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Proven Health VCT Plc (PHV)

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Tuesday 19 April, 2011

Proven Health VCT Plc

Final Results

                                                           PROVEN HEALTH VCT PLC


Financial highlights

                                               31 January 2011   31 January 2010

Net asset value per share ("NAV")                        48.0p             52.1p

Dividends paid since launch                              16.5p             14.5p

Total return (NAV plus dividends paid since              64.5p             66.6p

Chairman's Statement


The year to 31 January 2011 was dominated in the UK by the election and the
formation of a coalition government which immediately instigated an austerity
programme to improve the UK's debt position. Whilst this was well received by
the markets, opinions vary as to whether the regime will stifle the growth which
had begun to be seen and indeed the fourth quarter of 2010 showed a decline of
0.5% in GDP. The situation is further complicated by the unrest in the Middle
East and North Africa with rising oil prices and concerns over inflation.

Against this uncertain background, however, the long term fundamentals for
healthcare investment and the Company's returns remain attractive with
governments needing to provide ever increasing healthcare services to
progressively demanding populations, particularly the elderly, with reduced

Net asset value

At the year end, the Company's net asset value per share ("NAV") stood at
48.0p, a decrease of 2.1p per share or 4.0% over the year after adjusting for
the two dividends of 1.0p per share which were paid during the year.

The total return (NAV plus cumulative dividends paid) to ordinary shareholders
who invested at the outset of the Company was 64.5p per share at 31 January

Portfolio activity and valuation

At 31 January 2011, the Company's investment portfolio consisted of 9 unquoted
investments and 3 quoted investments at a total valuation of £6.0 million. In
addition, the Company had cash and liquidity fund investments of £3.2 million.

During the year the work on the restructuring of the portfolio continued. Plum
Baby, a later stage investment bought in 2007, was realised during the year at a
profit of £0.7 million and Biovex, an early stage company which had been held
for several years and whose value had been substantially written down, received
an offer from US NASDAQ quoted Amgen just before the year end which resulted in
an initial payment to the VCT of $1.1 million and a right to further payments,
depending on the achievement of commercialisation and sales milestones, of up to
a further $2.0 million. Whilst the initial payment alone reflects a loss against
cost of £170,000, it is well above the figure at which the holding was reflected
in last year's accounts and in accordance with accepted accounting practice no
allowance has been made in the accounts for the potential future payments which
could turn it into a substantial profit.

Two investments, Optasia Medical Limited and 1(st) Dental Laboratories plc,
entered administration crystallising a loss against cost of £1.0 million,
although much of this had already been reflected in the valuations at the end of
last year. More details of the portfolio activity are contained in the
Investment Manager's Review.

The Investment Manager continues to look for later stage investment
opportunities and we were very disappointed that two attractive prospects failed
to complete at the very final stages of negotiation. The realisations made since
the change of manager have left us with the finance available to take advantage
of opportunities as they arise and I look forward to having more to report in
this respect.

Results and dividends

The loss on activities after taxation for the year was £428,000(2010: profit
£305,000), comprising a revenue loss of £170,000 and a capital loss of

The Company paid two dividends during the year: a final dividend for the year to
31 January 2010 of 1.0p per share on 11 June 2010 and an interim dividend for
the year to 31 January 2011 of 1.0 p per share on 26 November 2010. The Board is
proposing a final dividend of 1.0p per share.  Subject to shareholder approval
at the forthcoming Annual General Meeting ("AGM"), this dividend will be paid on
17 June 2011 to shareholders on the register at 20 May 2011.

Share buybacks

The Company maintained a share buyback policy during the year. Shares are
repurchased at a discount which is currently set at 10% to the last published
NAV as adjusted for any dividends paid since publication. The share buyback
policy is subject to annual shareholder approval and to continuous review by the

During the year the Company purchased 491,217 shares for cancellation for an
aggregate consideration of £219,000 at an average price of 44.3p per share
(approximately equal to a 10% discount to the most recently published NAV at the
time of purchase) and representing 2.6% of the issued share capital held at 1
February 2010.

A special resolution to allow the Board to continue to purchase shares for
cancellation will be proposed at the forthcoming AGM.

Fundraising and dividend reinvestments

Between 1 April 2010 and 28 May 2010, 311,188 shares were issued at an average
price of 53.4p. The aggregate consideration for the shares was £166,000 with
related share issue costs thereon amounting to £9,000.

Under the Company's dividend reinvestment scheme, 135,950 shares were issued
during the year following the payment of the two dividends. The aggregate
consideration for these shares was £67,000 with related share issue costs
thereon amounting to £9,000.

On 5 April 2011, a further 400,074 shares were issued at a price of
approximately 50.8p per share. The aggregate consideration for the shares was
£199,000 with related share issue costs thereon amounting to £7,000.

At the date of this report the total number of shares in issue was 19,580,870.

Directorate changes

On 1 March 2011, Diane James was appointed to the Board of the Company. Diane
has a wealth of healthcare experience in the both the public and private sectors
including founding and selling a successful healthcare communications business.
She will, I am sure, be a valuable addition to the Board and I am glad to take
this opportunity to welcome her formally. Ann Hacker stepped down from the Board
on 19 April 2011 after eight years of service as a director. The Board and I
would like to thank Ann for her service and wise counsel to the Company over the
years and we wish her well in the future.

Annual general meeting

The AGM of the Company will be held at 39 Earlham Street, London WC2H 9LT at
10.00 am on 9 June 2011. Resolutions 1 to 9 will be proposed as ordinary
resolutions and resolutions 10 to 12 will be proposed as special resolutions
I would also draw your attention to the Investment Manager's annual shareholder
presentation which is expected to held in central London in November. This
provides shareholders with an opportunity to meet the Investment Manager and,
additionally, to hear directly from some of the portfolio companies and to meet
other VCT shareholders. Further details of the event will be communicated to
shareholders in the Autumn. The corresponding event in 2010 was very successful
and I look forward to welcoming you to this year's event.


Whilst there are interesting opportunities within the existing portfolio,
including the potential for further gains relating to the sale of Biovex, the
key focus in the coming year will be the introduction of new later stage
investments into the portfolio. The Board is also looking at the possibility of
offering an opportunity for shareholders to sell their shares back to the
company and reinvest the proceeds in new shares, through an enhanced share
buyback scheme. Whilst there would be a modest cost involved, shareholders
would, if eligible, be able to claim the 30% income tax relief on the new
investment provided the shares are held for five years. Further details will be
provided as appropriate.

Charles Pinney


Investment Manager's Review


We are pleased to present our investment management review for the year to 31
January 2011, the second anniversary of taking over the management of the
Company's investment portfolio.

The Company's total return fell slightly over the year. Quoted stockmarkets in
the UK (and elsewhere) continued to respond to improved market sentiment and the
impact of government intervention in financial markets. The increase in the FTSE
All Share Total Return Index was 18% over the same period.  As we mentioned in
last year's report, the comparison of a largely unquoted venture capital trust
investment portfolio to any quoted stockmarket index needs to be viewed with
care.  The Company's performance has, however, again been impacted by the
significant proportion of its net assets held in cash and liquidity funds during
a continued phase of low interest rates. Additionally, the early stage nature of
many of the Company's investments and the development time for their products,
together with some specific disappointments, has impacted Company returns.

Portfolio performance and activity

At 31 January 2011, the Company's investment portfolio comprised holdings in 12
companies, of which 9 were unquoted and 3 quoted, at a valuation of £6.0 million
and original acquisition cost of £8.5 million. In addition, the Company had cash
and liquidity funds of £3.2 million.
During the year, £688,000 was invested into four existing portfolio companies.
One investment, Plum Baby, was sold generating a profit on the original cost of
£678,000. Two investments went into administration and have been treated as
realised resulting in a loss of £1.0m against cost. The tables below summarise
the transactions during the year:

Additions               Cost                     Description


Altacor Limited          300                Follow on investment

Biovex Group Inc          54                Follow on investment

Optasia Medical          122                Follow on investment

Population Genetics      212                Follow on investment
Technologies Limited


                               Market value at
                                                           Realised Gain/ (loss)

                        Cost                   Proceeds gain/(loss) against cost

                       £'000             £'000    £'000       £'000        £'000

1st Dental               289                31        -        (31)        (289)
Laboratories plc

Inforsense Limited         -                 -       19          19           19

Optasia Medical          782              217*       17       (200)        (765)

Plum Baby Limited        749             1,067    1,427         360          678
                       1,820             1,315    1,463         148        (357)

*includes investments of £122,000 made in the year to 31 January 2011

We commented on the sale of Plum Baby in our half year report to 31 July 2010
but it is worth mentioning again as it illustrates the businesses we are
targeting for future investment by the Company. Strong brand awareness, a
quality management team and increasing revenues, achieved in part during
difficult economic times, proved very attractive to a number of potential buyers
and ultimately translated into a sale to a private equity buyer and a strong
financial return to shareholders.

In contrast it was disappointing that both Optasia Medical and 1(st) Dental
Laboratories were placed into administration in August and September
respectively.  Optasia was reliant on its institutional investors (including
ProVen Health VCT) to provide continued funding in order to further develop its
product. On balance it was decided that the risks of losing further investment
outweighed the chances of success and the administrator was appointed. With
1(st) Dental we had no chance to influence strategy given its quoted status and
our small shareholding, and trading was limited.

On a more positive note, Biovex reached agreement for its acquisition by NASDAQ
quoted Amgen Inc in late January 2011. This was completed in March 2011. The
acquisition values Biovex at up to $1.0 billion and the Company's interest at up
to $3.1 million dependent on the achievement of future commercialisation and
sales milestones. The year end valuation is based on the initial sales proceeds,
received by the Company in March 2011, of $1.1 million; future proceeds, if
appropriate, may take a number of months to materialise but provide a potential
significant upside to the Company. There was also good progress with regard to a
number of other companies, notably Vectura and IS Pharma, which were both valued
above their initial investment cost at the year end. Altacor and Population
Genetics Technologies both continue to adapt well in their respective markets.

The investment portfolio showed a decrease in value of £284,000, taking into
account the combined effect of additions and disposals. The key contributors to
this change were the provisions against Amura Holdings and Digital Healthcare
which were partially offset by upwards revaluations including Biovex and Onyx

In April 2011, Sinclair Pharma and IS Pharma reached agreement for a merger
though the acquisition of the entire share capital of IS Pharma by Sinclair. The
transaction will, subject to various approvals, complete in May.


We had anticipated the completion of at least two new investments in the second
half of the financial year but these failed to complete at the very final stages
of negotiation. Both provided attractive growth opportunities which were
unfortunately recognised by other acquirers. We continue, however, to believe in
the opportunities afforded by the healthcare sector and are well positioned with
significant cash reserves to identify and complete new investments.

Beringea LLP

Investment Portfolio

as at 31 January 2011

The following investments were held at 31 January 2011:

                                            Valuation movement in
                                                                  % of portfolio
                            Cost Valuation                              by value

                           £'000     £'000

Top venture capital

Altacor Limited            1,020     1,241                      -          13.4%

Population Genetics        1,079     1,030                   (49)          11.1%
Technologies Limited

Onyx Scientific Limited      850       997                    147          10.7%

Biovex Group, Inc            848       678                    568           7.3%

Vectura Group plc *          482       619                     97           6.8%

Omni Dental Sciences         750       580                  (148)           6.3%

IS Pharma plc **             366       428                     70           4.6%

Digital Healthcare Limited 1,010       381                  (255)           4.1%

Sinclair Pharma plc *        219        68                     11           0.7%
                           6,624     6,022                    441          65.0%

Other venture capital      1,898         -                  (725)           0.0%

Total venture capital      8,522     6,022                  (284)          65.0%

Standard Life Investments            1,800                                 19.4%
Liquidity Fund

Cash at bank and in hand             1,446                                 15.6%

Total investments                    9,268                                100.0%

All venture capital investments are unquoted unless otherwise stated.

*    Quoted on the Main Market

**   Quoted on AIM

Other venture capital investments at 31 January 2011 comprise Amura Holdings
Limited, Chromogenex Limited and DeltaDOT Limited.

All venture capital investments held at the year end are registered in England
and Wales, with the exception of Biovex Group Inc which was registered in the

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Report of the Directors, the
Directors' Remuneration Report, and the financial statements in accordance with
applicable law and regulations. They are also responsible for ensuring that the
Annual Report includes information required by the Listing Rules of the
Financial Services 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 those financial statements, the Directors are required to:

  * select suitable accounting policies and then apply them consistently;
  * make judgements and 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 and disclose with
reasonable accuracy at any time the financial position of the Company and to
enable them to ensure that the financial statements, and the Directors'
Remuneration Report, 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

The Directors are responsible for the maintenance and integrity of the corporate
and financial information relating to the Company included on the Investment
Manager's website. Legislation in the United Kingdom governing the preparation
and dissemination of the financial statements and other information included in
annual reports may differ from legislation in other jurisdictions.

Statement as to disclosure of information to auditor

The Directors in office at the date of the report have confirmed, as far as they
are aware, that there is no relevant audit information of which the Auditors are
unaware. Each of the Directors has confirmed that they have taken all the steps
that they ought to have taken as Directors in order to make themselves aware of
any relevant audit information and to establish that it has been communicated to
the Auditor.

By Order of the Board

Beringea LLP

Secretary of ProVen Health VCT plc

Company number: 04131354

Registered Office:

39 Earlham Street

London WC2H 9LT

Income Statement

for the year ended 31 January 2011

                                     2011                        2010

                          Revenue   Capital    Total   Revenue   Capital   Total

                            £'000     £'000    £'000     £'000     £'000   £'000

Income                         44         -       44        41         -      41

(Losses)/gains on               -     (136)    (136)         -       631     631

                               44     (136)     (92)        41       631     672

Investment management        (41)     (122)    (163)      (51)     (152)   (203)

Other expenses              (173)         -    (173)     (164)         -   (164)

(Loss)/return on
ordinary activities
before tax                  (170)     (258)    (428)     (174)       479     305

Tax on ordinary                 -         -        -         -         -       -

attributable to equity
shareholders                (170)     (258)    (428)     (174)       479     305

Basic and diluted
(loss)/ return  per
share                      (0.9p)    (1.3)p   (2.2p)    (0.9p)      2.5p    1.6p

All revenue and capital items in the above statement derive from 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.

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

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

Reconciliation of Movements in Shareholders' Funds

 for the year ended 31 January 2011

                                                         2011         2010

                                                        £'000        £'000

 Opening shareholders' funds                           10,018        9,950

 Proceeds from share issues                               233           36

 Share issue costs                                       (18)          (7)

 Purchase of own shares                                 (219)         (74)

 Total recognised (loss)/gain for the period            (428)          305

 Dividends paid                                         (387)        (192)

 Closing shareholders' funds                            9,199       10,018

Balance Sheet

as at 31 January 2011

                                                             2011          2010

                                                            £'000         £'000

 Fixed assets

 Investments                                                6,022         6,933

 Current assets

 Debtors                                                       21             9

 Current investments                                        1,800         1,791

 Cash at bank and in hand                                   1,446         1,358
                                                            3,267         3,158

 Creditors: amounts falling due within one year              (90)          (73)

 Net current assets                                         3,177         3,085

 Net assets                                                 9,199        10,018

 Capital and reserves

 Called up share capital                                      192           192

 Capital redemption reserve                                   398           393

 Share premium account                                      7,170         6,960

 Special distributable reserve                              7,586         8,192

 Capital reserve - realised                               (2,914)       (2,444)

 Capital reserve - unrealised                             (2,500)       (2,712)

 Revenue reserve                                            (733)         (563)

 Total equity shareholder's funds                           9,199        10,018

 Basic and diluted net asset value per share                48.0p         52.1p

 Cash Flow Statement

for the year ended 31 January 2011

                                                       2011        2010

                                                      £'000       £'000

 Net cash outflow from operating activities           (292)        (77)

 Capital expenditure

 Purchase of investments                              (688)       (710)

 Disposal of investments                              1,463       1,427
 Net cash inflow from capital expenditure               775         717

 Equity dividends paid                                (321)       (155)

 Net cash inflow before financing                       162         485


 Proceeds from share issues                             166           -

 Share issue costs                                     (18)         (2)

 Purchase of own shares                               (222)        (70)
 Net cash (outflow)/inflow from financing              (74)        (72)

                           Increase in cash              88         413

Notes to the Accounts

for the year ended 31 January 2011

1     Accounting policies

Basis of accounting

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

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

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

Presentation of Income Statement

In order to better reflect the activities of a venture capital trust and in
accordance with the SORP, supplementary information which analyses the Income
Statement between items of a revenue and capital nature has been presented
alongside the Income Statement. The net revenue is the measure the directors
believe appropriate in assessing the Company's compliance with certain
requirements set out in Part 6 of the Income Tax Act 2007.

Fixed assets investments

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, with a view to selling after a period of time, in accordance with the
Company's documented investment policy.  The fair value of an investment upon
acquisition is deemed to be cost.  Thereafter investments are measured at fair
value in accordance with International Private Equity and Venture Capital
Valuation Guidelines ("IPEVCVG") issued in September 2009 together with FRS26.

Publicly traded investments are measured using bid prices.

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

  * Investments are usually retained at cost for an appropriate period following
    investment, except where a company's performance against plan is
    significantly below the expectations on which the investment was made in
    which case a provision against cost is made as appropriate;
  * where a company is in the early stage of development it will normally
    continue to be held at cost, reviewed for impairment on the basis described
  * where a company is well established after an appropriate period, the
    investment may be valued by applying a suitable earnings or revenue multiple
    to that company's maintainable earnings or revenue.  The multiple used is
    based on comparable listed companies or a sector but discounted to reflect
    factors such as the different sizes of the comparable businesses, different
    growth rates and the lack of marketability of unquoted shares;
  * where a value is indicated by a material arms-length transaction by a third
    party in the shares of the company, the valuation will normally be based on
    this, reviewed for impairment as appropriate; and
  * where alternative methods of valuation, such as net assets of the business
    or the discounted cash flows arising from the business are more appropriate,
    then such methods may be used.

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

Where an investee company has gone into receivership or liquidation, or there is
little likelihood of a recovery from a company in administration, the loss on
the investment, although not physically disposed of, is treated as being

Gains and losses arising from changes in fair value are included in the Income
Statement for the year as a capital item.

It is not the Company's policy to exercise either significant or controlling
influence over investee companies.  Therefore the results of these companies are
not incorporated into the Income Statement except to the extent of any dividends
or interest accrued.  This is in accordance with the SORP that does not require
portfolio investments to be accounted for using the equity method of accounting.

Current assets investments

Current assets investments comprise investments in liquidity funds with AAA
rating and are redeemable on call. These investments are valued at bid price.


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

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.  Income which is not capable of being
received within a reasonable period of time is reflected in the capital value of
the investments.


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

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


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 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 and is not discounted. 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.

Other debtors and other creditors

Other debtors (including accrued income) and other creditors are included within
the accounts at amortised cost, equivalent to the fair value of the expected
balance receivable/payable by the Company.

Share issue costs

Expenses in relation to share issues are deducted from the Share Premium

 2     Basic and diluted return per share

                  Weighted     Revenue                    Capital
            average number    loss per                gain/(loss)
              of shares in       share                  per share        Capital
                     issue                                           gain/(loss)
                               (pence)     Revenue
                                              loss                         £'000

Year ended      19,296,351      (0.9p)       (170)         (1.3)p          (258)
31 January
Year ended      19,298,309      (0.9p)       (174)           2.5p            479
31 January

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

                                                     2011                 2010

                      Shares in issue     Net asset value      Net asset value

                                            Pence               Pence

                      2011       2010   per share   £'000   per share    £'000

Ordinary shares 19,180,796 19,224,875       48.0p   9,199       52.1p   10,018

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

4     Principal financial risks

As a VCT, the majority of the Company's assets are represented by financial
instruments which are held as part of the investment portfolio. In order to
ensure continued compliance with relevant VCT regulations and to be in a
position to deliver the long term capital growth, which is part of the Company's
investment objective, the Board is aware of the need to manage and mitigate the
risks associated with these financial instruments.

The management of these risks starts with the application of a clear investment
policy which has been developed by the Board who are experienced investment
professionals. Furthermore, the Board has appointed an experienced investment
manager to whom they have communicated the Company's investment objectives and
whose remuneration is linked to the achievement of those objectives. The
Investment Manager reports regularly to the Board on performance.

Further information about the VCT's investment policy is set out in the Report
of the Directors.

In assessing the risk profile of its investment portfolio, the Board has
identified three principal classes of financial instrument.  Additionally,
unquoted (level 3) investments may be further analysed between equity and non-
equity investments.

In addition to its investment portfolio, the VCT maintains a portfolio of
liquidity funds and cash balances with two of the main UK banks.   The Directors
consider that the risk profile associated with cash deposits and liquidity fund
investments is low and thus the carrying value in the financial statements is a
close approximation of the fair value.

The Board has reviewed the Company's financial risk profile and is of the
opinion that the exposure to financial risk has not changed significantly since
the previous year.

A review of the specific financial risks faced by the Company is presented

Market risks

The key market risk to which the Company is exposed is market price risk.  The
Company has undertaken sensitivity analysis on its financial instruments, split
into the relevant component parts, taking into consideration the economic
climate at the time of review in order to ascertain the appropriate risk
allocation.  The impact of a reasonable sensitivity in interest rates is not
considered to be significant on either the return or net assets of the VCT.  The
level of interest rates does impact more generally on the business environment
in which the portfolio companies operate and on the supply and demand for their
goods and services.  It is, however, not considered practical to quantify
accurately the impact of various interest rate scenarios either on the portfolio
overall or on individual companies.

Market price risk

Market price risk arises from uncertainty about the future prices of financial
instruments held in accordance with the Company's investment objectives.  It
represents the potential loss that the Company might suffer through holding
market positions in the face of market movements. At 31 January 2011, the
unrealised gain on quoted investments was £48,000 (2010: loss £388,000)

The investments the Company holds are, in the main, thinly traded (due to the
underlying nature of the investments) and, as such, the prices are more volatile
than those of more widely traded, full list, securities.  In addition, the
ability of the Company to realise the investments at their carrying value may at
times not be possible if there are no willing purchasers.  The ability of the
Company to purchase or sell investments is also constrained by the requirements
set down for VCTs.

It is not the Company's policy to use derivative instruments to mitigate market
risk, as the Board believes that the effectiveness of such instruments does not
justify the cost involved.

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.

Investments in loan stocks comprise a fundamental part of the Company's venture
capital investments and are managed within the main investment management
procedures. At 31 January 2011, loan stock valued at £293,000, including
interest of £43,000, was past due for payment, due to interest not being paid,
but had not been impaired. £14,000 of interest was past due by less than 12
months; £19,000 of interest was past due between 12 and 24 months and £10,000 of
interest was past due between 24 and 36 months.

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

Cash is held at Bank of Scotland plc and Natwest Bank plc, and, consequently,
the Directors consider that the risk profile associated with cash deposits is
low.  There have been no changes in fair value that are directly attributable to
changes in credit risk.

Interest, dividends and other receivables are predominantly covered within the
investment management procedures.  There have been no changes in fair value 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.
As the Company only ever has a very low level of creditors (2011: £90,000,
2010: £73,000) and has no borrowings, the Board believes that the Company's
exposure to liquidity risk is minimal.

5     Post balance sheet events

In March 2011, the sale of Biovex to Amgen Inc was concluded and proceeds of
approximately $1.1 million were received. Additionally, Chromogenex concluded a
financial restructuring which led to the Company's ordinary shareholding being
acquired by a new investor and proceeds of £31,000 being received. In April
2011, Sinclair Pharma plc and IS Pharma plc agreed to a merger which, subject to
regulatory and shareholder approvals, will complete in May.

On 5 April 2011, the Company issued 400,074 shares for consideration at
approximately 50.8p per share.  The aggregate consideration for the shares was
£199,000 and share issue costs thereon amounted to £7,000.

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 31 January 2011, but has been extracted
from the statutory financial statements for the year ended 31 January 2011,
which were approved by the Board of Directors on 19 April 2011 and will be
delivered to the Registrar of Companies following the Company's Annual General
Meeting.  The Independent Auditor's Report on those financial statements was
unqualified and did not contain any emphasis of matter nor statements under s
498(2) and (3) of the Companies Act 2006.

The statutory accounts for the year ended 31 January 2010 have been delivered to
the Registrar of Companies and received an Independent Auditors report which was
unqualified and did not contain any emphasis of matter nor statements under
S237(2) or (3) of the Companies Act 1985.

A copy of the full annual report and financial statements for the year ended 31
January 2011 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

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 Health VCT Plc via Thomson Reuters ONE



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