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Proven Health VCT Plc (PHV)

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Friday 30 September, 2011

Proven Health VCT Plc

Half-yearly report

ProVen Health VCT plc
Half-Yearly Report for the Six Months Ended 31 July 2011

Financial Summary

                                                    31 July 31 July 31 January
                                                       2011    2010       2011

Net asset value per share ("NAV")                     45.3p   46.9p      48.0p

Dividends paid since launch                           17.5p   15.5p      16.5p

Total return (NAV plus dividends paid since launch)   62.8p   62.4p      64.5p

Mid market share price                                41.3p   48.0p      42.0p

Chairman's Statement


The first part of the Company's financial year to 31 January 2012 has continued
in the same vein as last year with economic uncertainty and volatility in global
stock markets. If anything the situation is slightly worse with signs of slowing
growth across many countries even before key austerity programmes are
implemented and with the problems in the Eurozone still to be resolved.

Against this backdrop, the Company's investment portfolio has seen a lot of
activity with two new investments, three full disposals, one partial disposal,
two portfolio companies merging and a significant acquisition by a further
portfolio company, in the period up to the date of this statement.

Net asset value and portfolio activity

As at 31 July 2011, the Company's net asset value per share ("NAV") stood at
45.3p. After adjusting for the dividend of 1p per share paid on 17 June 2011,
this represents a decrease of 3.5% over the NAV at 31 January 2011.  The FTSE
All Share Index was broadly flat over the same period and the FTSE All Share
Total Return Index, which includes dividends reinvested, increased by a modest
1%. This, of course, excludes the impact of the wider stock market falls which
were experienced in August and September.

The total return (NAV plus cumulative dividends paid) to ordinary shareholders
who invested at the outset of the Company was 62.8p per share at 31 July 2011
(31 January 2011: 64.5p per share).

At 31 July 2011, the Company's investment portfolio comprised holdings in 9
companies, of which 7 were unquoted and 2 were quoted, at a valuation of £5.1
million and original acquisition cost of £7.4 million. In addition, the Company
held £3.7 million in cash and liquidity funds.

The two new additions, Community Pharmacy Limited and PolyTherics Limited, the
realisation of Onyx Scientific Limited and the partial disposal of Vectura Group
plc, occurred after the period end and are therefore not reflected in these
figures. They did not, however, have a material impact on the reported net asset

Further detail on all investment activity is provided in the Investment
Manager's Report on the following pages.

Results and dividend

The Income Statement shows a loss on ordinary activities after taxation for the
Company for the period of £345,000 (comprising a revenue loss of £62,000 and a
capital loss of £283,000). The Company is not, at this time, proposing an
interim dividend for the year ending 31 January 2012.


Between 5 April 2011 and 26 May 2011, the Company issued 480,096 shares for
consideration at an average price of approximately 49.7p per share, under a 10%
top up offer dated 24 January 2011. The offer closes on 15 December 2011 or
earlier at the directors' discretion or if fully subscribed. Share issue costs
thereon amounted to £8,000.  Under the Company's dividend reinvestment scheme,
75,495 shares were issued on 24 June 2011 following the final dividend payment
on 17 June 2011. At the date of this report the total number of shares in issue
was 19,380,664, including 85,000 shares purchased for cancellation which had not
settled at 31 July 2011.

Company strategy and development

Alongside good corporate governance and ensuring that the Company continues to
qualify as a VCT, the focus of the board is on delivering strong returns to
investors, through dividends and/or increases in net asset value. Since the new
investment manager took over on 1 February 2009, the investment portfolio has
delivered a net realised/unrealised gain. However, the effect of the expenses of
the fund (albeit capped at 3.6%), share buybacks and dividends, partially offset
by small top up fundraisings, have resulted in an overall reduction in net
assets from £9.95 million at 1 February 2009 to £8.78 million at 31 July 2011.
This reduction necessarily reduces the funds available for investment in
unquoted companies.

The Board and the Investment Manager have therefore been looking at ways of
increasing the size of the Company and are seeking shareholder input into the
process by way of a short survey which is being sent with the half year report.
Your responses to this survey would be greatly appreciated and so I would
encourage you to take a few minutes to answer the questions and return them to
the Company. In view of this survey, the Board has decided that it would be
appropriate to defer a decision on future dividend payments to shareholders and
a possible enhanced share buyback scheme until after the results of the survey
are known. The process will be completed by the end of November and I will be
informing shareholders of the outcome of the survey and the Board's discussions
in due course.

Investor presentation

The Investment Manager will be holding its annual VCT shareholder presentation
on Wednesday 2 November 2011 at RIBA, 66 Portland Place, London W1B 4AD. This
event provides shareholders with the opportunity to meet the Investment Manager,
Board directors and other shareholders, and to hear directly from some of the
portfolio companies. Shareholders should have received an invitation but if you
have not and would like to attend, then please contact the Investment Manager at
39 Earlham Street, London WC2H 9LT or by telephone on 020 7845 7820.

Risk and uncertainties

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

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

(i) investment risk associated with investing in small and immature businesses;

(ii) market risk arising from extremely volatile stock market conditions and
their potential effect on investment valuation particularly in the areas of
investment permitted by VCT rules; and

(iii) compliance risk in failing to maintain approval as a VCT.

In the case of (i), your Board is satisfied with the Company's approach. The
Investment Manager follows a rigorous process in vetting and structuring new
investments and, after an investment is made, close monitoring of the business.
In respect of (ii), the Company seeks to hold a diversified investment
portfolio, albeit concentrated in the healthcare sector.  Your Board is
confident that the Investment Manager's investment policy should help to limit
this risk whilst remaining within the constraints of the VCT regulations.

As far as (iii) is concerned, the Company's compliance with the VCT regulations
is continually monitored by the Investment Manager, who reports regularly to
your Board on the current and forecast position.  The Company also retains
PricewaterhouseCoopers to provide regular reviews and advice in this area.  Your
Board considers that this approach reduces the risk of a breach of the VCT
regulations to an acceptable level.


The economic environment continues to provide challenges for consumers and
businesses of all sizes. Whilst the healthcare sector's defensive qualities are
well justified, companies in the sector face similar challenges to those firms
outside it. Quality, well-run companies should, however, perform well over the
economic cycle and there remains an external market for them, as the recent sale
of Onyx Scientific demonstrates. In addition to the continued development of the
existing portfolio, one of the key challenges facing the Company is how to
increase its size to take advantage of further investment opportunities. I look
forward to reporting to shareholders further in this regard following the
results of the shareholder survey and the Board's subsequent deliberations.

Charles Pinney

Investment Manager's Report


We have pleasure in presenting our half yearly report to 31 July 2011 for ProVen
Health VCT plc. Whilst the broader economic backdrop remains little changed from
that described in our full year report to 31 January 2011, with trading
conditions continuing to be challenging for both UK smaller companies and UK
consumers, the period up to the date of this report has seen a high level of
activity for the Company.

Portfolio performance and activity

At 31 July 2011, the Company's investment portfolio comprised holdings in 9
companies, of which 7 were unquoted and 2 were quoted, at a valuation of £5.1
million and original acquisition cost of £7.4 million. In addition, the Company
held £3.7 million in cash and liquidity funds. The two new additions, Community
Pharmacy Limited and PolyTherics Limited, the realisation of Onyx Scientific
Limited and the partial disposal of Vectura Group plc, occurred after the period
end and are therefore not reflected in these figures.

The disposals of Biovex Group Inc and Chromogenex Limited occurred in early
March and were disclosed in the 2011 Annual Report. The Company made a small
loss on the original investment in Biovex but there is an opportunity to
generate up to a further $2.1 million, and therefore a significant overall
profit, dependent on the achievement of future commercialisation and sales
milestones. As the acquirer Amgen Inc is listed on NASDAQ, we are restricted to
publicly available information and at present have no visibility over the
likelihood and/or potential timing of any of the additional payments.
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 (the holding was previously fully provided against).

In May, the Company's investment holdings were further reduced when two
portfolio companies, Sinclair Pharma plc and IS Pharma plc, merged.  IS Pharma
shareholders received 2.6868 Sinclair Pharma shares for each IS Pharma share
held. The newly merged company was renamed Sinclair IS Pharma plc and
transferred its stock market listing to AIM in June. The merger has created an
international specialty pharmaceutical company with a market capitalisation of
over £100 million and a strong portfolio of products to treat wounds,
dermatological and oral diseases in both developed and emerging markets. The
increased size should make it more attractive to potential investors and

Excluding the impact of disposals, the overall investment portfolio showed a
decrease in value of £234,000. This was principally due to further provisions
being made against the valuations of Population Genetics Technologies and Omni
Dental Sciences. These were partially mitigated by increases in value for
Digital Healthcare and Vectura Group. Digital Healthcare's recent acquisition of
Orion Imaging, a leading provider of management software to the UK's diabetic
retinopathy screening programmes, consolidates its position in the sector and as
such we felt able to recommend to the Board an uplift to the company's
valuation. Vectura's share price made further good progress over the period,
increasing to over £1 a share at 31 July 2011. We took the opportunity to sell
just over one third of the Company's shareholding after the period end at over
£1 per share thereby crystallising a profit.

Post period end investment activity

Shortly after the period end, we completed a further three transactions: two new
acquisitions and the disposal of Onyx Scientific.

The first of the new investments was a £375,000 investment into Community
Pharmacy Limited (CPL) in August, alongside ProVen VCT plc and ProVen Growth and
Income VCT plc. CPL is seeking to establish a new chain of pharmacies and will
particularly focus on GP centre-based pharmacies, a fast growing segment in the
industry. The team is led by a very experienced founder and manager of pharmacy
chains.  Further funding by ProVen Health VCT of up to £275,000 has been
committed to implement the rollout plan and will be drawn down against agreed

In September, an investment of £750,000 was made into PolyTherics Limited.
PolyTherics is a biotechnology company that applies precision chemistry to
develop protein and peptide-based drugs. PolyTheric's technologies can extend
the duration of action of these classes of drugs so patients require fewer
injections, and can create more efficacious products. This reduces the cost of
treatment and improves patient compliance. The company was formed in 2002 with
technology that originated at the London School of Pharmacy and Imperial College

In August, we concluded the sale of Onyx Scientific to Ipca Laboratories from
Mumbai. Onyx provides a range of chemical services to the life science industry,
in particular scaling up the synthesis of new chemical compounds for use by
pharmaceutical companies. The sale generated a capital gain of £140,000 on an
initial investment of £850,000.


The high level of portfolio activity experienced in the period up to the date of
this report has happened against the background of considerable market
uncertainty and volatility. With wider economic imbalances still to be resolved,
we expect this uncertainty to continue. However, we remain optimistic about the
potential returns from the unquoted healthcare sector, based on recent portfolio
activity and observations of the wider market, both in the UK and the dominant
US market where we have an investment presence.

Beringea LLP

Summary of Investment Portfolio
as at 31 July 2011

                                                          Unrealised        % of
                                                         gain/(loss)   portfolio
                                                              in the    by value
                                          Cost Valuation      period

                                         £'000     £'000       £'000

Top ten venture capital investments

Altacor Limited                          1,020     1,241           -       14.0%

Onyx Research Chemicals Limited            850       990         (7)       11.2%

Population Genetics Technologies Limited 1,079       811       (219)        9.2%

Vectura Group plc*                         482       771         151        8.7%

Digital Healthcare Limited               1,010       518         137        5.9%

Sinclair Pharmaceuticals plc ** ***        585       440        (56)        5.0%

Omni Dental Sciences Limited               750       339       (240)        3.8%

                                         5,776     5,110       (234)       57.8%

Other venture capital investments        1,646         -           -        0.0%

                                         7,422     5,110       (234)       57.8%

Current asset investments -                        1,806                   20.4%
liquidity funds

Cash at bank and in hand                           1,931                   21.8%

Total investments                                  8,847                  100.0%

All venture capital investments are unquoted unless otherwise stated.

*           Quoted on the Main Market
**         Quoted on AIM

***        Sinclair IS Pharma plc was created from the merger of IS Pharma plc
and Sinclair Pharma plc in May 2011.

Summary of Investment Movements
for the six months ended 31 July 2011

Mergers (at cost)


 IS Pharma plc         (366)

 Sinclair Pharma plc     366



                                   Market                              Realised

                                 value at              Gain/(loss)        gain/

                               1 February   Disposal       against    (loss) in
                        Cost         2011   proceeds          cost       period

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

 Biovex Group Inc        848          678        661         (187)         (17)

 Chromogenex Limited     253            -         31         (222)           31

                       1,101          678        692         (409)           14

Unaudited Balance Sheet
as at 31 July 2011

                                         31 July       31 July        31 Jan
                                            2011          2010          2011

                                           £'000         £'000         £'000

 Fixed assets

 Investments                               5,110         4,938         6,022

 Current assets

 Debtors                                      15            48            21

 Current investments                       1,806         1,795         1,800

 Cash at bank and in hand                  1,931         2,340         1,446

                                           3,752         4,183         3,267

 Creditors: amounts falling due within      (82)          (52)          (90)
 one year

 Net current assets                        3,670         4,131         3,177

 Net assets                                8,780         9,069         9,199

 Capital and reserves

 Called up share capital                     194           193           192

 Capital redemption reserve                  401           396           398

 Share premium account                     7,428         7,147         7,170

 Special distributable reserve             7,445         7,871         7,586

 Capital reserve - realised              (3,581)       (2,561)       (2,914)

 Capital reserve - unrealised            (2,312)       (3,329)       (2,500)

 Revenue reserve                           (795)         (648)         (733)

 Total equity shareholders' funds          8,780         9,069         9,199

 Basic and diluted net asset value per     45.3p         46.9p         48.0p

Unaudited Income Statement
for the six months ended 31 July 2011

                                            Six months ended
                                            31 July 2011

                                            Revenue   Capital    Total

                                              £'000     £'000    £'000

Income                                           32         -       32

Losses on investments                             -     (220)    (220)

                                                 32     (220)    (188)

Investment management fee                      (21)      (63)     (84)

Other expenses                                 (73)         -     (73)

Loss on ordinary activities before taxation    (62)     (283)    (345)

Tax on ordinary activities                        -         -        -

Loss attributable to equity shareholders       (62)     (283)    (345)

Basic and diluted loss per share             (0.3p)    (1.5p)   (1.8p)

                                        Six months ended              Year ended
                                        31 July 2010                 31 Jan 2011

                                        Revenue   Capital    Total         Total

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

Income                                       21         -       21            44

Losses on investments                         -     (675)    (675)         (136)

                                             21     (675)    (654)          (92)

Investment management fee                  (20)      (59)     (79)         (163)

Other expenses                             (86)         -     (86)         (173)

Loss on ordinary activities before         (85)     (734)    (819)         (428)

Tax on ordinary activities                    -         -        -             -

Loss attributable to equity                (85)     (734)    (819)         (428)

Basic and diluted loss per share         (0.4p)    (3.8p)   (4.2p)        (2.2p)

Reconciliation of Movements in Shareholders' Funds

                                             31 July   31 July   31 Jan
                                                2011      2010     2011

                                               £'000     £'000    £'000

Opening shareholders' funds                    9,199    10,018   10,018

Proceeds from share issues                       271       200      233

Share issue costs                                (8)       (9)     (18)

Purchase of own shares                         (141)     (126)    (219)

Total recognised loss for the period           (345)     (819)    (428)

Dividends paid                                 (196)     (195)    (387)

Closing shareholders' funds                    8,780     9,069    9,199

Unaudited Cash Flow Statement
for the six months ended 31 July 2011

                                         Six months     Six months          Year
                                              ended          ended         ended
                                       31 July 2011   31 July 2010   31 Jan 2011

                                  Note        £'000          £'000         £'000

Net cash outflow from operating
activities                                    (167)          (199)         (292)

Capital expenditure

Purchase of investments                           -          (143)         (688)

Disposal of investments                         692          1,463         1,463

Net cash inflow from capital                    692          1,320           775

Equity dividends paid                         (163)          (161)         (321)

Net cash inflow before financing                362            960           162


Proceeds from share issues                      238            166           166

Share issue costs                               (8)           (15)          (18)

Purchase of own shares                        (107)          (129)         (222)

Net cash inflow/(outflow) from                  123             22          (74)

Increase in cash                  B             485            982            88

Notes to the cash flow statement:

A. Net cash flow from operating

Loss on ordinary activities                   (345)          (819)         (428)
before taxation

Losses on investments                           220            675           136

Re-invested liquidity funds                     (6)            (4)           (9)

Decrease/(increase) in debtors                    6           (39)          (11)

(Decrease)/increase in creditors               (42)           (12)            20

Net cash outflow from operating               (167)          (199)         (292)

B. Analysis of net funds

Beginning of period                           3,246          3,149         3,149

Net cash inflow                                 485            982            88

Other non cash changes                            6              4             9

End of period                                 3,737          4,135         3,246

Net funds split as:

Beginning of period:

Cash at bank and in hand                      1,446          1,358         1,358

Liquidity funds                               1,800          1,791         1,791

Total funds at beginning of                   3,246          3,149         3,149

End of period:

Cash at bank and in hand                      1,931          2,340         1,446

Liquidity funds                               1,806          1,795         1,800

Total funds at end of period                  3,737          4,135         3,246

Notes to the unaudited Financial Statements

1. The unaudited half yearly results cover the six months to 31 July 2011 and
have been prepared in accordance with Statement of Recommended Practice
"Financial Statements of Investment Trust Companies and Venture Capital Trusts"
revised January 2009 and in accordance with the accounting policies set out in
the statutory accounts for the year ended 31 January 2011, which were prepared
under UK Generally Accepted Accounting Practice.

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

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 July 2010 and
the year ended 31 January 2011.

6. Basic and diluted return per share for the period has been calculated on
19,436,116 shares, being the weighted average number of shares in issue during
the period.

7. Basic and diluted NAV per share for the period has been calculated on
19,380,664 shares, being the number of shares in issue at the period end.

8. Dividends

                                               Pence   31 July   31 Jan
                                                 per      2011     2011

                                               share     £'000    £'000

Paid in the period

2011 final dividend paid on 17 June 2011         1.0       196        -

2011 interim dividend paid on 26 November 2010   1.0         -      192

2010 final dividend paid on 11 June 2010         1.0         -      195

                                                           196      387

Split as:

Paid directly to shareholders                              163      321

Shares issued under dividend re-investment scheme           33       66

                                                           196      387

9. Reserves

                    Capital   Share           Capital Investment
                 redemption premium         reserve -    holding
                    reserve account Special  realised     losses Revenue
                                    reserve                      reserve

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

At 1 February 2011      398   7,170   7,586   (2,914)    (2,500)   (733)

Issue of new shares       -     267       -         -          -       -

Share issue costs         -     (9)       -         -          -       -

Purchase of own           3       -   (141)         -          -       -

Expenses capitalised      -       -       -      (63)          -       -

Gains/(losses) on         -
investments                       -       -        14      (234)       -

Realisation of
revaluations from         -       -       -     (422)        422       -
previous years

Transfer between          -       -       -         -          -       -

Retained net loss         -       -       -         -          -    (62)

Dividends paid in the     -       -       -     (196)          -       -

At 31 July 2011         401   7,428   7,445   (3,581)    (2,312)   (795)

Distributable reserves comprise the special reserve, capital reserve - realised
and revenue reserve.   At the period end there were £757,000 (31 Jan 2011:
£1,439,000) of reserves available for distribution after deducting the capital
reserve - unrealised of £2,312,000 (31 Jan 2011: £2,500,000).

10. 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 31 January 2011 have been extracted from the financial statements for
that year, which have been delivered to the Registrar of Companies; the
Auditor's report on those financial statements was unqualified.

11. 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

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.

12. 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

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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