Proven VCT plc : Final Results

PROVEN VCT PLC
FINAL RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2013

FINANCIAL SUMMARY

	New Ordinary Shares	Ordinary Shares*
As at 28 February	2013	2012
	pence	pence
Net asset value per share	103.3	98.8
Dividends paid since share consolidation	-	-
Total return (net asset value plus dividends paid since launch of New Ordinary Shares)	103.3	98.8
Year on year change in:
Net asset value per share	4.6%

*        rebased in respect of the share consolidation that took place on 30 October 2012

The table above reflects the Company's position after the share conversions and consolidations that took place on 30 October 2012.

CHAIRMAN'S STATEMENT

I am pleased to present the Annual Report for ProVen VCT plc for the year ended 28 February 2013. The Company underwent a reorganisation during the year such that it now has one share class, which significantly simplifies reporting to Shareholders. It is also pleasing to be able to report positive news from the Company's investment portfolio.

Net asset value
At 28 February 2013, the Company's Ordinary Share net asset value ("NAV") stood at 103.3p per share. This represents an increase of 4.5p or 4.6% since 29 February 2012, against the rebased Ordinary Share value at the previous year end. The effective movement for a Shareholder who started the year holding 'C' Shares was an increase of 8.9% and for 'D' Shares was an increase of 4.3%.

Total return (NAV plus cumulative dividends paid) for Shareholders who invested in the Company's original Ordinary Share offer in 2000 now stands at 165.6p for an investment of £1. This is before taking account of any initial income tax relief and the tax free nature of dividend returns.

Portfolio activity and valuation
Following the successful fundraising discussed below, the Company has an adequate level of funds available for investment and has seen a good level of investment activity during the year. A total of £4.7 million was invested in three new companies and seven existing companies. There were also several disposals and redemptions of loan stock which generated proceeds of £1.3 million.

The Board reviewed the valuations of the unquoted investments at the year end and made a number of adjustments to the previous carrying values. Net unrealised gains for the year were £2.1 million.

The most significant news from the portfolio has come since the year end during which time there have been two profitable disposals. Fjordnet was the subject of an acquisition by international consultancy, Accenture, giving rise to a realised gain of £3.1 million upon completion and a possible further consideration of up to £0.4 million within the next twelve months. The valuation of the Company's investment in Fjordnet at the year end reflected the value subsequently realised on disposal. The investment in Tossed was sold for a realised gain of £0.3 million and this was also reflected in the Company's net asset value at the year end.

Further details of investment activity and investments held are provided in the Investment Manager's Review and the Review of Investments.

Results and dividends
The total return on ordinary activities for the year was £2.7 million, comprising a £948,000 revenue return and a £1,799,000 capital return.

In line with the dividend policy that I set out in my report last year, an interim dividend of 5p per share will be paid in respect of the year ended 28 February 2013. Based on the NAV of the Ordinary Shares at 29 February 2012, this equates to a yield of 5.1%. The dividend will be paid as an interim dividend on 2 August 2013 to Shareholders on the register at 5 July 2013.

'C' Share tender offer
In accordance with the plans set out in the original 'C' Share prospectus, a tender offer was undertaken in August 2012 under which 1,198,996 'C' Shares (representing approximately 8.6% of 'C' Shares in issue at the time) were purchased at a price of 87.4p per share.

Share conversions and consolidation
On 30 October 2012, the Company's existing 'C' Shares and 'D' Shares were converted into New Ordinary Shares. At the same time, the Original Ordinary Shares underwent a one-for-two consolidation to create New Ordinary Shares. A summary of the conversion rates is as follows:

Each Original Ordinary Share consolidated into 0.5 New Ordinary Shares
Each 'C' Share converted into 0.9213 New Ordinary Shares
Each 'D' Share converted into 0.8720 New Ordinary Shares

All Shareholders were issued with new share certificates for New Ordinary Shares following the transactions in October 2012. Shareholders should note that any share certificates issued prior to 30 October 2012 are no longer valid and should be destroyed.

Fundraising activities
The Company's offer for subscription which launched on 8 December 2011, closed on 30 August 2012. This raised gross proceeds of £12.5 million. In November 2012, the Company launched a further 10% top-up non-prospectus offer for subscription. This closed in April 2013, having raised approximately £3.6 million.

Enhanced buyback facility
The Company also offered an enhanced buyback facility during the year. This facility allowed Shareholders, who had held their shares for the required VCT holding period, to sell them back to the Company and reinvest the proceeds in new VCT shares, which were eligible for income tax relief. The Board was pleased with the take up of 4.8 million shares.

Share buybacks
Share buybacks (excluding the Enhanced Buyback transactions) which took place during the year are summarised below:

	Number	Aggregate nominal value	Average consideration	Aggregate consideration	% of issued share capital
		£'000	pence per share	£'000
New Ordinary Shares	381,257	38	91.5p	349	0.85%
Original Ordinary Shares	136,350	7	44.1p	60	0.5%
'C' Shares	1,757,860	439	84.7p	1,489	12.2%
'D' Shares	21,893	-	82.9p	18	0.3%

All the above shares were subsequently cancelled.

On behalf of the Company, the Board intends to continue to make purchases of its shares when they become available in the market and has a current policy of purchasing New Ordinary Shares at a price equivalent to a 10% discount to the latest published NAV.

A special resolution to allow the Board to continue to purchase shares for cancellation will be proposed at the forthcoming Annual General Meeting ("AGM").

The Company is pleased to announce that it has recently appointed Panmure Gordon to act as its corporate broker. The Board believes that this should bring a significant benefit in reducing the spread on the Company's shares and producing more consistent pricing for Shareholders who wish to sell all or part of their holding or investors who wish to purchase shares in the market. Shareholders who are considering selling their shares may wish to contact Panmure Gordon prior to any sales, who will be able to provide details of the price at which the Company is buying shares.

Investment policy amendment and performance incentive fee amendment
In recent years, returns on cash and cash equivalents held by the Company have been very low. The Board believes that the performance of the Company could be improved if the scope of the investment policy in respect of non-qualifying investments was broadened to include investments in debt and debt-related securities in growth companies. These investments offer the prospect of higher interest rates than can be obtained on cash or near-cash investments in exchange for accepting slightly higher risk.

It has also come to the Board's attention that, in certain circumstances, the performance incentive fee arrangements might not operate precisely as the Board has intended. Two minor amendments are therefore being proposed to correct this matter. Shareholders should note that these amendments do not have any significant impact on the fundamental basis of the performance fee arrangements.

The Company has today issued a circular setting out full details of both of the above proposals. A general meeting is scheduled to follow shortly after the AGM to seek Shareholder approval.

Annual General Meeting and General Meeting
The next Annual General Meeting ("AGM") of the Company will be held in The Forest Room at The Hospital Club, 24 Endell Street, Covent Garden, London WC2H 9HQ at 11:00 a.m. on 30 July 2013.

Three items of special business will be proposed at the AGM as follows:

*        two resolutions in connection with the authority for the Directors to allot shares; and
*        one resolution in respect of share buybacks.

In order to give the Board flexibility in considering fundraising options over the next year without necessarily having to incur the costs of preparing an additional shareholder circular, the Board is seeking authority to issue and allot up to 25 million new shares.

At 11:30 a.m. on 30 July, following the AGM, the Company will hold a general meeting seeking approval for proposals in respect of the amendment to the investment policy and the performance incentive fee.

Shareholder event
I would also like to take this opportunity to draw your attention to the Investment Manager's annual Shareholder Event which, this year, will be held at the British Museum in central London on 22 October 2013, starting at 10.30 am. The event has been running in its current form for several years and has been well received by Shareholders. It provides attendees with an opportunity to meet Directors and members of the investment management team. There will also be presentations from a number of portfolio companies. I would strongly encourage you to attend. A formal invite is being sent separately.

Outlook
The Board is pleased with the progress made by the Company over the last year and, with a significant level of new funds available for investment, we expect to see the Company continuing to be an active investor over the coming year, albeit in a volatile and competitive environment. Activity has picked up since the year end with the profitable disposals of Tossed and Fjordnet and further investments made in Monica Vinader and Utility Exchange Online. The Board has encouraged the strategy of investing in more businesses in the media and digital services sectors and remains confident in the Manager's ability to find good companies, then to nurture these investments and eventually exit at a profit. I look forward to updating Shareholders on developments in my statement with the Half Yearly Report to 31 August 2013.

Andrew Davison
Chairman

INVESTMENT MANAGER'S REVIEW

Introduction
Beringea is a specialist venture capital management company which manages over £300 million in the UK and USA on behalf of a number of clients. In the UK, Beringea has a dedicated investment team managing over £100 million across four VCTs.

ProVen VCT has been managed by Beringea since its inception in 2000 and in that time has invested over £50 million in over 50 small and medium sized companies. At 28 February 2013, the Company had investments in 29 companies, at an average investment cost of approximately £820,000.

Review of the year
The Company invested £4.7 million during the year (2012: £3.6 million) including three investments in companies new to the portfolio and further funding for seven existing portfolio companies. The Company realised its investments in two companies during the year and there were partial loan repayments from a further four companies. At 28 February 2013, the Company held investments in 27 unquoted companies and 2 quoted companies at a cost of £23.7 million and a valuation of £31.1 million. In addition, the Company held cash of £16.8 million, most of which arose from the recent fundraisings. As a result of the merger of the share classes in October 2012, all shareholders now have an interest in all portfolio investments.

Following the year end, the Company sold its investments in Fjordnet and Tossed generating good returns. Further information is provided below.

Portfolio activity and valuation
There were three new additions to the portfolio: Inskin Media, Cognolink and Skills Matter.

Inskin Media is a UK based company that has developed a range of technologies for the rapidly growing area of online video advertising. The company has established itself as a significant player in the UK market by its ability to provide innovative technology formats which have been proven to drive higher yields for online media owners and strong returns for advertising campaigns.

Cognolink offers a broad range of "expert network" services to private equity firms, hedge funds, asset managers and large consulting businesses. These services assist these clients in their primary research by facilitating consultations with industry experts via one-to-one phone calls, in-person meetings and interactive conference calls.

Skills Matter supports a community of 35,000 software professionals with the learning and sharing of skills, via public/private training courses and conferences. The new funding will be used to provide even more opportunities for its community to collaborate with the world's top technology experts. In addition, the company will, in future, be able to offer work and collaboration space.

Further funding was provided to Fjordnet (partially offset by a loan repayment), Utility Exchange Online, APM Healthcare, Matssoft, Senselogix and Campden Media.

The disposal of Ashford Colour Press and administration/restructuring of Overtis Group (which resulted in the "new" investment in Vigiliant Applications) were concluded prior to the publication of last year's accounts and therefore included in our report of last year. Since that report, Isango! was sold to tour operator TUI Travel and there were a number of loan repayments from several portfolio companies.

At 28 February 2013, the venture capital portfolio showed a net unrealised gain across all investments of £2.1million.

There was encouraging performance from a number of companies in the portfolio and this was complemented by broader positive movements in comparable company multiples. Fjordnet and Tossed saw increases in their valuations which were crystallised on realisation after the year end. There were uplifts in the valuations of Campden Media and Matssoft. Think and Espresso saw decreases in valuation but the longer term prospects for these companies remain positive.

Post year end developments
In May 2013, the Company's investment in Fjordnet was the subject of an acquisition by Accenture Holdings B.V., a subsidiary company of Accenture (NYSE:CAN), giving rise to a realised gain of £3.1 million upon completion and a possible further consideration of up to £0.4 million within the next twelve months. This continues a list of notable successes in the digital media sector alongside Mergermarket, ILG Digital, Steak Media and Saffron Media.

Healthy eating chain, Tossed, was sold to management in April 2013, generating a return of 36% on the initial investment in three years. A restructuring of Campden Media was also concluded in May 2013 and saw the wealth management arm of the business demerged and purchased by management with backing from an external investor. The VCT now holds an increased equity interest in Campden's health focused business.

Monica Vinader, the luxury jewellery retailer, continues to progress and a further £1.1 million was invested by the Company in May 2013, and in June 2013, an additional £210,000 was invested in Utility Exchange Online; both investments are to fund continued developments. The Company also received proceeds from the partial disposal of Cross Solar PV in May 2013.

Outlook
We continue to be pleased with the overall performance of the venture capital portfolio and the recent profitable exits from Fjordnet and Tossed provide tangible evidence of this for Shareholders. We are optimistic that both further profitable exits and exciting new investments lie ahead although, as befits a venture capital portfolio, the timing of these is uncertain and subject to wider economic conditions.

Beringea LLP

INVESTMENT PORTFOLIO

Investment activity during the year is summarised as follows:

Additions	Cost
	£'000
Cognolink Limited	949
Fjordnet Limited	639
Speed-Trap Holdings Limited	609
Skills Matter Limited	476
Utility Exchange Online Limited	461
Vigilant Applications Limited* ~~	400
Inskin Media Limited	365
APM Healthcare Limited	238
Matssoft Limited**	235
Senselogix Limited	169
Campden Media Limited**	167
Total	4,708

Disposals	Cost	Market value at 01/03/12~	Disposal proceeds	(Loss)/gain against cost	Total realised gain during the year
	£'000	£000	£'000	£'000	£'000
Overtis Group Limited ~~	1,155	-	-	(1,155)	-
Isango! Limited	600	-	21	(579)	21
Ashford Colour Press Limited	500	382	526	26	144
Fjordnet Limited	240	240	240	-	-
Campden Media Limited**	167	167	167	-	-
Cross Solar PV Limited**	75	75	75	-	-
Sports Holdings Limited*	33	33	33	-	-
Saffron Media Limited	-	-	196	196	196
Steak Media Limited	-	-	12	12	12
Total	2,770	897	1,270	(1,500)	373

*        Non qualifying investment
**        Partially non qualifying investment
~        Adjusted for purchases during the year
~~        Administration/ restructuring of Overtis Group into Vigilant Applications

Of the investments above, Steak Media Limited and Saffron Media Limited were realised in prior periods but received proceeds in the current period in excess of the amounts previously accrued.

INVESTMENT PORTFOLIO

The following investments were held at 28 February 2013:

	Cost	Valuation	Valuation movement in year	% of portfolio by value
	£'000	£'000	£'000
Top ten venture capital investments (by value)
Fjordnet Limited **	1,675	4,939	3,264	10.3%
Think Limited**	1,606	3,397	(992)	7.1%
Espresso Group Limited**	1,317	3,239	(328)	6.8%
Donatantonio Limited**	1,467	2,463	(48)	5.1%
SPC International Limited**	2,021	2,409	185	5.0%
Campden Media Limited	1,516	1,902	348	4.0%
Tossed Limited**	1,226	1,545	226	3.2%
Matssoft Limited**	1,010	1,199	189	2.5%
Blis Media Limited**	482	1,119	51	2.3%
Eagle Rock Entertainment Group Limited**	1,225	1,049	(349)	2.2%
	13,545	23,261	2,546	48.5%
Other venture capital investments	10,195	7,842	(411)	16.4%
Total venture capital investments	23,740	31,103	2,135	64.9%
Cash at bank and in hand		16,777		35.1%
Total investments		47,880		100.0%

Other venture capital investments at 28 February 2013 comprise: Cognolink Limited, Cross Solar PV Limited, Charterhouse Leisure Limited, Monica Vinader Limited, Utility Exchange Online Limited, Chess Technologies Limited, Skills Matter Limited, Speed-Trap Holdings Limited, APM Healthcare Limited, Inskin Media Limited, Cinergy International Limited, Pilat Media Global plc**, Senselogix Limited, UBC Media Group plc**, Dianomi Limited, Sports Holdings Limited*, Long Eaton Healthcare Limited, Baby Innovations S.A. t/a Steribottle*, and Vigilant Applications Limited*.

*   Non qualifying investment  
**   Partially non qualifying investment

With the exclusion of Pilat Media Global plc and UBC Media Group plc, which are quoted on AIM, all venture capital investments are unquoted.

All of the above investments, with the exclusion of Think Limited, were also held by ProVen Growth & Income VCT plc of which Beringea LLP is the investment manager.

Long Eaton Healthcare Limited, Campden Media Limited, Fjordnet Limited and Cross Solar Limited were also held by ProVen Planned Exit VCT plc during the year of which Beringea LLP is the investment manager.

Long Eaton Healthcare Limited, APM Healthcare Limited, Skills Matter Limited, Cognolink Limited, Inskin Media Limited and Utility Exchange Online Limited were also held by ProVen Health VCT plc during the year of which Beringea LLP is the investment manager.

All venture capital investments are registered in England and Wales, with the exception of Baby Innovations S.A., which is registered in Madeira.

Directors' responsibilities statement
The Directors are responsible for preparing the Directors' Report and Business Review, the Directors' Remuneration Report and the financial statements in accordance with applicable law and regulations. They are also responsible for ensuring that the annual report includes information required by the Listing Rules of the Financial Conduct Authority.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these financial statements, the Directors are required to:

*        select suitable accounting policies and then apply them consistently;
*        make judgments and accounting estimates that are reasonable and prudent;
*        state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
*        prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions, to disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for ensuring that the annual report and the financial statements are made available on a website. Financial statements are published on the Investment Manager and Administration Manager's websites in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

INCOME STATEMENT

	Year ended 28 February 2013				Year ended 29 February 2012
	Revenue	Capital	Total		Revenue	Capital	Total
	£'000	£'000	£'000		£'000	£'000	£'000
Income	1,554	-	1,554		844	-	844
Gains on investments	-	2,508	2,508		-	2,245	2,245
	1,554	2,508	4,062		844	2,245	3,089
Investment management fees	(230)	(690)	(920)		(177)	(527)	(704)
Performance incentive fees	-	-	-		-	(582)	(582)
Other expenses	(376)	(19)	(395)		(288)	-	(288)
Return on ordinary activities before tax	948	1,799	2,747		379	1,136	1,515
Tax on ordinary activities	-	-	-		-	-	-
Return attributable to equity shareholders	948	1,799	2,747		379	1,136	1,515
Basic and diluted return per share:
Ordinary Share	2.1p	4.1p	6.2p		1.1p*	3.3p*	4.4p*

All revenue and capital movements in the year relate to continuing operations. No operations were acquired or discontinued during the year. The total column within the Income Statement represents the profit and loss account of the Company. The supplementary revenue and capital columns are presented for information purposes in accordance with the Statement of Recommended Practice issued by The Association of Investment Companies.

A Statement of Total Recognised Gains and Losses has not been prepared as all gains and losses are recognised in the Income Statement in the current and prior year as shown.

Other than revaluation movements arising on investments held at fair value through the Profit and Loss, there were no differences between the return as stated above and at historical cost.

*        rebased in respect of the share consolidation and conversions that took place on 30 October 2012

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

	Year ended 28 February 2013		Year ended 29 February 2012
	Total		Total
	£'000		£'000
Opening Shareholders' funds	36,434		33,966
Issue of shares	13,924		1,860
Share issue costs	(766)		(101)
Purchase of own shares	(1,923)		(572)
Movement in share capital to be issued	(2,609)		3,206
Total recognised gains for the year	2,747		1,515
Dividends paid	-		(3,440)
Closing Shareholders' funds	47,807		36,434

BALANCE SHEET

	28 February 2013		29 February 2012
	Total		Total
	£'000		£'000
Fixed assets
Investments	31,103		25,556
Current assets
Debtors	283		242
Current investments	-		6,200
Cash at bank and in hand	16,777		5,942
	17,060		12,384
Creditors: amounts falling due within one year	(356)		(1,506)
Net current assets	16,704		10,878
Total assets less current liabilities/Net assets	47,807		36,434
Capital and reserves
Called up share capital	4,572		5,053
Capital redemption reserve	2,795		313
Share premium	21,570		10,413
Unallotted share capital	597		3,206
Special reserve	8,127		11,763
Capital reserve - realised	1,303		2,442
Revaluation reserve	8,405		3,756
Revenue reserve	438		(512)
Total equity shareholders' funds	47,807		36,434
Basic and diluted net asset value per share	103.3p		98.8p*

*        rebased in respect of the share consolidation and conversions that took place on 30 October 2012

CASH FLOW STATEMENT

	Year ended 28 February 2013		Year ended 29 February 2012
	Total		Total
	£'000		£'000
Net cash outflow from operating activities	(43)		(914)
Capital expenditure
Purchase of investments	(4,309)		(3,613)
Sale of investments	1,270		1,792
Net cash outflow from capital expenditure	(3,039)		(1,821)
Equity dividends paid	-		(3,440)
Management of liquid resources
Purchase of current investments held as liquidity funds	-		(400)
Withdrawal from liquidity funds	6,200		3,400
Net cash inflow from liquid resources	6,200		3,000
Net cash inflow/(outflow) before financing	3,118		(3,175)
Financing
Proceeds from share issues	10,718		1,861
Share issue costs	(766)		(101)
Purchase of own shares	(1,923)		(572)
Unallotted share capital	597		3,206
Proceeds received on behalf of a co-investor	(909)		909
Net cash inflow from financing	7,717		5,303
Increase in cash	10,835		2,128

NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 28 FEBRUARY 2013

1.        Accounting policies
Basis of accounting
The Company has prepared its financial statements under UK Generally Accepted Accounting Practice ("UK GAAP") and in accordance with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" revised January 2009 ("SORP").  

The financial statements are prepared under the historical cost convention except for the revaluation of certain financial instruments measured at fair value.

The Company implements new Financial Reporting Standards ("FRS") issued by the Financial Reporting Council when required.

Going concern

The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.

Presentation of Income Statement

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

Fixed assets investments
Venture capital investments are designated as "fair value through profit or loss" assets due to investments being managed and performance evaluated on a fair value basis.  A financial asset is designated within this category if it is both acquired and managed on a fair value basis, 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 the International Private Equity and Venture Capital Valuation Guidelines ("IPEV Guidelines") together with FRS26 - Financial Instruments: Recognition and Measurements.

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

The valuation methodologies used by the Directors for assessing the fair value of unquoted investments are as follows:

*        Price of recent investment;
*        Multiples;
*        Net assets;
*        Discounted cash flows or earnings (of underlying business);
*        Discounted cash flows (from the investment); and
*        Industry valuation benchmarks.

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.

Fixed asset investments are derecognised when the contractual rights to the cash flows from the asset expire or it transfers the asset and substantially all the risks and rewards of ownership of the asset to another entity.
Where an investee company has gone into receivership or liquidation, or the loss in value below costs 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.

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

In accordance with exemptions under FRS 9, those undertakings in which the company holds more than 20% of the equity as part of an investment portfolio are not accounted for using the equity method.

Current asset investments
Current asset investments, which comprise investments in liquidity funds with AAA rating, are held at fair value through profit and loss and are marked-to-market. These assets are purchased and redeemed under a contract and the assets are recognised and derecognised on the trade date. These assets are initially measured at cost and subsequently valued at fair value, being the closing price of the fund as issued by the provider.

Income
Dividend income from investments is recognised when the shareholders' rights to receive payment has been established, normally the ex-dividend date, or, where no ex-dividend date is established, when the Company's right to receive payment is established.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable and only where there is reasonable certainty of collection in the foreseeable future. Income which is not capable of being received within a reasonable period of time is reflected in the capital value of the investments.

Expenses
All expenses are accounted for on an accruals basis. In respect of the analysis between revenue and capital items presented within the Income Statement, all expenses have been presented as revenue items except as follows:

*        expenses which are incidental to the acquisition of an investment are deducted from the Capital Account;
*        expenses which are incidental to the disposal of an investment are deducted from the disposal proceeds of the investment; and
*        expenses are split and presented partly as capital items where a connection with the maintenance or enhancement of the value of the investments held can be demonstrated and accordingly the investment management fee has been allocated 25% to revenue and 75% to capital, and the performance incentive fee is allocated 100% to capital, in order to reflect the Directors' expected long-term view of the nature of the investment returns of the Company.

Taxation
The tax effects of different items in the Income Statement are allocated between capital and revenue on the same basis as the particular item to which they relate using the Company's effective rate of tax for the accounting period.

Due to the Company's status as a venture capital trust and the continued intention to meet the conditions required to comply with Part 6 of the Income Tax Act 2007, no provision for taxation is required in respect of any realised or unrealised appreciation of the Company's investments.

Deferred taxation, which is not discounted, is provided in full on timing differences that result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law.

Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. Deferred tax assets and liabilities are not discounted.

Other debtors and other creditors
Other debtors (including accrued income), other creditors and loan notes are included within the accounts at amortised cost.

Share issue costs

Expenses in relation to share issues are deducted from the Share Premium Account upon allotment of shares.

2        Basic and diluted return per share

	Year ended 28 February 2013		Year ended 29 February 2012
	Ordinary Shares		Ordinary Shares*
Revenue return per share based on:
Net revenue after taxation (£'000)	948		379
Weighted average number of shares in issue	44,205,557		34,140,909
Pence per share	2.1		1.1
Capital return per share based on:
Net capital gain for the financial year (£'000)	1,799		1,136
Weighted average number of shares in issue	44,205,557		34,140,909
Pence per share	4.1		3.3

*        rebased in respect of the share consolidation and conversions that took place on 30 October 2012

As the Company has not issued any convertible securities or share options, there is no dilutive effect on return per share. The return per share disclosed therefore represents both basic and diluted return per share.

3        Basic and diluted net asset value per share

				2013			2012
	Shares in Issue			Net asset value			Net asset value
	2013	2012		per share	£'000		per share	£'000
New Ordinary Shares	45,718,436	n/a		103.3p	47,210		n/a	n/a
Original Ordinary Shares	n/a	27,355,996		n/a	n/a		49.4p	13,505
'C' Shares	n/a	14,414,223		n/a	n/a		87.4p	12,594
'D' Shares	n/a	8,249,401		n/a	n/a		86.4p	7,129
Ordinary share capital to be issued					597			3,206
					47,807			36,434

As the Company has not issued any convertible securities or share options, there is no dilutive effect on net asset per share. The net asset value per share disclosed therefore represents both basic and diluted return per share.

4        Principal risks and management objectives

The Company's investment activities expose the Company to a number of risks associated with financial instruments and the sectors in which the Company invests. The principal financial risks arising from the Company's operations are:

*        Market risks;
*        Credit risk; and
*        Liquidity risk.

The Board regularly reviews these risks and the policies in place for managing them. There have been no significant changes to the nature of the risks that the Company is exposed to over the year and there have also been no significant changes to the policies for managing those risks during the year. The risk management policies used by the Company in respect of the principal financial risks and a review of the financial instruments held at the year end are provided below:

Market risks

As a VCT, the Company is exposed to market risks in the form of potential losses and gains that may arise on the investments it holds. The management of these market risks is a fundamental part of investment activities undertaken by the Investment Manager and overseen by the Board. The Manager monitors investments through regular contact with management of investee companies, regular review of management accounts and other financial information and attendance at investee company board meetings. This enables the Manager to manage the investment risk in respect of individual investments. Market risk is also mitigated by holding a portfolio diversified across several business sectors and asset classes.

The key market risks to which the Company is exposed are:

*        Market price risk; and
*        Interest rate risk.

Market price risk

Market price risk arises from uncertainty about the future prices and valuations of financial instruments held in accordance with the Company's investment objectives. It represents the potential loss that the Company might suffer through market price movements in respect of quoted investments and also changes in the fair value of unquoted investments that it holds.

Interest rate risk

The Company is exposed to interest rate risk on floating-rate financial assets through the effect of changes in prevailing interest rates. The Company receives interest on its cash deposits at a rate agreed with its bankers and on liquidity funds at rates based on the underlying investments. Investments in loan stock and fixed interest investments attract interest predominately at fixed rates. A summary of the interest rate profile of the Company's financial instruments is shown overleaf.

There are three categories in respect of interest which are attributable to the financial instruments held by the Company as follows:

*        "Fixed rate" assets represent investments with predetermined yield targets and comprise certain loan note investments and Preference Shares.
*        "Floating rate" assets predominantly bear interest at rates linked to Bank of England base rate or LIBOR and comprise cash at bank and liquidity fund investments and certain loan note investments.
*        "No interest rate" assets do not attract interest and comprise equity investments, certain loan note investments, loans and receivables (excluding cash at bank) and other financial liabilities.

The Company monitors the level of income received from fixed, floating and non interest rate assets and, if appropriate, may make adjustments to the allocation between the categories, in particular, should this be required to ensure compliance with the VCT regulations.

Based on the assumption that the yield of all floating rate financial instruments would change by an amount equal to the movement in prevailing interest rates, it is estimated that an increase of 1% in interest rates would have increased total return before taxation for the year by £180,000. As the Bank of England base rate stood at 0.5% per annum throughout the year, it is believed that a reduction from this level is unlikely.

Credit risk

Credit risk is the risk that a counterparty to a financial instrument is unable to discharge a commitment to the Company made under that instrument. The Company is exposed to credit risk through its holdings of loan stock in investee companies, investments in liquidity funds, cash deposits and debtors. Credit risk relating to loan stock investee companies is considered to be part of market risk.

The Manager manages credit risk in respect of loan stock with a similar approach as described under Investment risks above. In addition the credit risk is partially mitigated by registering floating charges over the assets of certain investee companies. The strength of this security in each case is dependent on the nature of the investee company's business and its identifiable assets. The level of security is a key means of managing credit risk. Similarly, the management of credit risk associated with interest, dividends and other receivables is covered within the investment management procedures.

Credit risk in respect of investments in liquidity funds is minimised by investing in AAA-rated funds.

Cash is mainly held by Bank of Scotland plc and Royal Bank of Scotland plc, both of which are A-rated financial institutions and both also ultimately part-owned by the UK Government. Consequently, the Directors consider that the risk profile associated with cash deposits is low.

There have been no changes in fair value during the year that are directly attributable to changes in credit risk.

Liquidity risk

Liquidity risk is the risk that the Company encounters difficulties in meeting obligations associated with its financial liabilities. Liquidity risk may also arise from either the inability to sell financial instruments when required at their fair values or from the inability to generate cash inflows as required. The Company generally maintains a relatively low level of creditors (£356,000 at 28 February 2013) and has no borrowings. Also, the quoted investments held by the Company are considered to be readily realisable.

The Company always holds sufficient levels of funds as cash and readily realisable investments in order to meet expenses and other cash outflows as required. For these reasons, the Board believes that the Company's exposure to liquidity risk is minimal.

The Company's liquidity risk is managed by the Investment Manager in line with guidance agreed with the Board and is reviewed by the Board at regular intervals.

5        Post balance sheet events

Between 4 April 2013 and the date of this announcement, the Company issued 2,303,786 Ordinary Shares for an aggregate consideration of £2.5million. Share issue costs thereon amounted to £124,000.

On 22 May 2013 Fjordnet Limited was the subject of an acquisition by Accenture, giving rise to a realised gain of £3.1 million upon completion and a possible total realised gain of up to £3.5 million within the next twelve months. On 18 April 2013, the investment in Tossed Limited was sold for a realised gain of £313,000.

ANNOUNCEMENT BASED ON AUDITED ACCOUNTS
The financial information set out in this announcement does not constitute the Company's statutory financial statements in accordance with section 434 Companies Act 2006 for the year ended 28 February 2013, but has been extracted from the statutory financial statements for the year ended 31 January 2013, which were approved by the Board of Directors on 27 June 2013 and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The Independent Auditor's Report on those financial statements was unqualified and did not contain any emphasis of matter nor statements under s498(2) and (3) of the Companies Act 2006.

The statutory accounts for the year ended 29 February 2012 have been delivered to the Registrar of Companies and received an Independent Auditor's Report which was unqualified and did not contain any emphasis of matter nor statements under s498(2) and (3) of the Companies Act 2006.

A copy of the full annual report and financial statements for the year ended 28 February 2013 will be printed and posted to shareholders shortly. Copies will also be available to the public at the registered office of the Company at 39 Earlham Street, London WC2H 9LT and will be available for download from www.provenvcts.co.uk and www.downing.co.uk .

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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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