ProVen Growth and Income VCT plc: Half-yearly report

PROVEN GROWTH AND INCOME VCT PLC

Half-yearly report
For the six months ended 31 August 2022

Financial Summary

	31 August 2022	31 August 2021	28 February 2022
Net asset value per Ordinary share (“NAV”)	57.7p	63.4p	67.3p
Dividends paid since class launch (Originally as ‘C’ Shares)	73.9p	69.15p	70.7p
Total return (net asset value plus dividends paid since ‘C’ Share class launch)	131.6p	132.55p	138.0p
Net Assets (£’000)	168,515	160,668	169,564

Chair’s Statement

Introduction

I have pleasure in presenting the half year report for ProVen Growth and Income VCT plc (the “Company” or “Fund”) for the six months ended 31 August 2022.

Net asset value

During the six-month period, the net asset value (“NAV”) per share decreased from 67.3p to 57.7p at 31 August 2022 which, after adjusting for the dividends paid of 3.25p per share in early August, results in a net fall of 6.35p per share or 9.4% of the opening NAV. This decrease has been largely driven by a fall in unrealised valuations, resulting from a decline in comparable market multiples, together with significant write-downs in the value of three investments, as described below.

Portfolio activity and valuation

At 31 August 2022, your Fund’s investment portfolio comprised 52 investments at a valuation of £117.2 million.

During the six-month period, your Fund invested £7.9 million into three new companies:

• WS Holdco, PBC (t/a WiredScore) (£3.5 million) – assesses, certifies and improves digital connectivity and smart technology in homes and offices on a global scale.

www.wiredscore.com

• Chattermill Analytics Limited (£2.2 million) – a cloud-based customer experience management solution that helps businesses collect, manage and analyse customer feedback across chats, emails, app store reviews, surveys, social interactions and other channels. www.chattermill.com

• Not Another Beer Co Ltd (t/a Lucky Saint) (£2.2 million) – an award-winning alcohol- free beer company. www.luckysaint.com 

ProVen Growth and Income VCT plc also made follow-on investments during the period in Picasso Labs, Inc. (£1.2 million), Second Nature (£1.0 million), Social Value Portal (£1.0 million), DeepCrawl (£734,000) and MYCS (£551,000).

In March 2022, there was a part disposal of the Company’s holding in Zoovu. The Company received proceeds of £17.5 million, a return of 5.1x against the cost of the shares sold. Having performed well since the initial investment by the Company in August 2017, Zoovu had been exploring options for additional fundraising. It agreed on an offer which saw the Company sell 70% of its holding and roll over its remaining shares. Zoovu also raised additional primary capital to fund further expansion as part of the transaction. In June 2022, the Company disposed of its entire holding in Blis Media for proceeds of £6.7 million, in a transaction with Lloyds Development Capital. This resulted in a return against cost of 6.2x.

There have been significant write-downs to the value of three portfolio companies in the period. Festicket, an online platform which packages festival tickets together with travel, accommodation and add-ons to provide complete festival experiences, was badly impacted by the COVID-19 pandemic, leaving the company with a weakened balance sheet. An erratic reopening of the festival market in 2021, followed by the failure of several festivals in 2022, resulted in highly challenging cash-flow dynamics for Festicket. This led to the company entering administration shortly after the period end.

MYCS was also adversely impacted by market conditions, as a consequence of loan providers introducing new lending caps in March 2022 and a sharp decline of consumer confidence in the company’s markets. These factors prompted the company to enter into a merger with another private equity-backed business. As part of this transaction, the Company disposed of its interest in MYCS for the nominal value of the Company’s holding with potential for some contingent proceeds should the buyer secure a future sale for the enlarged group.

The value of Thread was written down by £4.1 million during the period. Thread has been pursuing a high growth strategy, including a recent entry into the US market, which has delivered a significant increase in revenues since your Company invested. Following the recent economic turmoil, however, Thread has been unable to raise further capital to fund its high growth strategy, which in turn has had a material negative impact on the value of the business.

The profits and write-downs referred to above reflect the early-stage, high-growth profile of the investments in your Company’s portfolio. Early-stage businesses carry inherent risk, meaning that some will be very successful and some will fail. The risk of individual investments is balanced by your Company’s diversified portfolio of more than fifty companies. Historically, the successes in the Company’s portfolio have always significantly outweighed the losses over the medium term, although past performance is not a guide to the future.

Market comparables fell significantly in the six-month period which adversely affected the valuations of several other portfolio companies. However, there were also some valuation uplifts in the portfolio. Luxury Promise and Been There Done That, in particular, saw significant increases of £3.0 million and £0.9 million respectively due to strong trading performance.

A summary of the top 20 venture capital investments, by value, is provided in the Summary of Investment Portfolio.

Post period end portfolio activity

Since 31 August 2022, the Company has made a follow-on investment of £0.1 million into Plum Guide.

Results and dividends

The total loss on ordinary activities for the six-month period to 31 August 2022 was £17.8 million.

During the six-month period, final and special dividends of 1.5p and 1.75p per share respectively were paid on 5 August 2022 to Shareholders on the register at 15 July 2022. These dividends were paid in respect of the year ended 28 February 2022.

The Board has declared an interim dividend of 1.5p per share which will be paid on 2 December 2022 to Shareholders on the register at 11 November 2022. The dividend represents a cash return of 2.3% on the opening NAV per share at 1 March 2022, adjusted for the August dividends of 3.25p per share. The payment of this interim dividend will result in an equivalent reduction in the Company’s NAV per share.

Shareholders are reminded that the Company operates a Dividend Reinvestment Scheme (“DRIS”) for Shareholders who wish to have their dividends reinvested in new shares and obtain further income tax relief on those shares, subject to the usual restrictions. If you are not currently registered for the DRIS and wish to have your dividends paid in the form of new shares, DRIS forms are available from the www.proveninvestments.co.uk website or by contacting Beringea on 020 7845 7820. Shareholders will need to be registered for the DRIS prior to 11 November 2022 to be eligible to receive the forthcoming dividend as new shares.

Fundraising and share issues

As detailed in the Annual Report and Accounts, the Company launched a combined Offer for Subscription with ProVen VCT plc on 11 January 2022 to raise up to a total of £20 million per company, with an overallotment facility of up to a further £20 million per company. The Offer closed to new applications on 12 August 2022 with £29 million of gross proceeds for your Fund.

During the period, the Company allotted 42,981,001 shares at an average price of 68.3p per share under the Company’s Offer for Subscription. In the same period, the Company allotted a further 2,309,547 shares at 60.95p per share under the Company’s DRIS in respect of the dividends paid on 5 August 2022.

In July 2022, the Company announced its intention to launch a new Offer for Subscription for tax years 2022/23 and 2023/24 later this year. A prospectus with full details of the proposed Offer will be published in due course.

Share buybacks

ProVen Growth and Income VCT plc continues to operate a policy of purchasing its own shares as they become available in the market at a discount of approximately 5% to the latest published NAV.

During the period, the Company completed purchases of 5,347,916 shares at an average price of 62.1p per share and for aggregate consideration (net of costs) of £3,320,000. This represented 2.12% of the shares in issue at the start of the period. The shares were subsequently cancelled.

Shareholder event

The Company’s Annual Shareholder Event continues to be well received and provides an important opportunity for Shareholders to hear from the Investment Manager on topics such as performance and investment activity, as well as receiving insights and updates from our portfolio companies. For your Board and the Investment Manager, it is also a vital platform for gathering and discussing the views of our Shareholders.

In order to ensure the safety and wellbeing of our Shareholders, employees and portfolio companies, we hosted our second fully digital shareholder day in Autumn 2021, using an online platform to deliver our assessment of fund performance and market conditions, as well as providing an opportunity for you to ask questions of the investment team and hear from portfolio companies.

Given the success of these virtual events, as well as the desire to hold a physical event, there will be a hybrid event in 2022, allowing the maximum number of Shareholders to attend either in person or virtually. This has been scheduled for 10am on Wednesday 16 November 2022 at the IET London on Savoy Place, and we would encourage you to join us for the session. If you have not received an invitation, then please contact the Beringea team at info@beringea.co.uk.

Regulatory Developments

The Company welcomes the Government’s commitment to extending the VCT scheme beyond 2025, which was announced in September 2022. Shareholders may have been aware that in 2015, owing to EU rules in relation to notified state aid, the Government was required to introduce a sunset clause into the VCT legislation. Unless legislation to extend or remove the sunset clause was enacted, income tax relief would have no longer been given to VCT subscriptions made on or after 6 April 2025. While it is good news that the sunset clause has been extended, we still await further details. Therefore, the industry will continue to promote the benefits of the VCT scheme to MPs, civil servants and other opinion formers, in order to ensure that VCTs are able to continue their support for early stage UK companies, which has done so much to stimulate UK economic growth, employment and innovation since the VCT scheme was first introduced nearly 30 years ago.

Outlook

The past two years have been marked by economic turbulence, political upheaval and commercial disruption, which have inevitably had an impact upon the investment landscape and the portfolio companies of the Company. Brexit, the COVID-19 pandemic, the invasion of Ukraine by Russia and rising inflation have all contributed to a challenging environment for the Company and its portfolio companies. These factors have had, and will almost certainly continue to have, an impact on portfolio companies through declining consumer and business confidence, and higher costs.

Despite this backdrop, your Company has continued to see profitable disposals from the portfolio, as well as a consistent flow of interesting new investment opportunities. The additional resources generated in the most recent fundraising will allow the Company to take advantage of these. As noted above, the Manager made three additions to the portfolio in the first half of the year. The Manager continues to take a disciplined approach to evaluating new opportunities and will only invest where they it believes that the pricing will allow the Company to achieve a good return on the investment.

Looking ahead, your Board anticipates that the next twelve months will be challenging. However, we remain confident in the medium-term prospects for the portfolio and the Company’s ability to deliver the target returns to Shareholders over the coming years.

Marc Vlessing OBE
Chair
12 October 2022

Summary of Investment portfolio
as at 31 August 2022

	Cost £’000	Valuation £’000	Valuation movement in period £’000	% of portfolio by value
Top twenty venture capital investments (by value)
Luxury Promise Limited	6,020	12,734	2,990	7.6%
Picasso Labs, Inc. (t/a CreativeX)	4,546	12,511	381	7.4%
Papier Ltd	4,703	6,389	(3,838)	3.8%
Zoovu Limited (t/a SmartAssistant)	847	5,339	304	3.2%
Been There Done That Global Limited	3,149	4,521	886	2.7%
Social Value Portal Ltd	2,542	4,249	690	2.5%
Sannpa Limited (t/a Fnatic)	6,718	4,149	(2,745)	2.5%
Infinity Reliance Limited (t/a My 1st Years)	2,769	4,010	(609)	2.4%
Second Nature Healthy Habits Ltd	3,842	3,979	(43)	2.4%
WS HoldCo, PBC. (t/a WiredScore)	3,494	3,722	228	2.2%
MPB Group Limited	1,194	3,635	(588)	2.2%
DeepCrawl Holding Company, Inc.	4,033	3,573	(787)	2.1%
Sealskinz Holdings Limited	3,116	3,116	–	1.8%
Utilis Israel Ltd (t/a Asterra)	2,144	2,808	560	1.7%
Lupa Foods Limited	931	2,649	738	1.6%
Stylescape Limited (t/a EDITED)	1,500	2,632	740	1.6%
Arctic Shores Limited	2,450	2,450	–	1.5%
Litchfield Media Limited	1,420	2,427	807	1.4%
Monica Vinader Limited	204	2,342	(694)	1.4%
Yardlink Ltd	2,319	2,319	–	1.4%
Other venture capital investments	52,188	27,686	(9,382)	16.4%
Total venture capital investments	110,129	117,240	(10,362)	69.3%
Cash at bank and in hand		52,004		30.7%
Total investments		169,244		100.0%

Other venture capital investments at 31 August 2022 comprise: Access Systems, Inc. (t/a Access Pay), Aistemos Limited, Andcrafted Ltd (t/a Plank Hardware), Buckingham Gate Financial Services Limited, CG Hero Ltd, Chattermill Analytics Limited, Cogora Group Limited, Commonplace Digital Limited, Dealroom.co B.V., DeepStream Technologies Limited, Disposable Cubical Curtains Limited (t/a Hygenica), Dryden Holdings Limited, Duncannon Holdings Limited, EMS Operations (UK) Ltd (t/a Archdesk), Enternships Limited (t/a Learnerbly), Festicket Ltd, Firefly Learning Limited, InContext Solutions, Inc., Honeycomb.TV Limited, Lantum Limited, Litta App Limited, Moonshot CVE Holdings Ltd, Not Another Beer Co Ltd (t/a Lucky Saint), Poq Studio Ltd, Plu&m Limited (t/a Plum Guide), Rapid Charge Grid Limited, Senselogix Limited, Simplestream Limited, Skills Matter Limited, Thread, Inc., Vigilant Applications Limited and Whistle Sports, Inc.

All venture capital investments are unquoted.

All of the above investments, with the exception of Dryden Holdings Limited were also held by ProVen VCT plc, of which Beringea LLP is the investment manager.

All venture capital investments are registered in England and Wales except for Access Systems, Inc., DeepCrawl Holding Company, Inc., InContext Solutions, Inc., Picasso Labs, Inc., Thread, Inc., WS Holdco, PBC and Whistle Sports, Inc. which are Delaware registered corporations in the United States of America, Utilis Israel Ltd (t/a Asterra), which is registered in Israel, and Dealroom.co B.V., which is registered in the Netherlands.

Summary of investment movements
for the six months ended 31 August 2022

Investment activity during the six months ended 31 August 2022 is summarised as follows:

Additions	Cost
	£’000
WS HoldCo, PBC (t/a WiredScore)	3,494
Not Another Beer Co Ltd (t/a Lucky Saint)	2,202
Chattermill Analytics Limited	2,199
Picasso Labs, Inc. (t/a CreativeX)	1,185
Second Nature Healthy Habits Ltd	1,042
Social Value Portal Ltd	1,042
DeepCrawl Holding Company, Inc.	734
Mycs GmbH	551
Total	12,449

Disposals	Cost	Market value at 1 March 2022	Disposal proceeds	Gain/ (loss) against cost	Realised (oss) / gain in period
	£’000	£’000	£’000	£’000	£’000
Zoovu Limited (t/a SmartAssistant)	3,449	17,471	17,464	14,015	(7)
Blis Global Ltd (formerly Blis Media Limited)	1,083	6,138	6,685	5,602	547
Netcall plc	324	336	279	(45)	(57)
Rapid Charge Grid Limited*	220	220	220	–	–
Lupa Foods Limited*	72	93	93	21	–
Response Tap Limited	–	–	79	79	79
ContactEngine Limited	–	–	70	70	70
D30 Holdings Limited			35	35	35
Mycs GmbH	5,038	6,001	(3)	(5,041)	(6,004)
Exonar Limited**	1,602	–	–	(1,602)	–
Total	11,788	30,259	24,922	13,134	(5,337)

*Loan repayment

**As mentioned in the Annual Report for year ended 28 February 2022, Exonar had its value written off by the Company during the year due to a failure to secure some key new contracts. After the Company’s year end, the business was sold to NowVertical Group Inc. in return for shares in the acquiror. Nil value is being attributed to these shares.

Of the disposals above, Response Tap Limited, ContactEngine Limited and D30 Holdings Limited were realised in a prior period, but proceeds were recognised in the current period in excess of the amounts previously accrued.

The total disposal proceeds outlined above do not match those recorded in the statement of cash flows as the cash flow figure represents total disposal proceeds received in cash in the six-month period to 31 August 2022, elements of which will have been accrued in prior periods. Furthermore, the disposal proceeds figure above includes accruals in excess of amounts already received in cash.

Unaudited Condensed Income Statement
for the six months ended 31 August 2022

	(unaudited) Six months ended  31 Aug 2022			(unaudited) Six months ended 31 Aug 2021			(audited) Year ended 28 Feb 2022
	Revenue	Capital	Total	Revenue	Capital	Total	Total
	£’000	£’000	£’000	£’000	£’000	£’000	£’000
Income	85	–	85	55	–	55	122
Realised (losses) / gains on investments	–	(5,337)	(5,337)	–	1,818	1,818	5,113
Unrealised (losses) / gains on investments	–	(10,362)	(10,362)	–	9,309	9,309	23,340
Investment management fee	(467)	(1,400)	(1,867)	(409)	(1,227)	(1,636)	(3,256)
Performance incentive fee	–	–	–	–	(319)	(319)	(2,130)
Other expenses	(360)	–	(360)	(356)	–	(356)	(749)
FX Translation	–	–	–	–	–	–	–
(Loss)/return on ordinary activities before taxation	(742)	(17,099)	(17,841)	(710)	9,581	8,871	22,440
Tax on ordinary activities	–	–	–	–	–	–	–
(Loss)/return attributable to equity shareholders	(742)	(17,099)	(17,841)	(710)	9,581	8,871	22,440
Basic and diluted (loss)/return per share	(0.3p)	(5.9p)	(6.2p)	(0.3p)	4.0p	3.7p	9.4p

All revenue and capital items in the above statement derive from continuing operations. The total column within this statement represents the Unaudited Condensed Income Statement of the Company.

The Company has no recognised gains or losses other than the results for the six-month period as set out above.

The accompanying notes form an integral part of this announcement.

Unaudited Condensed Statement of Financial Position
as at 31 August 2022

	(unaudited) 31 Aug 2022 £’000	(unaudited) 31 Aug 2021 £’000	(audited) 28 Feb 2022 £’000
Fixed assets
Investments	117,240	109,400	145,410
Current assets
Debtors	734	931	746
Cash at bank and in hand	52,004	51,336	25,890
	52,738	52,267	26,636
Creditors: amounts falling due within one year	(1,463)	(999)	(2,482)
Net current assets	51,275	51,268	24,154
Net assets	168,515	160,668	169,564
Capital and reserves
Called up share capital	4,727	4,103	4,081
Capital redemption reserve	277	153	190
Share premium account	106,235	75,650	76,198
Special reserve	26,222	45,436	40,200
Capital reserve – realised	26,940	16,897	15,206
Revaluation reserve	9,904	22,752	38,737
Revenue reserve	(5,790)	(4,323)	(5,048)
Total equity shareholders’ funds	168,515	160,668	169,564
Basic and diluted net asset value per share	57.7p	63.4p	67.3p

The accompanying notes form an integral part of this announcement.

Unaudited Condensed Statement of Changes in Equity

Six months ended 31 Aug 2022 (unaudited)	Called up share capital	Capital redemption reserve	Share premium account	Special reserve	Capital  reserve – realised	Revaluation reserve	Revenue reserve	Total
	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000
At 1 March 2022	4,081	190	76,198	40,200	15,206	38,737	(5,048)	169,564
Issue of new shares	733	–	30,037	(1,277)	–	–	–	29,493
Total comprehensive income	–	–	–	–	(6,737)	(10,362)	(742)	(17,841)
Transfer of previously unrealised gains now realised	–	–	–	–	18,471	(18,471)	–	–
Share buybacks and cancellation	(87)	87	–	(3,336)	–	–	–	(3,336)
Dividends paid	–	–	–	(9,365)	–	–	–	(9,365)
At 31 August 2022	4,727	277	106,235	26,222	26,940	9,904	(5,790)	168,515

Six months ended 31 Aug 2021 (unaudited)	Called up share capital	Capital redemption reserve	Share premium account	Special reserve	Capital  reserve – realised	Revaluation reserve	Revenue reserve	Total
	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000
At 1 March 2021	3,598	129	55,656	50,992	13,605	16,463	(3,613)	136,830
Issue of new shares	529	–	19,994	(899)	–	–	–	19,624
Total comprehensive income	–	–	–	–	272	9,309	(710)	8,871
Transfer of previously unrealised gains now realised	–	–	–	–	3,020	(3,020)	–	–
Share buybacks and cancellation	(24)	24	–	(862)	–	–	–	(862)
Dividends paid	–	–	–	(3,795)	–	–	–	(3,795)
At 31 August 2021	4,103	153	75,650	45,436	16,897	22,752	(4,323)	160,668

The special reserve, capital reserve – realised and revenue reserve are distributable reserves. Reserves available for distribution therefore amount to £47,372,000 (2021: £58,010,000).

The accompanying notes form an integral part of this announcement.

Unaudited Condensed Statement of Cash Flows
for the six months ended 31 August 2022

			(unaudited) Six months ended 31 Aug  2022	(unaudited) Six months ended 31 Aug  2021			(audited) Year  ended  28 Feb 2022
	Note		£’000	£’000		£’000
Net cash used in operating activities	A		(4,079)	(1,589)		(3,721)
Cash flows from investing activities
Purchase of investments			(12,449)	(7,998)		(32,663)
Sale of investments			24,816	9,041		15,310
Net cash from/(used in) investing activities			12,367	1,043		(17,353)
Cash flows from financing activities
Proceeds from share issues			29,363	19,955		19,955
Share issue costs			(1,202)	(899)		(899)
Purchase of own shares			(2,378)	(616)		(2,293)
Equity dividends paid			(7,957)	(3,227)		(6,468)
Net cash from financing activities			17,826	15,213		10,295
Increase/(decrease) in cash and cash equivalents	B		26,114	14,667		(10,779)
Notes to the cash flow statement:
A   Cash flows used in operating activities
(Loss) / return on ordinary activities before taxation			(17,841)	8,871		22,440
Loss / (gain) on investments			15,698	(11,127)		(28,453)
Decrease in prepayments, accrued income and other debtors			118	258		140
(Decrease) / increase in accruals and other creditors			(2,054)	409		2,152
Net cash used in operating activities			(4,079)	(1,589)		(3,721)
B    Analysis of net funds
Beginning of period/year			25,890	36,669		36,669
Net cash inflows / (outflows)			26,114	14,667		(10,779)
End of period/year			52,004	51,336		25,890

The accompanying notes form an integral part of this announcement.

Notes to the half-yearly report

for the six months ended 31 August 2022

1.    Accounting policies

Basis of accounting
The Company has prepared its financial statements under Financial Reporting Standard 104 (“FRS104”) and in accordance with the Statement of Recommended Practice ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ (the “SORP”) issued by the Association of Investment Companies (“AIC”), as updated in July 2022.

The following accounting policies have been applied consistently throughout the period. Further details of principal accounting policies were disclosed in the Annual Report and Accounts for the year ended 28 February 2022. There has been no change to the accounting policies from those disclosed in the financial statements for the year ended 28 February 2022.

The unaudited financial statements set out herein have not been subject to review by the auditor and do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The figures for the year ended 28 February 2022 have been extracted from the financial statements for that period, which have been delivered to the Registrar of Companies; the Auditor’s report on those financial statements was unqualified.

Presentation of Income Statement
In order to better reflect the activities of an investment company and, in accordance with guidance issued by the AIC, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The revenue return attributable to equity shareholders is the measure the Directors believe appropriate in assessing the Company’s compliance with certain requirements set out in Part 6 of the Income Tax Act 2007.

Investments
Investments, including equity and loan stock, are recognised at their trade date and measured at “fair value through profit or loss” due to investments being managed and performance evaluated on a fair value basis. A financial asset is designated within this category if it is both acquired and managed, with a view to selling after a period of time, in accordance with the Company’s documented investment policy. The fair value of an investment upon acquisition is deemed to be cost. Thereafter investments are measured at fair value in accordance with International Private Equity and Venture Capital Valuation Guidelines (“IPEV Guidelines”) issued in December 2018, together with Sections 11 and 12 of FRS102.

Publicly traded investments are measured using bid prices in accordance with the IPEV Guidelines.

Key judgements
The valuation methodologies used by the Directors for estimating the fair value of unquoted investments are in accordance with the IPEV guidelines and as follows:

• where a company is in the early stage of development, the estimate of fair value is calculated based on market data and assumptions as to the potential outcomes, benchmarked against alternative valuation methodologies during this time;
• where a company is well established after an appropriate period, the investment may be valued by applying a suitable earnings or revenue multiple to that company’s maintainable earnings or revenue. The multiple used is based on comparable listed companies or a sector but discounted to reflect factors such as the different sizes of the comparable businesses, different growth rates and the lack of marketability of unquoted shares;
• where a value is indicated by a material arm’s-length transaction by a third party in the shares of the company, the valuation will normally be based on this;
• where alternative methods of valuation, such as net assets of the business, are more appropriate then such methods may be used; and
• where repayment of the equity is not probable, redemption premiums will be recognised.

The methodology applied takes account of the nature, facts and circumstances of the individual investment and uses reasonable data, market inputs, assumptions and estimates in order to ascertain fair value. Methodologies are applied consistently from year to year except where a change results in a better estimate of fair value.

Where an investee company has gone into receivership or liquidation, or the loss in value below cost is considered to be permanent, or there is little likelihood of a recovery from a company in administration, the loss on the investment, although not physically disposed of, is treated as being realised.

All investee companies are held as part of an investment portfolio and measured at fair value. Therefore, it is not the policy for investee companies to be consolidated and any gains or losses arising from changes in fair value are included in the Unaudited Condensed Income Statement for the period as a capital item.

Gains and losses arising from changes in fair value are included in the Unaudited Condensed Income Statement for the period as a capital item and transaction costs on acquisition or disposal of the investment are expensed.

Investments are derecognised when the contractual rights to the cash flows from the asset expire or the Company transfers the asset and substantially all the risks and rewards of ownership of the asset to another entity.

Key estimates
The key estimates involved in determining the fair value of a company can include:

• identifying a relevant basket of market comparables;
• deducing the discount to take on those market comparables;
• determining reoccurring revenue;
• determining reoccurring earnings; or
• identifying surplus cash.

2.    All revenue and capital items in the Unaudited Condensed Income Statement derive from continuing operations.

3.    There are no other items of comprehensive income other than those disclosed in the Unaudited Condensed Income Statement.

4.    The Company has only one operating segment as reported to the Board of Directors in their capacity as chief operating decision makers and derives its income from investments made in shares, securities and bank deposits.

5.    The comparative figures are in respect of the year ended 28 February 2022 and the six-month period ended 31 August 2021.

6.    Basic and diluted return per share for the period has been calculated on 287,309,948 shares, being the weighted average number of shares in issue during the period.

7.    Basic and diluted NAV per share for the period has been calculated on 292,033,361 shares, being the number of shares in issue at the period end.

8.    Dividends

		(unaudited)			(unaudited)			(audited)
		Six months ended			Six months ended			Year ended
		31-Aug-22			31-Aug-21			28-Feb-22
		Revenue	Capital	Total	Revenue	Capital	Total	Total
	Pence	£’000	£’000	£’000	£’000	£’000	£’000	£’000
2021 Final	1.50	–	–	–		3,795	3,795	3,795
2022 Interim	1.50	–	–	–	–	–	–	3,803
2022 Final	1.50	–	4,323	4,323	–	–	–	–
2022 Special	1.75	–	5,042	5,042	–	–	–	–
Total dividends paid		–	9,365	9,365	–	3,795	3,795	7,598

9.    Contingent liabilities, guarantees and financial commitments

Based on the NAV per share at 31 August 2022, before any performance fee accrual, and cumulative dividends paid and payable ahead of 28 February 2023, no performance fee is currently payable by the Manager in respect of the period.

The Company has no other contingent liabilities, guarantees or financial commitments at 31 August 2022.

10.    Called up share capital

During the period, the Company issued 42,981,001 Ordinary Shares for an aggregate consideration of £29.4 million under the combined offer for subscription with ProVen VCT plc which launched on 11 January 2022. Share issue costs thereon amounted to £1.3 million.

In the same period, the Company allotted a further 2,309,547 shares at 60.95p per share under the Company’s DRIS in respect of the dividend paid on 5 August 2022.

During the period, the Company completed purchases of 5,347,916 shares at an average price of 62.1p per share and for aggregate consideration (net of costs) of £3,319,626. This represented 2.12% of the shares in issue at the start of the period. The shares were subsequently cancelled.

11.    Financial instruments

Investments are valued at fair value as determined using the measurement policies described in note 1.

The Company has categorised its financial instruments that are measured subsequent to initial recognition at fair value, using the fair value hierarchy as follows:

                        Level 1        Reflects instruments quoted in an active market.
                        Level 2        Reflects financial instruments that have been valued using inputs, other than quoted prices, that are observable.
                        Level 3         Reflects financial instruments that have been valued using valuation techniques with unobservable inputs.

	(unaudited) 31 Aug 2022				(audited) 28 Feb 2022
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000
AIM quoted	–	–	–	–	337	–	–	337
Loan notes	–	–	11,228	11,228	–	–	11,000	11,000
Unquoted investments	–	–	106,012	106,012	–	–	134,073	134,073
Total	–	–	117,240	117,240	337	–	145,073	145,073

There have been no transfers between the three levels outlined above.

12.    Controlling party and related party transactions

In the opinion of the Directors there is no immediate or ultimate controlling party.

Malcolm Moss, a Director of the Company, is also a Partner of Beringea LLP. Beringea LLP was the Company’s Investment Manager during the period. During the six months ended 31 August 2022, £1,867,000 (2021: £1,636,000) was payable to Beringea LLP in respect of these services. At the period end the Company owed Beringea LLP £nil (2021: £nil).

Beringea LLP was also the Company’s Administration Manager during the period. Fees paid to Beringea in its capacity as Administration Manager for the six months ended 31 August 2022 amounted to £31,000 (2021: £30,000) of which £nil (2021: £nil) remained outstanding at the period end.

As the Company’s investment manager, Beringea LLP is also entitled to receive a performance incentive fee based on the Company’s performance for each financial year to 28 February. The performance incentive fee arrangements are set out, in detail, in the Annual Report and Accounts. In respect of the year ending 28 February 2023, no performance incentive fee has been accrued. The actual performance incentive fee, if any, will only be payable once the full year results have been finalised.

Beringea LLP may charge arrangement fees, in line with industry practice, to companies in which it invests. It may also receive directors’ fees or monitoring fees from investee companies. These costs are borne by the investee company not the Company. In the six-month period to 31 August 2022, £90,000 (2021: £185,000) was payable to Beringea LLP for arrangement fees under such arrangements. Directors’ and monitoring fees payable to Beringea LLP in the six-month period to 31 August 2022 amounted to £234,000 (2021: £261,000).

During the six months to 31 August 2022, an amount of £66,000 (2021: £66,000) was payable to the Directors of the Company as remuneration for services provided to the Company. No amount was outstanding at the period end.

As part of the combined offer for subscription with ProVen VCT plc launched on 11 January 2022, Beringea LLP received £640,000 in promoter’s fees. Out of this promoter fee, the Manager is responsible for paying all the costs on the offer, including professional fees and marketing expenses. The £640,000 above formed part of the £1,277,000 offer issue costs referenced elsewhere in these financial statements. The remainder of this amount was paid to financial advisers, as agreed between them and their respective clients. All offer allotments are made net of fees. The fees outlined above do not therefore impact the NAV of the Company.

13.    The Directors confirm that, to the best of their knowledge, the half-yearly financial statements have been prepared in accordance with Financial Reporting Standard 104 issued by the Financial Reporting Council and the half-yearly financial report includes a fair review of the information required by:

1. DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and
2. DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period, and any changes in the related party transactions described in the last annual report that could do so.

14.    Risk and uncertainties

Under the Disclosure and Transparency Directive, the Board is required in the Company’s half-yearly results, to report on the principal risks and uncertainties facing the Company over the remainder of the financial year.

The Board has concluded that the key risks facing the Company over the remainder of the financial year are as follows:

(i)    investment risk associated with investing in small and immature businesses;
(ii)    investment risk arising from volatile stock market conditions and their potential effect on the value of the Company’s venture capital investments and the exit opportunity for those investments; and
(iii)    breach of VCT regulations.

In the case of (i), the Board is satisfied with the Company’s approach. The Investment Manager follows a rigorous process in vetting and careful structuring of new investments and, after an investment is made, close monitoring of the business. In respect of (ii), the Company seeks to hold a diversified portfolio. However, the Company’s ability to manage this risk is quite limited, primarily due to the restrictions arising from the VCT regulations.

The Company’s compliance with the VCT regulations is continually monitored by the Administration Manager, who reports regularly to the Board on the current position. The Company also retains Philip Hare & Associates LLP to provide regular reviews and advice in this area. The Board considers that this approach reduces the risk of a breach of the VCT regulations to an appropriate level.

15.    Going concern

The Directors have reviewed the Company’s financial resources at the period end and concluded that the Company is well placed to manage its business risks.

The Board confirms that it is satisfied that the Company has adequate resources to continue in business for the foreseeable future. For this reason, the Board believes that the Company continues to be a going concern and that it is appropriate to apply the going concern basis in preparing the financial statements.

Copies of the unaudited half yearly results will be sent to shareholders. Further copies can be obtained from the Company’s registered office and will be available for download from www.proveninvestments.co.uk.

16.    Post balance sheet events

Since 31 August 2022, the Company has made a follow-on investment of £0.1 million into Plum Guide.