solar PV Limited is also held by ProVen VCT plc and ProVen
Growth and Income VCT plc.
2. Long Eaton Healthcare Limited is also held by ProVen VCT plc,
ProVen Growth and Income VCT plc and ProVen Health VCT plc.
3. Eagle-i Music Limited is also held by ProVen Growth and Income VCT
plc. ProVen VCT plc and ProVen Growth and Income VCT plc also hold an
investment in Eagle Rock Entertainment Group Limited which is a
significant shareholder in Eagle-i Music Limited.
4. Other debtors of GBP550,000 relates to an investment in Fjordnet
Limited, which completed on 21 February 2013. Fjordnet Limited was also
held in ProVen VCT plc and ProVen Growth and Income VCT plc at 31
January 2013.
The relationship between the VCTs managed by Beringea is covered by a
co-investment agreement.
All venture capital investments held at the year end are registered in
England and Wales.
Directors' Responsibilities Statement
The Directors are responsible for preparing the Report of the Directors,
the Directors' Remuneration Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for
each financial year. Under that law the directors have elected to
prepare the financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting
Standards and applicable laws). Under company law 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 and 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 judgments and accounting estimates that are reasonable and prudent;
-- state whether UK 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 confirm that:
-- so far as each director is aware there is no relevant audit information
of which the company's auditor is unaware; and
-- the Directors have taken all steps that they ought to have taken as
directors to make themselves aware of any relevant audit information and
to establish that the auditor is aware of that information.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the company's website.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in
other jurisdictions.
Directors' statement pursuant to the Disclosure and Transparency Rules
Each of the Directors, confirms that, to the best of his or her
knowledge:
-- the financial statements, which have been prepared in accordance with
United Kingdom Generally Accepted Accounting Practice, give a true and
fair view of the assets, liabilities, financial position and loss of the
Company; and
-- the management report contained in the Chairman's Statement, Investment
Manager's Review and Report of the Directors 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.
On behalf of the Board
Peter L R Hewitt
Chairman
ProVen Planned Exit VCT plc
Company number: 07333086
Registered Office:
39 Earlham Street
London WC2H 9LT
Income Statement
for the year ended 31 January 2013
2013 2012
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 66 - 66 13 - 13
Investment management
fees (15) (44) (59) (12) (37) (49)
Other expenses (97) - (97) (86) (9) (95)
Losses on ordinary
activities before tax (46) (44) (90) (85) (46) (131)
Tax on ordinary
activities - - - - - -
Losses attributable to
equity shareholders (46) (44) (90) (85) (46) (131)
Basic and diluted loss
per share (1.0p) (0.9p) (1.9p) (1.9p) (1.0p) (2.9p)
All revenue and capital items in the above statement derive from
continuing operations. The total column within the Income Statement
represents the profit and loss account of the Company.
The Company has no recognised gains or losses other than the results for
the year as set out above.
Reconciliation of Movements in Shareholders' Funds
for the year ended 31 January 2013
2013 2012
GBP'000 GBP'000
Opening shareholders' funds 4,281 -
Proceeds from share issues - 4,714
Share issue costs - (157)
Total recognised losses for the year/period (90) (131)
Dividends paid (289) (145)
Closing shareholders' funds 3,902 4,281
Balance Sheet
as at 31 January 2013
2013 2012
GBP'000 GBP'000
Fixed assets
Investments 1,200 450
Current assets
Debtors 563 10
Investments 1,003 380
Cash at bank and in hand 1,198 3,523
2,764 3,913
Creditors: amounts falling due within one year (62) (82)
Net current assets 2,702 3,831
Net assets 3,902 4,281
Capital and reserves
Called up Ordinary Share capital 5 5
Called up 'A' Share capital 7 7
Share premium account - -
Special distributable reserve 4,111 4,400
Capital reserve - realised (90) (46)
Revenue reserve (131) (85)
Total equity shareholders' funds 3,902 4,281
Ordinary Share 80.8p 88.7p
'A' Share 0.1p 0.1p
Cash Flow Statement
for the year ended 31 January 2013
Period
Year ended ended 31
31 January January
2013 2012
GBP'000 GBP'000
Net cash outflow from operating activities (663) (59)
Capital expenditure:
Purchase of investments (1,000) (450)
Repayment of loan 250 -
Net cash outflow from capital expenditure (750) (450)
Equity dividends paid (289) (145)
Management of liquid resources:
Purchase of current investments held as liquidity
funds (623) (500)
Withdrawal from liquidity funds - 120
Net cash outflow from liquid resources (623) (380)
Net cash outflow before financing (2,325) (1,034)
Financing:
Proceeds from Ordinary Share issues - 4,707
Proceeds from 'A' Share issues - 7
Proceeds from Preference Share issues - 50
Redemption of Preference Shares - (50)
Share issue costs - (157)
Net cash inflow from financing - 4,557
(Decrease)/increase in cash (2,325) 3,523
Notes to the Accounts
for the year ended 31 January 2013
1.Accounting policies
Basis of accounting
The Company has prepared its financial statements under UK Generally
Accepted Accounting Practice ("UK GAAP") and in accordance with the
Statement of Recommended Practice "Financial Statements of Investment
Trust Companies and Venture Capital Trusts" revised January 2009
("SORP").
The Company's accounting policies remain unchanged from the prior year.
The financial statements are prepared under the historical cost
convention except for certain financial instruments measured at fair
value.
In accordance with "Going Concern and Liquidity Risk: Guidance for
Directors of UK Companies 2009", issued by the Financial Reporting
Council, the Board has assessed the Company's operation as a going
concern. The Company has considerable financial resources both at the
year end and at the date of this report comprising of cash, liquidity
funds and fixed asset investments. As a consequence, the Directors
believe that the Company is well placed to manage its business risks
successfully despite the current uncertain economic outlook. The
Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable
future. For this reason they believe 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.
The Company implements new Financial Reporting Standards ("FRS") issued
by the Accounting Standards Board when required.
Presentation of Income Statement
In accordance with the SORP, supplementary information which analyses
the Income Statement between items of a revenue and capital nature has
been presented alongside the Income Statement. The net revenue is the
measure the Directors believe appropriate in assessing the Company's
compliance with certain requirements set out in S274 of the Income Tax
Act 2007.
Fixed assets investments
Investments, including equity and loan stock, are designated as "fair
value through profit or loss" assets 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 ("IPEVCVG") issued in September
2009 together with FRS26.
The valuation methodologies used by the Directors for assessing the fair
value of unquoted investments are as follows:
-- investments are usually retained at cost for an appropriate period
following investment, except where a company's performance against plan
is significantly below the expectations on which the investment was made
in which case a provision against cost is made as appropriate;
-- where a company is in the early stage of development it will normally
continue to be held at cost, reviewed for impairment on the basis
described above;
-- where a company is well established after an appropriate period, the
investment may be valued by applying a suitable earnings or revenue
multiple to that company's maintainable earnings or revenue. The
multiple used is based on comparable listed companies or a sector but
discounted to reflect factors such as the different sizes of the
comparable businesses, different growth rates and the lack of
marketability of unquoted shares;
-- where a value is indicated by a material arms-length transaction by a
third party in the shares of the company, the valuation will normally be
based on this, reviewed for impairment as appropriate; and
-- where alternative methods of valuation, such as net assets of the
business or the discounted cash flows arising from the business are more
appropriate, then such methods may be used.
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
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.
Gains and losses arising from changes in fair value are included in the
Income Statement for the year as a capital item.
It is not the Company's policy to exercise either significant or
controlling influence over investee companies. Therefore the results of
these companies are not incorporated into the Income Statement except to
the extent of any dividends or interest accrued. This is in accordance
with the SORP that does not require portfolio investments to be
accounted for using the equity method of accounting.
Current asset investments
Current asset investments, which comprise investments in liquidity funds
with AAA rating, are held at fair value through profit or loss and are
marked-to-market. Liquidity funds are mutual funds that invest in high
quality short-term money market instruments enabling investors to access
a highly diversified and liquid portfolio. These assets are purchased
and redeemed under a contract and the assets are recognised and
derecognised on the trade date. These assets are initially measured at
fair value which equates to cost and subsequently continue to be valued
at fair value, being the closing price of the fund as issued by the
provider.
Income
Dividend income from investments is recognised when the shareholder's
right to receive payment has been established, normally the ex dividend
date.
Interest income is accrued on a time apportioned basis, by reference to
the principal outstanding and at the effective interest rate applicable
and only where there is reasonable certainty of collection.
Expenses
All expenses are accounted for on an 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:
-- expenses which are incidental to the acquisition of an investment are
deducted from the Capital Account;
-- expenses which are incidental to the disposal of an investment are
deducted from the disposal proceeds of the investment; and
-- 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 investment
management fee has been allocated 25% to revenue and 75% to capital, in
order to reflect the Directors' expected long-term view of the nature of
the investment returns of the Company.
Taxation
The tax effects on different items in the Income Statement are allocated
between capital and revenue on the same basis as the particular item to
which they relate, using the Company's effective rate of tax for the
accounting period.
Due to the Company's status as a Venture Capital Trust and the continued
intention to meet the conditions required to comply with S274 of the
Income Tax Act 2007, no provision for taxation is required in respect of
any realised or unrealised appreciation of the Company's investments
which arises.
Deferred taxation assets are provided in full on timing differences that
result in an obligation at the balance sheet date to pay more tax, or a
right to pay less tax at a future date, as rates expected to apply when
they crystallise based on current tax rates and law. Timing differences
arise from the inclusion of items of income and expenditure in taxation
computations in periods different from those in which they are included
in the accounts.
Cash
Cash, for the purposes of the cash flow statement, comprises cash in
hand and deposits repayable on demand.
Debtors
The Company's debtors are initially recognised at fair value and
subsequently measured at amortised cost using the effective interest
method.
Liabilities
The Company's financial liabilities are initially recognised at fair
value and subsequently measured at amortised cost using the effective
interest method.
Issue costs
Issue costs in relation to share issues have been deducted from the
share premium account.
2. Loss per share
Weighted
average Revenue Capital
number of loss per loss per
shares in share Revenue loss share Capital loss
issue (pence) GBP'000 (pence) GBP'000
Year ended 31
January 2013:
Ordinary Shares 4,818,237 (1.0p) (46) (0.9p) (44)
'A' Shares 7,227,354 - - - -
Year ended 31
January 2012:
Ordinary Shares 4,552,965 (1.9p) (85) (1.0p) (46)
'A' Shares 5,625,410 - - - -
3. Net asset value per share
2013 2012
2013 2012 Net Net
2013 Pence Pence asset asset
Shares in per per value value
issue 2012 Shares in issue share share GBP'000 GBP'000
Ordinary
Shares 4,818,237 4,818,237 80.8 88.7 3,895 4,274
'A' Shares 7,227,352 7,227,352 0.1 0.1 7 7
Net assets 3,902 4,281
The Directors allocate the assets and liabilities of the Company between
the Ordinary Shares and 'A' Shares such that each share class has
sufficient net assets to represent its dividend and return of capital
rights.
As the Company has not issued any convertible securities or share
options, there is no dilutive effect on net asset per share. The net
asset value per share disclosed therefore represents both basic and
diluted net asset value per share.
4. Principal financial risks and management objectives
The Company's investment activities expose the Company to a number of
risks associated with financial instruments and the sectors in which the
Company invests. The principal financial risks arising from the
Company's operations are:
-- market risks;
-- credit risk; and
-- liquidity risk.
The Board regularly reviews these risks and the policies in place for
managing them. There have been no significant changes to the nature of
the risks that the Company is exposed to over the year and there have
also been no significant changes to the policies for managing those
risks during the year.
The risk management policies used by the Company in respect of the
principal financial risks and a review of the financial instruments held
at the year end are provided below:
Market risks
As a VCT, the Company is exposed to market risks in the form of
potential losses and gains that may arise on the investments it holds.
The key market risk to which the Company is exposed is market price
risk. The Company has undertaken sensitivity analysis on its financial
instruments, split into the relevant component parts, taking into
consideration the economic climate at the time of review in order to
ascertain the appropriate risk allocation.
Market price risk
Market price risk arises from uncertainty about the future prices of
financial instruments held in accordance with the Company's investment
objectives. It represents the potential loss that the Company might
suffer through changes in the fair value of unquoted investments.
It is not the Company's policy to use derivative instruments to mitigate
market risk, as the Board believes that the effectiveness of such
instruments does not justify the cost involved.
The sensitivity analysis below assumes that each of the sub categories
of financial instruments (ordinary shares, preference shares, loan
stocks and liquidity funds) held by the Company produces an overall
movement of 20%. Shareholders should note that equal correlation
between these sub categories is unlikely to be the case in reality,
particularly in the case of loan stock instruments. This is because the
loan stock instruments would not share in the impact of any increase in
share prices to the same extent as the equity instruments, as the
returns are set by reference to interest rates and premiums agreed at
the time of the initial investment. Similarly, where share prices are
falling, the equity instrument could fall in value before the loan stock
instrument. It is not considered practical to assess the sensitivity of
the loan stock instruments to market price risk in isolation.
Sensitivity 2013 - 20% fall 2012 - 20% fall
Impact Impact
on NAV on NAV
per per
Risk Ordinary Risk Ordinary
exposure Impact on Share exposure Impact on Share
GBP'000 net assets GBP'000 Pence GBP'000 net assets GBP'000 Pence
Venture
capital
investments 1,200 (240) (4.9p) 450 (90) (1.9p)
Liquidity
fund 1,003 (201) (4.1p) 380 (76) (1.5p)
2,203 (441) (9.0p) 830 (166) (3.4p)
Credit risk
Credit risk is the risk that a counterparty to a financial instrument is
unable to discharge a commitment made under that instrument. The Company
is exposed to credit risk through its holdings of investments in loan
stock, liquidity funds, cash deposits and debtors.
The Company's exposure to credit risk is summarised as follows:
2013 2012
GBP'000 GBP'000
Investments in loan stock 867 417
Investments in liquidity funds 1,003 380
Cash and cash equivalents 1,198 3,523
Interest, dividends and other receivables 563 10
3,631 4,330
Credit risk in respect of loan stock is managed with a similar approach
as described under 'market risks' above.
Credit risk in respect of the investment in liquidity funds is minimised
by investing in AAA-rated funds.
Cash is mainly held by HSBC Bank plc and Natwest Bank plc which are AA-
and AA rated financial institutions respectively. Consequently, the
Directors consider that the risk profile associated with cash deposits
is low.
Liquidity risk
Liquidity risk is the risk that the Company encounters difficulties in
meeting obligations associated with its financial liabilities. As the
Company only ever has a low level of creditors and no borrowings, the
Board believes that the Company's exposure to liquidity risk is minimal,
given the current large cash balance.
5. Post balance sheet events
Two VCT qualifying investments totalling GBP1.05 million were completed
after the year end.
On 21 February 2013, an investment of GBP550,000, comprising GBP55,000
in ordinary shares and GBP495,000 in loan stock, was made in Fjordnet
Limited.
Fjordnet was acquired by Accenture Holdings B.V., a subsidiary of
Accenture (NYSE: ACN) on 22 May 2013. This resulted in the full
repayment of the loan notes and generated a small profit for the
Company.
On 22 May 2013, an investment of GBP500,000, comprising GBP150,000 in
ordinary shares and GBP350,000 in loan stock, was made in Campden Media.
Announcement based on audited accounts
The financial information set out in this announcement does not
constitute the Company's statutory financial statements in accordance
with section 434 Companies Act 2006 for the year ended 31 January 2013,
but has been extracted from the statutory financial statements for the
year ended 31 January 2013, which were approved by the Board of
Directors on 28 May 2013 and will be delivered to the Registrar of
Companies following the Company's Annual General Meeting. The
Independent Auditor's Report on those financial statements was
unqualified and did not contain any emphasis of matter nor statements
under s 498(2) and (3) of the Companies Act 2006.
The statutory accounts for the period ended 31 January 2012 have been
delivered to the Registrar of Companies and received an Independent
Auditors report which was unqualified and did not contain any emphasis
of matter nor statements under S237(2) or (3) of the Companies Act 1985.
A copy of the full annual report and financial statements for the year
ended 31 January 2013 will be printed and posted to shareholders
shortly. Copies will also be available to the public at the registered
office of the Company at 39 Earlham Street, London, WC2H 9LT and will be
available for download from www.provenvcts.co.uk.
-End
This announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other
applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the
information contained therein.
Source: ProVen Planned Exit VCT plc via Thomson Reuters ONE
HUG#1704610
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