Half-yearly report

ProVen VCT plc Half-Yearly Report for the six months ended 31 August 2010 Financial Summary   |31 Aug|31 Aug|28 Feb | 2010| 2009| 2010 ----------------------------------------------------+------+------+------ Ordinary shares |  |  | ----------------------------------------------------+------+------+------ Net asset value per share ("NAV") | 47.80| 53.10| 54.80 ----------------------------------------------------+------+------+------ Dividends paid per share since launch |101.45| 93.45| 93.45 ----------------------------------------------------+------+------+------ Total return (NAV plus dividends paid since launch)|149.25|146.55|148.25 ----------------------------------------------------+------+------+------   |  |  | ----------------------------------------------------+------+------+------ C shares |  |  | ----------------------------------------------------+------+------+------ Net asset value per share ("NAV") | 71.40| 72.30| 75.50 ----------------------------------------------------+------+------+------ Dividends paid per share since issue | 4.75| 4.75| 4.75 ----------------------------------------------------+------+------+------ Total return (NAV plus dividends paid since issue) | 76.15| 77.05| 80.25 ----------------------------------------------------+------+------+------   |  |  | ----------------------------------------------------+------+------+------ D shares |  |  | ----------------------------------------------------+------+------+------ Net asset value per share ("NAV") | 92.30| 93.45| 92.20 ----------------------------------------------------+------+------+------ Dividends paid per share since issue | -| -| - ----------------------------------------------------+------+------+------ Total return (NAV plus dividends paid since issue) | 92.30| 93.45| 92.20 ----------------------------------------------------+------+------+------ Chairman's Statement Introduction The six-month period ended 31 August 2010 has seen a reasonably stable overall performance by each of the Company's share pools, with falls in the value of some investments generally being offset by the better performing investments. The uncertain economic outlook has continued to produce a challenging environment for new investment activities, although I am pleased to report an increased level of activity in recent months. Net asset values Ordinary shares As at 31 August 2010, the net asset value ("NAV") per Ordinary share stood at 47.8p, an increase of 1.0p per share or 1.8% since the year end (after adjusting for the dividends of 8.0p paid in the period). C shares As at 31 August 2010, the NAV per C share stood at 71.4p, a decrease of 4.1p per share or 5.1% since the year end. D shares As at 31 August 2010, the NAV per D share stood at 92.3p, an increase of 0.1p per share or 0.1% since the year end. Fundraising As I reported previously, the Ordinary Share Top-Up Offer, raised in conjunction with ProVen Growth and Income VCT plc and ProVen Health VCT plc, closed on 28 May 2010 having raised £1.2 million for ProVen VCT plc. The Linked 'D' Share Offer with ProVen Growth and Income VCT plc closed on 29 October 2010 having raised a total of approximately £2.6 million for the Company. Venture capital investments Ordinary share portfolio During the period, the Ordinary share pool made one new investment and one follow-on investment at a total cost of £611,000 and had one realisation in the form of repayment of loan notes at par. The net effect of investment valuation movements over the period was an unrealised gain of £662,000. C share portfolio The C share pool made investments totalling £640,000, comprising one new investment and two follow-on investments during the six months, and also received proceeds from a loan stock redemption at par. The net effect of investment valuation movements over the period was an unrealised loss of £541,000. D share portfolio The D share pool completed its first investment during the period, being £183,000 into Tossed Limited. Further details of the developments within the investment portfolios are included in the Investment Manager's Report. Results and dividends The Income Statement shows a loss on ordinary activities after taxation for the Company during the period of £363,000 (£33,000 revenue gain and £396,000 capital loss). Details of how this is analysed between the various share pools is shown in the Income Statement below. No interim dividends will be paid in respect of any class of shares. Share buybacks The Company continues to have a policy of purchasing its own shares that become available in the market in order to help provide liquidity to those shareholders that need it.  The Company has a current policy of purchasing Ordinary shares and 'C' shares at a price equivalent to a 10% discount to the latest published NAV and at a 5% discount in respect of 'D' shares. During the period, the Company purchased 338,967 Ordinary shares at an average price of 48.4p per share; 40,000 C shares at an average price of 68.0p per share; and 55,698 D shares at an average price of 92.3p per share. These shares were subsequently cancelled. Risk and uncertainties Under the Disclosure and Transparency Directive, the Board is required, in the Company's half-yearly results, to report on 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 a large proportion of the ordinary share assets being invested in a single investment; ii. investment risk associated with investing in small and immature businesses; iii. investment risk arising from extremely volatile stock market conditions and their potential effect on investment valuation; and  iv. failure to maintain approval as a VCT. Although having a large proportion of the Ordinary share assets invested in a single investment involves additional risks, this situation is not unusual within the venture capital industry and has arisen as a result of strong growth in the value of one investment. The Board regularly reviews the position. Risk and uncertainties continued In the case of (ii), the Board is also 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 (iii), 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 Administrator, who reports regularly to the Board on the current position. The Company also retains PricewaterhouseCoopers 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 a minimal level. Outlook Recent economic events have created conditions which are not only presenting barriers to completing good quality new investments at realistic prices but also extending the period it takes to complete them. The Investment Manager has, however, completed three new investments since the year end and I am therefore confident that the Company is well placed to reach its investment targets in the future. In terms of general outlook, the existing portfolio contains some interesting investments which give hope that positive realisations will be achieved in future. Andrew Davison Chairman 29 October 2010 Investment Manager's Report Introduction We are pleased to present our review of the investment portfolio for the six month period ended 31 August 2010. Against a backdrop of mixed economic news and continuing economic uncertainty we continue to focus on what we can do both to enhance existing portfolio company value and to take advantage of new investment opportunities. We are in regular dialogue with portfolio company management regarding strategy and commercial issues and actively review up-to-date management and financial information; we have reviewed many new investment opportunities and made a number of new and follow-on investments, some of which occurred after the period end but prior to the date of this report. Additionally, some potential investments which, for various reasons, were not suitable or did not proceed, are being monitored so that we are well positioned to consider future investment if the opportunity arises. The following commentary is designed to provide investors with an overview of the portfolio during the period whilst ensuring that sensitive information which could ultimately affect the returns of both portfolio companies and their investors (including the Company), is not disclosed. Portfolio activity and valuation Ordinary share pool At 31 August 2010, the Company's ordinary share portfolio compromised holdings in 17 companies, 14 of which were unquoted and 3 quoted, with a cost of £10.8 million and a valuation of £10.4 million. In addition, the Ordinary shares held cash and liquidity funds of £1.7 million. One new investment of £468,000 was made in the period, in the healthy eating outlet chain, Tossed and a further short term loan of £143,000 was made in Overtis Group. The Company subsequently redeemed its loan notes in Overtis Group following the disposal of its Solutions division to AIM quoted Digital Barriers plc. Overtis is now focussed on developing its VigilancePro® user activity management software. This software is relevant across all business sectors and is being used, with considerable success, by a number of police forces across the UK where the protection of data is paramount. Espresso Group continues to account for over 25% of the value of the ordinary share portfolio. During the period Espresso announced the expansion of its primary school product, Espresso Primary, into the US market through a partnership with a specialist US company called Defined Learning, Inc. The UK market continues to hold up well with high renewal rates for the core primary and secondary school products. C share pool At 31 August 2010, the Company's C share portfolio compromised 16 unquoted investments with a cost of £8.5 million and a valuation of £6.9 million. In addition, the C share pool held cash and liquidity funds of £3.5 million. One new investment in Tossed (£345,000) and a further investment in Steak Media (£181,000) and Overtis Group (£14,000) were made during the period. Overtis Group loan notes were redeemed and the trading subsidiary of the Vending Corporation went into administration early in the period (as outlined in the annual report to 28 February 2010) and has been treated as realised. C share pool continued Value in the C share pool is more evenly spread when compared to the ordinary share pool with the largest venture capital investment by value, Fjordnet, accounting for 11.3% of the total C share valuation. Fjordnet is a digital media agency, an area in which we have particular experience. We believe that this investment and Think, a similar business (which is also held by the ordinary share pool), are well positioned for future growth. Both the ordinary and C share pools have seen movements in valuations reflecting both individual portfolio company circumstances and wider changes to market comparables. Notable movements since 28 February 2010 include SPC (held by the ordinary and C share pool), Eagle Rock (ordinary and C share pool), Donatantonio (ordinary and C share pool), Heritage Partners (C share pool), Path Group (C share pool) and Chess Technologies (C Share pool). D share pool The D share pool made its first investment during the period, a £183,000 investment in healthy eating outlet chain, Tossed, alongside the ordinary share pool and ProVen Growth and Income VCT. In addition, the pool held cash and liquidity funds totalling £7.4 million, some of which was utilised by investments completed after the period end. Post period end portfolio activity In the period since 31 August 2010, the Company has made new investments in: · Monica Vinader Limited, a high end fashion jewellery brand (C share pool: £224,000; D share pool: £138,000); · Senselogix Limited, a provider of energy savings solutions (C share pool: £112,000; D share pool: £69,000); and · Speed-Trap Limited, which provides real time analysis of online customer behaviour (C share pool: £470,000; D share pool: £300,000). Outlook The period since 28 February 2010 to the date of this report has seen a number of new investments and continued support of the existing portfolio. We are also looking at a number of interesting investment opportunities. The full impact of the UK government's spending review announced earlier this month will obviously take time to feed through the economic system but undoubtedly new opportunities will be created for investors. With a significant portion of the C share and D share funds in low risk cash and cash equivalents, the Company is well placed to take advantage of any opportunities that may arise. Beringea LLP 29 October 2010 Unaudited Balance Sheet as at 31 August 2010   31 Aug   31 Aug   28 Feb 2010 2009 2010   £'000   £'000   £'000 Fixed assets Investments 17,441   12,625   16,657 -------------------------------------------------------------------------- Current assets Debtors 146   124   41 -------------------------------------------------------------------------- Current investments 10,200   10,200   10,200 -------------------------------------------------------------------------- Cash at bank and in hand 2,486   10,671   4,324 -------------------------------------------------------------------------- Creditors: amounts falling due within one year (182)   (5,427)   (2,200) -------------------------------------------------------------------------- Net current assets 12,650   15,568   12,365 -------------------------------------------------------------------------- Net assets 30,091   28,193   29,022 -------------------------------------------------------------------------- Capital and reserves Called up share capital 4,984   4,900   4,877 -------------------------------------------------------------------------- Capital redemption reserve 225   172   197 -------------------------------------------------------------------------- Share premium account 8,763   4,955   5,167 -------------------------------------------------------------------------- Special reserve 16,953   21,900   18,637 -------------------------------------------------------------------------- Capital reserve - realised 1,633   3,558   3,484 -------------------------------------------------------------------------- Investment holding losses (2,048)   (6,923)   (3,180) -------------------------------------------------------------------------- Revenue reserve (419)   (369)   (160) -------------------------------------------------------------------------- Equity shareholders' funds 30,091   28,193   29,022 -------------------------------------------------------------------------- Net asset value per Ordinary share: 47.8p   53.1p   54.8p -------------------------------------------------------------------------- Net asset value per C share: 71.4p   72.3p   75.5p -------------------------------------------------------------------------- Net asset value per D share: 92.3p   93.4p   92.2p -------------------------------------------------------------------------- Unaudited Balance Sheet as at 31 August 2010 Ordinary share pool   31 Aug   31 Aug   28 Feb 2010 2009 2010   £'000   £'000   £'000 Fixed assets Investments 10,387   7,932   9,543 ------------------------------------------------------------------------- Current assets Debtors 122   76   31 ------------------------------------------------------------------------- Current investments 890   4,190   3,190 ------------------------------------------------------------------------- Cash at bank and in hand 823   595   1,172 ------------------------------------------------------------------------- Creditors: amounts falling due within one year (86)   (110)   (1,007) ------------------------------------------------------------------------- Net current assets 1,749   4,751   3,386 ------------------------------------------------------------------------- Net assets 12,136   12,683   12,929 ------------------------------------------------------------------------- Capital and reserves Called up share capital 1,269   1,194   1,179 ------------------------------------------------------------------------- Capital redemption reserve 202   170   185 ------------------------------------------------------------------------- Share premium account 1,026   -   - ------------------------------------------------------------------------- Special reserve 7,356   11,741   8,961 ------------------------------------------------------------------------- Capital reserve - realised 1,738   3,793   3,553 ------------------------------------------------------------------------- Investment holding losses 632   (4,140)   (1,041) ------------------------------------------------------------------------- Revenue reserve (87)   (75)   92 ------------------------------------------------------------------------- Equity shareholders' funds 12,136   12,683   12,929 ------------------------------------------------------------------------- Net asset value per Ordinary share: 47.8p   53.1p   54.8p ------------------------------------------------------------------------- Unaudited Balance Sheet as at 31 August 2010 C share pool   31 Aug   31 Aug   28 Feb 2010 2009 2010   £'000   £'000   £'000 Fixed assets Investments 6,871   4,693   7,114 -------------------------------------------------------------------------- Current assets Debtors 20   47   9 -------------------------------------------------------------------------- Current investments 2,810   6,010   3,460 -------------------------------------------------------------------------- Cash at bank and in hand 728   (127)   519 -------------------------------------------------------------------------- Creditors: amounts falling due within one year (59)   (65)   (106) -------------------------------------------------------------------------- Net current assets 3,499   5,865   3,882 -------------------------------------------------------------------------- Net assets 10,370   10,558   10,996 -------------------------------------------------------------------------- Capital and reserves Called up share capital 3,633   3,653   3,643 -------------------------------------------------------------------------- Capital redemption reserve 22   2   12 -------------------------------------------------------------------------- Share premium account -   -   - -------------------------------------------------------------------------- Special distributable reserve 9,597   10,159   9,676 -------------------------------------------------------------------------- Capital reserve - realised -   (212)   - -------------------------------------------------------------------------- Investment holding losses (2,680)   (2,783)   (2,139) -------------------------------------------------------------------------- Revenue reserve (202)   (261)   (196) -------------------------------------------------------------------------- Equity shareholders' funds 10,370   10,558   10,996 -------------------------------------------------------------------------- Net asset value per C share: 71.4p   72.3p   75.5p -------------------------------------------------------------------------- Unaudited Balance Sheet as at 31 August 2010 D share pool   31 Aug   31 Aug   28 Feb 2010 2009 2010   £'000   £'000   £'000 Fixed assets Investments 183   -   - ------------------------------------------------------------------------- Current assets Debtors 4   1   1 ------------------------------------------------------------------------- Current investments 6,500   -   3,550 ------------------------------------------------------------------------- Cash at bank and in hand 935   10,203   2,633 ------------------------------------------------------------------------- Creditors: amounts falling due within one year (37)   (5,252)   (1,087) ------------------------------------------------------------------------- Net current assets 7,402   4,952   5,097 ------------------------------------------------------------------------- Net assets 7,585   4,952   5,097 ------------------------------------------------------------------------- Capital and reserves Called up share capital 82   53   55 ------------------------------------------------------------------------- Capital redemption reserve 1   -   - ------------------------------------------------------------------------- Share premium account 7,737   4,955   5,167 ------------------------------------------------------------------------- Special distributable reserve -   -   - ------------------------------------------------------------------------- Capital reserve - realised (105)   (23)   (69) ------------------------------------------------------------------------- Investment holding losses -   -   - ------------------------------------------------------------------------- Revenue reserve (130)   (33)   (56) ------------------------------------------------------------------------- Equity shareholders' funds 7,585   4,952   5,097 ------------------------------------------------------------------------- Net asset value per D share: 92.3p   93.4p   92.2p ------------------------------------------------------------------------- Unaudited Income Statement for the six months ended 31 August 2010 Company Total Six months ended 31 August 2010   Revenue   Capital   Total   £'000   £'000   £'000 Income 261   -   261 -------------------------------------------------------------------------------- Gains/(losses) on investments -   121   121 --------------------------------------------------------------------------------   261   121   382 -------------------------------------------------------------------------------- Investment management fee (53)   (157)   (210) -------------------------------------------------------------------------------- Performance incentive fees -   (360)   (360) -------------------------------------------------------------------------------- Recoverable VAT -   -   - -------------------------------------------------------------------------------- Other expenses (175)   -   (175) -------------------------------------------------------------------------------- Return/(loss) on ordinary activities before 33   (396)   (363) taxation -------------------------------------------------------------------------------- Tax on ordinary activities -   -   - -------------------------------------------------------------------------------- Return/(loss) attributable to equity shareholders 33   (396)   (363) -------------------------------------------------------------------------------- Basic and diluted return/(loss) per Ordinary share 0.2p   0.9p   1.1p Basic and diluted return/(loss) per C share -   (2.9p)   (2.9p) Basic and diluted return/(loss) per D share (0.3p)   (0.5p)   (0.8p) -------------------------------------------------------------------------------- Analysed by share class: Ordinary share pool Six months ended 31 August 2010   Revenue   Capital   Total   £'000   £'000   £'000 Income 170   -   170 -------------------------------------------------------------------------------- Gains/(losses) on investments -   662   662 --------------------------------------------------------------------------------   170   662   832 -------------------------------------------------------------------------------- Investment management fee (23)   (69)   (92) -------------------------------------------------------------------------------- Performance incentive fees -   (360)   (360) -------------------------------------------------------------------------------- Recoverable VAT -   -   - -------------------------------------------------------------------------------- Other expenses (85)   -   (85) -------------------------------------------------------------------------------- Return/(loss) on ordinary activities before taxation 62   233   295 -------------------------------------------------------------------------------- Tax on ordinary activities -   -   - -------------------------------------------------------------------------------- Return/(loss) attributable to equity shareholders 62   233   295 --------------------------------------------------------------------------------   Six months ended   Year ended 28 Feb 2010 31 August 2009 Income Revenue   Capital   Total   Total Gains/(losses) on investments £'000   £'000   £'000   £'000   184   -   184   266 --------------------------------------------------------------------------------   -   (625)   (625)   591 -------------------------------------------------------------------------------- Investment management fee 184   (625)   (441)   857 -------------------------------------------------------------------------------- Performance incentive fees Recoverable VAT (71)   (214)   (285)   (575) -------------------------------------------------------------------------------- Other expenses -   (45)   (45)   (53) --------------------------------------------------------------------------------   10   31   41   1 -------------------------------------------------------------------------------- Return/(loss) on ordinary activities (537)   -   (537)   (713) before taxation -------------------------------------------------------------------------------- Tax on ordinary activities   (414)   (853)   (1,267)   (483) -------------------------------------------------------------------------------- Return/(loss) attributable to equity -   -   -   - shareholders -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Basic and diluted return/(loss) per (414)   (853)   (1,267)   (483) Ordinary share -------------------------------------------------------------------------------- Basic and diluted return/(loss) per C share Basic and diluted return/(loss) per D (0.5p)   (3.1p)   (3.6p)   (2.0p) share   (1.7p)   (0.6p)   (2.3p)   (0.8p)   (0.7p)   (0.5p)   (1.2p)   (2.5p) --------------------------------------------------------------------------------   Six months ended   Year ended 28 Feb 2010  31 August 2009 Ordinary share pool Revenue   Capital   Total   Total   £'000   £'000   £'000   £'000   118   -   118   170 -------------------------------------------------------------------------------- Income -   (599)   (599)   (26) -------------------------------------------------------------------------------- Gains/(losses) on investments 118   (599)   (481)   144 --------------------------------------------------------------------------------   (41)   (123)   (164)   (263) -------------------------------------------------------------------------------- Investment management fee -   (45)   (45)   (53) -------------------------------------------------------------------------------- Performance incentive fees 10   31   41   1 -------------------------------------------------------------------------------- Recoverable VAT (213)   -   (213)   (304) -------------------------------------------------------------------------------- Other expenses   (126)   (736)   (862)   (475) -------------------------------------------------------------------------------- Return/(loss) on ordinary activities -   -   -   - before taxation -------------------------------------------------------------------------------- Tax on ordinary activities --------------------------------------------------------------------------------   (126)   (736)   (862)   (475) -------------------------------------------------------------------------------- Return/(loss) attributable to equity shareholders -------------------------------------------------------------------------------- Unaudited Income Statement for the six months ended 31 August 2010 C share pool Six months ended 31 August 2010   Revenue   Capital   Total   £'000   £'000   £'000 Income 71   -   71 -------------------------------------------------------------------------------- Gains/(losses) on investments -   (541)   (541) --------------------------------------------------------------------------------   71   (541)   (470) -------------------------------------------------------------------------------- Investment management fee (18)   (52)   (70) -------------------------------------------------------------------------------- Performance incentive fees -   -   - -------------------------------------------------------------------------------- Recoverable VAT -   -   - -------------------------------------------------------------------------------- Other expenses (59)   -   (59) -------------------------------------------------------------------------------- Return/(loss) on ordinary activities before taxation (6)   (593)   (599) -------------------------------------------------------------------------------- Tax on ordinary activities -   -   - -------------------------------------------------------------------------------- Return/(loss) attributable to equity shareholders (6)   (593)   (599) -------------------------------------------------------------------------------- D share pool Six months ended 31 August 2010   Revenue   Capital   Total   £'000   £'000   £'000 Income 20   -   20 -------------------------------------------------------------------------------- Gains/(losses) on investments -   -   - --------------------------------------------------------------------------------   20   -   20 -------------------------------------------------------------------------------- Investment management fee (12)   (36)   (48) -------------------------------------------------------------------------------- Performance incentive fees -   -   - -------------------------------------------------------------------------------- Recoverable VAT -   -   - -------------------------------------------------------------------------------- Other expenses (31)   -   (31) -------------------------------------------------------------------------------- Return/(loss) on ordinary activities before taxation (23)   (36)   (59) -------------------------------------------------------------------------------- Tax on ordinary activities -   -   - -------------------------------------------------------------------------------- Return/(loss) attributable to equity shareholders (23)   (36)   (59) --------------------------------------------------------------------------------   Six months ended   Year ended 28 Feb 2010 31 August 2009 C share pool Revenue   Capital   Total   Total   £'000   £'000   £'000   £'000   56   -   56   75 -------------------------------------------------------------------------------- Income -   (26)   (26)   617 -------------------------------------------------------------------------------- Gains/(losses) on investments 56   (26)   30   692 --------------------------------------------------------------------------------   (23)   (68)   (91)   (220) -------------------------------------------------------------------------------- Investment management fee -   -   -   - -------------------------------------------------------------------------------- Performance incentive fees -   -   -   - -------------------------------------------------------------------------------- Recoverable VAT (288)   -   (288)   (355) -------------------------------------------------------------------------------- Other expenses   (255)   (94)   (349)   117 -------------------------------------------------------------------------------- Return/(loss) on ordinary activities -   -   -   - before taxation -------------------------------------------------------------------------------- Tax on ordinary activities ----------------------------------------   (255)   (94)   (349)   117 -------------------------------------------------------------------------------- Return/(loss) attributable to equity shareholders --------------------------------------------------------------------------------   Six months ended   Year ended 28 Feb 2010 31 August 2009 D share pool Revenue   Capital   Total   Total   £'000   £'000   £'000   £'000   10   -   10   21 -------------------------------------------------------------------------------- Income -   -   -   - -------------------------------------------------------------------------------- Gains/(losses) on investments 10   -   10   21 --------------------------------------------------------------------------------   (7)   (23)   (30)   (92) -------------------------------------------------------------------------------- Investment management fee -   -   -   - -------------------------------------------------------------------------------- Performance incentive fees -   -   -   - -------------------------------------------------------------------------------- Recoverable VAT (36)   -   (36)   (54) -------------------------------------------------------------------------------- Other expenses   (33)   (23)   (56)   (125) -------------------------------------------------------------------------------- Return/(loss) on ordinary activities -   -   -   - before taxation -------------------------------------------------------------------------------- Tax on ordinary activities   (33)   (23)   (56)   (125) -------------------------------------------------------------------------------- Return/(loss) attributable to equity shareholders -------------------------------------------------------------------------------- Reconciliation of Movements in Shareholders' Funds for the six months ended 31 August 2010       31 Aug   28 Feb 31 Aug 2010 2009 2010   Ordinary shares C shares D shares Total Total Total   £'000   £'000   £'000   £'000   £'000   £'000 Opening 12,929   10,996   5,097   29,022   24,877   24,877 Shareholders' funds -------------------------------------------------------------------------------- Proceeds from 1,198   -   2,749   3,947   5,154   5,526 share issues -------------------------------------------------------------------------------- Share issue (66)   -   (151)   (217)   (146)   (304) costs -------------------------------------------------------------------------------- Purchase of own (165)   (27)   (51)   (243)   (38)   (208) shares -------------------------------------------------------------------------------- Total recognised gain/(loss) for 295 (599) (59) (363) (1,267) (483) the year -------------------------------------------------------------------------------- Distributions (2,055)   -   -   (2,055)   (387)   (386) -------------------------------------------------------------------------------- Closing 12,136   10,370   7,585   30,091   28,193   29,022 Shareholders' funds -------------------------------------------------------------------------------- Unaudited Cash Flow Statement for the six months ended 31 August 2010         Six months      Six months ended ended 31 August 31 August Year  ended 2010 2009 28 Feb 2010    Note £'000      £'000      £'000 Net cash (outflow)/ inflow A from operating activities (623) 433   (700) -------------------------------------------------------------------------------- Capital expenditure -------------------------------------------------------------------------------- Purchase of investments      (1,434)      -   (3,002) -------------------------------------------------------------------------------- Disposal of investments      771      383   568 -------------------------------------------------------------------------------- Net cash (outflow)/ inflow      (663)      383   (2,434) from capital expenditure -------------------------------------------------------------------------------- Equity distributions paid      (2,055)      (386)   (386) -------------------------------------------------------------------------------- Management of liquid resources ---------------------------------------------- ------------------------------ Purchase of current   -      -   (3,550) investments held as liquidity funds ---------------------------------------------- -------------- ------------ Withdrawal from liquidity      -      -   3550 funds --------------------------- ------------------------------------------------- Net cash inflow/(outflow)      -      -   - from liquid resources --------------------------- ------------------------------------------------- Net cash (outflow)/ inflow      (3,341)      430   (3,520) before financing Financing -------------------------------------------------------------------------------- Proceeds from share issue      1,929      7,741   5,526 -------------------------------------------------------------------------------- Share issue costs      (183)      (292)   (304) -------------------------------------------------------------------------------- Purchase of own shares      (243)      (38)   (208) -------------------------------------------------------------------------------- Net cash inflow from      1,503      7,411   5,014 financing -------------------------------------------------------------------------------- (Decrease)/ increase in B (1,838) 7,841 1,494 cash -------------------------------------------------------------------------------- Notes to the cash flow statement: A Net cash flow from operating activities --------------------------------------------------------------------------------  (Loss)/ return on    (363)      (1,267)   (483) Ordinary activities before taxation --------------------------------------------------------------------------------  (Gain)/ loss on      (121)   625   (591) investment --------------------------------------------------------------------------------  (Increase)/decrease in    (105)      799   882 debtors --------------------------------------------------------------------------------  (Decrease)/ increase in    (34)      276   (508) creditors -------------------------------------------------  Net cash (outflow)/      (623)   433   (700) inflow from operating activities ------------------------------------------------- B Analysis of net funds --------------------------------------------------------------------------------  Beginning of period      4,324      2,830   2,830 --------------------------------------------------------------------------------  Net cash (outflow)/      (1,838)      7,841   1,494 inflow --------------------------------------------------------------------------------  End of period      2,486      10,671   4,324 -------------------------------------------------------------------------------- Summary of Investment Portfolio as at 31 August 2010 Valuation movement   % of portfolio Ordinary share pool Cost Valuation in the period by value   £'000   £'000   £'000 Top ten venture capital investments Espresso Group Limited 1,257   3,342   283   27.6% -------------------------------------------------------------------------------- SPC International Limited 1,618   1,448   744   12.0% -------------------------------------------------------------------------------- Eagle Rock Entertainment   9.2% Group Limited 1,010   1,114   (620) -------------------------------------------------------------------------------- Saffron Media Group 480   553   (84)   4.6% Limited -------------------------------------------------------------------------------- Donatantonio Limited 582   551   172   4.6% -------------------------------------------------------------------------------- Overtis Group Limited 359   498   152   4.1% -------------------------------------------------------------------------------- Ashford Colour Press 625   492   -   4.1% Limited -------------------------------------------------------------------------------- Tossed Limited 468   468   -   3.9% -------------------------------------------------------------------------------- Think Limited 470   470   -   3.9% -------------------------------------------------------------------------------- Campden Media Limited 975   463   -   3.8% --------------------------------------------------------------------------------   7,844   9,399   647   77.8% -------------------------------------------------------------------------------- Other venture capital 2,922   988   15   7.9% investments --------------------------------------------------------------------------------   10,766   10,387   662   85.7% -------------------------------------------------------------------------------- Liquidity fund     890       7.4% investments -------------------------------------------------------------------------------- Cash at bank and in hand     823       6.9% -------------------------------------------------------------------------------- Ordinary share pool total     12,100       100% -------------------------------------------------------------------------------- Summary of Investment Portfolio as at 31 August 2010 Valuation movement in   % of portfolio C share pool Cost Valuation the period by value   £'000   £'000   £'000 Top ten venture capital investments Fjordnet Limited 800   1,168   15   11.2% -------------------------------------------------------------------------------- Lazurite Limited 1,000   984   (16)   9.4% -------------------------------------------------------------------------------- Charterhouse Leisure   8.3% Limited 700   865   - -------------------------------------------------------------------------------- Donatantonio Limited 885   838   261   8.1% -------------------------------------------------------------------------------- SPC International Limited 403   488   91   4.7% -------------------------------------------------------------------------------- Think Limited 470   470   -   4.5% -------------------------------------------------------------------------------- Chess Technologies 600   453   (206)   4.4% Limited -------------------------------------------------------------------------------- Overtis Group Limited 286   399   122   3.8% -------------------------------------------------------------------------------- Tossed Limited 345   345   -   3.3% -------------------------------------------------------------------------------- Eagle Rock Entertainment 215   231   (135)   2.2% Group Limited --------------------------------------------------------------------------------   5,704   6,241   132   59.9% -------------------------------------------------------------------------------- Other venture capital 2,835   630   (673)   6.1% investments --------------------------------------------------------------------------------   8,539   6,871   (541)   66.0% -------------------------------------------------------------------------------- Liquidity fund     2,810       27.0% investments -------------------------------------------------------------------------------- Cash at bank and in hand     728       7.0% -------------------------------------------------------------------------------- C share pool total     10,409       100.0% -------------------------------------------------------------------------------- All venture capital investments are unquoted unless otherwise stated Summary of Investment Portfolio as at 31 August 2010 Valuation movement in   % of portfolio D share pool Cost Valuation the period by value   £'000   £'000   £'000 Venture capital investments Tossed Limited 183   183   -   2.4% --------------------------------------------------------------------------------   183   183   -   2.4% -------------------------------------------------------------------------------- Liquidity fund     6,500       85.3% investments -------------------------------------------------------------------------------- Cash at bank and in hand     935       12.3% -------------------------------------------------------------------------------- D share pool total     7,618       100% -------------------------------------------------------------------------------- All venture capital investments are unquoted unless otherwise stated. Summary of Investment Movements for the six months ended 31 August 2010 Additions Cost   £'000 Ordinary share pool Overtis Group Limited 143 ------------------------------- Tossed Limited 468 -------------------------------   611 ------------------------------- C share pool Overtis Group Limited 114 ------------------------------- Tossed Limited 345 ------------------------------- Steak Media Limited 181 -------------------------------   640 ------------------------------- D share pool Tossed Limited 183 -------------------------------   183 ------------------------------- Disposals     Market     value at     Realised 1 March Disposal Gain/(loss) gain/(loss) in   Cost  2010* Proceeds against cost period   £'000 £'000  £'000  £'000  £'000 Ordinary share pool Overtis Group 429 Limited 429 429 - - -------------------------------------------------------------------------------- C share pool The Vending - Corporation Limited 1,012 - (1,012) - -------------------------------------------------------------------------------- Overtis Group 342 Limited 342 342 - - --------------------------------------------------------------------------------   1,354 342 342 (1,012) - -------------------------------------------------------------------------------- No disposals were made by the D share pool in the period. * Adjusted for investments made since 1 March 2010 Notes to the unaudited Financial Statements 1. The unaudited half yearly results cover the six months to 31 August 2010 and have been prepared in accordance with UK Generally Accepted Accounting Practice ("UK GAAP"). Where presentational guidance set out in the Statement of Recommended Practice "Financial Statements of Investment Trust Companies" revised January 2009 ("SORP") is consistent with the requirements of UK GAAP, the directors have sought to prepare the financial statements on a consistent basis compliant with the recommendations of the SORP. 2. All revenue and capital items in the Income Statement derive from continuing operations. 3. There are no recognised gains or losses other than those disclosed in the Income Statement. 4. The Company has only one class of business and derives its income from investments made in shares, securities and bank deposits. 5. The comparative figures were in respect of the period ended 31 August 2009 and the year ended 28 February 2010.  6. Return per share for the period has been calculated on the following:     Ordinary shares   C shares   D shares Revenue return per share based on: -------------------------------------------------------------------------------- Net revenue profit after taxation (£'000) 62 (6)   (23) -------------------------------------------------------------------------------- Weighted average number of shares in issue 25,229,647 14,562,187   7,673,900 -------------------------------------------------------------------------------- Capital return per share based on: -------------------------------------------------------------------------------- Net revenue profit after taxation (£'000) 233 (593)   (36) -------------------------------------- ----------------------------------------- Weighted average number of shares in issue 25,229,647 14,562,187   7,673,900 -------------------------------------- -----------------------------------------  7. NAV per share for the period has been calculated on the following:     Ordinary shares   C shares   D shares Net Assets (£'000)   12,136   10,370   7,585 -------------------------------------------------------------------------------- Number of shares in issue at period end 25,376,474 14,531,317   8,218,712 --------------------------------------------------------------------------------  8. Dividends   6 months to 31 Aug 2010   6 months to 31 Aug   28 Feb 2010 2009 Pence Revenue Capital Total   Revenue Capital Total   Total   £'000 £'000 £'000   £'000 £'000 £'000   £'000 Ordinary share dividends paid in period -------------------------------------------------------------------------------- 2010 Final 8.0 - 2,055 2,055   - - -   - -------------------------------------------------------------------------------- 2009 Final 1.0 - - -   - 240 240   240 --------------------------------------------------------------------------------     - 2,055 2,055   - 240 240   240 -------------------------------------------------------------------------------- C share dividends paid in period -------------------------------------------------------------------------------- 2009 Final 1.0 - - -   146 - 146   146 --------------------------------------------------------------------------------     - - -   146 - 146   146 -------------------------------------------------------------------------------- 9. Reserves   Capital redemption Share   Capital Unrealised reserve premium Special reserve - holding Revenue account reserve realised losses reserve   £'000 £'000 £'000 £'000 £'000 £'000 At 1 March 2010 197 5,167 18,637 3,484 (3,180) (160) -------------------------------------------------------------------------------- Expenses 1 - - (517) - - capitalised -------------------------------------------------------------------------------- Tax relief on - - - - - (51) expenses capitalised -------------------------------------------------------------------------------- Share issue - 3,596 - - - - -------------------------------------------------------------------------------- Purchase of own 27 - (192) - - - shares -------------------------------------------------------------------------------- Gains/(losses) on - - - - 120 - investments -------------------------------------------------------------------------------- Retained revenue - - - - - 33 -------------------------------------------------------------------------------- Distributions paid - - - (2,055) - - -------------------------------------------------------------------------------- Transfer between - - (1,492) 721 1,012 (241) reserves -------------------------------------------------------------------------------- At 31 August 2010 225 8,763 16,953 1,633 (2,048) (419) -------------------------------------------------------------------------------- 10. Contingent liabilities, guarantees and financial commitments The Company has guaranteed bank borrowings of one of its investments, Donatantonio Limited, amounting to £225,000. A third party has provided a guarantee to the Company amounting to £112,500 in respect of the above guarantee such that the Company's net exposure is £112,500. Apart from the above, the Company has no contingent liabilities, guarantees and financial commitments. 11. The unaudited financial statements set out herein do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 and have not been delivered to the Registrar of Companies.  The figures for the year ended 28 February 2010 have been extracted from the financial statements for that year, which have been delivered to the Registrar of Companies; the auditors' report on those financial statements was unqualified. 12. The Directors confirm that, to the best of their knowledge, the half-yearly financial statements have been prepared in accordance with the "Statement: Half- Yearly Financial Reports" issued by the UK Accounting Standards Board and the half-yearly financial report includes a fair review of the information required by: a. 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 b. 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. 13. 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.provenvcts.com and www.downing.co.uk. [HUG#1457315] This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Proven VCT plc via Thomson Reuters ONE

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