Managed by Beringea LLP ProVen Growth & Income VCT plc Annual Report and Accounts for the year ended 29 February 2012 Growth & Income VCT plc
Managed byBeringea LLP
ProVen Growth & Income VCT plcAnnual Report and Accountsfor the year ended 29 February 2012
Growth & IncomeVCT plc
Project2_Layout 1 09/07/2012 21:00 Page 1
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Contents page
Principal Investment Objectives and Financial Highlights 4Fund Overview 5Chairman’s Statement 6Investment Manager’s Review 9Investment Portfolio and Review of Investments 13Board of Directors 24Directors’ Report and Business Review 25Statement of Corporate Governance 32Directors’ Remuneration Report 36Independent Auditor’s Report 39Income Statement 41Reconciliation of Movements in Shareholders’ Funds 43Balance Sheet 44Cash Flow Statement 45Notes to the Accounts 46Shareholder Information 58Company Information 60Notice of Annual General Meeting (including the Appendix) 61Form of Proxy
ProVen Growth & Income VCT plc4
ProVen Growth & Income VCT plcPrincipal Investment Objectives
•toachieveatotalreturnsignificantlygreaterthanthatavailablefromdirectinvestmentinquotedbusinessesbyinvestinginaportfolioofcarefullyselectedsmallercompanieswithexcellentgrowthprospects;
•tominimisetheriskofeachinvestmentandtheportfolioasawhole;and
•toobtainandmaintainVCTstatusinordertosecurethesubstantialtaxbenefitsavailableforinvestmentinaVCT.
Financial Highlights
82.2p Ordinary Share net asset value pershareat29February2012
86.8p ‘D’ Share net asset value pershareat29February2012
5
Fund OverviewFinancial summary
Ordinary Shares ‘D’ Shares
As at 29 February 2012 pence
2011 pence
2012 pence
2011 pence
Netassetvaluepershare 82.2 86.4 86.8 90.0
Dividendspaidsinceshareconversion/classlaunch 4.5 – – –
Totalreturn (netassetvalueplusdividendspaidsinceshareconversion/classlaunch)
86.7 86.4 86.8 90.0
Year on year change in:
Netassetvaluepershare(adjustedfordividendspaid) 0.3% -3.6%
FTSEAllShareIndextotalreturn 1.5% 1.5%
Shareholder investment and returns analysis Thechartbelowshowstheoriginalsubscriptionprice,netcostaftertax(assumingfullincometaxreliefattheraterulingatthetimeoftheinvestment)andtotalreturn(netassetvalueanddividendspaid)foreachshareclassandtaxyearfundraising,asat29February2012.Theordinarysharefundsraisedin2011/2012wereissuedateither(1)90.6ppershare,priorto2June2011or(2)86.3ppershare,after2June2011butpriorto24August2011or(3)84.4ppershare,after24August2011.Noaccounthasbeentakenofthepossiblebenefitofanycapitalgainstaxdeferral(availablefornewinvestmentsuptoandincludingtaxyear2003/2004)orofadditionalsharesthatmayhavebeenavailablethroughearlybirdorfinancialintermediarydiscounts.
60
100105
8091 86 84
100 100
8074
5663
60 5970
200
9987
82 82
9687
0
20
40
60
80
100
120
140
160
180
200
2010/11 &2011/12 (1)
PencePer
Share
Share Class and Tax Year(s)
Ordinary
2005/06 2008/09 to2010/11
87
Ordinary Ordinary Ordinary
Subscription Price Net Cost After Tax Total Return (Dividends Paid Plus Net Asset Value)
220
Original Ordinary
Original Ordinary
Original C
2000/01 &2001/02
2007/08 &2008/09
2009/10 &2010/11
2011/12 (2)
2011/12 (3)
D
ProVen Growth & Income VCT plc6
Chairman’s StatementIampleasedtopresenttheAnnualReportforProVenGrowth&IncomeVCTplcfortheyearended29February2012.
Theyearsawacontinuationofthedifficulteconomicconditions,withrenewedfearsofaEurozonecrisisfuellingmorevolatilityinstockmarketpricesandhinderingarecoveryininvestorconfidence.SomeoftheCompany’sportfoliocompanieshavebeenimpactedbythisclimate,however,anumberofthestrongerportfoliocompanieshavebeenabletomakeheadway,suchthattheOrdinarySharepoolhasbeenabletoreportanincreaseinNAVovertheyear(afteradjustingfordividendspaid).
Net asset valueOrdinary SharesAt29February2012,theCompany’sOrdinaryShareNAVstoodat82.2ppershare.Thisrepresentsanincreaseof0.3por0.3%since28February2011afteradjustingforthedividendof4.5ppersharewhichwaspaidintheyear.PerformancesinceoriginalinvestmentforthevariousgroupsofShareholdersthatnowholdOrdinarySharesissummarisedinthetableonpage5.
‘D’ SharesTheNAVoftheCompany’s‘D’Sharesstoodat86.8pat29February2012,adecreaseof3.2por3.6%since28February2011.Nodividendshavebeenpaidto‘D’Shareholderstodate.ThefallinNAVispartlyafunctionofthefactthatthe‘D’Sharepoolisstillintheprocessofbeinginvestedanduninvestedcashdoesnotprovidesufficientincometocoverrunningcosts.
Portfolio activity and valuationOrdinary Share poolHavingraisedasignificantlevelofnewfundsatthestartoftheyear,theOrdinarySharepoolhasseenareasonablelevelofinvestmentactivity.Threenewinvestmentsandthreefollow-oninvestmentswerecompletedduringtheyearatatotalcostof£2.9million.ThenewinvestmentswereCrossSolarPV,Eagle-iMusicandUtilityExchangeOnline.TheOrdinarySharepoolalsoexitedfromfourinvestments,includingCoolabiandSteakMedia,whichwasacquiredinacashtransactionandhasresultedinatotalgainof£439,000againstcost,withthepossibilityoffurtherproceedsdependentonfutureperformance.
TheBoardhasreviewedthevaluationsoftheunquotedinvestmentsattheyearendandmadeanumberofadjustmentstothepreviouscarryingvalues.Thenetmovementontheportfoliowasagainfortheyearof£88,000.FurtherdetailsareprovidedintheInvestmentManager’sReviewandtheReviewofInvestments.
‘D’ Share poolThe‘D’Sharepoolalsohasfundsavailableforinvestmentandcontinuedtomakeprogressinbuildingitsportfolioduringtheyear.Twonewinvestmentsandtwofollow-oninvestmentsweremadeatatotalcostof£610,000.
AswiththeOrdinarySharepool,theBoardhasreviewedtheunquotedvaluationsattheyearendandmadesomeadjustmentstothecarryingvalues.Thishasresultedinanetunrealisedlossof£114,000.FurtherdetailsareprovidedintheInvestmentManager’sReviewandtheReviewofInvestments.
Results Thetotal(loss)/returnonordinaryactivitiesfortheyearwasasfollows:
Revenue £’000
Capital £’000
Total £’000
Ordinary Shares 199 (77) 122
‘D’ Shares (37) (226) (263)
162 (303) (141)
7
DividendsTheCompanypaidaninterimdividendof4.5pperOrdinaryShareon29July2011.TheBoardisproposingtopayafinaldividendof4.5pperOrdinaryShareinrespectoftheyearended29February2012on31August2012toOrdinaryShareholdersontheregisterat3August2012,subjecttoShareholderapprovalattheAGM.Nodividendisproposedinrespectofthe‘D’Shares.
FundraisingDuringtheyear,theCompanyraisedfundsunderitsOrdinaryShareofferforsubscriptionwhichopenedon10December2010.Theofferclosedon31October2011havingraisedgrossfundsof£10.0million.
‘D’ Shares – proposed conversion to Ordinary SharesTheBoardhasreviewedthecurrentstructureoftheCompanyandbelievestherearesignificantbenefitsforbothShareholdersandtheCompanyinmergingtheCompany’stwoshareclassestogether.HavingoneshareclasswillprovideallShareholderswithexposuretoabroaderrangeofinvestmentsandreducethepotentialimpactofunderperformanceofanyoneinvestment.Itwillalsosimplifythetaskofmanagingtheinvestments,reportingtoShareholdersandadministration.
TheBoardwillputproposalstoShareholderstoconvert‘D’SharesintoOrdinarySharesshortly.Itisproposedthatthe‘D’ShareswillbeconvertedtoOrdinarySharesbasedontherelativeNAVofeachshareclassat31August2012.Iftheseproposalsareapproved,theCompanywillhaveoneOrdinaryshareclassgoingforward.
Dividend policyThesubjectonwhichIreceivemostcorrespondenceisdividends.Inthesurveyconductedlastyear,theBoardaskedShareholderswhethertheywouldprefer(1)profitsoninvestmentdisposalstobedistributedastheyariseorfordividendstobesmoothed,and(2)distributionofthemaximumamounteachyear,evenifthisreducestheNAV,oranamountwhichmaintainsorincreasestheNAV.OftheShareholderswhoresponded,asmallmajorityofboththeOrdinaryShareholdersand‘D’Shareholdersexpressedapreferenceforrealisedprofitstobedistributedassoonaspossible.However,whenaskedifthemaximumpossibledividendshouldbepaidevenifthisreducesthenetassetvaluepershare,opinionwasalmostevenlysplit.
InanticipationofthemergeroftheOrdinaryand‘D’Shareclassesproposedforlaterthisyear,theBoardhasdecidedtoadoptaconsistentdividendpolicyforbothshareclasses.Withthediversityofopinionexpressedinthesurvey,itisimpossibletoprovideadistributionpolicywhichwillsatisfyallindividualpreferences.TheBoardhasthereforedecidedtosetanobjectiveofpayingadistributioneachyearwhichwillequatetoayieldofapproximately5%ofnetassetvalue.Theabilitytoachievethisobjectivewill,however,dependontherebeingsufficientreservesavailablefordistribution,whichinturnwilldependonthelevelandtimingofprofitablerealisations.It,therefore,cannotbeguaranteed.Intheeventoftherebeingarealisationfromtheportfoliowhichresultsinanexceptionallylargegain,theBoardmaydecidetopayaspecialdividendwhichissignificantlyinexcessofthetargetyieldof5%.
TheBoardbelievesthatthisobjectiveisconsistentwiththenetassetvaluepershareremainingbroadlystableorincreasingovertime,althoughthiswillclearlydependonthereturnsfromtheCompany’sinvestmentsandcannotbeguaranteed.
ToenableShareholderswhodonotwantdistributionstoautomaticallyreinvestdividends,theBoardhasdecidedtointroduceadividendreinvestmentscheme(“DRIS”).ShareholderswhowouldliketotakeadvantageofthisshouldcompletethemandateformenclosedwiththeseAccounts.ToprovideliquiditytoShareholderswhowishtoselltheirshares,thesharebuybackofferwillbemaintained,dependantontherebeingsufficientliquidityandsubjecttotheannuallimitof10%ofeachshareclass.
Share buybacksInordertoensureliquidityinthemarketintheCompany’sshares,theCompanyhasoperatedapolicyofbuyinginitsownsharesthatbecomeavailableinthemarket.
ProVen Growth & Income VCT plc8
Duringtheyear,theCompanymademarketpurchasesof823,563OrdinarySharesforcancellationatanaveragepriceof74.0ppershareand33,097‘D’Sharesforcancellationatanaveragepriceof85.7ppershare.
TheBoardintendstocontinuetomakepurchasesofitsshareswhentheybecomeavailableinthemarketandhasacurrentpolicyofpurchasingOrdinarySharesatapriceequivalenttoa10%discounttothelatestpublishedNAVandata5%discountinrespectof‘D’Sharesinaccordancewiththepoliciessetoutintherelevantprospectuses.Iftheproposedconversionof‘D’SharesintoOrdinarySharesdescribedaboveisapprovedbyShareholders,theCompanywillonlyhaveOrdinarySharesinissuefollowingtheconversion.Thediscountof10%toNAVwillthenapplytoallsharebuybacks.
AspecialresolutiontoallowtheBoardtocontinuetopurchasesharesforcancellationwillbeproposedattheforthcomingAGM.
ShareholderswhoareconsideringsellingtheirsharesareremindedthattheCompany’sAdministrator,DowningLLP,isabletoprovidedetailsofcloseperiodsandofthepricesatwhichtheCompanyhasboughtinshares.Contactdetailscanbefoundonpage60.
Shareholdersmaybeawareof“enhancedsharebuyback”schemesthathavebeenofferedbysomeVCTs,whichallowinvestorswhohaveheldtheirshareformorethan5yearstoselltheirsharesbacktotheVCTatanilorsmalldiscounttoNAVandreinvesttheproceedsinnewsharesissuedbytheVCT.Thisallowsinvestorstoeffectivelyrollovertheirshareholdingandobtainafurther30%incometaxreliefonthecurrentvalueoftheirshares(assumingtheyholdthenewsharesforatleastafurther5years).TheBoardbelievesthisisanattractivepropositionforShareholdersandwillconsiderofferingsuchaschemeinthecomingyear.
Annual General MeetingTheAnnualGeneralMeeting(“AGM”)oftheCompanywillbeheldinTheForestRoomatTheHospitalClub,24EndellStreet,CoventGarden,LondonWC2H9HQat2:30p.m.on21August2012.Noticeofthemeetingisattheendofthisdocument.
SevenitemsofspecialbusinesswillbeproposedattheAGMasfollows:
•oneresolutioninrespectofsharebuybacks,
• tworesolutionsinconnectionwithauthorityfortheDirectorstoallotsharesand
• fourresolutionsinconnectionwiththeintroductionofthedividendreinvestmentscheme.
Shareholder eventIwouldliketotakethisopportunitytodrawyourattentiontotheInvestmentManager’sannualshareholderpresentationwhichisexpectedtobeheldincentralLondonlaterintheyear.ThiseventprovidesShareholderswithanopportunitytomeettheInvestmentManagerand,additionally,toheardirectlyfromsomeoftheportfoliocompaniesandtomeetotherVCTshareholders.FurtherdetailsoftheeventwillbecommunicatedtoShareholdersinduecourse.
OutlookTheproposedmergeroftheCompany’stwoshareclasseswill,subjecttoShareholderapproval,resultinallShareholdersholdingastakeinamorediversifiedinvestmentportfolioandinaCompanywhichhasasignificantleveloffundsavailableforinvestment.
Withthegeneraleconomicoutlookremaininggloomy,anduncertaintiescreatedbyregulatorsandlegislators,newinvestmentactivitiesareexpectedtoremainchallengingoverthecomingyear.However,IbelievethatwehaveanumberofinterestinginvestmentsthathavethepotentialtoshowmeaningfulprofitsandthattheInvestmentManagerhastheskilltodeliverthem.TheInvestmentManageralsoreportsanattractiveflowofpotentialinvestmentopportunities,albeitatfullprices,insectorswhichhavedeliveredgoodreturnsfortheCompanyinthepastandwethereforeexpecttoseetheCompanybeinganactiveinvestoroverthenext12months.
Marc Vlessing Chairman 25June2012
Chairman’s Statement (continued)
9
Investment Manager’s ReviewIntroductionBeringeaisaspecialistventurecapitalmanagementcompanywhichmanages£200millionintheUKandUSAonbehalfofanumberofclients.IntheUK,Beringeahasadedicatedinvestmentteammanagingover£90millionacrossfourVCTs.
ProVenGrowth&IncomeVCThasbeenmanagedbyBeringeasinceitsinceptionin2001.TheCompany’slaunchcoincidedwithadownturninboththegeneralstockmarketand,nodoubtasadirectconsequence,VCTfundraisinggenerally.Theinitialfundraisingwas,therefore,amodest£7million.Majorfundraisingssince2006havesinceaddednetnewfundsof£42million.Sinceinception,theCompanyhasinvested£30millionin50smallandmediumsizedcompaniesand,attheyearend,had£17millionofcashandliquidfunds,thevastmajorityofwhichcanbeusedtomakefurtherventurecapitalinvestments.Atpresent,theCompanyhasinvestmentsin28companies,averagingapproximately£630,000perinvestment.
ProVenGrowth&IncomeVCTandotherVCTslikeitcontinuetomakeanimportantcontributiontothedevelopmentofUKbusinessparticularlyatatimewhentraditionallendersarereluctanttoadvancecredit.Thissupportextendsbeyondpurelyfinancialsupportwithourinvestmentexecutivesprovidingongoingmentoringandstrategicadviceandidentifyingnewkeydirectorswhocanbothsupportindividualbusinessesanddrivethemtothenextlevel.
Review of the yearTheCompanyinvested£3.5millionduringtheyear(2011:£3.0million).Therewerefouradditionstotheportfolioandfurtherfundingwasprovidedtofiveexistingcompanies.TheCompanyrealiseditsinvestmentsinfourportfoliocompanies:Coolabi,SteakMedia,LazuriteandPreludeMedia.Thevalueoftheexistingportfoliowasoverallbroadlyunchangedovertheyear:upwardsrevaluationsfromDonatantonio,ChessTechnologiesandBlisMediawereoffsetbyvaluationreductionsforanumberofinvestmentsincludingthoseinFjordnet,SenselogixandOvertis.Itisworthpointingoutthatthesereductionscanreflectboththeperformanceoftheindividualcompaniesand/orthewiderperformanceofcomparablesectors/companiesusedinvaluingtheinvestments.
Ordinary Share pool – portfolio activity and valuationAt29February2012,theCompany’sOrdinarySharepoolcomprised22companies,ofwhich19wereunquotedand3quoted,atavaluationof£15.2millionandoriginalacquisitioncostof£14.4million.Inaddition,theOrdinarySharepoolhadcashandliquidityfundsof£12.1million,themajorityofwhichwasraisedinthefinancialyearto29February2012.
Threenewinvestmentswereaddedtotheportfolioduringtheyear:CrossSolar,aresidentialrooftopsolarenergycompany,Eagle-iMusic,amusicpublishingbusiness,andUtilityExchangewhichprovidesutility(electricity,gasandtelecommunications)pricecomparisonandcontractswitchingforsmallbusinesses.FurtherinvestmentsweremadeinOvertis,CampdenMediaandBlisMedia.
ProVen Growth & Income VCT plc10
ThegenerationofrenewableenergyfromsolarinstallationswhichbenefitfromgovernmentbackedFeed-inTariffshasbeenwelldocumentedandCrossSolarismanagedbyoneofthemostexperiencedteamsinthissector.Someofthefundsforthisinvestmentcamefromanotherinvestment,Lazurite,anditalsoreceivedfundingfromotherProVenVCTs.
Eagle-iMusicisthemusicpublishingarmofEagleRockEntertainmentGroupLimitedinwhichtheProVenVCTsalreadyhaveaninvestment.Publishingremainsoneofthemostlucrativeandvaluableareaswithinthemusicindustry,inpartduetolowerrelianceonphysicalgoodssalesforrevenues.TheCompanyinvestedthroughPreludeMedia,andalongsideProVenPlannedExitVCTplc,todevelopthisdivision.
UtilityExchangehasanexperiencedteamofmanagerswithover 20years’backgrounddeliveringbusinesstelecommunications servicesand10years’experiencedeliveringbusinesselectricityandgastoallsizesofcustomers,fromSMEstolargecorporates.
WewerepleasedtoconcludethedisposalofSteakMediainMay2011whichwereportedoninlastyear’sannualreport.Theinvestmenthastodatereturned1.8timestheinitialinvestmentcostwiththepotentialforfurtherreceiptsdependentonfutureperformance.TheCompanyalsodisposedofitsholdinginCoolabiplcasaresultofitdelistingfromAIMandbecomingaprivatecompany.
TheinvestmentsinEspressoGroupandDonatantonioaccountfor16.9%ofthenetassetvalueoftheOrdinarySharepool.EspressocontinuestoperformwellasaproviderofdigitalcontenttoschoolsbothintheUKandoverseas.Thecompany’sstrongcashflowgenerationintheUKhasprovidedafirmbaseforexpansionintooverseasterritories.Donatantonio,awholesalerofMediterraneanfoods,has,afteradifficultperiodfollowingtheCompany’sinitialinvestment,madeverygoodprogressunderthedirectionofaverycompetentseniormanagementteam.GoodprogresswasalsomadebyChessTechnologiesandBlisMedia,thelatterreceivingfurtherinvestmentfromtheCompanyandanewexternalinvestortofunditsongoingdevelopment.
‘D’ Share pool – portfolio activity and valuationAt29February2012,theCompany’s‘D’Sharepoolcomprised9unquotedcompaniesatavaluationof£2.5millionandoriginalcostof£2.7million.Inaddition,theCompanyhadcashandliquidityfundsof£4.8million.
NewinvestmentsweremadeinUtilityExchange(describedabove)andAPMHealthcare.Furtherfollow-onfundingwasprovidedtoTossedandSenselogix.APMHealthcareistheholdingcompanyofCommunityPharmacies(UK)Limited(“CPL”)whichisaimingtobecomeaprominentnicheplayerintheprescriptionpharmacysectorinpartnershipwithGPpractices.Sinceourinvestment,CPLhasopenedfivenewpharmacies.Staffedbyprofessionalpharmacists,thebusinessencouragesoperatingfreedomtoalloweachoutlettoprovideexactlywhatlocalcustomersneed,withsupportandexpertguidancefromacentralisedheadoffice.
The‘D’Sharepoolisvaluednearcostalthoughattheindividualcompanyleveltherehasbeenstrongperformancefromthejewellerybrand,MonicaVinader,whichhasenabledanupwardsrevaluation.MatsSoftandTossedcollectivelyaccountfor18.5%ofthe‘D’Sharepoolnetassets.
Investment Manager’s Review (continued)
11
Post year end developmentsInApril2012,the‘D’SharepoolreceivedsharesinLongEatonHealthcareLimited,aMidlandsbasedGP-centrepharmacy,byvirtueofitsinvestmentinAPMHealthcare.FundingforthisinvestmentwasprovidedbyProVenPlannedExitVCTplcwhichisalsomanagedbyBeringea.FurtherfollowonfundingwasalsoprovideddirectlytoAPMHealthcareandtoUtilityExchange,bothinlinewiththeoriginalinvestmentproposal.
InJune2012theCompanytooktheopportunitytorealiseitsinvestmentinAshfordColourPresswithrealisationproceedsexceedingthevaluationat29February2012.
OvertisGroupwentthroughatechnicalrestructuringaftertheyearendwherebyitenteredadministrationanditsassetsandintellectualpropertywereacquiredbyanewentitycalledVigilantApplications.ProVenVCTrolledover£399,000ofitsloannoteinvestmentinOvertisGroupintothenewentity.TheinvestmentinOvertishadbeenfullyprovidedforattheyearendandthereisthereforenoimpactontheCompany’snetassetvalue.
OutlookWecontinuetoseeanattractiveflowofinvestmentopportunitiesinavarietyofsectors.Digitalmediacontinuestobeanattractiveareaandoneinwhichwehavehistoricallydonewell,withcompaniessuchasMergermarket,SaffronMediaandILGDigital,andinwhichwethinktherearefurthergoodopportunities.Ourexperienceandnetworkofcontactsinthesectormakesusanaturalchoiceforthosedigitalmediabusinessesseekingfunding.DespitethechallengesfacingmanyUKbusinesses,theportfoliocontinuestoperformwelloverall.Wearealsoconfidentthatfurthergoodinvestmentopportunitieslieahead.
Beringea LLP 25June2012
ProVen Growth & Income VCT plc12
Investmentactivityduringtheyearissummarisedasfollows:
Additions
Cost £’000
Ordinary Share pool
CrossSolarPVLimited** 978
Eagle-iMusicLimited 804
BlisMediaLimited** 375
OvertisGroupLimited 366
UtilityExchangeOnlineLimited 268
CampdenMediaLimited 113
2,904
‘D’ Share pool
UtilityExchangeOnlineLimited 234
APMHealthcareLimited 187
TossedLimited 120
SenselogixLimited 69
610
Total 3,514
Disposals
Cost £’000
Market value at 01/03/11
£’000Proceeds
£’000
Profit/(loss) vs cost
£’000
Realised gain/(loss) £’000
Ordinary Share pool
LazuriteLimited 1,000 930 902 (98) (28)
PreludeMediaLimited 1,000 925 876 (124) (49)
Coolabiplc** 450 108 112 (338) 4
SteakMediaLimited** 621 725 1,060 439 335
3,071 2,688 2,950 (121) 262
**Partiallynon-qualifyinginvestment
The‘D’Sharepooldidnotmakeanydisposalsduringtheyear.
Alloftheaboveinvestments,withtheexceptionofEagle-iMusicLimited,werealsoheldbyProVenVCTplc.
CrossSolarPVLimited,Eagle-iMusicLimitedandCampdenMediaLimitedwerealsoheldbyProVenPlannedExitVCTplc.
APMHealthcareLimitedwasalsoheldbyProVenHealthVCTplc.
ProvenVCTplc,ProVenHealthVCTplcandProVenPlannedExitVCTplcareallmanagedbyBeringeaLLP.
Investment Manager’s Review (continued)
13
Investment Portfolio – Ordinary Share Pool as at 29 February 2012
Ordinary Share portfolio of investmentsThefollowinginvestmentswereheldat29February2012:
Cost £’000
Valuation £’000
Valuation movement
in year £’000
% of portfolio by value
Top ten venture capital investments (by value)
EspressoGroupLimited** 1,582 2,435 88 8.9%
DonatantonioLimited 1,366 2,337 627 8.6%
FjordnetLimited 1,400 1,646 (777) 6.0%
BlisMediaLimited** 621 1,373 651 5.0%
ChessTechnologiesLimited 900 1,096 414 4.0%
CharterhouseLeisureLimited** 1,000 1,057 87 3.9%
CrossSolarPVLimited** 978 978 – 3.6%
EagleRockEntertainmentGroupLimited 680 805 (102) 3.0%
Eagle-iMusicLimited 804 804 – 2.9%
CampdenMediaLimited 757 776 79 2.8%
10,088 13,307 1,067 48.7%
Other venture capital investments 4,262 1,861 (979) 6.8%
Total venture capital investments 14,350 15,168 88 55.5%
Liquidityfunds 1,250 4.6%
Cashatbankandinhand 10,897 39.9%
Total Ordinary Share investments 27,315 100.0%
Otherventurecapitalinvestmentsasat29February2012comprise: AshfordColourPressLimited,BabyInnovationsS.A.t/aSteribottle*,DianomiLimited,ImmediaGroupplc,Isango!Limited,MatsSoftLimited**,OvertisGroupLimited,PilatMediaGlobalplc**,SPCInternationalLimited,SportsHoldingsLimited*,UBCMediaGroupplc**andUtilityExchangeOnlineLimited.
* Non-qualifyinginvestment ** Partiallynon-qualifyinginvestment
WiththeexclusionofPilatMediaGlobalplc,UBCMediaGroupplcandImmediaGroupplc,whicharequotedonAIM,allventurecapitalinvestmentsareunquoted.
Alloftheaboveinvestments,withtheexclusionofEagle-iMusicLimitedandImmediaGroupplc,werealsoheldbyProVenVCTplc.
CrossSolarPVLimited,Eagle-iMusicLimitedandCampdenMediaLimitedwerealsoheldbyProVenPlannedExitVCTplc.
ProvenVCTplcandProVenPlannedExitVCTplcarebothmanagedbyBeringeaLLP.
AllventurecapitalinvestmentsaboveareregisteredinEnglandandWales,withtheexceptionofBabyInnovationsS.A.,whichisregisteredinMadeira.
ProVen Growth & Income VCT plc14
Review of Investments – Ordinary Share Pool as at 29 February 2012
Furtherdetailsofthetenlargestventurecapitalinvestments(byvalue)withintheOrdinarySharepoolareasfollows:
Espresso Group LimitedEspressoGroupdevelopsanddeliversmultimediaeducationcontentforschools.Over9,000primaryschools,equaltoapproximately45%oftheUKprimaryschoolmarket,nowsubscribetoitsflagship“EspressoforSchools”product.Followingtheacquisitionof4Learning,theeducationalbusinessofChannel4,thecompanyexpandedintotheUKsecondaryschoolsmarket.Thecompanyhasnowembarkedonaninternationalexpansionstrategy.IthasanestablishedpresenceinSwedenandarapidlygrowingmarketpenetrationintheUS.
Cost: £1,582,000 Valuation at 29/02/12: £2,435,000
Investment comprises: Valuation at 28/02/11: £2,347,000
Ordinary shares: £260,000 Valuation method: Earningsmultiple
‘A’ ordinary shares: £220,000
‘B’ ordinary shares: £2,000
Loan stock: £1,100,000
www.espresso.co.uk Audited accounts: 31/07/11 31/07/10 Dividend income: –
Turnover: £13.3m £13.3m Loan note income: £110,000
Loss before tax: £(669,000) £(3,000) Proportion of equity held: 7.5%
Net assets: £5.8m £6.5m Diluted equity: 7.3%
Donatantonio LimitedDonatantonioLimitedistheUKmarketleaderintheimportanddistributionofpremiumquality,authenticMediterraneaningredientstotheUKfoodmanufacturingandfoodservicesectors.Donatantonio’sstate-of-the-artfacilitiesallowittoprovidecertificationoffoodqualityoncethegoodsreachtheUK.Thismeansthattheproductssuppliedtofoodmanufacturersarereadyforimmediateincorporationintofinishedproductsanddonotrequirefurthertestingbythemanufacturerbeforeproductioncanbegin.
Cost: £1,366,000 Valuation at 29/02/12: £2,337,000
Investment comprises: Valuation at 28/02/11: £1,710,000
Ordinary shares: £17,000 Valuation method: Earningsmultiple
‘A’ ordinary shares: £208,000
Preference shares: £45,000
www.donatantonio.com Loan stock: £1,096,000
Audited accounts: 31/01/11 31/01/10 Dividend income: –
Turnover: £18.7m £17.9m Loan note income: –
Profit/(loss) before tax:
£87,000 £(150,000) Proportion of equity held: 24.1%
Net liabilities: £(156,000) £(159,000) Diluted equity: 24.1%
15
Fjordnet LimitedFjordisanestablisheddigitaldesignagencyworkingacrossmanysectorsincludingtelecommunications,media,financeandhealthcare.Ithasworkedonmarketleadingflagshipprojects-includingprojectsfortheBBC,Nokia,Orange,SwisscomandYahoo!.Itwasinstrumentalinbringingthehugelysuccessfulaward-winningBBCiPlayertomobile.ThecompanyhasofficesinLondon,Helsinki,Berlin,Paris,Madrid,Stockholm,NewYorkandSanFrancisco.
Cost: £1,400,000 Valuation at 29/02/12: £1,646,000
Investment comprises: Valuation at 28/02/11: £2,423,000
Ordinary shares: £700,000 Valuation method: Earningsmultiple
Preference shares: £300,000
‘B’ preference shares: £400,000
www.fjordnet.com Audited accounts: 31/12/10 31/12/09 Dividend income: –
Turnover: £15.3m £11.9m Loan note income: n/a
Profit before tax: £1.1m £1.4m Proportion of equity held: 14.6%
Net assets: £3.9m £3.4m Diluted equity: 11.4%
Blis Media Limited (formerly Breeze Tech (UK) Limited)BlisMediaisaleadingmobilemarketingspecialistfeaturingarosterofblue-chipclients.ItwasoneofthefirstplayersintheUKtospecializeinlocationbasedmedia,andretainsastrongbaseofproprietaryIP.Itscuttingedgetechnologyprovidescustomerswithanunprecedentedlevelofaudiencegranularity.
Cost: £621,000 Valuation at 29/02/12: £1,373,000
Investment comprises: Valuation at 28/02/11: £347,000
Ordinary shares: £23,000 Valuation method: Priceofrecentinvestment
‘A’ ordinary shares: £22,000
‘C’ ordinary shares £374,000
www.blismedia.com Preference shares £101,000
Loan stock: £101,000
Audited accounts*: 31/12/11 31/12/10 Dividend income: –
Turnover: £1,883,000 £1,131,000 Loan note income: £8,100
Profit/(loss) before tax:
£108,000 £(141,000) Proportion of equity held:
20.5%
Net assets: £1,428,000 £449,000 Diluted equity: 20.5%
*Thecompanyfiledfullauditedaccountsforthefirsttimeto31December2011;comparativefiguresfortheprioryearhavethereforebeenprovided
ProVen Growth & Income VCT plc16
Chess Technologies LimitedChessdesignsandmanufactureselectro-opticalsystemsforuseindefenceapplicationsworldwide.Chess’sleadingedgeengineeringskillsandin-housedevelopmentofinnovativetechnologiesenableittoproduceanextensiverangeofstandardandcustomisedsolutionsforland,seaandairapplications.
Cost: £900,000 Valuation at 29/02/12: £1,096,000
Investment comprises: Valuation at 28/02/11: £682,000
Ordinary shares: £450,000 Valuation method: Earningsmultiple
Loan stock: £450,000
Audited accounts: 30/04/11 30/04/10 Dividend income: –
www.chess-dynamics.com Turnover: Unpublishedinformation Loan note income: £36,000
Profit before tax: Unpublishedinformation Proportion of equity held: 18.0%
Net assets: £2.5m £2.5m Diluted equity: 16.6%
Charterhouse Leisure LimitedCharterhouseLeisuretradesunderthename“CoalGrill&Bar”,agrowingrestaurantchainprovidinginformaldininganddrinkinginacomfortableandmodernatmosphere.Thecompanyhassevenbranchesandhasplanstorolloutthechainnationwide.Thecoremanagementteamdevelopedandranthe“MaPotters”restaurantchain,aformerProVenGrowth&IncomeVCTinvestmentthatwassoldin2007foratotalreturnofover2.5timestheinitialinvestment.
Cost: £1,000,000 Valuation at 29/02/12: £1,057,000
Investment comprises: Valuation at 28/02/11: £970,000
Ordinary shares: £200,000 Valuation method: Earningsmultiple
Loan stock: £800,000
Audited accounts: 28/02/11 28/02/10 Dividend income: –
www.coalgrillandbar.co.uk Turnover: £7.6m £4.9m Loan note income: £75,409
Loss before tax: £(677,000) £(187,000) Proportion of equity held: 27.7%
Net (liabilities)/assets:
£(48,000) £611,000 Diluted equity: 21.0%
Cross Solar PV LimitedCrossSolarisaresidentialrooftopsolarPVdevelopermanagedbyISISSolar.ISISisoneoftheUK’slargestresidentialPVdevelopers,beingoneofthefirsttomarkettoofferinstallationsfreetohomeowners.Throughthescheme,homeownersreceivealloftheirelectricityforfreeforupto25years,andinreturnCrossSolarbenefitsfrom25yearguaranteedFeed-inTariffs.
Cost: £978,000 Valuation at 29/02/12: £978,000
Investment comprises: Valuation at 28/02/11: n/a
Ordinary shares: £271,000 Valuation method: Costasreviewedforimpairment
Preference shares: £707,000
Audited accounts: Noaccountsfiled Dividend income: –
Loan note income: –
Proportion of equity held: 18.5%
Diluted equity: 18.5%
Review of Investments – Ordinary Share Pool (continued)
17
Eagle Rock Entertainment Group LimitedEagleRockisaleadingindependentproducer,publisheranddistributorofmusicprogrammingfortelevisionandDVD,comprisingliveconcertsanddocumentaries.Eaglehasanextensivecatalogueofaudio-visualIPR,whichisavailableformulti-mediaexploitationincludingbroadcast,broadbandandtelephony.
Cost: £680,000 Valuation at 29/02/12: £805,000
Investment comprises: Valuation at 28/02/11: £907,000
Ordinary shares: £68,000 Valuation method: Earningsmultiple
Preference shares: £612,000
Audited accounts: 31/12/10 31/12/09 Dividend income: £21,420
www.eaglerockent.com Turnover: £27.0m £27.3m Loan note income: n/a
Loss before tax: £(578,000) £(643,000) Proportion of equity held: 7.1%
Net assets: £15.6m £16.9m Diluted equity: 7.1%
Eagle-i Music LtdEagle-iMusicisthemusicpublishingarmoftheportfoliocompany,EagleRockEntertainmentGroup.ProVenGrowth&IncomeVCTplcinvested£804,000inFebruary2012.
Cost: £804,000 Valuation at 29/02/12: £804,000
Investment comprises: Valuation at 28/02/11: n/a
Ordinary shares: £244,000 Valuation method: Costasreviewedforimpairment
Loan stock: £560,000
Audited accounts: Noaccountsfiled Dividend income: –
www.eagle-imusic.com Loan note income: –
Proportion of equity held: 23.2%
Diluted equity: 23.2%
Campden Media LimitedCampdenMediaisamagazinepublisherandeventorganiserinthehealthcareandprivatewealthmanagementsectors.Thecompanypublishesarangeoftitles,manyofwhichareendorsedbytherelevantprofessionalbodies.Thebusinesshasastrongandprovenmanagementteamandoperatesinsectorswhichareregardedasmoreresilienttoadversemacro-economicmovements.
Cost: £757,000 Valuation at 29/02/12: £776,000
Investment comprises: Valuation at 28/02/11: £585,000
Ordinary shares: £97,000 Valuation method: Earningsmultiple
‘A’ ordinary shares: £1,000
Loan stock: £659,000
www.campdenmedia.com Audited accounts: 31/12/10 31/12/09 Dividend income: –
Turnover: £6.8m £5.6m Loan note income: £37,814
Profit before tax: £(94,000) £(651,000) Proportion of equity held: 5.5%
Net assets: £(1.3)m £(1.2)m Diluted equity: 5.5%
ProVen Growth & Income VCT plc18
ReferencestothelatestaccountsrefertothelatestannualreportandaccountspublishedbytheinvesteecompanyfollowingthedateofinvestmentbyProVenGrowth&IncomeVCTplc.
PortfoliocompanyfinancialinformationisbasedonpubliclyavailableinformationfiledatCompaniesHouseintheUK(orequivalentlocationsinoverseasjurisdictions).Certaininformationmaynotberequiredtobefiled,dependent,forexample,onthecompany’ssize,and,intheinterestsofportfoliocompanyconfidentiality,isnotdisclosedhere.
TheproportionofequityheldineachinvestmentalsorepresentsthelevelofvotingrightsheldbytheCompanyinrespectoftheinvestment.
Analysis of investments by commercial sectorThesplitoftheOrdinarySharepoolventurecapitalinvestmentsbycommercialsector(byvalueandcostat 29February2012)issummarisedasfollows:
Analysis of investments by investment typeAt29February2012,theOrdinarySharepoolassetsemployedwerebroadlyinlinewiththetargetswithintheinvestmentpolicy.Thesearesummarisedasfollows:
Type of investment (by fair value)
VCTqualifyinginvestments 54.6%
Otherinvestments,includingcashatbankandinhandandliquidityfunds 45.4%
100%
Review of Investments – Ordinary Share Pool (continued)
Spread of Investments by Sector
Cost
Valuation
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
£ M
illio
n
Media & entertainment
Support services
Healthcare Travel and Leisure
Software and computer services
Food and Beverage
TechnologyHardware
Environmental
Sectors
19
Investment Portfolio – ‘D’ Share Pool as at 29 February 2012
‘D’ Share portfolio of investmentsThefollowinginvestmentswereheldat29February2012:
Cost £’000
Valuation £’000
Valuation movement in
year £’000
% of portfolio by value
Venture capital investments
TossedLimited 624 671 47 9.3%
MatsSoftLimited** 650 650 – 9.0%
MonicaVinaderLimited 138 315 177 4.4%
UtilityExchangeOnlineLimited 234 234 – 3.2%
APMHealthcareLimited 187 187 – 2.6%
Speed-TrapHoldingsLimited 295 181 (114) 2.5%
CinergyInternationalLimited 115 113 (2) 1.6%
FjordnetLimited* 276 102 (84) 1.4%
SenselogixLimited 138 – (138) 0.0%
Total venture capital investments 2,657 2,453 (114) 34.0%
Liquidityfunds 1,250 17.4%
Cashatbankandinhand 3,505 48.6%
Total ‘D’ Share investments 7,208 100.0%
* Non-qualifyinginvestment ** Partiallynon-qualifyinginvestment
Allventurecapitalinvestmentsaboveareunquoted.
AlloftheaboveinvestmentswerealsoheldbyProVenVCTplc.
APMHealthcareLimitedwasalsoheldbyProVenHealthVCTplc.
ProvenVCTplcandProVenHealthVCTplcarebothmanagedbyBeringeaLLP.
AllventurecapitalinvestmentsaboveareregisteredinEnglandandWales.
ProVen Growth & Income VCT plc20
Review of Investments – ‘D’ Share Pool Furtherdetailsoftheventurecapitalinvestments(byvalue)withintheDSharepoolareasfollows:
Tossed LimitedTossedoperatesaseriesoftakeawayfocusedhealthyeatingestablishments.Therearecurrentlyeightlocationsinoperation,includingonefranchiselocation,allbasedinLondon.ProVenGrowth&IncomeVCTinvested£504,000inApril2010andafurther£120,000inJuly2011alongsideProVenVCTplc.
Cost: £624,000 Valuation at 29/02/12: £671,000
Investment comprises: Valuation at 28/02/11: £504,000
Ordinary shares: £219,000 Valuation method: Earningsmultiple
Preference shares: £168,000
Loan stock: £237,000
www.tosseduk.com Audited accounts: 31/03/11 Dividend income: –
Turnover: Unpublishedinformation Loan note income: £1,156
Profit before tax: Unpublishedinformation Proportion of equity held: 11.6%
Net assets: £1.0m Diluted equity: 11.6%
MatsSoft LimitedMatsSoftisasoftwarecompanyspecialisingindevelopinghostedSoftwareasaService(“SaaS”)businessprocessmanagement,workflowandcustomerandcommunicationssolutions,completewithacomprehensivesuiteofmanagementinformationandconfigurationtools.MatsSofthasbuiltastrongreputationbyprovidingsolutionsforenterprisecustomersthatdeliverdramaticprocessingefficiencieswhilstkeepingcustomersatisfactionhighthroughproactivecommunication
Cost: £650,000 Valuation at 29/02/12: £650,000
Investment comprises: Valuation at 28/02/11: £650,000
Ordinary shares: £197,000 Valuation method: Priceofrecentinvestment
‘A’ ordinary shares: £236,000
Loan stock: £217,000
www.matssoft.co.uk Audited accounts: 31/12/10 31/12/09 Dividend income: –
Turnover: Unpublishedinformation Loan note income: £4,820
Profit before tax: Unpublishedinformation Proportion of equity held: 10.0%
Net assets: £219,000 £192,000 Diluted equity: 10.0%
21
Monica Vinader LimitedMonicaVinaderisahighend,award-winningfashionjewellerybrand.DesignerMonicaVinaderbeganproducingjewelleryin2002andcommercialisedthebrandin2006.ThebrandisregularlyfeaturedinglossymagazinessuchasVogue,HarpersandGraziaandboastsacelebrityfollowingofCameronDiaz,KeiraKnightleyandCherylCole.
Cost: £138,000 Valuation at 29/02/12: £315,000
Investment comprises: Valuation at 28/02/11: £138,000
Ordinary shares: £69,000 Valuation method: Revenuemultiple
Loan stock: £69,000
Audited accounts: 31/07/11 30/04/10 Dividend income: –
www.monicavinader.com Turnover: Unpublishedinformation Loan note income: –
Profit before tax: Unpublishedinformation Proportion of equity held: 4.0%
Net assets: £563,000 £113,000 Diluted equity: 4.0%
Utility Exchange Online LimitedUtilityExchangeOnlineprovidespricecomparisonservicesforutilities,includingheatingandelectricity,forsmallbusinesses.Unlikethedomesticandlargecorporatemarkets,thesmallbusinessmarketforutilitycomparisonisunderservedasaresultofitscomplexityandmanuallyintensiveprocesses.UEO’sautomatedquotingenginewillbethefirstofitskindforbusinessutilitypricecomparison.
Cost: £234,000 Valuation at 29/02/12: £234,000
Investment comprises: Valuation at 28/02/11: n/a
‘A’ ordinary shares: £95,000 Valuation method: Costasreviewedforimpairment
Loan stock: £139,000
Audited accounts: 31/03/11 31/03/10 Dividend income: –
www.utility-exchange.co.uk Turnover: Unpublishedinformation Loan note income: –
Profit before tax: Unpublishedinformation Proportion of equity held: 10.2%
Net liabilities: £(1.2)m £(232,000) Diluted equity: 10.2%
APM Healthcare LimitedAPMHealthcareistheholdingcompanyofCommunityPharmacies(UK)Limited,aproviderofintegratedpharmacyservices.Thepharmaciesoperateattheheartofprimarycareinpartnershipwithlocalsurgerypractices,butwithexpertsupportfromacentralheadoffice.
Cost: £187,000 Valuation at 29/02/12: £187,000
Investment comprises: Valuation at 28/02/11: n/a
‘A’ ordinary shares: £57,000 Valuation method: Costasreviewedforimpairment
Loan stock: £130,000
Audited accounts: 31/03/11 31/03/10 Dividend income: –
www.apmhealthcare.co.uk Turnover: Unpublishedinformation Loan note income: £12,224
Profit before tax: Unpublishedinformation Proportion of equity held: 5.0%
Net assets: £Nil £2,000 Diluted equity: 5.0%
ProVen Growth & Income VCT plc22
Speed-Trap Holdings LimitedSpeed-TrapisasoftwarecompanyprovidingenterpriseandSaaSsolutions,whichallowscorporatedigitalplatformownerstocapture,analyseandinterpretdigitalinteractionswithusersoftheirplatforms.Thesoftwarealsoallowsthecustomertomakerealtimedecisionsandtotakeproactiveactionsinresponsetothisinformationviathedigitalplatform.
Cost: £295,000 Valuation at 29/02/12: £181,000
Investment comprises: Valuation at 28/02/11: £295,000
‘A’ ordinary shares: £115,000 Valuation method: Priceofrecentinvestmentwith
provisionLoan stock: £180,000
Audited accounts: 31/12/10 31/12/09 Dividend income: –
www.speed-trap.com Turnover: – – Loan note income: £10,852
Loss before tax: £(72,000) – Proportion of equity held: 3.0%
Net assets: £4.8m £4.0m Diluted equity: 3.0%
Cinergy International LimitedCinergyprovidescompetitiveintelligenceforMNOsandMNVOsregardingmobiledealsavailableinthemarketaswellaspricecomparisonservicesformobilephonepackagesforconsumers
Cost: £115,000 Valuation at 29/02/12: £113,000
Investment comprises: Valuation at 28/02/11: £115,000
Ordinary shares: £11,000 Valuation method: Revenuemultiple
Loan stock: £104,000
Audited accounts: 31/12/10 31/12/09 Dividend income: –
www.cinergize.com Turnover: £1.2m £784,000 Loan note income: –
Loss before tax: £(148,000) £(98,000) Proportion of equity held: 0.3%
Net liabilities: £(117,000) £(47,000) Diluted equity: 0.3%
Fjordnet LimitedFjordisanestablisheddigitaldesignagencyworkingacrossmanysectorsincludingtelecommunications,media,financeandhealthcare.Ithasworkedonmarketleadingflagshipprojects–includingprojectsfortheBBC,Nokia,Orange,SwisscomandYahoo!.Itwasinstrumentalinbringingthehugelysuccessfulaward-winningBBCiPlayertomobile.ThecompanyhasofficesinLondon,Helsinki,Berlin,Paris,Madrid,Stockholm,NewYorkandSanFrancisco.
Cost: £276,000 Valuation at 29/02/12: £102,000
Investment comprises: Valuation at 28/02/11: £185,000
‘A’ ordinary shares: £276,000 Valuation method: Earningsmultiple
Audited accounts: 31/12/10 31/12/09 Dividend income: –
Turnover: £15.3m £11.9m Loan note income: n/a
www.fjordnet.com Profit before tax: £1.1m £1.4m Proportion of equity held: 1.9%
Net assets: £3.9m £3.4m Diluted equity: 1.2%
Review of Investments – ‘D’ Share Pool (continued)
23
Spread of Investments by Sector
Cost
Valuation
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
£ M
illio
n
Media & entertainment
Support services
Healthcare Travel and Leisure
Software and computer services
Retail Environmental
Sectors
Senselogix LimitedSenselogix™isanawardwinningproviderofenergyreductionforthebuildingsmarket.Senselogixdeliverrobust,intuitivehardwareandsoftwaresolutionsdesignedtomeasureandmanageelectricityincommercialbusinesses,publicsector,educationandotherofficebasedenvironments,toeliminateelectricalwaste.
Cost: £138,000 Valuation at 29/02/12: –
Investment comprises: Valuation at 28/02/11: £69,000
Ordinary shares: £138,000 Valuation method: Fullprovision
Audited accounts: 31/03/11 31/03/10 Dividend income: –
Turnover: Unpublishedinformation Loan note income: n/a
www.senselogix.com Profit before tax: Unpublishedinformation Proportion of equity held: 6.1%
Net assets: £170,000 £22,000 Diluted equity: 6.1%
ReferencestothelatestaccountsrefertothelatestannualreportandaccountspublishedbytheinvesteecompanyfollowingthedateofinvestmentbyProVenGrowth&IncomeVCTplc.
PortfoliocompanyfinancialinformationisbasedonpubliclyavailableinformationfiledatCompaniesHouseintheUK(orequivalentlocationsinoverseasjurisdictions).Certaininformationmaynotberequiredtobefiled,dependent,forexample,onthecompany’ssize,and,intheinterestsofportfoliocompanyconfidentiality,isnotdisclosedhere.
TheproportionofequityheldineachinvestmentalsorepresentsthelevelofvotingrightsheldbytheCompanyinrespectoftheinvestment.
Analysis of investments by commercial sectorThesplitofthe‘D’Sharepoolventurecapitalinvestmentsbycommercialsector(byvalueandcostat29February2012)issummarisedasfollows:
Analysis of investments by investment typeAt29February2012,the‘D’Sharepoolassetswereinvestedasfollows;broadlyinlinewiththeinvestmentpolicy.
Type of investment (by fair value)
VCTqualifyinginvestments 29.9%
Otherinvestments,includingcashatbankandinhandandliquidityfunds 70.1%
100.0%
ProVen Growth & Income VCT plc24
Board of Directors
Marc Vlessing, Chairman MarcstartedhiscareerasacorporatefinancierwithCountyNatWest.In1991,hesetupMediaFinance,amanagementconsultancybusinessspecialisinginthemediasector.In1997,hebecameChiefExecutiveofCrescentEntertainment,whichranagroupofLondontheatresandcinemas;subsequentlyhebecameChiefExecutiveofFirstCallInternational,theUK'slargestindependentticketingbusiness.HeiscurrentlyChairmanofOctopusEclipseVCT2plcandaprincipalinPocket,adeveloperwhichhelpspeopleonlowtomoderateincomesowntheirfirsthome.
Natasha Christie-Miller Natashahasworkedinthemediasectorfor17years.Forthelast11yearsshehasbeenatEMAP,recentlyrebrandedastheTopRightGroupplc.AtEMAPNatashahasworkedonawiderangeofmagazinetitlessuchasElle,RedandHeatandbecameManagingDirectoroftheRetailportfolioin2007.In2010,NatashabecameCEOofEMAP.NatashajoinedtheBoardofProVenGrowth&IncomeVCTasanon-executivedirectorin2011.
Malcolm Moss MalcolmisaSeniorManagingDirectorofBeringeaLLCandafounderofBeringeaLLP.Overthelast20yearshehasbeenresponsibleforthegrowth,developmentandmanagementoftheprivateequitybusinessofBeringeainboththeUKandtheUSA.InadditiontosittingontheboardsofProVenVCTplc,ProVenGrowth&IncomeVCTplcandProVenPlannedExitVCTplc,hesitsontheinvestmentcommitteesofBeringea’sthreeotherventurecapitalfundsandasanon-executivedirectoronseveralotherportfolioinvestments.PriortofoundingBeringea,MalcolmgainedEurope-wideindustrial,planningandanalyticalexperienceinhealthcare,engineeringandfinancialserviceswith,respectively,BaxterInternational,UniroyalInc.andLloydsTSBGroup.
James Stewart JameswasformerlymanagingdirectorofCreditanstaltInvestmentBankAG'ssubsidiaryinLondon,where hehadpreviouslyestablishedCreditanstaltBankverein'sdevelopmentcapitalactivity.Hehasbeena non-executivedirectorofanumberofquotedandunquotedcompaniesandhenowworksasanindependentventurecapitalist.
AlltheDirectorsarenon-executiveand,withtheexceptionofMalcolmMoss,areconsideredbytheBoardtobeindependentoftheInvestmentManagerastheBoardconsidersthateachofthemhassuitableexperiencetobeabletoexerciseproperjudgement.
25
Directors’ Report and Business Review TheDirectorspresenttheAnnualReportandFinancialStatementsoftheCompanyfortheyearended 29February2012.
Principal activity and statusTheprincipalactivityoftheCompanyisthatofaventurecapitaltrust.IthasbeenapprovedbyHMRevenueandCustoms(“HMRC”)asaventurecapitaltrustinaccordancewithPart6oftheIncomeTaxAct2007andintheopinionoftheDirectors,theCompanyhasconducteditsaffairssoastoenableittomaintainsuchapproval.Approvalfortheyearended29February2012issubjecttoreviewshouldtherebeanysubsequentenquiryundercorporationtaxself-assessment.
TheDirectorsconsiderthattheCompanywasnotatanytime,uptothedateofthisreport,aclosecompanywithinthemeaningofSection414oftheIncomeandCorporationTaxesAct1988.
TheCompanyhasnoemployeesotherthantheDirectors.Thesamewastrueinthepreviousyear.
Business review and developmentsTheCompany’sbusinessreviewanddevelopmentsduringtheyeararereviewedintheChairman’sStatementandtheInvestmentManager’sReview.
ThetotalrunningcostsoftheCompanyexceededrevenuearisingfromtheinvestmentsheld(includingcashatbankandliquidityfunds)by£377,000(2011:£269,000).Thetotalexpenseratio(excludingperformancefees,recoverableVATandprovisionforloanstockinterest)inrespectoftheyearended29February2012,comparedtonetassetsattheyearendwas2.9%(2011:2.8%).
Results and distributions
£’000 Pence per share
(Loss)/returnonordinaryactivitiesaftertaxfortheyearended29February2012splitas:
Ordinary Shares 122 0.4p
‘D’ Shares (263) (3.2p)
(141)
Duringtheyearended29February2012,theCompanypaidaninterimdividendof4.5pperOrdinaryShareofwhich0.5pwasrevenueand4.0pwascapital(2011:nodividendswerepaidbytheCompany).
TheBoardisproposingtopayafinaldividendof4.5pperOrdinarySharefortheyearended29February2012.
DirectorsTheDirectorsoftheCompanyduringtheyearandtheirbeneficialinterestsintheissuedOrdinarySharesand‘D’SharesoftheCompany,at28February2011,29February2012andatthedateofthisreportwereasfollows:
Director At the date of this report 29 Feb 2012 28 Feb 2011
MalcolmMoss Ords 14,058 14,058 14,058
‘D’ Shares 3,165 3,165 3,165
JamesStewart Ords 7,103 7,103 7,103
MarcVlessing Ords 15,682 15,682 15,682
‘D’ Shares 4,148 4,148 4,148
ProVen Growth & Income VCT plc26
NatashaChristie-Millerwasappointedasdirectoron24August2011.ShedoesnotholdanyOrdinarySharesor‘D’Sharesat29February2012oratthedateofthisreport.NicholasLewisresignedasdirectoron24August2011.Heheld14,957OrdinarySharesat28February2011.
Inaccordancewithdevelopmentsincorporategovernancepractice,theBoardhasdecidedthatitisbestpracticeforallDirectorstoretireateachAnnualGeneralMeeting.Accordingly,alltheDirectorswillretireattheforthcomingAnnualGeneralMeetingand,beingeligible,areofferingthemselvesforre-election.TheBoardrecommendsthatShareholderstakeintoconsiderationeachDirector’sconsiderableexperienceinVCTsandotherareas,asshownintheirrespectivebiographiesonpage24togetherwiththeresultsfortheperiodtodate,inordertosupporttheresolutionstoreappointallfourDirectors.
EachoftheDirectorshassignedaletterofappointmentwhichisterminablebythreemonths’rollingnoticeoneitherside.TotheextentpermittedundertheCompaniesAct2006,theCompanyindemnifieseachoftheDirectorsagainstallcosts,charges,losses,expensesandliabilitieswhichmightariseintheexecutionoftheirduties,saveforcertainexceptions.EachDirectorisrequiredtodevotesuchtimetotheaffairsoftheCompanyastheBoardrequires.
AtthelastAGM,on24August2011,Directorsweregrantedtheauthoritytomakemarketpurchasesofupto14.9%oftheissuedsharecapitaloftheCompanyandtodisapplypre-emptionrightsandallotuptoamaximumnominalamountof£55,660forOrdinarySharesand£8,255for‘D’Shares.Theauthoritytomakemarketpurchaseswasusedasdescribedonpage29.
Investment policyTheCompany’sinvestmentpolicycoversseveralareasasfollows:
Qualifying investmentsTheCompanyseekstomakeinvestmentsinVCT-qualifyingcompanieswiththefollowingcharacteristics:
• astrong,balancedandwell-motivatedmanagementteamwithaproventrackrecordofachievement;
• adefensiblemarketposition;
• goodgrowthpotential;
• anattractiveentrypricefortheCompany;
• theabilitytostructuretheinvestmentwithaproportionofsecuredloannotesinordertoreducerisk;and
• aclearlyidentifiedrouteforaprofitablerealisationwithina3-4yearperiod.
TheCompanyinvestsincompaniesatvariousstagesofdevelopment,includingthoserequiringcapitalforexpansionandinmanagementbuy-outs,butnotinstart-ups.Investmentsarespreadacrossarangeofdifferentsectors.
Inrespectofthe‘D’Sharepoolonly,itisintendedthat75%ofthefirsttrancheoffundsraisedunderthefirst‘D’ShareLinkedofferareinvestedinqualifyinginvestmentsfrom29February2012onwardsandthatby28February2013,75%ofthefundsraisedunderthesecond‘D’ShareLinkedofferwillalsobeinvestedinqualifyinginvestments.
Other investmentsFundsnotinvestedinqualifyinginvestmentswillbeheldincash,liquidityfunds,fixedinterestsecuritiesofA-ratingorbetterorininvestmentsoriginatedinlinewiththeCompany'squalifyingVCTpolicybutwhichdonotqualifyundertheVCTrulesfortechnicalreasons.
Directors’ Report and Business Review (continued)
27
Venture capital trust regulationsIncontinuingtomaintainitsVCTstatus,theCompanycomplieswithanumberofregulationsassetoutinPart6oftheIncomeTaxAct2007.HowthemainregulationsapplytotheCompanyissummarisedasfollows:
1. TheCompanyholdsatleast70%ofitsinvestmentsinqualifyingcompanies(asdefinedbyPart6oftheIncomeTaxAct2007);
2. Atleast30%(70%inthecaseoffundsraisedafter5April2011)oftheCompany’squalifyinginvestments(byvalue)areheldin“eligibleshares”–(“eligibleshares”generallybeingordinarysharecapital);
3. Atleast10%ofeachinvestmentinaqualifyingcompanyisheldin“eligibleshares”(bycostattimeofinvestment);
4. Noinvestmentconstitutesmorethan15%oftheCompany’sportfolio(byvalueattimeofinvestment);
5. TheCompany’sincomeforeachfinancialyearisderivedwhollyormainlyfromsharesandsecurities;
6. TheCompanydistributessufficientrevenuedividendstoensurethatnotmorethan15%oftheincomefromsharesandsecuritiesinanyoneyearisretained;and
7. Amaximumunitsizeof£1millionineachVCTqualifyinginvestmentpertaxyear(inrespectoffundsraisedpriorto6April2012).
BorrowingsItisnottheCompany’sintentiontohaveanyborrowings.TheCompanydoes,however,havetheabilitytoborrowamaximumamountwhichisequaltothenominalcapitaloftheCompanyanditsdistributableandundistributablereserves,currentlyequalto£35.4million(2011:£28.2million).Therearenoplanstoutilisethisfacilityatthecurrenttime.
Environmental and social policyTheBoardseekstoconducttheCompany’saffairsresponsiblyandconsidersrelevantsocialandenvironmentalmatterswhereappropriate.
Investment management and administration feesBeringeaLLP(“Beringea”)providesinvestmentmanagementservicestotheCompanyforanannualfeeof2.0%oftheOrdinarySharenetassetsandthe‘D’Sharenetassetsperannum.Beringeaisalsoentitledtoreceiveperformanceincentivefeesasdescribedfurtherbelow.Theinvestmentmanagementagreementisterminablebyeitherpartyatanytimebyoneyear’spriorwrittennotice.
TheBoardissatisfiedwithBeringea’sapproachandproceduresinprovidinginvestmentmanagementservicestotheCompany.TheDirectorshavethereforeconcludedthatthecontinuingappointmentofBeringeaLLPasinvestmentmanagerremainsinthebestinterestofShareholders.
InJune2011,DowningManagementServicesLimited(“DMS”)transferreditsbusinesstoalimitedliabilitypartnership,DowningLLP.TheCompany’sAdministrationAgreementwithDMSwasnovatedtoDowningLLP.Thetermsoftheagreement,servicesprovidedbyDowningLLPandtheprovisionofarunningcostscapareidenticaltothoseprovidedundertheoriginalagreement.
DowningLLPprovidesadministrationservicestotheCompanyforafeeof£37,000(plusVATandRPIadjustment)perannum.
Theannualrunningcosts(excludinganyperformancefeespayable)oftheCompany,fortheyear,alsosubjecttoacapof3.6%oftheCompany’snetassets.AnycostsinexcessofthisarebornebyBeringeaLLP.
ProVen Growth & Income VCT plc28
Performance incentive feesOrdinary SharesSubjecttotheexceptionsnotedbelow,BeringeaisentitledtoperformanceincentivefeesiftheCompanyhasreturnedtoinvestorsacumulativedividendequaltoatleast4pperOrdinaryShareperannumforthefinancialyearsstarting1March2009andtheperformancevalueperOrdinaryShareisatleast130p.Beringeaisentitledtoreceiveaperformanceincentivefeeequalto15%ofthecumulativedividendspaidontheOrdinarySharesafter1March2009upto4pperOrdinaryShareperannum,plus20%ofthecumulativedividendspaidafter1March2009inexcessof4pperOrdinaryShareperannum,lesstheamountofanyincentivefeepreviouslypaidtoBeringeainrelationtotheOrdinaryShares.Dividendspaidonthe‘C’SharespriortotheirconversionintoOrdinarySharesinOctober2009shallbetreatedasdividendsontheOrdinaryShares.
InrelationtodividendspaidastheresultoftherealisationofinvestmentsmadefromtheOriginalOrdinarySharefund,Beringeaisentitledtoreceiveanincentivefeeequalto15%ofthecumulativedividendspaidfrom1March2006upto4pperOriginalOrdinaryShareperannum,plus20%ofthecumulativedividendspaidfrom1March2006inexcessof4pperOriginalOrdinaryShareperannum,lesstheamountofanyincentivefeepreviouslypaidtoBeringeainrelationtotheOriginalOrdinaryShares.ForthepurposesofcalculatingthiselementoftheperformanceincentivefeefordividendspaidfollowingtheexchangeofOriginalOrdinarySharesforOrdinaryShares,apro-formadividendperOriginalOrdinarySharewillbecalculated,basedonthenumberofOriginalOrdinarySharesinissueimmediatelypriortotheshareconversion.
InrelationtoOrdinarySharesissuedundertheofferforsubscriptionlaunchedon10December2010(“theOffer”),providingthattheCompanyhaspaidcumulativedividendsequaltoatleast4%oftheweightedaveragesubscriptionpriceofsuchsharesperannumforthefinancialyearsstarting1March2014andtheperformancevalueperOrdinaryShareofsuchsharesisatleast1.3timestheweightedaveragesubscriptionpriceofsuchshares,Beringeaisentitledtoreceiveaperformanceincentivefeeequalto15%ofthecumulativedividendspaidontheOrdinarySharesissuedundertheOfferafter1March2014upto4%oftheweightedaveragesubscriptionpricepershareperannum,plus20%ofthecumulativedividendspaidafter1March2014inexcessof4%oftheweightedaveragesubscriptionpricepershareperannum,lesstheamountofanyincentivefeepreviouslypaidtoBeringeainrelationtosuchshares.
NosuchfeeswerepaidinrespectoftheOrdinarySharesintheyearunderreview(2011:£nil).
‘D’ SharesBeringeaisentitledtoreceiveperformanceincentivefeesinrespectofthe‘D’Shares.Thesearefirstcalculatedinrelationtothefinancialyearstartingon1March2012andprovidedthat:
(i) theCompanyhasreturnedtoholdersof‘D’Shareswhosubscribedunderthe‘D’Shareprospectusinaggregateanamountequalto25pper£1sosubscribed;and
(ii) thesumofthenetassetvalueper‘D’Shareplusdistributionsper‘D’Sharepaidsincelaunchexceeds130p,
anannualperformanceincentivefee(inclusiveofVATifapplicable)ispayableequalto:
(i) 33%ofthecumulativedividendspaidinrelationtothefinancialyearsstartingonorafter1March2012overandabove3penceper‘D’Shareperannumbutlessthan6penceper‘D’Shareperannum;plus
(ii) 20%ofthecumulativedividendspaidinrelationtothefinancialyearsstartingonorafter1March2012inexcessof6penceper‘D’Shareperannum,
lessthecumulativeamountofanyincentivefeepreviouslypaidtotheInvestmentManager.
Nosuchfeeswerepaidinrespectofthe‘D’Sharesintheyearunderrevieworintheprioryear.
VCT statusTheCompanyhasretainedPricewaterhouseCoopersLLPtoadviseitoncompliancewithVCTrequirements,includingevaluationofinvestmentopportunitiesasappropriate,andregularreviewoftheportfolio.AlthoughPricewaterhouseCoopersworkscloselywiththeInvestmentManagerandAdministrationManager,theyreportdirectlytotheBoard.
Directors’ Report and Business Review (continued)
29
CompliancewiththemainVCTRegulationsasat29February2012andfortheyearthenendedissummarisedasfollows:
1. 70%ofitsinvestmentsinqualifyingcompanies: 78.6%
2. Atleast30%oftheCompany’squalifyinginvestmentsin“eligibleshares”: 40.8%
3. Atleast10%ofeachinvestmentheldin“eligibleshares”: Complied
4. Noinvestmentconstitutesmorethan15%oftheCompany’sportfolio: Complied
5. Incomeisderivedwhollyormainlyfromsharesandsecurities: 79.3%
6. Nomorethan15%oftheincomefromsharesandsecuritiesisretained: 0.0%
7. Amaximumunitsizeof£1millionineachVCTqualifyinginvestment(pertaxyear): Complied
Share capitalTheCompanyhastwoclassesofshares:Ordinarysharesof1.6187peach(“OrdinaryShares”)and‘D’sharesof1peach(“‘D’Shares”).Eachshareclasshasaseparatepoolofassetsattributabletoit,witheachclassbearingaproportionoftherunningcostsoftheCompany.OrdinarySharesand‘D’Sharesrankpari passu witheachotherintermsofvotingandotherrights.TheproportionoftheCompany’snetassetsattributabletotheOrdinarySharesand‘D’Sharesare79.8%and20.2%respectively.
Atthe2011AGM,ShareholdersauthorisedtheCompanytomakemarketpurchasesofitsownsharesofupto14.9%ofthesharecapitalinissueatthatdateandtowaivepre-emptionrightsandtoissueOrdinarySharesuptoamaximumnominalamountof£55,660and‘D’Sharesuptoamaximumnominalamountof£8,255.
Duringtheyear,theCompanyrepurchased823,563OrdinarySharesforaconsiderationof£612,355andforanaggregatenominalamountof£13,331.Theaveragepricewas74.0pperOrdinarySharebeing3.4%oftheOrdinarySharecapital.TheCompanyalsorepurchased33,097‘D’Sharesforaconsiderationof£28,520andforanaggregatenominalamountof£331.Theaveragepricewas85.7pper‘D’Sharebeing0.4%ofthe‘D’Sharecapital.Thesesharesweresubsequentlycancelled.
Between18March2011and31October2011,theCompanyissued10,489,428OrdinarySharesat90.6ppershare,172,212OrdinarySharesat86.3ppershareand435,156Ordinaryat84.4ppershareunderthetermsoftheprospectusdated10December2010.Theaggregatenominalvalueoftheshareswas£179,000andtheaggregateconsiderationfortheshareswas£10,020,000.
Creditor payment policyTheCompany’spaymentpolicyistopaycreditorswithinthirtydaysofreceiptofaninvoiceexceptwhereothertermshavebeenagreed.TradecreditorsoftheCompanyattheyearendamountedto£nil(2011:£nil).
Key performance indicatorsAteachBoardmeeting,theDirectorsconsideranumberofperformancemeasurestoassesstheCompany’ssuccessinmeetingitsinvestmentobjectives(asshownonpage4).TheBoardbelievestheCompany’skeyperformanceindicatorsareNAVtotalreturn(NAVpluscumulativedividendspaidtodate)anddividendspershare(seepage5).
Inaddition,theBoardconsiderstheCompany’sperformanceinrelationtootherVCTs.
Principal risks and uncertaintiesTheprincipalfinancialrisksfacedbytheCompany,whichincludemarketpricerisk,interestraterisk,creditriskandliquidityrisk(beingminimal)aresummarisedwithinnote18tothefinancialstatements.
Inadditiontotheserisks,theCompany,asafullylistedCompanyontheLondonStockExchangeandasaventurecapitaltrust,operatesinacomplexregulatoryenvironmentandthereforefacesanumberofrelatedrisks.AbreachoftheVCTRegulationscouldresultinthelossofVCTstatusandconsequentlossoftaxreliefscurrentlyavailabletoShareholdersandtheCompanybeingsubjecttocapitalgainstax.Seriousbreachesofotherregulations,suchastheListingRulesoftheFinancialServicesAuthorityandtheCompaniesAct2006,couldleadtosuspensionfromtheStockExchangeanddamagetotheCompany’sreputation.
ProVen Growth & Income VCT plc30
TheBoardreviewsandagreespoliciesformanagingeachoftheserisks.TheDirectorsreceivequarterlyreportsfromtheManagerswhichmonitorthecomplianceoftheserisks,andplacerelianceontheManagerstogiveupdatesintheinterveningperiods.Thesepolicieshaveremainedunchangedsincethebeginningofthefinancialperiod.
AuditorDeloitteLLPresignedasauditortotheCompanyinMarch2012.TheBoardappointedPKF(UK)LLPastheCompany’sauditorwitheffectfromMarch2012.Aresolutiontore-appointPKF(UK)LLPastheCompany’sauditorwillbeproposedattheforthcomingAGM.
Annual General MeetingTheAnnualGeneralMeetingwillbeheldinTheForestRoomatTheHospitalClub,24EndellStreet,CoventGarden,LondonWC2H9HQat2:30p.m.on21August2012.TheNoticeoftheAnnualGeneralMeetingandFormofProxyareattheendofthisdocument.
Substantial interestsAsat29February2012,andthedateofthisreport,theCompanywasnotawareofanybeneficialinterestexceeding3%oftheissuedOrdinarySharecapitalor‘D’Sharecapital.
Future developmentsTheDirectorsdonotforeseeanymajorchangesintheactivityundertakenbytheCompanyinthecomingyear.TheCompanycontinueswithitsobjectivetoinvestinunquotedcompaniesthroughouttheUnitedKingdomwithaviewtominimisingtherisksofinvestmentandprovidingbothcapitalgrowthanddividendincometoShareholdersoverthelongtermwhilstmaintainingVCTqualifyingstatus.IntheChairman’sStatementonpage7,theCompanyhasannouncedplanstoconvertthe‘D’SharesintonewOrdinarySharessuchthattheCompanywillultimatelyhaveoneshareclass.
Directors’ responsibilities statementThedirectorsareresponsibleforpreparingthedirectors'report,thedirectors'remunerationreportandthefinancialstatementsinaccordancewithapplicablelawandregulations.TheyarealsoresponsibleforensuringthattheannualreportincludesinformationrequiredbytheListingRulesoftheFinancialServicesAuthority.
Companylawrequiresthedirectorstopreparefinancialstatementsforeachfinancialyear.UnderthatlawthedirectorshaveelectedtopreparethefinancialstatementsinaccordancewithUnitedKingdomGenerallyAcceptedAccountingPractice(UnitedKingdomaccountingstandardsandapplicablelaw).Undercompanylawthedirectorsmustnotapprovethefinancialstatementsunlesstheyaresatisfiedthattheygiveatrueandfairviewofthestateofaffairsofthecompanyandoftheprofitorlossofthecompanyforthatperiod.
Inpreparingthesefinancialstatements,theDirectorsarerequiredto:
• selectsuitableaccountingpoliciesandthenapplythemconsistently;
•makejudgmentsandaccountingestimatesthatarereasonableandprudent;
• statewhetherapplicableUKaccountingstandardshavebeenfollowed,subjecttoanymaterialdeparturesdisclosedandexplainedinthefinancialstatements;and
•preparethefinancialstatementsonthegoingconcernbasisunlessitisinappropriatetopresumethattheCompanywillcontinueinbusiness.
Thedirectorsareresponsibleforkeepingadequateaccountingrecordsthataresufficienttoshowandexplainthecompany'stransactions,todisclosewithreasonableaccuracyatanytimethefinancialpositionoftheCompanyandtoenablethemtoensurethatthefinancialstatementscomplywiththeCompaniesAct2006.TheyarealsoresponsibleforsafeguardingtheassetsoftheCompanyandhencefortakingreasonablestepsforthepreventionanddetectionoffraudandotherirregularities.
Directors’ Report and Business Review (continued)
31
TheDirectorsareresponsibleforthemaintenanceandintegrityofthecorporateandfinancialinformationincludedontheManager'swebsite.LegislationintheUnitedKingdomgoverningthepreparationanddisseminationofthefinancialstatementsandotherinformationincludedinannualreportsmaydifferfromlegislationinotherjurisdictions.
Directors’ statement pursuant to the Disclosure and Transparency RulesEachoftheDirectors,whosenamesandfunctionsarelistedonpage24,confirmsthattothebestofeachperson’sknowledge:
• thatthefinancialstatements,whichhavebeenpreparedinaccordancewithUKGenerallyAcceptedAccountingPractice,giveatrueandfairviewoftheassets,liabilities,financialpositionandprofitorlossoftheCompany;and
• thatthemanagementreportincludedwithintheDirectors’ReportandBusinessReview,Chairman’sStatement,InvestmentManager’sReviewandReviewofInvestmentsincludesafairreviewofthedevelopmentandperformanceofthebusinessandthepositionoftheCompany,togetherwithadescriptionoftheprincipalrisksanduncertaintiesthatitfaces.
Electronic publicationThefinancialstatementsarepublishedonwww.provenvcts.co.uk(maintainedbytheInvestmentManager)andalsoonwww.downing.co.uk.
Corporate governanceTheCompany’scompliancewith,anddeparturefrom,theFinancialReportingUKCorporateGovernanceCode(www.frc.org.uk)isshownonpages32to35.
TheCorporateGovernanceStatementdescribeshowtheprinciplesandsupportingprincipleswithintheUKCorporateGovernanceCode,publishedinJune2010,havebeenappliedbytheCompanythroughouttheyearended29February2012,exceptwheredisclosedwithintheCorporateGovernanceStatement.
Statement as to disclosure of information to the AuditorTheDirectorsinofficeatthedateofthereporthaveconfirmed,asfarastheyareaware,thatthereisnorelevantauditinformationofwhichtheAuditorisunaware.EachoftheDirectorshasconfirmedthattheyhavetakenallthestepsthattheyoughttohavetakenasDirectorsinordertomakethemselvesawareofanyrelevantauditinformationandtoestablishthatithasbeencommunicatedtotheAuditor.Thisconfirmationisgivenandshouldbeinterpretedinaccordancewiththeprovisionsofsection418oftheCompaniesAct2006.
ByorderoftheBoard
Grant Whitehouse CompanySecretary 39EarlhamStreet LondonWC2H9LT
25June2012
ProVen Growth & Income VCT plc32
Statement of Corporate Governance TheDirectorssupporttherelevantprinciplesoftheUKCorporateGovernanceCodeissuedinJune2010,beingtheprinciplesofgoodgovernanceandthecodeofbestpractice,assetoutintheUKCorporateGovernanceCode.
Application of the Principles of the CodeTheBoardattachesimportancetomatterssetoutintheUKCorporateGovernanceCodeandappliesitsprinciples.However,asaventurecapitaltrustcompany,mostoftheCompany’sday-to-dayresponsibilitiesaredelegatedtothirdpartiesandtheDirectorsareallnon-executive.
The BoardTheCompanyhasaBoardcomprisingfournonexecutivedirectors.TheChairmanandseniordirectorisMarcVlessing.NatashaChristie-Miller,JamesStewartandMarcVlessingareconsideredtobeindependentdirectorsbytheBoard.BiographicaldetailsofallBoardmembers(includingthesignificantcommitmentsoftheChairman)areshownonpage24.
InaccordancewithCompanypolicy,alloftheDirectorsareofferingthemselvesforre-electionatthenextAGM.
FullBoardmeetingstakeplacequarterlyandtheBoardmeetsmoreregularlytoaddressspecificissuesincludingconsideringrecommendationsfromtheInvestmentManagerandreviews,periodically,thetermsofengagementofallthirdpartyadvisers(includingtheInvestmentManagerandAdministrationManager).TheBoardhasaformalscheduleofmattersspecificallyreservedforitsdecision.
ThefollowingtablesetsouttheDirectors’attendanceatfullBoardandCommitteemeetingsheldduringtheyearended29February2012.
Board meetingsAudit Committee
meetingsRemuneration
Committee meetings
Director held attended held attended held attended
MarcVlessing 4 4 1 1 1 1
NatashaChristie-Miller 3 3 – – – –
NicholasLewis 1 1 1 1 1 1
MalcolmMoss 4 4 1 1 1 –
JamesStewart 4 4 1 1 1 1
TheBoardhasalsoestablishedprocedureswherebyDirectorswishingtodosointhefurtheranceoftheirdutiesmaytakeindependentprofessionaladviceattheCompany’sexpense.
AllDirectorshaveaccesstotheadviceandservicesoftheCompanySecretary.TheCompanySecretaryprovidestheBoardwithfullinformationontheCompany’sassetsandliabilitiesandotherrelevantinformationrequestedbytheChairman,inadvanceofeachBoardmeeting.
TheBoardhasnotappointedanominationcommitteeasitconsidersitselftobesmallanditcompriseswhollynon-executivedirectors.AppointmentsofnewdirectorsaredealtwithbythefullBoard.
Board performance evaluationAnevaluationoftheperformanceoftheBoard,eachofitscommitteesandofthenon-executivedirectorswasconductedusingaseriesofquestionnaires.AbroadrangeofstandardtopicswascoveredincludingtheprogrammeofregularBoardorCommitteebusiness,Boardbehavioursandstrategy.Differentquestions
33
areusedforassessingtheskillsandcontributionsofeachoftheChairmanandnon-executivedirectors.Thesurveywillbeupdatedeachyearincludingtheapproachtorisk,BoardtrainingandDirectors’abilitytoprovideeffectivechallenge.
TheBoardconsideredwhethertointroduceanexternalfacilitatortomanagetheevaluation.However,itconcludedthattheCompanySecretarywaswellplacedtodeviseupdatedquestionsthatarerelevantandappropriatetotheCompanyandthat,havingattendedBoardandCommitteemeetingsthroughouttheyear,heandtheChairmanwouldalsounderstandandensureafullandfrankdiscussionaroundanyconcernsraised.TheChairmanhasreviewedtheresultsofthequestionnaireandfolloweduprelevantmatterswitheachDirector.Theoutcomeofthe2012BoardreviewhasconfirmedthattheDirectorsconsidertheBoardtohaveagoodbalanceofskillsandtobeworkingwell.
Remuneration CommitteeTheBoardhasappointedaremunerationcommitteecomprisingofallDirectorsandchairedbyMarcVlessing.Thecommitteegenerallymeetsonceayearandatothertimesasrequiredandhasspecifictermsofreferenceinordertofulfilitsdutiesinrespectofmattersrelatingtoremuneration.
Audit CommitteeTheCompanyhasanauditcommitteecomprisingJamesStewartasChairman,NatashaChristie-MillerandMarcVlessing.ThisCommitteehasdefinedtermsofreferenceandduties.TheCommitteemetonceduringtheyearwithallmembersbeinginattendance.EachofthemembersoftheAuditCommitteehasrecentandrelevantfinancialexperienceasevidencedbytheirbiographiesonpage24.
TheAuditCommitteeisresponsibleforreviewingtheannualaccountsandnormallywillalsoreviewthehalfyearlyaccounts.ItisalsoresponsibleforreviewingthetermsofappointmentoftheAuditor,togetherwith theirremuneration,aswellasreviewingtheeffectivenessoftheCompany’sinternalcontrolandriskmanagementsystems.
Anynon-auditservicesprovidedbytheAuditorarereviewedandapprovedbytheCommitteepriortobeingundertakentoensurethatauditorobjectivityandindependenceissafeguarded.Duringtheyear,inadditiontotheaudit,PKF(UK)LLPprovidedcorporationtaxcomplianceservicesonbehalfoftheCompany.TheCommitteeconsidersthatPKF(UK)LLPiswellplacedtoprovidethisservicegiventheknowledgegainedfromtheworkundertakenduringtheauditoftheCompany.
Aspartofitsannualreviewprocedures,theCommitteehasobtainedsufficientassurancefromtheirownevaluation,theauditfeedbackdocumentationandfromcorrespondenceanddiscussionswiththeengagementpartnerofPKF(UK)LLP.Basedontheassuranceobtained,theCommitteeissatisfiedwiththeperformance ofthecurrentAuditorandrecommendstoShareholdersthattheybere-appointedasAuditorfortheforthcomingyear.
TheCommitteereviewedtheinternalfinancialcontrolsandconcludedthattheywerestillappropriatetotheCompany.Theyalsoconsideredtheneedforaninternalauditfunctionandconcludedthatthisfunctionwouldnotbeanappropriatecontrolforaventurecapitaltrust.
AstheCompanyhashadnostaff,otherthantheDirectors,therearenoproceduresinplaceinrespectofC3.4oftheUKCorporateGovernanceCode.
Relations with ShareholdersShareholdershavetheopportunitytomeettheBoardattheAGM.TheBoardisalsohappytorespondtoanywrittenqueriesmadebyShareholdersduringthecourseoftheyear,ortomeetwithmajorshareholdersifsorequested.AshareholderpresentationforalltheProVenVCTsisalsoheldeachyearandShareholdersareinvitedtoattend.
InadditiontotheformalbusinessoftheAGM,representativesofthemanagementteamandtheBoardareavailabletoansweranyquestionsaShareholdermayhave.
ProVen Growth & Income VCT plc34
SeparateresolutionsareproposedattheAGMoneachsubstantiallyseparateissue.TheAdministrationManagerortheInvestmentManagercollatesproxyvotesandtheresults(togetherwiththeproxyforms)areforwardedtotheCompanySecretaryimmediatelypriortotheAGM.InordertocomplywiththeUKCorporateGovernanceCode,proxyvotesareannouncedattheAGM,followingeachvoteonashowofhands,exceptintheeventofapollbeingcalled.ThenoticeofthenextAGMandproxyformcanbefoundattheendofthesefinancialstatements.
ThetermsofreferenceoftheAuditandRemunerationCommitteesandtermsandconditionsofappointmentofnon-executivedirectorsareavailabletoShareholdersuponrequest.
Financial reportingTheDirectors’statementofresponsibilitiesforpreparingtheaccountsissetoutintheDirectors’Reportonpages30and31andastatementbytheAuditorabouttheirreportingresponsibilitiesissetoutintheIndependentAuditor’sReportonpage39.
Internal controlTheBoardhasadoptedanInternalControlManual(“Manual”)forwhichtheyareresponsible,whichhasbeencompiledtocomplywiththeUKCorporateGovernanceCode.TheManualisdesignedtoprovidereasonable,butnotabsolute,assuranceagainstmaterialmisstatementorloss,whichitachievesbydetailingtheperceivedrisksandcontrolsinplacetomitigatethem.TheBoardreviewstheperceivedrisksinlinewithrelevantguidanceonanannualbasisandimplementsadditionalcontrolsasappropriate.
TheBoardisresponsibleforensuringthattheprocedurestobefollowedbytheadvisersandthemselvesareinplace,anditreviewstheeffectivenessoftheManual,basedonthereportfromtheAuditCommittee,onanannualbasistoensurethatthecontrolsremainrelevantandwereinoperationthroughouttheyear.TheBoarddidnotundertakeaformalreviewoftheManualduringtheyearbuthasrevieweditsincetheyearend.
AlthoughtheBoardisultimatelyresponsibleforsafeguardingtheassetsoftheCompany,theBoardhasdelegated,throughwrittenagreements,theday-to-dayoperationoftheCompanytothefollowingadvisers:
InvestmentManagement BeringeaLLP Administration DowningLLP
Share capitalTherightsandobligationsattachingtotheCompany’sshares,includingthepoweroftheCompanytobuybacksharesanddetailsofanysignificantshareholders,aresetoutintheChairman’sStatementonpages7and8andtheDirectors’Reportonpage30respectively.
Going concernTheCompany’sbusinessactivities,togetherwiththefactorslikelytoaffectitsfuturedevelopment,performanceandposition,aresetoutintheChairman’sStatementonpage6,theInvestmentManager’sReviewonpage9,andtheDirectors’ReportandBusinessReviewonpage25.ThefinancialpositionoftheCompany,itscashflows,liquiditypositionandborrowingfacilitiesareshownintheBalanceSheetonpage44,theCashFlowStatementonpage45andtheDirectors’Reportonpage27.Inaddition,note18tothefinancialstatementsincludetheCompany’sobjectives,policiesandprocessesformanagingitscapital;itsfinancialriskmanagementobjectives;detailsofitsfinancialinstruments;anditsexposurestocreditriskandliquidityrisk.
TheCompanyhasconsiderablefinancialresourcesbothattheyearendandatthedateofthisreport,andholdsadiversifiedportfolioofinvestments.Asaconsequence,theDirectorsbelievethattheCompanyiswellplacedtomanageitsbusinessriskssuccessfullydespitethecurrentuncertaineconomicoutlook.
TheDirectorshaveareasonableexpectationthattheCompanyhasadequateresourcestocontinueinoperationalexistencefortheforeseeablefuture.Thus,theycontinuetoadoptthegoingconcernbasisofaccountinginpreparingtheannualfinancialstatements.
Statement of Corporate Governance (continued)
35
Compliance statementTheListingRulesrequiretheBoardtoreportoncompliancewiththefifty-twoUKCorporateGovernanceCodeprovisionsthroughouttheaccountingperiod.Withtheexceptionofthelimiteditemsoutlinedbelow,theCompanyhascompliedthroughouttheaccountingyearended29February2012withtheprovisionssetoutinSection1oftheUKCorporateGovernanceCode:
a. NewDirectorsdonotreceiveafull,formalandtailoredinductiononjoiningtheBoard.Suchmattersareaddressedonanindividualbasisastheyarise.AlsotheCompanyhasnomajorShareholderssoShareholdersarenotgiventheopportunitytomeetanynewnon-executiveDirectorsataspecificmeetingotherthanattheAnnualGeneralMeeting.(B.4.1,B.4.2,E.1.1)
b. TheDirectorsdonothaveservicecontractsinplace(B.2.3).TheDirectorshaveagreedlettersofappointmentinplacewithathreemonthnoticeperiod
c. DuetothesizeoftheBoard,theCompanydoesnothaveaformalnominationcommittee.RelevantmattersweredealtwithbythefullBoard.(B.2.1)
d. AstheCompanyhashadnostaff,otherthanDirectors,therearenoproceduresinplacerelatingtowhistleblowing.(C.3.4)
e. DuetothesizeoftheCompany,theAuditCommitteehasconcludedthataninternalauditfunctionisnotappropriate.(C.3.5)
ByorderoftheBoard
Grant Whitehouse Secretary 39EarlhamStreet LondonWC2H9LT
25June2012
ProVen Growth & Income VCT plc36
Directors’ Remuneration Report TheBoardandRemunerationCommitteehavepreparedthisreportinaccordancewiththerequirementsoftheCompaniesAct2006.AresolutiontoapprovethisreportwillbeputtothemembersattheAnnualGeneralMeetingtobeheldon21August2012.
UndertherequirementsofSection497,theCompany’sAuditorisrequiredtoauditcertaindisclosurescontainedwithinthereport.ThesedisclosureshavebeenhighlightedandtheauditopinionthereoniscontainedwithintheAuditor’sReportonpages39and40.
Remuneration CommitteeTheRemunerationCommitteecomprisesallmembersoftheBoardandischairedbyMarcVlessing.
Directors’ remuneration policyDirectors’remunerationiscalculatedinaccordancewiththeCompany’sArticlesofAssociationasfollows:
• TheDirectorsshallbepaidoutofthefundsoftheCompany,bywayoffeesfortheirservices,anaggregatesumnotexceeding£100,000perannum.TheDirectorsshallalsoreceivebywayofadditionalfeessuchfurthersums(ifany)astheCompanyinGeneralMeetingmayfromtime-to-timedetermine.SuchfeesandadditionalfeesshallbedividedamongtheDirectorsinsuchproportionandmannerastheymaydetermineandindefaultofdeterminationequally.
• TheDirectorsshallbeentitledtoberepaidallreasonabletravel,hotelandotherexpensesincurredbythemrespectivelyinorabouttheperformanceoftheirdutiesasDirectors,includinganyexpensesincurredinattendingmeetingsoftheBoardorofCommitteesoftheBoardorGeneralMeetingsandifintheopinionoftheDirectors,itisdesirablethatanyoftheirnumbershouldmakeanyspecialjourneysorperformanyspecialservicesonbehalfoftheCompanyoritsbusiness,suchDirectororDirectorsmaybepaidreasonableadditionalremunerationandexpensesastheDirectorsmayfromtime-to-timedetermine.
Directors’remuneration,asshowninthefollowingtable,issetataleveldesignedtoreflectthetimecommitmentandhighlevelresponsibilitybornebythenon-executivedirectorsandshouldbebroadlycomparablewiththatpaidbysimilarcompanies.
Directors’ agreementsEachoftheDirectorshasanagreedletterofappointmentwherebytheyarerequiredtodevotesuchtimetotheaffairsoftheCompanyastheBoardreasonablyrequiresconsistentwiththeirroleasanon-executiveDirector.Athreemonthrollingnoticeapplies.
37
100.0
150.0
200.0
250.0
300.0
Original Ordinary Share performance chart
ProVen Growth & Income VCT NAV Total Return
ProVen Growth & Income VCT Share Price Total Return
-
50.0
100.0
Feb-
01
Feb-
02
Feb-
03
Feb-
04
Feb-
05
Feb-
06
Feb-
07
Feb-
08
Feb-
09
Feb-
10
Feb-
11
Feb-
12
VCT Share Price Total Return
FTSE All Share Total Return Index
Ordinary Share performance chart
20.0
40.0
60.0
80.0
100.0
120.0
140.0
Ordinary Share performance chart
ProVen Growth & Income VCT NAV Total Return
ProVen Growth & Income VCT Share Price Total Return
FTSE All Share Total Return
Original 'C' Share performance chart
-
20.0
Aug
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FTSE All Share Total Return Index
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Original 'C' Share performance chart
ProVen Growth & Income VCT NAV Total Return
ProVen Growth & Income VCT Share Price Total Return
FTSE All Share Index Total Return-
20.0
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FTSE All Share Index Total Return
180.0 200.0
'D' Share performance chart
-20.0 40.0 60.0 80.0
100.0 120.0 140.0 160.0 180.0 200.0
Feb-
09
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ProVen Growth & Income VCT NAV Total Return
ProVen Growth & Income VCT Share Price Total Return
FTSE All Share Index Total Return
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May
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Nov Feb
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Nov Feb
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Nov Feb
Directors’ remuneration (audited)Directors’remunerationfortheyearunderreviewwasasfollows:
Year ended 29 Feb 2012
£’000
Year ended 28 Feb 2011
£’000
MarcVlessing(Chairmanfrom24August2010) 30.0 25.2
AndrewDavison(formerChairman,resigned24August2010) – 9.5
NatashaChristie-Miller(Directorfrom24August2011) 11.6 –
NicholasLewis(formerDirector,resigned24August2011) 10.9 19.0
MalcolmMoss 15.0 15.0
JamesStewart 22.5 21.3
90.0 90.0
NootheremolumentsorpensioncontributionswerepaidbytheCompanyto,oronbehalfof,anyDirector.Theremunerationlevelsfortheforthcomingyearareexpectedtobeatthefollowingrates:
Annual Rate £’000
MarcVlessing(Chairman) 30.0
NatashaChristie-Miller 22.5
JamesStewart 22.5
MalcolmMoss 15.0
90.0
Insurance coverDirectors’andOfficers’liabilityinsurancecoverisheldbytheCompanyinrespectoftheDirectors.
Performance graphThechartsbelowrepresenttheCompany’sOrdinaryShareand‘D’Shareperformanceoverthereportingperiodssinceshareconversionorlaunchoftherespectiveshareclasses.ThechartscomparetheNetAssetValueTotalReturnandtheSharePriceTotalReturntoarebasedFTSEAllShareIndexTotalReturn(source:FTSEInternationalLimited).NetAssetValueTotalReturniscalculatedasNetAssetValueplusdividendsreinvestedintheCompanyattheNetAssetValueprevailingatthedatethedividendswerepaid.SharePriceTotalReturniscalculatedinasimilarway,butreinvestingdividendsatthemid-marketsharepriceatthedatedividendsarepaid.TheFTSEAllShareIndexisnotconsideredtobeabenchmarkfortheCompanybuthasbeenselectedasitisconsideredtobethemostrelevantpubliclyavailableindex.Allserieshavebeenrebasedto100attherelevantlaunchdates.
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ProVen Growth & Income VCT NAV Total Return
ProVen Growth & Income VCT Share Price Total Return
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ProVen Growth & Income VCT plc38
ByorderoftheBoard
Grant Whitehouse CompanySecretary 39EarlhamStreet LondonWC2H9LT
25June2012
Directors’ Remuneration Report (continued)
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ProVen Growth & Income VCT NAV Total Return
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ProVen Growth & Income VCT NAV Total Return
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Original 'C' Share performance chart
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ProVen Growth & Income VCT NAV Total Return
ProVen Growth & Income VCT Share Price Total Return
FTSE All Share Index Total Return-
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'D' Share performance chart
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ProVen Growth & Income VCT Share Price Total Return
FTSE All Share Index Total Return
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ProVen Growth & Income VCT NAV Total Return
ProVen Growth & Income VCT Share Price Total Return
FTSE All Share Index Total Return
39
Independent Auditor’s Report to the Members of ProVen Growth & Income VCT plc
WehaveauditedthefinancialstatementsofProVenGrowth&IncomeVCTplcfortheyearended29February2012whichcomprisetheIncomeStatement,theReconciliationofMovementsinShareholders'Funds,theBalanceSheet,theCashFlowStatementandtherelatednotes.ThefinancialreportingframeworkthathasbeenappliedintheirpreparationisapplicablelawandUnitedKingdomAccountingStandards(UnitedKingdomGenerallyAcceptedAccountingPractice).
ThisreportismadesolelytotheCompany'smembers,asabody,inaccordancewithChapter3ofPart16oftheCompaniesAct2006.OurauditworkhasbeenundertakensothatwemightstatetotheCompany'smembersthosematterswearerequiredtostatetotheminanauditor'sreportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthantheCompanyandtheCompany'smembersasabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.
Respective responsibilities of directors and auditorAsexplainedmorefullyinthedirectors’responsibilitiesstatement,thedirectorsareresponsibleforthepreparationofthefinancialstatementsandforbeingsatisfiedthattheygiveatrueandfairview.OurresponsibilityistoauditandexpressanopiniononthefinancialstatementsinaccordancewithapplicablelawandInternationalStandardsonAuditing(UKandIreland).ThosestandardsrequireustocomplywiththeAuditingPracticesBoard'sEthicalStandardsforAuditors.
Scope of the audit of the financial statementsAnauditinvolvesobtainingevidenceabouttheamountsanddisclosuresinthefinancialstatementssufficienttogivereasonableassurancethatthefinancialstatementsarefreefrommaterialmisstatement,whethercausedbyfraudorerror.Thisincludesanassessmentof:whethertheaccountingpoliciesareappropriatetothecompany'scircumstancesandhavebeenconsistentlyappliedandadequatelydisclosed;thereasonablenessofsignificantaccountingestimatesmadebythedirectors;andtheoverallpresentationofthefinancialstatements.Inaddition,wereadallthefinancialandnon-financialinformationintheannualreporttoidentifymaterialinconsistencieswiththeauditedfinancialstatements.Ifwebecomeawareofanyapparentmaterialmisstatementsorinconsistenciesweconsidertheimplicationsforourreport.
Opinion on financial statementsInouropinionthefinancialstatements:
• giveatrueandfairviewofthestateoftheCompany’saffairsasat29February2012andofitslossfortheyearthenended;
• havebeenproperlypreparedinaccordancewithUnitedKingdomGenerallyAcceptedAccountingPractice;and
•havebeenpreparedinaccordancewiththerequirementsoftheCompaniesAct2006.
Opinion on other matters prescribed by the Companies Act 2006Inouropinion:
• thepartoftheDirectors’RemunerationReporttobeauditedhasbeenproperlypreparedinaccordancewiththeCompaniesAct2006;
• theinformationgivenintheDirectors’Reportforthefinancialyearforwhichthefinancialstatementsarepreparedisconsistentwiththefinancialstatements;and
ProVen Growth & Income VCT plc40
• theinformationgivenintheStatementofCorporateGovernancesetoutonpages32to35incompliancewithrules7.2.5and7.2.6intheDisclosureRulesandTransparencyRulessourcebookissuedbytheFinancialServicesAuthority(informationaboutinternalcontrolandriskmanagementsystemsinrelationtofinancialreportingprocessesandaboutsharecapitalstructures)isconsistentwiththefinancialstatements.
Matters on which we are required to report by exceptionWehavenothingtoreportinrespectofthefollowing:
UndertheCompaniesAct2006wearerequiredtoreporttoyouif,inouropinion:
• adequateaccountingrecordshavenotbeenkept,orreturnsadequateforouraudithavenotbeenreceivedfrombranchesnotvisitedbyus;or
• thefinancialstatementsandthepartoftheDirectors’RemunerationReporttobeauditedarenotinagreementwiththeaccountingrecordsandreturns;or
• certaindisclosuresofdirectors’remunerationspecifiedbylawarenotmade;or
•wehavenotreceivedalltheinformationandexplanationswerequireforouraudit;or
• acorporategovernancestatementhasnotbeenpreparedbytheCompany.
UndertheListingRuleswearerequiredtoreview:
• theDirectors’statement,setoutonpage34,inrelationtogoingconcern;and
• thepartoftheStatementofCorporateGovernancerelatingtotheCompany’scompliancewiththenineprovisionsofthetheUKCorporateGovernanceCodespecifiedforourreview;and
• certainelementsofthereporttotheshareholdersbytheBoardonDirectors’remuneration.
Rhodri Whitlock (Senior statutory auditor)forandonbehalfofPKF(UK)LLP,StatutoryauditorLondon,UK
25June2012
Independent Auditor’s Report to the Members of ProVen VCT plc (continued)
41
Income Statement for the year ended 29 February 2012
Company
Year ended 29 February 2012 Year ended 28 February 2011
NoteRevenue
£’000Capital
£’000Total
£’000Revenue
£’000Capital
£’000Total
£’000
Income 2 663 – 663 517 – 517
Gainsoninvestments 9 – 236 236 – 2,919 2,919
663 236 899 517 2,919 3,436
Investmentmanagementfees 3 (179) (539) (718) (132) (393) (525)
Otherexpenses 4 (322) – (322) (261) – (261)
(Loss)/return on ordinary activities before tax 162 (303) (141) 124 2,526 2,650
Taxonordinaryactivities 6 – – – – – –
(Loss)/return attributable to equity shareholders 162 (303) (141) 124 2,526 2,650
Basicanddilutedreturn/(loss)pershare:
Ordinary Share 8 0.6p (0.2p) 0.4p 0.7p 11.2p 11.9p
‘D’ Share 8 (0.5p) (2.7p) (3.2p) (0.6p) (2.5p) (3.1p)
Allrevenueandcapitalitemsinthestatementsonpage42andabovederivefromcontinuingoperations.Nooperationswereacquiredordiscontinuedduringtheyear.ThetotalcolumnwithintheIncomeStatementrepresentstheprofitandlossaccountoftheCompany,preparedinaccordancewiththeaccountingpoliciesdetailedinnote1tothefinancialstatements.ThesupplementaryrevenueandcapitalcolumnsarepresentedforinformationpurposesinaccordancewiththeStatementofRecommendedPracticeissuedbyTheAssociationofInvestmentCompanies.
AStatementofTotalRecognisedGainsandLossesrelatingtoeachclassofsharehasnotbeenpreparedasallgainsandlossesarerecognisedintherelevantIncomeStatementsinthecurrentandprioryearasshownonpage42andabove.
OtherthanrevaluationmovementsarisingoninvestmentsheldatfairvaluethroughtheIncomeStatement,therewerenodifferencesbetweenthereturnasstatedonpage42andaboveandathistoricalcost.
The accompanying notes are an integral part of these financial statements.
ProVen Growth & Income VCT plc42
Split as: Ordinary Shares
Year ended 29 February 2012 Year ended 28 February 2011
Revenue £’000
Capital £’000
Total £’000
Revenue £’000
Capital £’000
Total £’000
Income 585 – 585 466 – 466
Gainsoninvestments – 350 350 – 3,009 3,009
585 350 935 466 3,009 3,475
Investmentmanagementfees (143) (427) (570) (94) (281) (375)
Otherexpenses (243) – (243) (199) – (199)
Return/(loss) on ordinary activities before tax 199 (77) 122 173 2,728 2,901
Taxonordinaryactivities – – – – – –
Return/(loss) attributable to equity shareholders 199 (77) 122 173 2,728 2,901
‘D’ Shares
Year ended 29 February 2012 Year ended 28 February 2011
Revenue £’000
Capital £’000
Total £’000
Revenue £’000
Capital £’000
Total £’000
Income 78 – 78 51 – 51
Lossesoninvestments – (114) (114) – (90) (90)
78 (114) (36) 51 (90) (39)
Investmentmanagementfees (36) (112) (148) (38) (112) (150)
Otherexpenses (79) - (79) (62) – (62)
Loss on ordinary activities before tax (37) (226) (263) (49) (202) (251)
Taxonordinaryactivities – – – – – –
Loss attributable to equity shareholders (37) (226) (263) (49) (202) (251)
Income Statement for the year ended 29 February 2012 (continued)
The accompanying notes are an integral part of these financial statements.
43
Reconciliation of Movements in Shareholders’ Funds for the year ended 29 February 2012
Year ended 29 February 2012
Year ended 28 February 2011
Note
Ordinary Shares £’000
‘D’ Shares £’000
Total £’000
Ordinary Shares £’000
‘D’ Shares £’000
Total £’000
Openingshareholders’funds 20,799 7,442 28,241 17,561 5,099 22,660
Issueofshares 10,020 – 10,020 737 2,800 3,537
Share issue costs (549) – (549) (41) (154) (195)
Purchaseofownshares (612) (28) (640) (359) (52) (411)
Distributions 7 (1,547) – (1,547) – – –
Totalrecognisedgains/(losses)fortheyear 122 (263) (141) 2,901 (251) 2,650
Closing shareholders’ funds 28,233 7,151 35,384 20,799 7,442 28,241
The accompanying notes are an integral part of these financial statements.
ProVen Growth & Income VCT plc44
Balance Sheet as at 29 February 2012
29 February 2012 28 February 2011
Note
Ordinary Shares £’000
‘D’ Shares £’000
Total £’000
Ordinary Shares £’000
‘D’ Shares £’000
Total £’000
Fixed assets Investments 9 15,168 2,453 17,621 14,865 1,956 16,821
Current assets Debtors 10 1,189 19 1,208 345 16 361
Currentinvestments 11 1,250 1,250 2,500 1,250 1,250 2,500
Cashatbankandinhand 10,897 3,505 14,402 5,851 4,282 10,133
13,336 4,774 18,110 7,446 5,548 12,994
Creditors:amountsfallingduewithinoneyear 12 (271) (76) (347) (1,512) (62) (1,574)
Net current assets 13,065 4,698 17,763 5,934 5,486 11,420
Total assets less current liabilities/ Net assets 28,233 7,151 35,384 20,799 7,442 28,241
Capital and reserves Calledupsharecapital 13 556 82 638 390 82 472
Capitalredemptionreserve 14 965 1 966 952 1 953
Sharepremium 14 9,973 7,785 17,758 681 7,785 8,466
Specialreserve 14 14,513 – 14,513 15,940 – 15,940
Capitalreserve–realised 14 1,752 (293) 1,459 2,860 (181) 2,679
Revaluationreserve 14 818 (204) 614 347 (90) 257
Revenuereserve 14 (344) (220) (564) (371) (155) (526)
Total equity shareholders’ funds 28,233 7,151 35,384 20,799 7,442 28,241
Basic and diluted net asset value per share 15 82.2p 86.8p 86.4p 90.0p
Thefinancialstatementsonpages41to57wereapprovedandauthorisedforissuebytheBoardofDirectorson25June2012andweresignedonitsbehalfby:
Marc Vlessing ChairmanProVenGrowth&IncomeVCTplcCompanynumber:4125326
The accompanying notes are an integral part of these financial statements.
45
Cash Flow Statement for the year ended 29 February 2012
Year ended 29 February 2012
Year ended 28 February 2011
Note
Ordinary Shares £’000
‘D’ Shares £’000
Total £’000
Ordinary Shares £’000
‘D’ Shares £’000
Total £’000
Net cash (outflow)/inflow from operating activities 16 (1,510) (139) (1,649) 850 (23) 827
Capital expenditure Purchaseofinvestments (2,904) (610) (3,514) (1,014) (2,047) (3,061)
Saleofinvestments 2,019 – 2,019 4,429 – 4,429
Net cash (outflow)/inflow from capital expenditure (885) (610) (1,495) 3,415 (2,047) 1,368
Equity dividends paid (1,547) – (1,547) – – –
Net cash (outflow)/inflow before financing (3,942) (749) (4,691) 4,265 (2,070) 2,195
Financing Proceedsfromshareissue 10,020 – 10,020 737 2,800 3,537
Share issue costs (549) – (549) (41) (154) (195)
Purchaseofownshares (483) (28) (511) (359) (52) (411)
Net cash inflow/(outflow) from financing 8,988 (28) 8,960 337 2,594 2,931
Increase/(decrease) in cash 17 5,046 (777) 4,269 4,602 524 5,126
The accompanying notes are an integral part of these financial statements.
ProVen Growth & Income VCT plc46
Notes to the Accounts for the year ended 29 February 2012
1 Accounting policies
Basis of accountingTheCompanyhasprepareditsfinancialstatementsunderUKGenerallyAcceptedAccountingPractice(“UKGAAP”)andinaccordancewiththeStatementofRecommendedPractice“FinancialStatementsofInvestmentTrustCompaniesandVentureCapitalTrusts”revisedJanuary2009(“SORP”).
Thefinancialstatementsarepreparedunderthehistoricalcostconventionexceptforcertainfinancialinstrumentsmeasuredatfairvalue.
TheCompanyimplementsnewFinancialReportingStandards(“FRS”)issuedbytheAccountingStandardsBoardwhenrequired.
Going concernTheDirectorshave,atthetimeofapprovingthefinancialstatements,areasonableexpectationthattheCompanyhasadequateresourcestocontinueinoperationalexistencefortheforeseeablefuture.Thus,theycontinuetoadoptthegoingconcernbasisofaccountinginpreparingthefinancialstatements.FurtherdetailiscontainedintheStatementofCorporateGovernanceonpage34.
Presentation of Income StatementInordertobetterreflecttheactivitiesofaninvestmentcompanyand,inaccordancewithguidanceissuedbytheAssociationofInvestmentCompanies(“AIC”),supplementaryinformationwhichanalysestheIncomeStatementbetweenitemsofarevenueandcapitalnaturehasbeenpresentedalongsidetheIncomeStatement.ThenetrevenueisthemeasuretheDirectorsbelieveappropriateinassessingtheCompany'scompliancewithcertainrequirementssetoutinPart6oftheIncomeTaxAct2007.
Fixed assets investmentsInvestmentsaredesignatedas“fairvaluethroughprofitorloss”assetsduetoinvestmentsbeingmanagedandperformanceevaluatedonafairvaluebasis.Afinancialassetisdesignatedwithinthiscategoryifitisbothacquiredandmanaged,withaviewtosellingafteraperiodoftime,inaccordancewiththeCompany’sdocumentedinvestmentpolicy.Thefairvalueofaninvestmentuponacquisitionisdeemedtobecost.Thereafter,investmentsaremeasuredatfairvalueinaccordancewiththeInternationalPrivateEquityandVentureCapitalValuationGuidelines(“IPEVGuidelines”)togetherwithFRS26-FinancialInstruments:RecognitionandMeasurement.
PubliclytradedinvestmentsaremeasuredusingbidpricesinaccordancewiththeIPEVGuidelines.
ThevaluationmethodologiesusedbytheDirectorsforassessingthefairvalueofunquotedinvestmentsareasfollows:
•Priceofrecentinvestment;
•Multiples;
•Netassets;
•Discountedcashflowsorearnings(ofunderlyingbusiness);
•Discountedcashflows(fromtheinvestment);and
• Industryvaluationbenchmarks.
Themethodologyappliedtakesaccountofthenature,factsandcircumstancesoftheindividualinvestmentandusesreasonabledata,marketinputs,assumptionsandestimatesinordertoascertainfairvalue.
47
Fixedassetinvestmentsarederecognisedwhenthecontractualrightstothecashflowsfromtheassetexpireorittransferstheassetandsubstantiallyalltherisksandrewardsofownershipoftheassettoanotherentity.
Whereaninvesteecompanyhasgoneintoreceivershiporliquidation,orthereislittlelikelihoodofarecoveryfromacompanyinadministration,thelossontheinvestment,althoughnotphysicallydisposedof,istreatedasbeingrealised.
GainsandlossesarisingfromchangesinfairvalueareincludedintheIncomeStatementfortheyearasacapitalitem.
ItisnottheCompany’spolicytoexercisesignificantinfluenceoverinvesteecompanies.Therefore,theresultsofthesecompaniesarenotincorporatedintotheIncomeStatementexcepttotheextentofanyincomeaccrued.ThisisinaccordancewiththeSORPthatdoesnotrequireportfolioinvestmentstobeaccountedforusingtheequitymethodofaccounting.
Current asset investmentsCurrentassetinvestments,whichcompriseinvestmentsinliquidityfundswithAAArating,areheldatfairvaluethroughprofitandlossandaremarked-to-market.Theseassetsarepurchasedandredeemedunderacontractandtheassetsarerecognisedandderecognisedonthetradedate.Theseassetsareinitiallymeasuredatcostandsubsequentlyvaluedatfairvalue,beingtheclosingpriceofthefundasissuedbytheprovider.
Income Dividendincomefrominvestmentsisrecognisedwhentheshareholders’rightstoreceivepaymenthasbeenestablished,normallytheex-dividenddateor,wherenoex-dividenddateisestablished,whentheCompany’srighttoreceivepaymentisestablished.
Interestincomeisaccruedonatimebasis,byreferencetotheprincipaloutstandingandattheeffectiveinterestrateapplicableandonlywherethereisreasonablecertaintyofcollection.Incomewhichisnotcapableofbeingreceivedwithinareasonableperiodoftimeisreflectedinthecapitalvalueoftheinvestments.
ExpensesAllexpensesareaccountedforonanaccrualsbasis.InrespectoftheanalysisbetweenrevenueandcapitalitemspresentedwithintheIncomeStatement,allexpenseshavebeenpresentedasrevenueitemsexceptasfollows:
• expenseswhichareincidentaltotheacquisitionofaninvestmentaredeductedfromtheCapitalAccount;
• expenseswhichareincidentaltothedisposalofaninvestmentaredeductedfromthedisposalproceedsoftheinvestment;and
•expensesaresplitandpresentedpartlyascapitalitemswhereaconnectionwiththemaintenanceorenhancementofthevalueoftheinvestmentsheldcanbedemonstratedandaccordinglytheinvestmentmanagementfeehasbeenallocated25%torevenueand75%tocapital,inordertoreflecttheDirectors’expectedlong-termviewofthenatureoftheinvestmentreturnsoftheCompany.
TaxationThetaxeffectsofdifferentitemsintheIncomeStatementareallocatedbetweencapitalandrevenueonthesamebasisastheparticularitemtowhichtheyrelateusingtheCompany’seffectiverateoftaxfortheaccountingperiod.
DuetotheCompany’sstatusasaventurecapitaltrustandthecontinuedintentiontomeettheconditionsrequiredtocomplywithPart6oftheIncomeTaxAct2007,noprovisionfortaxationisrequiredinrespectofanyrealisedorunrealisedappreciationoftheCompany’sinvestmentswhicharises.
Deferredtaxationisprovidedinfullontimingdifferencesthatresultinanobligationatthebalancesheetdatetopaymoretax,orarighttopaylesstax,atafuturedate,atratesexpectedtoapplywhentheycrystallisebasedoncurrenttaxratesandlaw.Timingdifferencesarisefromtheinclusionofitemsofincomeandexpenditureintaxationcomputationsinperiodsdifferentfromthoseinwhichtheyareincludedinthefinancialstatements.Deferredtaxassetsarerecognisedtotheextentthatitisregardedasmorelikelythannotthattheywillberecovered.Deferredtaxassetsandliabilitiesarenotdiscounted.
ProVen Growth & Income VCT plc48
Other debtors and other creditorsOtherdebtors(includingaccruedincome),othercreditorsandloannotesareincludedwithintheaccountsatamortisedcost.
Share issue costsExpensesinrelationtoshareissuesaredeductedfromtheSharePremiumAccountuponallotmentofshares.
2 Income
2012 £’000
2011 £’000
Income from investments
Loanstockinterest 480 406
Dividendincome 27 51
Liquidityfundinterest 19 14
526 471
Other income
Depositinterest 136 46
Otherincome 1 –
663 517
TheDirectorsconsiderthattheCompanyhasoneclassofbusinessandthatallitsactivitiesariseintheUnitedKingdom.
3 Investment management fees
2012 £’000
2011 £’000
Investmentmanagementfees 718 525
TheCompanyhasanagreementwithBeringeaLLPfortheprovisionofinvestmentmanagementservicesinrespectofitsportfolioofventurecapitalinvestmentswhichisterminablewithoneyear’swrittennotice.Themanagementfeeisbaseduponanannualamountof2.0%ofnetassets.TheannualrunningcostsoftheCompany,excludingperformancefeesandtrailcommission,aresubjecttoacapat3.6%oftheCompany’snetassets.
4 Other expenses
2012 £’000
2011 £’000
Administrationservices 52 49
Directors’remuneration 90 100
SocialsecuritycostsandirrecoverableVATon Directors’remuneration 11 1
Trailcommission 74 33
Auditor’sremunerationforauditofCompany’sannualaccounts 19 19
Auditor’sremunerationfornon-auditservices(taxation) 4 –
Otherexpenses 72 59
322 261
Notes to the Accounts (continued)
49
5 Directors’ remunerationDetailsofremunerationoftheDirectors(excludingemployers’NIandVAT)canbefoundintheDirectors’RemunerationReportonpages36and37.
TheCompanyhadnoemployeesotherthantheDirectorsduringeitheryear.CostsinrespectofDirectorsaredisclosedinnote4.
6 Taxation on ordinary activities2012
£’0002011
£’000
(a) Tax charge for year
Current year
UKcorporationtax(chargedtotherevenueaccount) – –
Chargedtocapitalexpenses – –
Chargeforyear – –
(b) Factors affecting tax charge for the year
Returnonordinaryactivitiesbeforetax (141) 2,650
Taxchargecalculatedonoperatingprofitattheapplicablerateof26%(2011:21%) (37) 557
Effectsof:
UKdividendincome (7) (11)
Gainsoninvestments (62) (613)
Expensesdisallowedfortaxpurposes 19 7
Excessmanagementfees 87 60
– –
(c) Excess management fees
Excessmanagementfees,whichareavailabletobecarriedforwardandsetoffagainstfuturetaxableincome,amountedto£1,955,000(2011:£1,624,000).Adeferredtaxassetof£488,000(2011:£341,000)hasnotbeenrecognisedduetothefactthatitisunlikelytheexcessmanagementfeeswillbesetoffintheforeseeablefuture.
7 DividendsYear ended 29 February 2012 Year ended 28 February 2011
PenceRevenue
£’000Capital
£’000Total £’000
Revenue £’000
Capital £’000
Total £’000
Ordinary Share dividends Paid in year
2012Interim(paid29/07/2011) 4.5 172 1,375 1,547 – – –
172 1,375 1,547 – – –
TheCompanyisproposingtopayafinaldividendof4.5pperOrdinarySharefortheyearended29February2012,ofwhich0.5pisrevenueand4.0piscapital,on31August2012.Itisestimatedthattheaggregateamountofthedividendwillbe£1,545,000basedontheOrdinarySharesinissueatthedateofthisreport.
ProVen Growth & Income VCT plc50
8 Basic and diluted return per shareYear ended 29 February 2012 Year ended 28 February 2011
Ordinary Shares ‘D’ Shares
Ordinary Shares ‘D’ Shares
Revenuereturnpersharebasedon:
Netrevenueaftertaxation(£’000) 199 (37) 173 (49)
Weightedaveragenumberofsharesinissue 33,425,600 8,246,968 24,319,643 7,970,999
Pencepershare 0.6p (0.5p) 0.7p (0.6p)
Capitalreturn/(loss)persharebasedon:
Netcapitalgain/(loss)forthefinancialyear(£‘000) (77) (226) 2,728 (202)
Weightedaveragenumberofsharesinissue 33,425,600 8,246,968 24,319,643 7,970,999
Pencepershare (0.2p) (2.7p) 11.2p (2.5p)
AstheCompanyhasnotissuedanyconvertiblesecuritiesorshareoptions,thereisnodilutiveeffectonreturnpershare.Thereturnpersharedisclosedthereforerepresentsbothbasicanddilutedreturnpershare.
9 Investments “Fair value through profit or loss” assets
Investments quoted on AIM
£'000
Unquoted investments
£'000Total £'000
Openingcostat1March2011 1,070 15,495 16,565
Unrealisedgains/(losses)/(impairments)at1March2011 (779) 1,035 256
Openingfairvalueat1March2011 291 16,530 16,821
Movement in year Purchases at cost – 3,514 3,514
Sales -proceeds (112) (2,838) (2,950)
-realisedgain/(losses)onsales 4 258 262
Gains/(losses)intheincomestatement (56) 30 (26)
Closingfairvalueat29February2012 127 17,494 17,621
Closingcostat29February2012 620 16,387 17,007
Unrealisedgains/(losses)/(impairments)at29February2012 (493) 1,107 614
Closingfairvalueat29February2012 127 17,494 17,621
Thebasisofvaluationwaschangedforanumberofinvestmentsheldthroughouttheyear.Thecombinedeffectofthesechangeswasanupliftof£79,000inthevaluationoftheOrdinarySharepoolandareductionof£30,000inthevaluationofthe‘D’Sharepool,relativetotheprioryear.SignificantvaluationchangesintheOrdinarySharepoolincludethefollowing:thevaluationofCampdenMedia(29February2012valuation£776,000,upliftof£79,000)waschangedfromapriceofrecentinvestmentbasistoanearningsmultiplebasis.Significantvaluationchangesinthe‘D’Sharepoolincludethefollowing:thevaluationofMonicaVinader(29February2012valuation£315,000,upliftof£177,000)waschangedfromapriceofrecentinvestmentbasistoarevenuemultiplebasis;thevaluationofSpeed-Trap(29February2012valuation£180,000,decreaseof£114,000)waschangedfromapriceofrecentinvestmentbasistoapriceofrecentinvestmentwithprovisionbasis;thevaluationofSenselogix(29February2012valuation£nil,decreaseof£138,000)waschangedfromapriceofrecentinvestmentbasistoafullprovisionbasis.TheDirectorsconsiderthesechangeswerenecessarytoenableabetterassessmentofthefairvalueoftherelevantinvestments.
AnanalysisofventurecapitalinvestmentsbetweenOrdinaryand‘D’Sharesclassesissetoutinthereviewoftheinvestmentsonpages13to23.
10 Debtors2012
£’0002011
£’000Other debtors 1,111 306PrepaymentsandaccruedIncome 97 55
1,208 361
Otherdebtorsincludesmoniesduefromthesaleofinvestments.
Notes to the Accounts (continued)
51
11 Current investments“Fair value through profit and loss” assets
2012 £’000
2011 £’000
BlackRockLiquidityFund(formerlyBGISterlingLiquidityFirstFund) 1,250 1,250
InsightLiquidityFund 1,250 1,250
2,500 2,500
12 Creditors: amounts falling due within one year2012
£’0002011
£’000
Unallottedsharecapital – 1,279
Corporationtax 4 4
Othertaxesandsocialsecurity 4 –
Accrualsanddeferredincome 339 291
347 1,574
13 Called up share capital2012
£’0002011
£’000
Issued, allotted, called up and fully-paid:
34,341,341(2011:24,068,108)Ordinarysharesof1.6187peach 556 390
8,236,814(2011:8,269,911)‘D’sharesof1peach 82 82
638 472
Management of capitalTheCompany’scapitalismanagedinaccordancewithitsinvestmentpolicyasshownintheDirector’sReport,inpursuitofitsprincipalinvestmentobjectivesasstatedonpage4.Therehasbeennosignificantchangeintheobjectives,policiesorprocessesformanagingcapitalfromthepreviousyear.
Byitsnature,theCompanyhasanamountofcapital,atleast70%(asmeasuredundertaxlegislation)ofwhichmustbeinvested,andretained,intherelativelyhighriskassetclassofsmallUKcompaniesbroadlywithinthreeyearsofthatcapitalbeingsubscribed.TheCompanyaccordinglyhaslimitedscopetomanageitscapitalstructureinlightofchangesineconomicconditionsandtheriskcharacteristicsoftheunderlyingassets.Subjecttothisoverallconstraintuponthechangingcapitalstructure,theCompanymayadjusttheamountofdividendspaidtoShareholders,purchaseitsownshares,issuenewsharesorsellassetsifsorequiredtomaintainalevelofliquiditytoremainagoingconcern.AlthoughtheCompanyispermittedtoborrowtogiveadegreeofflexibility,therearenocurrentplanstodoso.
AstheCompanyhasalowlevelofliabilities,theBoardconsiderstheCompany’snetassetstobeitscapital.TheCompanydoesnothaveanyexternallyimposedcapitalrequirements.
TheCompanyhastheauthoritytobuybacksharesasdescribedintheDirectors’Report.
Duringtheyear,theCompanyrepurchased823,563OrdinarySharesof1.6187peach(“OrdinaryShares”)withanaggregatenominalvalueof£13,331andforanaggregateconsiderationof£612,355,beinganaveragepriceof74.0pperOrdinaryShare,andrepresenting3.4%oftheissuedOrdinarySharecapital.Thesesharesweresubsequentlycancelled.
Duringtheyear,10,489,428OrdinaryShareswereissuedat90.6ppershare,172,212OrdinaryShareswereissuedat86.3ppershareand435,156OrdinaryShareswereissuedat84.4ppershareallpursuanttotheofferforsubscriptionandprospectusdated10December2010.Theaggregatenominalvalueoftheshareswas£179,000andtheaggregateconsiderationfortheshareswas£10,020,000,whichincludesissuecostsof£549,000.
Duringtheyear,theCompanyrepurchased33,097‘D’sharesof1peach(“‘D’Shares”)withanaggregatenominalvalueof£331andforanaggregateconsiderationof£28,520,beinganaveragepriceof85.7pper‘D’Share,andrepresenting0.4%oftheissued‘D’Sharecapital.Thesesharesweresubsequentlycancelled.
ProVen Growth & Income VCT plc52
14 ReservesCapital
redemption reserve
£’000
Share premium
£’000
Special reserve
£’000
Capital reserve - realised
£’000
Revaluation reserve
£’000
Revenue reserve
£’000Total £’000
At1March2011 953 8,466 15,940 2,679 257 (526) 27,769
Purchaseofownshares 13 – (612) – – (28) (627)
Issueofnewshares – 9,292 – – – – 9,292
Expensescapitalised – – – (539) – – (539)
Gainsoninvestments – – – 262 (26) – 236
Retainedrevenue – – – – – 162 162
Distributionspaid – – – (1,375) – (172) (1,547)
Transferbetweenreserves – – (815) 432 383 – –
At29February2012 966 17,758 14,513 1,459 614 (564) 34,746
Split between:
Ordinary Shares
At1March2011 952 681 15,940 2,860 347 (371) 20,409
Purchaseofownshares 13 – (612) – – – (599)
Issueofnewshares – 9,292 – – – – 9,292
Expensescapitalised – – – (427) – – (427)
Gainsoninvestments – – – 262 88 – 350
Retainedrevenue – – – – – 199 199
Distributionspaid – – – (1,375) – (172) (1,547)
Transferbetweenreserves – – (815) 432 383 – –
At29February2012 965 9,973 14,513 1,752 818 (344) 27,677
‘D’ Shares
At1March2011 1 7,785 – (181) (90) (155) 7,360
Purchaseofownshares – – – – – (28) (28)
Expensescapitalised – – – (112) – – (112)
Lossesoninvestments – – – – (114) – (114)
Retainedrevenue – – – – – (37) (37)
At29February2012 1 7,785 – (293) (204) (220) 7,069
ThespecialreserveisadistributablereservethatallowstheCompanytomakemarketpurchasesofitsownsharesandtopaydistributions.Thespecialreserve,capitalreserve–realisedandrevenuereservearealldistributablereserves.Thedistributablereservesarereducedbylossesof£2,971,000whichareincludedintherevaluationreserve.Reservesavailablefordistributionthereforeamountto£12,437,000.
15 Basic and diluted net asset value per share
Shares in Issue2012
Net asset value2011
Net asset value
2012 2011pence
per share £'000pence
per share £'000
Ordinary Shares 34,341,341 24,068,108 82.2p 28,233 86.4p 20,799
‘D’ Shares 8,236,814 8,269,911 86.8p 7,151 90.0p 7,442
35,384 28,241
AstheCompanyhasnotissuedanyconvertiblesecuritiesorshareoptions,thereisnodilutiveeffectonnetassetpershare.Thenetassetvaluepersharedisclosedthereforerepresentsbothbasicanddilutedreturnpershare.
Notes to the Accounts (continued)
53
16 Reconciliation of return on ordinary activities before taxation to net cash flow from operating activities
2012 2011
Ordinary Shares
£'000
‘D’ Shares
£'000Total
£0'00
Ordinary Shares/
‘C’ Shares £'000
‘D’ Shares
£'000Total
£0'00
Returnonordinaryactivitiesbeforetax 122 (263) (141) 2,901 (251) 2,650
(Gains)/lossesoninvestments (350) 114 (236) (3,009) 90 (2,919)
(Increase)/decreaseinprepayments,accruedincomeandotherdebtors (41) (4) (45) 34 574 608
(Decrease)/increaseinaccrualsandother creditors (1,241) 14 (1,227) 924 (436) 488
Netcash(outflow)/inflowfromoperatingactivities (1,510) (139) (1,649) 850 (23) 827
17 Reconciliation of net cash flow to movement in net funds2012
£’0002011
£’000
Beginningofyear 10,133 5,007
Netcashinflowfortheyear 4,269 5,126
Endofyear 14,402 10,133
18 Financial instruments TheCompany’sfinancialinstrumentscompriseinvestmentsheldatfairvaluethroughtheprofitandloss,beingequityandloanstockinvestmentsinquotedcompaniesandunquotedcompaniesandliquidityfunds;loansandreceivables(beingcashdepositsandshorttermdebtors);andfinancialliabilities(beingcreditorsarisingfromitsoperations).Themainpurposeofthesefinancialinstrumentsistogeneratecashflow,revenueandcapitalappreciationfortheCompany’soperations.TheCompanyhasnogearingorotherfinancialliabilitiesapartfromshort-termcreditorsanddoesnotuseanyderivatives.
Principal risks and management objectives TheCompany’sinvestmentactivitiesexposetheCompanytoanumberofrisksassociatedwithfinancialinstrumentsandthesectorsinwhichtheCompanyinvests.TheprincipalfinancialrisksarisingfromtheCompany’soperationsare:
•Marketrisks;
•Creditrisk;and
• Liquidityrisk.
TheBoardregularlyreviewstheserisksandthepoliciesinplaceformanagingthem.TherehavebeennosignificantchangestothenatureoftherisksthattheCompanyisexposedtoovertheyearandtherehavealsobeennosignificantchangestothepoliciesformanagingthoserisksduringtheyear.
TheriskmanagementpoliciesusedbytheCompanyinrespectoftheprincipalfinancialrisksandareviewofthefinancialinstrumentsheldattheyearendareprovidedbelow:
Market risksAsaVCT,theCompanyisexposedtomarketrisksintheformofpotentiallossesandgainsthatmayariseontheinvestmentsitholds.ThemanagementofthesemarketrisksisafundamentalpartofinvestmentactivitiesundertakenbytheInvestmentManagerandoverseenbytheBoard.TheManagermonitorsinvestmentsthroughregularcontactwithmanagementofinvesteecompanies,regularreviewofmanagementaccountsandotherfinancialinformationandattendanceatinvesteecompanyboardmeetings.ThisenablestheManagertomanagetheinvestmentriskinrespectofindividualinvestments.Marketriskisalsomitigatedbyholdingaportfoliodiversifiedacrossseveralbusinesssectorsandassetclasses.
ProVen Growth & Income VCT plc54
ThekeymarketriskstowhichtheCompanyisexposedare:
•Marketpricerisk;and
• Interestraterisk.
Market price riskMarketpriceriskarisesfromuncertaintyaboutthefuturepricesandvaluationsoffinancialinstruments.ItrepresentsthepotentiallossthattheCompanymightsufferthroughmarketpricemovementsinrespectofquotedinvestmentsandthroughchangesinthefairvalueofunquotedinvestments.
At29February2012,theAIM-quotedportfoliowasvaluedat£127,000(2011:£291,000).
TheCompany’ssensitivitytofluctuationsinthesharepricesofitsAIM-quotedinvestmentsissummarisedbelow.A10%movementinthesharepriceofalloftheAIM-quotedstocksheldbytheCompanywouldhaveaneffectasfollows:
25% movement in AIM-quoted stocks
Impact on net assets
£'000
2012 Impact on
NAV per share pence
Impact on net assets
£'000
2011 Impact on
NAV per share pence
Ordinary Shares 32 0.1p 73 0.3p
‘D’ Shares – – – –
At29February2012,theunquotedportfoliowasvaluedat£17,494,000(2011:£16,530,000).
AsmanyoftheCompany’sunquotedinvestmentsarevaluedusingrevenueorearningsmultiplesofcomparablecompaniesorsectors,afallinsharepricesgenerallywouldimpactonthevaluationoftheunquotedportfolio.A10%movementinthevaluationsofalloftheunquotedinvestmentsheldbytheCompanywouldhaveaneffectasfollows:
10% movement in unquoted investment valuations
Impact on net assets
£'000
2012 Impact on
NAV per share pence
Impact on net assets
£'000
2011 Impact on
NAV per share pence
Ordinary Shares 1,504 4.4p 1,457 6.1p
‘D’ Shares 245 3.0p 196 2.4p
Thesensitivityanalysisforunquotedvaluationsaboveassumesthateachofthesub-categoriesoffinancialinstruments(ordinaryshares,preferencesharesandloanstocks)heldbytheCompanyproducesanoverallmovementof10%.Shareholdersshouldnotethatequalcorrelationbetweenthesesub-categoriesisunlikelytobethecaseinreality,particularlyinthecaseofloanstockinstruments.Wheresharepricesarefalling,theequityinstrumentcouldfallinvaluebeforetheloanstockinstrument.Itisnotconsideredpracticaltoassessthesensitivityoftheloanstockinstrumentstomarketpriceriskinisolation.
Interest rate riskTheCompanyisexposedtointerestrateriskonfloating-ratefinancialassetsthroughtheeffectofchangesinprevailinginterestrates.TheCompanyreceivesinterestonitscashdepositsatarateagreedwithitsbankersandonliquidityfundsatratesbasedontheunderlyinginvestments.Investmentsinloanstockandfixedinterestinvestmentsattractinterestpredominatelyatfixedrates.AsummaryoftheinterestrateprofileoftheCompany’sfinancialinstrumentsisshownbelow.
TherearethreecategoriesinrespectofinterestwhichareattributabletothefinancialinstrumentsheldbytheCompanyasfollows:
• “Fixedrate”assetsrepresentinvestmentswithpredeterminedyieldtargetsandcomprisecertainloannoteinvestmentsandPreferenceShares.
Notes to the Accounts (continued)
55
• “Floatingrate”assetspredominantlybearinterestatrateslinkedtoBankofEnglandbaserateorLIBORandcomprisecashatbankandliquidityfundinvestmentsandcertainloannoteinvestments.
• “Nointerestrate”assetsdonotattractinterestandcompriseequityinvestments,certainloannoteinvestments,loansandreceivables(excludingcashatbank)andotherfinancialliabilities.
Average interest rate
Average period until maturity
2012 £’000
2011 £’000
Fixedrate 6.6% 1,105days 8,153 6,150
Floatingrate 0.6% 1,421days 17,291 13,609
No interest rate 9,940 8,482
35,384 28,241
TheCompanymonitorsthelevelofincomereceivedfromfixed,floatingandnointerestrateassetsand,ifappropriate,maymakeadjustmentstotheallocationbetweenthecategories,inparticularshouldthisberequiredtoensurecompliancewiththeVCTregulations.
Basedontheassumptionthattheyieldofallfloatingratefinancialinstrumentswouldchangebyanamountequaltothemovementinprevailinginterestrates,itisestimatedthatanincreaseof1%ininterestrateswouldhaveincreasedtotalreturnbeforetaxationfortheyearby£180,000.AstheBankofEnglandbaseratestoodat0.5%perannumthroughouttheyear,itisnotbelievedthatareductionfromthislevelislikely.
Credit riskCreditriskistheriskthatacounterpartytoafinancialinstrumentisunabletodischargeacommitmenttotheCompanymadeunderthatinstrument.TheCompanyisexposedtocreditriskthroughitsholdingsofloanstockininvesteecompanies,investmentsinliquidityfunds,cashdepositsanddebtors.Creditriskrelatingtoloanstockinvesteecompaniesisconsideredtobepartofmarketrisk.
TheCompanyisexposedtocreditriskasfollows:
2012 £’000
2011 £’000
Investmentsinliquidityfunds 2,500 2,500
Investmentsinloanstocks 8,542 8,339
Cashandcashequivalents 14,402 10,133
Interest,dividendsandotherreceivables 152 214
25,596 21,186
Creditriskinrespectofloanstockof£8,542,000ispartiallymitigatedbyregisteringfloatingchargesovertheassetsoftherespectiveinvesteecompanies.Thestrengthofthissecurityineachcaseisdependentonthenatureoftheinvesteecompanies’businessanditsidentifiableassets.Similarly,themanagementofcreditriskassociatedwithinterest,dividendsandotherreceivablesiscoveredwithintheinvestmentmanagementprocedures.
CreditriskinrespectofinvestmentsinliquidityfundsisminimisedbyinvestinginAAA-ratedfunds.
CashismainlyheldbyBankofScotlandplcandRoyalBankofScotlandplc,bothofwhichareA-ratedfinancialinstitutionsandbothalsoultimatelypart-ownedbytheUKGovernment.Consequently,theDirectorsconsiderthattheriskprofileassociatedwithcashdepositsislow.
Therehavebeennochangesinfairvalueduringtheyearthataredirectlyattributabletochangesincreditrisk.
Liquidity riskLiquidityriskistheriskthattheCompanyencountersdifficultiesinmeetingobligationsassociatedwithitsfinancialliabilities.Liquidityriskmayalsoarisefromeithertheinabilitytosellfinancialinstrumentswhenrequiredattheirfairvaluesorfromtheinabilitytogeneratecashinflowsasrequired.TheCompanymaintainsarelativelylowlevelofcreditors(£347,000at29February2012)andhasnoborrowings.Also,
ProVen Growth & Income VCT plc56
liquidityfundsandsomequotedinvestmentsheldbytheCompanyareconsideredtobereadilyrealisable.TheCompanyalwaysholdssufficientlevelsoffundsascashandreadilyrealisableinvestmentsinordertomeetexpensesandothercashoutflowsasrequired.Forthesereasons,theBoardbelievesthattheCompany’sexposuretoliquidityriskisminimal.
TheCompany’sliquidityriskismanagedbytheInvestmentManagerinlinewithguidanceagreedwiththeBoardandisreviewedbytheBoardatregularintervals.
AlthoughtheCompany’sinvestmentsarenotheldtomeettheCompany’sliquidityrequirements,thetablebelowshowsananalysisoftheloannotes,highlightingthelengthoftimethatitcouldtaketheCompanytorealiseitsassetsifitwererequiredtodoso.
Thecarryingvalueofloanstockinvestmentsat29February2012asanalysedbyexpectedmaturitydateisasfollows:
As at 29 February 2012
Not later than 1
year £’000
Between 1 and 2
years £’000
Between 2 and 3
years £’000
Between 3 and 5
years £’000
More than 5 years
£’000Total
£’000
Fullyperformingloanstock 445 1,709 2,005 1,832 1,812 7,803
Pastdueloanstock 81 131 132 263 132 739
526 1,840 2,137 2,095 1,944 8,542
As at 28 February 2011
Fullyperformingloanstock 81 374 3,476 3,604 804 8,339
Pastdueloanstock – – – – – –
81 374 3,476 3,604 804 8,339
Oftheloanstockclassifiedas“pastdue”above,£81,000relatestotheprincipalofloannoteswheretheprincipalhaspasseditsmaturitydate.Asatthebalancesheetdate,theextenttowhichtheprincipalispastitsmaturitydategivingrisetotheclassificationoftheloannotesaspastduefallswithinthebandingofnolaterthanoneyearpastdue.Notwithstandingthattheprincipalhaspasseditsmaturitydate,theDirectorsdonotconsiderthattheloannoteitselfhasbeenimpairedorthematurityoftheprincipalhasaltered.
Oftheloanstockclassifiedas“pastdue”above,£658,000relatestotheprincipalofloannoteswhere,althoughtheprincipalremainswithinterm,theinvesteecompanyisnotfullyservicingtheinterestobligationsundertheloannoteandisthusinarrears.Asatthebalancesheetdate,theinterestgivingrisetotheclassificationoftheloannotesaspastduefellwithinthebandingof18to24months.Notwithstandingthearrearsofinterest,theDirectorsdonotconsiderthattheloannoteitselfhasbeenimpairedorthematurityoftheprincipalhasaltered.
Fair Value of Financial InstrumentsFair value measurements recognised in the balance sheetInvestmentsarevaluedatfairvalueasdeterminedusingthemeasurementpoliciesdescribedinnote1.Thecarryingvalueoffinancialassetsandliabilitiesrecordedatamortisedcost,whichincludesshorttermdebtorsandcreditors,isconsideredbyDirectorstobeequivalenttotheirfairvalue.
TheCompanyhascategoriseditsfinancialinstrumentsthataremeasuredsubsequenttoinitialrecognitionatfairvalueusingthefairvaluehierarchyasfollows:
Level1 Reflectsfinancialinstrumentsquotedinanactivemarket(liquidityfundinvestments,investmentslistedontheMainMarketandinvestmentsquotedonAIM);
Level2 Reflectsfinancialinstrumentsthathavepricesthatareobservableeitherdirectlyorindirectly(nosuchinvestmentscurrentlyheld);and
Level3 Reflectsfinancialinstrumentsthathavepricesthatarenotbasedonobservablemarketdata(unquotedequityinvestmentsandloannoteinvestments).
Notes to the Accounts (continued)
57
2012 2011
Level 1 £'000
Level 2 £'000
Level 3 £'000
Total £'000
Level 1 £'000
Level 2 £'000
Level 3 £'000
Total £'000
AIMquoted 127 – – 127 291 – – 291
Loan notes – – 8,542 8,542 – – 8,339 8,339
Preferenceshares – – 1,625 1,625 – – – –
Unquotedequity – – 7,327 7,327 – – 8,191 8,191
Liquidityfund 2,500 – – 2,500 2,500 – – 2,500
2,627 – 17,494 20,121 2,791 – 16,530 19,321
DuringtheyeartoFebruary2012aholdingof19,000unquotedloannotes,costing£40,000,wereconvertedatparintounquotedshares.Therewerenotransfersbetweenlevelsduringtheyear(2011:none).
Reconciliation of fair value for Level 3 financial instruments held at the year end:Loan Notes
£'000Unquoted Equity
£'000Total £'000
Balanceat28February2011 8,339 8,191 16,530
Movementsintheincomestatement:
Unrealisedgainsintheincomestatement (200) 230 30
(Losses)/gainsintheincomestatement (24) 282 258
8,115 8,703 16,818
Purchases at cost 2,243 1,271 3,514
Salesproceeds (1,776) (1,062) (2,838)
Loanstockconvertedtoshares (40) 40 –
Balanceat29February2012 8,542 8,952 17,494
FRS29requiresdisclosuretobemadeifchangingoneormoreoftheassumptionsusedinvaluinginvestmentswouldresultinasignificantchangeinthefairvalueoftheinvestments.Theportfoliohasbeenreviewedandbothdownsideandupsidealternativeassumptionsidentified.Theseresultinanoverallincreaseof£395,000(OrdinarySharepool-£378,000and‘D’Sharepool-£17,000)tothevalueoftheunquotedinvestmentsforanupsidescenarioandanoveralldecreaseof£216,000(OrdinarySharepool–£55,000and‘D’Sharepool-£161,000)tothevalueoftheunquotedinvestmentsforadownsidescenario.
19 Contingencies, guarantees and financial commitmentsTheCompanyhadguaranteedbankborrowingsofoneofitsinvestments,DonatantonioLimited,amountingto£225,000.AthirdpartyhadprovidedaguaranteetotheCompanyamountingto£112,500inrespectoftheaboveguarantee.Thisguaranteewasdischargedon1March2012.
TheCompanyhasnocontingentliabilities,guaranteesandfinancialcommitmentsattheyearend.
20 Controlling party and related party transactionsIntheopinionoftheDirectorsthereisnoimmediateorultimatecontrollingparty.
BeringeaLLP,ofwhichMalcolmMossisapartner,actedaspromoterfortheOrdinaryShareofferlaunchedinDecember2010.BeringeaLLPreceived5.5%ofthegrossproceedsoftheoffer,outofwhichitpaidthecostsoftheofferincludinginitialcommissions.Thefeesintheyearamounted£549,000.Noissuecostsweredueoroutstandingattheyearend.
BeringeaLLPwasalsotheinvestmentmanagerduringtheyear.Thetotalfeesrelatingtothisserviceamountedto£718,000(2011:£525,000)(allinclusiveofVAT),ofwhich£187,000(2011:£150,000)wasoutstandingattheyearend.
NicholasLewis,aformerDirectorwhoservedduringtheyear,isapartnerofDowningLLP,whichprovidesadministrationservicestotheCompany.Duringtheyear,£52,000(2011:£49,000)(inclusiveofVAT)wasduetoDowningLLPinrespectoftheseservices,ofwhich£13,000(2011:£12,000)remainedoutstandingattheyearend.
ProVen Growth & Income VCT plc58
Shareholder Information
WebsitesLatestfinancialinformation,includinginformationonrecentinvestmenttransactions,newslettersandelectroniccopiesofAnnualReports,HalfYearlyFinancialStatementsandInterimManagementStatementscanbefoundontheInvestmentManager’swebsite:
www.provenvcts.co.ukDividendhistory,linkstoCompanyannouncementsandotherfinancialinformationcanbefoundonDowning’swebsiteatwww.downing.co.uk.ShareholderscanalsocheckdetailsoftheirshareholdingsusingCapitaRegistrar’swebsiteatwww.capitaregistrars.com,byclickingon“Shareholders”.
DividendsDividendsarepaidbytheRegistraronbehalfoftheCompany.Shareholderswhowishtohavedividendspaiddirectlyintotheirbankaccountratherthanbychequetotheirregisteredaddresscancompleteamandate formforthispurpose(formscanbedownloadedfromwww.capitaregistrars.com).QueriesrelatingtodividendsandrequestsformandateformsshouldbedirectedtotheCompany’sRegistrar,CapitaRegistrars,bycalling08716640324(callscost10pperminuteplusnetworkextras),orbywritingtothematTheRegistry,34BeckenhamRoad,Beckenham,KentBR34TU.
Share pricesTheCompany’ssharepricescanbefoundonvariousfinancialwebsiteswiththefollowingTIDM/EPICcodes:
Ordinary Shares ‘D’ Shares
TIDM/EPICcode “PGOO” “PGOD”
Latestshareprice(22June2012): 63.25ppershare 80.0ppershare
Selling sharesTheCompany’ssharescanbeboughtandsoldinthesamewayasanyothercompanylistedontheLondonStockExchangeviaastockbroker.ShareholderswhoinvestedintheCompanyinthe2008/2009taxyearandsubsequenttaxyearsshouldbeawarethattheyneedtoholdtheirsharesforaminimumperiodoftimetoretaintheincometaxrelieftheyreceivedoninvestment.Sellingyoursharesmayhavetaxconsequences,therefore,youshouldcontactyourindependentfinancialadviserifyouhaveanyqueries.
TheCompanyoperatesapolicyofbuyingitsownsharesforcancellationastheybecomeavailableinthemarket.TheCompanyis,however,unabletobuybacksharesdirectfromShareholders,soyouwillneedtouseastockbrokertosellyourshares.DowningLLPisabletoprovidedetailsofcloseperiods(whentheCompanyisprohibitedfrombuyinginshares)anddetailsofthepriceatwhichtheCompanyhasboughtinshares.Contactdetailsareshownonpage60ofthisdocument.
Financial calendar21August2012 AnnualGeneralMeeting October2012 Announcementofhalf-yearresults
59
Unsolicited communication with ShareholdersWeareawareofcasesofshareholdersinVCTshavingreceivedunsolicitedphonecalls,e-mailsorcorrespondenceconcerninginvestmentmatters.PleasenotethatitisveryunlikelythattheCompany,BeringeaortheCompany’sRegistrar,CapitaRegistrars,wouldmakeunsolicitedtelephonecallsorsende-mailstoShareholders.Shareholderscan,however,expectofficialdocumentationinconnectionwiththeCompanyandmayreceivedetailsofinvestmentactivityandnewVCToffersfromtheInvestmentManager.Furthermore,pleasebeassuredthattheCompanylimitsaccesstotheCompany’sshareregisterbythirdpartiestothemaximumextentpermissibleundertheCompaniesAct2006.Ifyoureceiveeitheranunexpectedtelephonecallorcorrespondenceaboutwhichyouhaveconcerns,pleasecontactGrantWhitehouse,theCompanySecretary,on02074167780.
Notification of change of addressCommunicationswithShareholdersaremailedtotheregisteredaddressheldontheshareregister.Intheeventofachangeofaddress,orotheramendment,thisshouldbenotifiedtotheCompany’sregistrar,CapitaRegistrars,underthesignatureoftheregisteredholder.
ProVen Growth & Income VCT plc60
Company Information Directors Company SecretaryMarc Vlessing (Chairman) Grant Whitehouse
Natasha Christie-Miller 39EarlhamStreet
Malcolm Moss LondonWC2H9LT
James Stewart
allof:
39EarlhamStreet
LondonWC2H9LT
Investment manager Registered officeBeringea LLP 39EarlhamStreet
39EarlhamStreet LondonWC2H9LT
LondonWC2H9LT Tel:02078457820
Tel:02078457820
www.provenvcts.com
Registrars Administration managerCapita Registrars Downing LLP
TheRegistry 10LowerGrosvenorPlace
34BeckenhamRoad LondonSW1W0EN
Beckenham Tel:02074167780
KentBR34TU www.downing.co.uk
Tel:08716640324
(callscost10pperminuteplusnetworkextras)
www.capitaregistrars.com
Auditor VCT status adviserPKF (UK) LLP PricewaterhouseCoopers LLP
FarringdonPlace 1EmbankmentPlace
20FarringdonRoad LondonWC2N6RH
LondonEC1M3AP
Solicitors BankersHoward Kennedy Bank of Scotland
19CavendishSquare 33 Old Broad Street
LondonW1A2AW LondonEC2N1HZ
Company number Royal Bank of Scotland
4125326 LondonVictoriaBranch
119/121VictoriaStreet
LondonSW1E6RA
61
Notice of the Annual General Meeting of ProVen Growth & Income VCT plc
NOTICE IS HEREBY GIVENthattheAnnualGeneralMeetingofProVenGrowth&IncomeVCTplcwillbeheldinTheForestRoomatTheHospitalClub,24EndellStreet,CoventGarden,LondonWC2H9HQat2:30p.m.on21August2012forthetransactionofthefollowingbusiness:
AsOrdinary Business,toconsiderand,ifthoughtfit,passthefollowingresolutionswhichwillbeproposedasOrdinaryResolutions:
1. ToreceiveandadopttheReportoftheDirectorsandAccountsoftheCompanyfortheyearended29February2012,togetherwiththereportoftheauditorsthereon.
2. ToapprovetheDirectors’RemunerationReport.
3. Toapprovethepaymentofafinaldividendof4.5pperOrdinaryShare.
4. Tore-appointPKF(UK)LLPasAuditorsoftheCompanytoholdofficeuntiltheconclusionofthenextAnnualGeneralMeetingatwhichaccountsoftheCompanyarepresentedandtoauthorisetheDirectorstodeterminetheirremuneration.
5. Tore-electasDirector,MarcVlessing,whoretiresinaccordancewiththeCompany’spolicyand,beingeligible,offershimselfforre-election.
6. Tore-electasdirector,MalcolmMoss,whoretiresinaccordancewiththeCompany’spolicyand,beingeligible,offershimselfforre-election.
7. Tore-electasdirector,JamesStewart,whoretiresinaccordancewiththeCompany’spolicyand,beingeligible,offershimselfforre-election.
8. Tore-electasDirector,NatashaChristie-Miller,whoretiresinaccordancewiththeCompany’spolicyand,beingeligible,offersherselfforre-election.
AsSpecial Business,toconsiderand,ifthoughtfit,passthefollowingresolutions:
Ordinary Resolutions
9. ThattheDirectorsbegenerallyandunconditionallyauthorisedinaccordancewithSection551oftheCompaniesAct2006(“theAct”)toallotOrdinarySharesuptoamaximumnominalamountof£404,675(representingapproximately73%oftheOrdinarySharecapitalinissueattoday’sdate).ThisauthoritytoexpireatthelateroftheconclusionoftheCompany’sAnnualGeneralMeetingnextfollowingthepassingofthisresolutionandtheexpiryof15monthsfromthepassingoftherelevantresolution(unlesspreviouslyrevoked,variedorextendedbytheCompanyingeneralmeetingbutsothatsuchauthorityallowstheCompanytomakeOffersoragreementsbeforetheexpirythereofwhichwouldormightrequirerelevantsecuritiestobeallottedaftertheexpiryofsuchauthority).
10.Thatpursuanttoarticle151(1)oftheCompany’sarticlesofassociation,theDirectorsbeandareherebyauthorisedtoofferholdersofsharesintheCompanytherighttoreceivesharespursuanttotheCompany’sdividendreinvestmentscheme,creditedasfullypaid,insteadofcashinrespectofthewhole(orsomeparttobedeterminedbytheBoard)ofalloranydividenddeclaredintheperiodcommencingonthedateofthisresolutionandending,subjecttothepassingofresolution15below,oneitherthefifthanniversaryofthisresolutionor,ifresolution15isnotpassed,thedateoftheCompany’snextannualgeneralmeeting.
11.ThattheDirectorsbeandareherebygenerallyandunconditionallyauthorisedinaccordancewithSection551oftheActtoexerciseallthepowersoftheCompanytoallotsharesintheCompanyinconnectionwithadividendreinvestmentschemeduringtheperiodcommencingonthepassingofthisresolutionandexpiringonthefifthanniversaryofthisresolution(unlesspreviouslyrevoked,variedorextendedbytheCompanyingeneralmeeting),butsothatthisauthorityshallallowtheCompanytomakebeforetheexpiryofthisauthorityoffersoragreementswhichwouldormightrequiresharestobeallottedaftersuchexpiryandthatallpreviousauthoritiesgiventotheDirectorsbeandtheyareherebyrevoked,providedthatsuchrevocationshallnothaveretrospectiveeffect.
ProVen Growth & Income VCT plc62
Special Resolutions
12.ToempowertheDirectorspursuanttoSection570(1)oftheActtoallotormakeoffersoragreementstoallotequitysecurities(asdefinedinSection560(1)oftheAct)forcashpursuanttotheauthorityreferredtoinresolution9asifSection561(1)oftheActdidnotapplytoanysuchallotmentsandsothat:
(a) referencetoallotmentinthisresolutionshallbeconstruedinaccordancewithSection94ofthesaidAct;and
(b)thepowerconferredbythisresolutionshallenabletheCompanytomakeanyofferoragreementbeforetheexpiryofthesaidpowerwhichwouldormightrequireequitysecuritiestobeallottedaftertheexpiryofthesaidpowerandthedirectorsmayallotequitysecuritiesinpursuanceofsuchofferoragreementnotwithstandingtheexpiryofsuchpower;andthispower,unlesspreviouslyvaried,revokedorrenewed,shallcometoanendattheconclusionoftheAnnualGeneralMeetingoftheCompanynextfollowingthepassingofthisresolutionor,ifearlier,ontheexpiryof15monthsfromthepassingofthisresolution.
13.That,theCompanybeandisherebygenerallyandunconditionallyauthorisedforthepurposeofsection701oftheActtomakeoneormoremarketpurchases(asdefinedinsection693(4)oftheAct)ofOrdinarySharesand‘D’Sharesprovidedthat:
(i) themaximumnumberofOrdinarySharesherebyauthorisedtobepurchasedis5,116,345representingapproximately14.9%ofthepresentissuedOrdinarySharecapitaloftheCompany,andthemaximumnumberof‘D’Sharesherebyauthorisedtobepurchasedis1,226,704representingapproximately14.9%ofthepresentissued‘D’SharecapitaloftheCompany;
(ii) theminimumprice(exclusiveofexpenses)whichmaybepaidforsuchOrdinarySharesis1.6187pand‘D’Shareis1pbeingthenominalamountthereof;
(iii) themaximumprice(exclusiveofexpenses)whichmaybepaidforsuchOrdinarySharesand‘D’Sharesshallbeanamountequalto5percent.abovetheaverageofthemiddlemarketquotationsforsuchclassoftheCompany’sshares,asderivedfromtheDailyOfficialListoftheLondonStockExchange,forthefivebusinessdaysimmediatelyprecedingthedayonwhichthepurchasewasmade;
(iv) theCompanymaymakeacontracttopurchaseitsownOrdinarySharesor’D’Sharesunderthisauthoritypriortotheexpiryofthisauthority,andsuchcontractwillormaybeexecutedwhollyorpartlyaftertheexpiryofthisauthority,andtheCompanymaymakeapurchaseofitsownOrdinarySharesor‘D’Sharesinpursuanceofanysuchcontract;
andthispower,unlesspreviouslyvaried,revokedorrenewed,shallcometoanendattheconclusionoftheAnnualGeneralMeetingoftheCompanynextfollowingthepassingofthisresolutionor,ifearlier,ontheexpiryof15monthsfromthepassingofthisresolution.
14.ThattheDirectorsbeandareherebyempoweredinaccordancewithsection570(1)oftheActduringtheperiodcommencingonthepassingofthisresolutionandexpiringonthefifthanniversaryofthisresolution(unlesspreviouslyrevoked,variedorextendedbytheCompanyingeneralmeeting),toallotequitysecurities(asdefinedinSection560(i)oftheAct)forcashpursuanttothegeneralauthorityconferredupontheDirectorsinresolution10aboveasifsection561(i)oftheActdidnotapplytoanysuchallotmentprovidedthatthispowerislimitedtotheallotmentofequitysecuritiesinconnectionwithadividendreinvestmentschemebutsothatthisauthorityshallallowtheCompanytomakeoffersoragreementsbeforetheexpiryandtheDirectorsmayallotequitysecuritiesinpursuanceofsuchoffersoragreementsasifthepowersconferredherebyhadnotsoexpired.
15.Thatarticle151(1)oftheCompany’sarticlesofassociationbeamendedtodeletethewords“dateoftheAnnualGeneralMeetingnextfollowing”andsubstitutingthewords“fifthanniversaryof”therefore.
ByorderoftheBoard
Grant WhitehouseCompanySecretaryRegisteredOffice:39EarlhamStreet,LondonWC2H9LT25June2012
Notice of the Annual General Meeting of ProVen Growth & Income VCT plc (continued)
63
Rules of the Dividend Reinvestment Scheme 1. Shareholdersontheregisterofmembersatthecloseofbusinessontherelevantrecorddatemayelect
toreceiveShares,creditedasfullypaid,insteadofreceivingthedividendincashfortherelevantfinancialperiod(“thefullcashdividend”).TheelectionmayonlybemadebyShareholdersinrespectofthewhole(andnotpartonly)oftheirshareholdingsandshall,subjecttoCondition7,operateasamandateinrespectofallsubsequentdividendsunlessanduntiltheShareholdergivesnoticetoterminatehisorherparticipationintheSchemeinaccordancewiththetermsoftheScheme.
2. ShareholdersmayonlyjointheSchemeinrespectofanyclassofSharesifalldividendsonallSharesintheCompanyregisteredintheirname,ofwhatevershareclass,aremandatedtotheScheme.ThenumberofSharesheldbysuchShareholder(a“ParticipatingShareholder”)whicharemandatedtotheSchemeshallbealteredimmediatelyfollowinganychangetothenumberofSharesinrespectofwhichsuchShareholderistheregisteredholderasenteredontotheregisterofmembersoftheCompanyfromtimetotime.
3. TheCompanyshallinvestthemoniesheldwithintheScheme(beingdividendspaidonSharesby,oronbehalfof,ParticipatingShareholders)inthesubscriptionofSharesofthesameclassintheCompany.TheCompanyshallnothavethediscretiontovarysuchinvestmentsandShareholdersmaynotinstructtheCompanyortheSchemeAdministratortomakeanyotherinvestments.
4. (a)OnorassoonaspracticableafteradayonwhichanydividendispaidtoShareholders(a“ReinvestmentDay”),thefundsheldbytheCompanyonbehalfofeachParticipatingShareholdershallbeappliedonbehalfofthatShareholderinthesubscriptionforthemaximumnumberofSharesascanbeacquiredwiththosefunds.(b)ThenumberofSharesissuedtoaParticipatingShareholderpursuanttocondition4(a)aboveshallbecalculatedbydividingtheaggregatevalueofthedividendspaidontheSharestowhichtheParticipatingShareholderisentitledbythegreaterof(i)themostrecentlyannouncedunauditednetassetvalueperShare,lesstheamountofthedividendandanyrelatedperformanceincentive(unlessaccountedforinthemostrecentlyannouncednetassetvalueperShare);and(ii)thenominalvalueperShare.(c)NofractionsofShareswillbeissuedundertheSchemeandsubjecttocondition4(d)belowtheelectionmayonlybemadebyShareholdersinrespectofthewholeandnotpartoftheirshareholdings.AnybalanceofcashremainingwiththeCompanyafterthesubscriptionshallbeheldbytheCompanyonbehalfoftheParticipatingShareholdertowhomitrelatesandaddedtothecashavailableinrespectofthatShareholderforthesubscriptionoftherelevantclassofSharesonthenextrelevantReinvestmentDay.NointerestshallaccrueorbepayablebytheCompanyinfavourofanyShareholderonanysuchcashbalances.(d)TheSchemeinvolvesthereinvestmentofthewholedividendpaidoneachshareholdingeachtimeadividendispaidbytheCompany,togetherwithanycashresiduebroughtforwardfromthepreviousdividend.Partialreinvestmentofdividendsisonlypermittedbynominees,whoneedtolodgeaMandateFormforeachReinvestmentDayquotingthenumberofSharesinrespectofwhichtheirelectionismade.ShareholderswillremainintheSchemesothatallfuturedividendswillbereinvestedinthesameway,untiltheygivenoticeinwritingtotheSchemeAdministratorthattheywishtoterminatetheirparticipationintheScheme.
5. TheSchemeAdministratorshallontherelevantReinvestmentDaytakeallnecessarystepstoensurethattheParticipatingShareholdersareenteredontotheshareregisteroftheCompanyastheregisteredholdersoftheShares,issuedtothemundertheScheme,andthatsharecertificatesinrespectofsuchsharesissuedarepostedtotheParticipatingShareholdersattheirownriskassoonasisreasonablypractical,unlesssuchsharesaretobeuncertificated.
6. ToassistParticipatingShareholderswiththeirtaxreturns,theSchemeAdministratorwillattachtothenewsharecertificatesaStatementofEntitlement,orifsharesareheldinuncertificatedform,aStatementofEntitlementwillbesenttoaParticipatingShareholderseparately,detailingthefollowing:-(i)thetotaldividendpayable;(ii)thesubscriptionpriceperShare;(iii)thenumberofSharesallottedtoaParticipating
Appendix to Resolution 10
ProVen Growth & Income VCT plc64
Shareholder;(iv)theresidualcashbalance(ifany)representinganentitlementtoafractionofaSharetobecarriedforwardtothenextdividend;and(v)thecashequivalentoftheSharesissued,togetherwithanysuchotherinformationasshallberequiredundertheListingRulesoftheFinancialServicesAuthority.
7. ApplicationtojointheSchemecanbemadeatanytimebyreturningacompletedMandateForm.However,MandateFormsneedtohavebeenreceivedbyBeringeaLLP,39EarlhamStreet,London,WC2H9LTatleast20BusinessDayspriortothepaymentofadividendwhichistobereinvested.MandateFormsreceivedafterthatdateshallbeeffectiveinrelationtoanyfuturedividendsinrespectofwhichtheDirectorsofferadividendreinvestmentalternative.
8. If,priortothedayonwhichtheSharesbecameex-dividend,aShareholderhassoldallorsomeofhisorherholdingsinShares,theShareholdershouldconsulthisorherstockbrokeroragentwithoutdelay.
9. AnapplicationwillbemadetotheUKListingAuthorityforadmissionoftheSharesissuedundertheSchemetotheOfficialListandtotheLondonStockExchangeplcforadmissiontotradingontheLondonStockExchangeplc’smainmarketforlistedsecurities(together“Admission”).Onissue,theShareswillrankparipassuinallrespectswiththeexistingissuedSharesofthatclassandwillrankforfuturedividends.SubjecttoAdmission,definitivesharecertificatesfortheShareswillbepostedassoonaspracticablefollowingAdmissionattheriskofthepersonsentitledtothem.WhereSharesareissuedasuncertificatedshares,assoonaspracticablefollowingAdmissiontheCompanywillarrangefortherelevantParticipatingShareholders’stockaccountsinCRESTtobecreditedwiththeirentitlementtoSharesandaStatementofEntitlementwillbepostedtothem.ShareswillbeallottedasandwhentheDirectorsdetermineitappropriate,withAdmissionandDealingsexpectedwithin10BusinessDaysofallotment.ShareCertificateswillnotbeissuedandCRESTaccountswillnotbecrediteduntilAdmissionbecomeseffective.IntheeventthatAdmissiondoesnotbecomeeffective,MandateFormswillbedisregardedinrespectofthedividendandthefullcashdividendwillbepaidassoonaspossibleintheusualway.
10.Furthercopiesofthisdocumentand/orMandateFormsmaybeobtainedfromBeringeaLLP,39EarlhamStreet,London,WC2H9LT.
11.AllcostsandexpensesincurredbytheSchemeAdministratorinadministeringtheSchemewillbebornebytheCompany.
12.EachShareholderapplyingtoparticipateintheSchemewillbedeemedtowarranttotheSchemeAdministratorandtheCompanyintheMandateFormthat(i)saveinthecaseofaShareholderholdinghisSharesasnominee,duringthecontinuanceofhisorherparticipationintheSchemeheorshewillremainthesolebeneficialowneroftheSharesmandatedtotheSchemefreefromencumbrancesorsecurityinterests;and(ii)allinformationsetoutintheMandateFormiscorrectand,totheextentanyoftheinformationchanges,heorshewillnotifythechangestotheSchemeAdministrator.
13.EachParticipatingShareholderacknowledgesthatnoneoftheCompany,theSchemeAdministratornorBeringeaLLPisprovidingadiscretionarymanagerservice.NeithertheSchemeAdministrator,BeringeaLLPortheCompanyshallberesponsibleforanylossordamagetoParticipatingShareholdersasaresultoftheirparticipationintheSchemeunlessduetothenegligenceordefaultoftheSchemeAdministratorortheCompany(respectively),itsservantsoragents.
14.Thefinancialcalendarandprocedureforfuturedividendsbothastoanyfinaland/orinterimdividendwillbenotifiedinwritingtoShareholdersand/orpublishedthroughanRIS.
15.TheParticipatingShareholdermayatanytime,bynoticeofnotlessthan20BusinessDayspriortotherelevantReinvestmentDaytotheSchemeAdministrator,terminatehisorherparticipationinthisScheme.IfaParticipatingShareholdershallatanytimeceasetoholdanySharesofaparticularclassintheCompany,heorsheshallbedeemedtohaveservedsuchanoticeinrespectofhisorherparticipationintheSchemeinrespectofthatclassofShares.
16.TheCompanyandtheSchemeAdministratorshallbeentitled,atanytimeandfromtimetotime,tosuspendtheoperationoftheSchemeinwholeorinpartand/ortoterminatetheSchemewithoutnoticetotheParticipatingShareholders.CircumstancesunderwhichtheDirectorsmightsuspendorterminatetheSchemeinclude,butarenotlimitedtochangesinlegislationgoverningVCTs(includingchangesinavailabletaxreliefs)andadversemarketconditionsinthepublicmarkets.
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65
17.AllnoticesandinstructionstobegiventotheSchemeAdministratorshallbeinwritinganddeliveredorpostedtoCapitaRegistrarsLimited,TheRegistry,34BeckenhamRoad,BeckenhamBR34TU.ApplicationstoparticipateintheSchemewillbemadebywayofMandateFormintheprescribedformasprovidedbyBeringeaLLPortheSchemeAdministrator.
18.SubjecttotheprioragreementoftheSchemeAdministrator,theDirectorsshallbeentitledtoamendtheSchemetermsandconditionsongivingonemonth’snoticeinwritingtoallParticipatingShareholders.Ifsuchamendmentshavearisenasaresultofanychangeinstatutoryorotherregulatoryrequirements,noticeofsuchamendmentwillnotbegiventoParticipatingShareholdersunless,intheSchemeAdministrator’sopinion,thechangemateriallyaffectstheinterestsofParticipatingShareholders.AmendmentstotheSchemeTermsandConditionswhichareofaformal,minorortechnicalnature,ormadetocorrectamanifesterrorandwhichdonotadverselyaffecttheinterestsofParticipatingShareholders,maybeeffectedwithoutnotice.
19.BycompletinganddeliveringtheMandateFormprovidedbytheSchemeAdministrator,theParticipatingShareholderwill(i)agreetoprovidetheCompanywithanyinformationwhichitmayrequestinconnectionwithsuchapplicationandtocomplywithlegislationrelatingtoVCTsorotherrelevantlegislation(asthesamemaybeamendedfromtimetotime);and(ii)declarethatnoloanhasbeenmadetotheParticipatingShareholderoranyassociate,whichwouldnothavebeenmade,ornothavebeenmadeonthesametermsbutfortheParticipatingShareholderofferingtosubscribefor,oracquiring,Shares,andthattheSharesarebeingacquiredforbonafidecommercialpurposesandnotaspartofaschemeorarrangement,themainpurposeofwhichistheavoidanceoftax.
20.SubscriptionsforVCTsharesonlyattracttaxreliefsifinanytaxyearsubscriptionstoallVCTsdonotexceed£200,000(includingsubscriptionspursuanttodividendreinvestmentschemes).WhereSharesareheldbyanomineeasattherelevantrecorddate,thatnominee’sbeneficiarywillnotbeentitledtoreceivethetaxreliefsotherwiseavailabletoParticipatingShareholdersundertheScheme.ParticipatingShareholdersundertheSchemeareresponsibleforascertainingtheirowntaxstatusandliabilitiesandneithertheSchemeAdministratornortheCompanycanacceptanyliabilityintheeventtheydonotreceiveanyVCTtaxreliefs,orsuchreliefsarereducedorrestrictedinanyway.
21.DividendsonSharesacquiredinexcessof£200,000inanytaxyearwillnotbeexemptedfromincometaxinthesamewayasSharesacquiredwithinthislimit,thereforeParticipatingShareholderswillgenerallybeliabletotaxonsuchdividends.
22.TheelectiontoreceiveSharesinplaceofthecashdividendisnotbeingofferedto,orforthebenefitof,anycitizenoftheUnitedStates,CanadaorAustralia,anycorporation,partnershiporotherentitycreatedororganisedin,orunderthelawsoftheUnitedStates,CanadaorAustraliaoranypoliticalsub-divisionthereoforwitharegisteredofficeinanyofthesecountriesoranyestateortrust,theincomeofwhichissubjecttoUnitedStatesFederal,orCanadian,orAustralianincometaxationregardlessofitssource.“UnitedStates”meansUnitedStatesofAmerica(includingtheDistrictofColumbia).ReferencestotheUnitedStates,CanadaandAustraliaincludetheirterritories,possessionsandallareassubjecttotheirjurisdiction.NopersonreceivingacopyoftheCircularand/orMandateForminanyterritoryotherthantheUnitedKingdommaytreatitasconstitutinganinvitationtohimunlessintherelevantterritorysuchaninvitationcouldlawfullybemadetohimwithoutcomplyingwithanyregistrationorotherlegalrequirements.
It is the responsibility of the Shareholder outside the United Kingdom wishing to elect to receive Shares to satisfy himself as to the full observance of the laws of the relevant territory in connection with the offer, including obtaining any governmental or other consents which may be necessary and observing any other formalities requiring to be observed in such territory.
23.TheCompanyshallnotberequiredtoissueShareshereunderiftheDirectorssodecideintheirabsolutediscretion.IftheDirectorsdecidenottoissueShareshereunder,thefullcashdividendwillbepaidassoonaspossibleintheusualway.
24.TheseSchemetermsandconditionsshallbegovernedby,andconstruedinaccordancewith,EnglishlawandeachParticipatingShareholdersubmitstothejurisdictionoftheEnglishcourtsandagreesthatnothingshalllimittherightoftheCompanytobringanyaction,suitorproceedingarisingoutoforinconnectionwiththeSchemeinanyothermannerpermittedbylaworinanycourtofcompetentjurisdiction.Shareholders in any doubt about their tax position should consult their independent adviser.
ProVen Growth & Income VCT plc66
DEFINITIONS
“theCompany” ProVenGrowthandIncomeVCTplc,registeredwiththeRegistrarofCompaniesofEnglandandWaleswithregisterednumber4125326andwhoseregisteredofficeis39EarlhamStreet,LondonWC2H9LT;
“CREST” therelevantsystem(asdefinedintheRegulations)inrespectofwhichEuroclearistheOperator(asdefinedintheRegulations);
“Directors” directorsoftheCompany
“Euroclear” EuroclearUKandIrelandLimited;
"ListingRules” thelistingrulesoftheFinancialServicesAuthoritymadeundersection73AofFSMA;
“MandateForm” theformattheendofthisdocumentwhichenablesShareholderstoparticipateintheDividendReinvestmentScheme;
“Regulations” theUncertificatedSecuritiesRegulations2001(SI2001/3755);
“Scheme”or“DividendReinvestmentScheme” thedividendreinvestmentschemethetermsandconditionsofwhicharedescribedinthisdocument;
“SchemeAdministrator” CapitaRegistrarsLimited,TheRegistry,34BeckenhamRoad,Beckenham,KentBR34TU;
“Shares” sharesinthecapitaloftheCompany;
“Shareholders” holdersofthesharesinthecapitaloftheCompany;
“VCT” VentureCapitalTrust.
InformationregardingtheAnnualGeneralMeeting,includingtheinformationrequiredbysection311AoftheCompaniesAct2006,isavailablefromwww.downing.co.uk.
Note: Please see the notes set out on page 67 and 68 which contain important information about the Annual General Meeting.
Notice of the Annual General Meeting of ProVen Growth & Income VCT plc (continued)
67
Notesa. AnymemberoftheCompanyentitledtoattendandvoteattheAnnualGeneralMeetingisalsoentitledto
appointoneormoreproxiestoattend,speakandvoteinsteadofthatmember.AmembermayappointmorethanoneproxyinrelationtotheAnnualGeneralMeetingprovidedthateachproxyisappointedtoexercisetherightsattachedtoadifferentshareorsharesheldbythatmember.Aproxymaydemand,orjoinindemanding,apoll.AproxyneednotbeamemberoftheCompanybutmustattendtheAnnualGeneralMeetinginordertorepresenthisappointor.AmemberentitledtoattendandvoteattheAnnualGeneralMeetingmayappointtheChairmanoranotherpersonashisproxyalthoughtheChairmanwillnotspeakforthemember.Amemberwhowisheshisproxytospeakforhimshouldappointhisownchoiceofproxy(nottheChairman)andgiveinstructionsdirectlytothatperson.IfyouarenotamemberoftheCompanybutyouhavebeennominatedbyamemberoftheCompanytoenjoyinformationrights,youdonothavearighttoappointanyproxiesundertheproceduressetoutintheseNotes.PleasereadNote(h)below.Undersection319AoftheAct,theCompanymustansweranyquestionamemberasksrelatingtothebusinessbeingdealtwithattheAnnualGeneralMeetingunless:
• answeringthequestionwouldinterfereundulywiththepreparationfortheAnnualGeneralMeetingorinvolvethedisclosureofconfidentialinformation;
• theanswerhasalreadybeengivenonawebsiteintheformofananswertoaquestion;or
• itisundesirableintheinterestsoftheCompanyorthegoodorderoftheAnnualGeneralMeetingthatthequestionbeanswered.
b. Tobevalid,aFormofProxyandthepowerofattorneyorotherwrittenauthority,ifany,underwhichitissignedoranofficeornotariallycertifiedcopyoracopycertifiedinaccordancewiththePowersofAttorneyAct1971ofsuchpowerandwrittenauthority,mustbedeliveredtoDowningLLP,10LowerGrosvenorPlace,[email protected],ineachcasenotlessthan48hours(excludingweekendsandpublicholidays)beforethetimeappointedforholdingtheAnnualGeneralMeetingoradjournedmeetingatwhichthepersonnamedintheFormofProxyproposestovote.Inthecaseofapolltakenmorethan48hours(excludingweekendsandpublicholidays)afteritisdemanded,thedocument(s)mustbedeliveredasaforesaidnotlessthan24hours(excludingweekendsandpublicholidays)beforethetimeappointedfortakingthepoll,orwherethepollistakennotmorethan48hours(excludingweekendsandpublicholidays)afteritwasdemanded,bedeliveredatthemeetingatwhichthedemandismade.
c. InordertorevokeaproxyinstructionamemberwillneedtoinformtheCompanyusingoneofthefollowingmethods:
•bysendingasignedhardcopynoticeclearlystatingtheintentiontorevoketheproxyappointmenttoDowningLLP,10LowerGrosvenorPlace,LondonSW1W0EN.Inthecaseofamemberwhichisacompany,therevocationnoticemustbeexecutedunderitscommonsealorsignedonitsbehalfbyanofficerofthecompanyoranattorneyforthecompany.Anypowerofattorneyoranyotherauthorityunderwhichtherevocationnoticeissigned(oradulycertifiedcopyofsuchpowerorauthority)mustbeincludedwiththerevocationnotice;or
Ineithercase,therevocationnoticemustbereceivedbyDowningLLPbeforetheAnnualGeneralMeetingortheholdingofapollsubsequentlythereto.Ifamemberattemptstorevokehisorherproxyappointmentbuttherevocationisreceivedafterthetimespecifiedthen,subjecttoNote(d)directlybelow,theproxyappointmentwillremainvalid.
Notes for the Notice of Annual General Meeting
ProVen Growth & Income VCT plc68
d. CompletionandreturnofaFormofProxywillnotprecludeamemberoftheCompanyfromattendingandvotinginperson.IfamemberappointsaproxyandthatmemberattendstheAnnualGeneralMeetinginperson,theproxyappointmentwillautomaticallybeterminated.
e. CopiesoftheDirectors’LettersofAppointmentandtheRegisterofDirectors’interestsintheOrdinarySharesand‘D’SharesoftheCompany,willbeavailableforinspectionattheregisteredofficeoftheCompanyduringusualbusinesshoursonanyweekday(weekendsandpublicholidaysexcluded)fromthedateofthisnoticeuntiltheconclusionoftheAnnualGeneralMeetingandattheplaceofthemeetingforatleast15minutespriortothemeetinguntilitsconclusion.
f. PursuanttoRegulation41oftheUncertificatedSecuritiesRegulations2001,theCompanyhasspecifiedthatonlythoseholdersoftheCompany’ssharesregisteredontheRegisterofMembersoftheCompanyasat2:30p.m.on17August2012or,intheeventthattheAnnualGeneralMeetingisadjourned,ontheRegisterofMembers48hoursbeforethetimeofanyadjournedmeeting,shallbeentitledtoattendandvoteatthesaidAnnualGeneralMeetinginrespectofsuchsharesregisteredintheirnameattherelevanttime.ChangestoentriesontheRegisterofMembersafter11:00p.m.on17August2012or,intheeventthattheAnnualGeneralMeetingisadjourned,ontheRegisterofMemberslessthan48hoursbeforethetimeofanyadjournedmeeting,shallbedisregardedindeterminingtherightofanypersontoattendandvoteattheAnnualGeneralMeeting.
g. Asat9:00a.m.on25June2012,theCompany’sissuedsharecapitalcomprised34,337,891OrdinarySharesand8,232,914‘D’SharesandthetotalnumberofvotingrightsintheCompanywere42,570,805.Informationonthenumberofsharesandvotingrightscanbefoundatwww.downing.co.uk.
h. Ifyouareapersonwhohasbeennominatedundersection146oftheActtoenjoyinformationrights(“NominatedPerson”):
• YoumayhavearightunderanagreementbetweenyouandthememberoftheCompanywhohasnominatedyoutohaveinformationrights(“RelevantMember”)tobeappointedortohavesomeoneelseappointedasaproxyfortheAnnualGeneralMeeting;
• Ifyoueitherdonothavesucharightorifyouhavesucharightbutdonotwishtoexerciseit,youmayhavearightunderanagreementbetweenyouandtheRelevantMembertogiveinstructionstotheRelevantMemberastotheexerciseofvotingrights;and
•YourmainpointofcontactintermsofyourinvestmentintheCompanyremainstheRelevantMember(or,perhapsyourcustodianorbroker)andyoushouldcontinuetocontactthem(andnottheCompany)regardinganychangesorqueriesrelatingtoyourpersonaldetailsandyourinterestintheCompany(includinganyadministrativematters).TheonlyexceptiontothisiswheretheCompanyexpresslyrequestsaresponsefromyou.
i. Acorporationwhichisamembercanappointoneormorecorporaterepresentativeswhomayexercise,onitsbehalf,allitspowersasamemberprovidedthatnomorethanonecorporaterepresentativeexercisespowersoverthesameshare.
j. Avotewithheldisnotavoteinlaw,whichmeansthatthevotewillnotbecountedinthecalculationofvotesfororagainsttheresolution.Ifnovotingindicationisgiven,theproxywillvoteorabstainfromvotingathisorherdiscretion.Theproxywillvote(orabstainfromvoting)asheorshethinksfitinrelationtoanyothermatterwhichisputbeforetheAnnualGeneralMeeting.
k. Exceptasprovidedabove,memberswhohavegeneralqueriesabouttheAnnualGeneralMeetingshouldwritetotheChairmanattheregisteredofficesetoutabove.
l. MembersmaynotuseanyelectronicaddressprovidedeitherinthisnoticeofAnnualGeneralMeeting,oranyrelateddocuments(includingtheChairman'sletterandFormofProxy),tocommunicatewiththeCompanyforanypurposesotherthanthoseexpresslystated.
Notes for the Notice of Annual General Meeting (continued)
Form of Proxy – ProVen Growth & Income VCT plc
ForuseattheAnnualGeneralMeetingoftheabove-namedCompanytobeheldon21August2012,inTheForestRoomatTheHospitalClub,24EndellStreet,CoventGarden,LondonWC2H9HQat2:30p.m.
I/We* (BLOCKCAPITALSplease)
of
beingtheholder(s)*ofOrdinaryShares/‘D’Sharesinthecapitaloftheabove-namedCompany,herebyappointtheChairmanofthemeeting(seenote1)
or
of
asmy/our*proxytoattendforme/us*onmy/our*behalfattheAnnualGeneralMeetingoftheCompanytobeheldinTheForestRoomatTheHospitalClub,24EndellStreet,CoventGarden,LondonWC2H9HQon21August2012oratanyadjournmentthereof.
I/We*desiretovoteontheresolutionsasindicatedintheappropriatecolumnbelow.Pleaseindicatewithan“X”howyouwishyourvotetobecast.
DetailsoftheresolutionsaresetoutintheNoticeoftheAnnualGeneralMeeting.
ORDINARY BUSINESS FOR AGAINST WITHHELD
1. ToreceiveandadopttheDirectors’ReportandAccounts.
2. ToapprovetheDirectors’RemunerationReport.
3. Toapprovethepaymentofafinaldividendof4.5pperOrdinaryShare.
4. Tore-appointtheauditorandauthorisetheDirectorstodeterminetheirremuneration.
5. Tore-electMarcVlessingasadirector.
6. Tore-electMalcolmMossasadirector.
7. Tore-electJamesStewartasadirector.
8. Tore-electNatashaChristie-Millerasadirector.
SPECIAL BUSINESS
9. ToauthorisetheDirectorstoallotshares.
10. ToadopttheDividendReinvestmentScheme.
11. ToauthorisetheDirectorstoallotOrdinarySharesinconnectionwith
theDividendReinvestmentScheme.
12. Todisapplypre-emptionrights.
13. ToauthorisetheCompanytomakemarketpurchasesofitsshares.
14. Todisapplypre-emptionrightsinrespectofsharesallottedpursuantto
theDividendReinvestmentScheme.
15. Toamendarticle151(1)oftheCompany'sarticlesofassociationwithrespect
totheallotmentofsharespursuanttotheDividendReinvestmentScheme.
Signature(s) Date
NOTES AND INSTRUCTIONS:
1. AnymemberoftheCompanyentitledtoattendandvoteattheMeetingisalsoentitledtoappointoneormoreproxiestoattend,speakandvoteinsteadofthatmember.AmembermayappointmorethanoneproxyinrelationtotheAnnualGeneralMeetingprovidedthateachproxyisappointedtoexercisetherightsattachedtoadifferentshareorsharesheldbythatmember.Aproxymaydemand,orjoinindemanding,apoll.AproxyneednotbeamemberoftheCompanybutmustattendtheMeetinginordertorepresenthisappointor.AmemberentitledtoattendandvoteatthemeetingmayappointtheChairmanoranotherpersonashisproxy,althoughtheChairmanwillnotspeakforthemember.Amemberwhowisheshisproxytospeakforhimshouldappointhisownchoiceofproxy(nottheChairman)andgiveinstructionsdirectlytothatperson.
2. Delete“theChairmanofthemeeting”ifitisdesiredtoappointanyotherpersonandinserthisorhernameandaddress.Ifnonameisinserted,theproxywillbedeemedtohavebeengiveninfavouroftheChairmanofthemeeting.IfthisFormofProxyisreturnedwithoutstatinghowtheproxyshallvoteonanyparticularmattertheproxywillexercisehisdiscretionastowhether,andifsohow,hevotes.
3. AnyalterationstotheFormofProxyshouldbeinitialled.
4. Tobevalid,thisFormofProxyandthepowerofattorneyorotherwrittenauthority,ifany,underwhichitissignedoranofficeornotariallycertifiedcopyoracopycertifiedinaccordancewiththePowersofAttorneyAct1971ofsuchpowerandwrittenauthority,mustbedeliveredtoDowningLLP,10LowerGrosvenorPlace,LondonSW1W0ENnotlessthan48hours(excludingweekendsandpublicholidays)beforethetimeappointedforholdingtheMeetingoradjournedmeetingatwhichthepersonnamedinthisFormofProxyproposestovote.Inthecaseofapolltakenmorethan48hours(excludingweekendsandpublicholidays)afteritisdemanded,thedocument(s)mustbedeliveredasaforesaidnotlessthan24hours(excludingweekendsandpublicholidays)beforethetimeappointedfortakingthepoll,orwherethepollistakennotmorethan48hours(excludingweekendsandpublicholidays)afteritwasdemanded,andbedeliveredatthemeetingatwhichthedemandismade.
5. Inthecaseofacorporation,thisformmustbeunderitscommonsealorunderthehandofsomeofficerorattorneydulyauthorisedonthatbehalf.
6. Inthecaseofjointholders,thevoteoftheseniorholdertenderingavotewillbeacceptedtotheexclusionofthevotesoftheotherjointholders.Senioritydependsontheorderinwhichthenamesstandintheregisterofmembers.
7. ThecompletionandreturnofthisFormofProxywillnotprecludeyoufromattendingandvotingattheAnnualGeneralMeetingshouldyousubsequentlydecidetodoso.IfamemberappointsaproxyandthatmemberattendstheAnnualGeneralMeetinginperson,theproxyappointmentwillautomaticallybeterminated.
8. Avotewithheldisnotavoteinlaw,whichmeansthatthevotewillnotbecountedinthecalculationofvotesfororagainsttheresolution.Ifnovotingindicationisgiven,theproxywillvoteorabstainfromvotingathisorherdiscretion.Theproxywillvote(orabstainfromvoting)asheorshethinksfitinrelationtoanyothermatterwhichisputbeforetheAnnualGeneralMeeting.
*Deleteasappropriate