ProVen Growth and Income VCT plc
Half-Yearly Financial Report
for the Six Months Ended 31 August 2007
SHAREHOLDER INFORMATION
Recent Performance Summary
31 Aug 28 Feb 31 Aug
2007 2007 2006
pence pence pence
Net asset value per Ordinary share 126.0 129.7 171.0
Cumulative distributions per Ordinary share 75.9 68.9 18.9
Total return per Ordinary share 201.9 198.6 189.9
Net asset value per 'C' share 95.7 97.2 95.1
Cumulative distributions per 'C' share 2.0 - -
Net asset value per 'C' share 97.7 97.2 95.1
Dividend History
Year ended 28 February
Pence per share 2002 2003 2004 2005 2006 2007 Total
Ordinary Shares 1.4 1.0 3.5 6.5 6.5 57.0 75.9
'C' Shares n/a n/a n/a n/a n/a 2.0 2.0
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the results of Proven Growth & Income VCT plc
for the six months ended 31 August 2007
Net Asset Values
At 31 August 2007, the Company's net asset value per Ordinary Share
stood at 126.0p, an increase of 3.3p (2.5%) per share since the
previous year end (after adjusting for dividends paid in the period).
The net asset value per 'C' share at 31 August 2007 stood at 95.7p, a
small increase of 0.5p per share since 28 February 2007 (again after
adjusting for dividends paid in the period).
Venture Capital Investments
Ordinary Share Pool
Two disposals took place from the Ordinary Share pool during the
period. Oasis Healthcare plc was the subject of a takeover offer
generating a realised gain in the period of £219,000. The remaining
holding in AIM-quoted Cardpoint plc was also sold realising a gain
against original cost of £44,000.
The Board has reviewed the valuations of the investments held at the
period end and made several valuation adjustments. The net unrealised
movement on the venture capital investments was a gain of £111,000
over the period.
'C' Share Pool
The Manager has been very active during the period in building the
'C' Share portfolio. Nine new investments were made at a total cost
of £5.5 million. The 'C' Share pool now comprises eleven investments
with a total cost of £6.4 million.
In reviewing the valuations at the period end, the Board has agreed
two valuation adjustments such that the portfolio shows a small loss
of £87,000 over the six months.
Further details of the investments and investment management
activities are included in the Investment Manager's Report below.
Liquidity Fund Investments
The Company holds a proportion of its surplus funds in AAA rated
liquidity funds. At the period end the Company held £18.1 million in
six such funds, the majority of which related to the 'C' Share pool.
The Board expects to continue to hold these investments until funds
are needed for venture capital investments.
Results
The return on ordinary activities after taxation for the period was
£330,000 (comprising £313,000 revenue return and £17,000 capital
return). Details of how this is analysed between the share pools is
shown in note 7.
Dividend
The Company will pay an interim capital dividend of 6.0p per Ordinary
Share.
A revenue dividend of 1.0p per C Share will also be paid. Both
dividends will be paid on 6 December 2007 to Shareholders on the
registers at 16 November 2007.
Repurchase of Shares
The Company has a policy of purchasing its own shares that become
available, at approximately a 10% discount to the latest published
NAV, in order to help provide liquidity to those Shareholders that
need it.
During the period the Company purchased 4,427 Ordinary Shares at an
average price of 109.5p per share and 13,420 "C" shares at an average
price 86.0p per share. These shares were subsequently cancelled.
Risk and uncertainties
Under the Disclosure and Transparency Directive, the Board is now
required in the Company's half year results, to report on principal
risks and uncertainties facing the Company over the remainder of the
financial year.
The Board has concluded that the key risks facing the Company over
the remainder of the financial period are as follows:
* investment risk associated with a large proportion of the
Company's assets being invested in a small number of investments;
* investment risk associated with investing in small and immature
businesses; and
* failure to maintain approval as a VCT.
Although having a large proportion of the Company's assets invested
in a small number of investments involves additional risks, this
situation is not unusual within the venture capital industry and has
arisen as a result of strong growth in the value of two investments.
The Board regularly reviews the position to ensure that the potential
benefits of continuing to hold these investments outweighs the
additional risk.
In the case of the other key risks, the Board is also satisfied with
the Company's approach. The Investment Manager follows a rigorous
process in vetting and careful structuring of new investments and,
after the investment is made, close monitoring of the business.
The Company's compliance with the VCT regulations is continually
monitored by the Administrator, who regularly report to the Board on
the current position. The Company also retains
PricewaterhouseCoopers to provide regular reviews and advice in this
area. The Board considers that this approach reduces the risk of a
breach of the VCT regulations to a minimal level.
Outlook
The Investment Manager's main focus now is on new investing
activities, particularly in respect of the 'C' Share pool. At 31
August 2007, approximately 26% of the 'C' Share funds were invested
in VCT qualifying businesses. With the target of 70% to be invested
by 28 February 2009, the Board receives regular updates from the
Manager to ensure that the satisfactory rate of investments achieved
to date is maintained and a good quality, well-diversified portfolio
is built in a timely manner.
Despite the recent turbulence in stockmarkets, the Board is
cautiously optimistic that the Manager can deliver further good
results from this portfolio. Although there have been a number of
major, profitable realisations in recent periods, the Ordinary Share
portfolio still includes a number of maturing investments with bright
prospects.
Andrew Davison
Chairman
INVESTMENT MANAGER'S REVIEW
Introduction
This review covers the Company's six month period ended 31 August
2007. The total return attributable to the ordinary shares was
201.9p, more than double the initial subscription price, and an
increase of 2.1% over the period. This compares to an increase in the
total return on the FTSE All Share Index over the six month period of
4.2%.
The 'C' Shares show a total return of 97.7p compared to 94.5p at
launch and a small increase of 0.5p over the total return at 28
February 2007.
The Company continued to comply with the VCT regulations throughout
the period.
Portfolio Activity
The period has seen a significant number of new investments from the
'C' Share pool, and two further realisations from the ordinary share
pool.
Ordinary Share Pool
During the period the Company made two realisations. Oasis
Healthcare, which was one of the VCT's earliest investments back in
2001, was sold after a period of sustained performance generating a
total gain of 2.3 times the initial investment. The Company's
remaining holding in Cardpoint was finally sold at a small profit to
the initial cost.
'C' Share Pool
The period saw good progress towards investing the proceeds of the
2005/2006 'C' Share fundraising. In total, nine new investments
totalling £5.5 million were made.
Amount
Company & activity £'000
The Vending Corporation 1,000
Distribution of automated vending machines
Optima Data Intelligence Services 1,000
Marketing and data intelligence services
Eagle Rock Entertainment 680
Music and entertainment programming
Saffron Media Group 670
Mobile telephone and web services content provider
Heritage Media Partners 650
Image library rights owner
Charterhouse Leisure 529
Development of "Coal" branded restaurants
Steak Media 375
Online marketing services
Dianomi 324
Online marketing services
Coolabi 300
AIM-quoted character rights owner
Total 5,528
An agreement has been reached to make further investments in both
Heritage Media Partners and Charterhouse Leisure subject to
satisfactory performance and the achievement of other targets.
Portfolio Valuation
Ordinary Share Pool
At 31 August 2007, the Company's quoted and unquoted Ordinary Share
pool comprised 11 investments valued at £6.3 million. The major
change for investments held at 28 February 2007 was a further uplift
in the value of Espresso Broadband reflecting continued good progress
within its core primary school market and the increasing contribution
made by its newer, recent acquisitions. Offsetting this gain, in
part, have been falls in the valuations of AIM companies Pilat and
UBC Media. The Company's investment in Gyro has also fallen slightly
as the result of the fall in market comparables although we continue
to be pleased with the company's progress.
In addition to the venture capital investments, the Ordinary Share
pool held over £1.2 million in cash and liquidity funds.
C Share Pool
At 31 August 2007, the Company's quoted and unquoted 'C' Share pool
comprised 11 investments with a total value of £6.6 million. Nine of
these investments were valued at cost in accordance with venture
capital valuation guidelines, the exceptions being ILG and Gyro which
were valued on an earnings multiple basis. In addition, the 'C' Share
pool held over £17 million in cash and liquidity funds.
Further details of both portfolios are provided below.
Outlook
The Company has made good progress towards investing the proceeds of
the C share fundraising and, equally importantly, we continue to take
an active role in the management of the existing portfolio. We are
excited to be working again with proven entrepreneurs from previous
portfolio companies following the Company's investments in
Charterhouse Leisure (run by the management team from former
portfolio company Ma Potters) and Steak Media (run by senior
executives from Espotting) In addition, we are delighted to be
backing new management teams with exciting ideas and visions.
The stockmarket falls of August 2007 demonstrate the dynamic
environment in which we operate. Debt providers now appear to be
taking a more cautious approach to funding new investments and this
may have an effect on both new investment and possible exit
opportunities. We believe, however, that strong, well managed
businesses will continue to do well and are broadly pleased with the
overall performance and positioning of the portfolios.
Beringea Limited
INCOME STATEMENT
for the six months ended 31 August 2007
Six months ended
31 Aug 2007
Revenue Capital Total
£'000 £'000 £'000
Company Total
Income 700 - 700
Gains on investments - 236 236
700 236 936
Investment management fees (95) (284) (379)
Performance incentive fees (13) (75) (88)
Other expenses (139) - (139)
Return on ordinary activities 453 (123) 330
before taxation
Taxation (140) 140 -
Return attributable to 313 17 330
equity shareholders
Return per Ordinary share 0.3p 3.0p 3.3p
Return per 'C' share 1.2p (0.7p) 0.5p
Ordinary Shares
Income 110 - 110
Gains on investments - 323 323
110 323 433
Investment management fees (24) (73) (97)
Performance incentive fees (13) (75) (88)
Other expenses (43) - (43)
Return on ordinary activities 30 175 205
before taxation
Taxation (11) 11 -
Return attributable to 19 186 205
equity shareholders
'C' Shares
Income 590 - 590
(Losses)/gains on investments - (87) (87)
590 (87) 503
Investment management fees (71) (211) (282)
Other expenses (96) - (96)
Return on ordinary activities 423 (298) 125
before taxation
Taxation (129) 129 -
Return attributable to 294 (169) 125
equity shareholders
Six months ended Year ended
31 Aug 2006 28 Feb 2007
Revenue Capital Total Total
£'000 £'000 £'000 £'000
Company Total
Income 566 - 566 1,255
Gains on investments - 2,607 2,607 4,115
566 2,607 3,173 5,370
Investment management fees (90) (269) (359) (759)
Performance incentive fees - - - (604)
Other expenses (132) - (132) (258)
Return on ordinary activities 344 2,338 2,682 3,749
before taxation
Taxation (56) 56 - (3)
Return attributable to 288 2,394 2,682 3,746
equity shareholders
Return per Ordinary share 0.2p 39.6p 39.8p 48.5p
Return per 'C' share 1.2p (0.6p) 0.6p 2.8p
Ordinary Shares
Income 80 - 80 200
Gains on investments - 2,607 2,607 3,791
80 2,607 2,687 3,991
Investment management fees (26) (78) (104) (222)
Performance incentive fees - - - (604)
Other expenses (44) - (44) (89)
Return on ordinary activities 10 2,529 2,539 3,076
before taxation
Taxation 6 (6) - (3)
Return attributable to 16 2,523 2,539 3,073
equity shareholders
'C' Shares
Income 486 - 486 1,055
(Losses)/gains on investments - - - 324
486 - 486 1,379
Investment management fees (64) (191) (255) (537)
Other expenses (88) - (88) (169)
Return on ordinary activities 334 (191) 143 673
before taxation
Taxation (62) 62 - -
Return attributable to 272 (129) 143 673
equity shareholders
UNAUDITED SUMMARISED BALANCE SHEET
as at 31 August 2007
As at As at
31 Aug 28 Feb
As at 31 Aug 2007 2006 2007
Ordinary 'C'
shares Shares Total Total Total
£'000 £'000 £'000 £'000 £'000
Investments 6,286 6,649 12,935 10,475 7,732
Net current assets 1,609 17,253 18,862 24,108 24,690
Net assets 7,895 23,902 31,797 34,583 32,422
Capital and reserves
Called up share capital 63 1,248 1,311 1,312 1,312
Capital redemption reserve 8 1 9 8 8
Share premium account 27 22,357 22,384 22,384 22,384
Special reserve 4,905 - 4,905 5,189 4,977
Capital reserve - realised 713 (257) 456 389 722
Capital reserve - unrealised 2,074 237 2,311 4,897 2,337
Revenue reserve 105 316 421 404 682
Equity shareholder's funds 7,895 23,902 31,797 34,583 32,422
Net asset value per:
Ordinary Share 126.0p 171.0p 129.7p
'C' Share 95.7p 95.1p 97.2p
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
31 Aug 28 Feb
31 Aug 2007 2006 2007
Ordinary 'C'
shares Shares Total Total Total
£'000 £'000 £'000 £'000 £'000
Opening shareholders' funds 8,134 24,288 32,422 11,074 11,074
Issue of shares - - - 22,350 22,350
Share issue costs - - - (1,230) (1,229)
Repurchase of own shares (5) (11) (16) (70) (146)
Total recognised gains for the 205 125 330 2,682 3,746
period
Distributions paid in period (439) (500) (939) (223) (3,373)
Closing shareholders' funds 7,895 23,902 31,797 34,583 32,422
UNAUDITED CASH FLOW STATEMENT
for the six months ended 31 August 2007
Six Six
months months Year
ended ended ended
31 Aug 31 Aug 28 Feb
2007 2006 2007
Note £'000 £'000 £'000
Cash (outflow)/inflow from
operating 1
activities and returns on
investments (605) 126 387
Capital expenditure
Purchase of investments (5,528) (261) (1,145)
Sale of investments 562 - 4,799
Net cash (outflow)/inflow from (4,966) (261) 3,654
capital expenditure
Equity distributions paid (939) (223) (3,373)
Management of liquid resources
Purchase of current investments - (23,600) (24,600)
held
as liquidity funds
Withdrawal from liquidity funds 3,900 - 3,000
3,900 (23,600) (21,600)
Net cash outflow before financing (2,610) (23,958) (20,932)
Financing
Proceeds from share issue - 18,266 18,266
Share issue costs - (1,254) (1,254)
Purchase of own shares (16) (59) (146)
Net cash (outflow)/inflow from (16) 16,953 16,866
financing
Decrease in cash 2 (2,626) (7,005) (4,066)
Notes to the cash flow statement:
1. Cash flow from operating
activities
and returns on investments
Net revenue before taxation 453 344 807
Expenses charged to capital (360) (269) (1,173)
Increase in other debtors (48) (110) (53)
(Decrease)/increase in accruals (650) 161 806
and other creditors
Net cash (outflow)/inflow from (605) 126 387
operating activities
2. Analysis of net funds
Beginning of period 3,123 7,189 7,189
Net cash outflow (2,626) (7,005) (4,066)
End of period 497 184 3,123
SUMMARY OF INVESTMENT PORTFOLIO
as at 31 August 2007
Movement
% of in the
Cost Valuation portfolio period
£'000 £'000 by value £'000
Ordinary Share pool
Venture capital investments
Espresso Broadband Limited 784 2,416 32.0% 374
ILG Digital Limited 600 1,595 21.1% (38)
(formerly i-Level Limited)
Gyro International Limited 500 896 11.9% (127)
Campden Media Limited 488 594 7.9% 67
Ashford Colour Press Limited 550 466 6.2% 7
UBC Media plc * 400 143 1.9% (63)
Pilat Media Global plc * 50 119 1.6% (67)
Sports Holdings Limited 260 39 0.5% (37)
Immedia Broadcasting plc * 171 18 0.2% (5)
Baby Innovations S.A. t/a 209 - - -
Steribottle
Campus Communications Group
Limited (formerly - JVTV -
Holdings
Limited) 200 - -
Total venture capital 111
investments 4,212 6,286 83.3%
Liquidity funds 1,000 13.2%
Cash at bank and in hand 264 3.5%
Ordinary Share Pool - Total 7,550 100.0%
C' Share pool
Venture capital investments
Optima Data Intelligence 1,000 1,000 4.2% -
Limited
The Vending Corporation Limited 1,000 1,000 4.2% -
Gyro International Limited 681 821 3.4% (80)
Eagle Rock Entertainment Group 680 680 2.8% -
Limited
Saffron Media Group Limited 670 670 2.8% -
Heritage Partners Limited 650 650 2.7% -
Charterhouse Leisure Limited 529 529 2.2% -
Steak Media Limited 375 375 1.6% -
Dianomi Limited 324 324 1.4% -
Coolabi plc* 300 300 1.2% -
ILG Digital Limited (formerly 203 300 1.2% (7)
i-Level Limited)
Total venture capital (87)
investments 6,412 6,649 27.7%
Liquidity funds 17,100 71.3%
Cash at bank and in hand 233 1.0%
'C' Share Pool - Total 23,982 100.0%
Company Total 31,532
All venture capital investments are unquoted unless otherwise stated.
* Quoted on AIM
SUMMARY OF INVESTMENT MOVEMENTS
For the six months ended 31 August 2007
Additions
£'000
'C' Share Portfolio
Optima Data Intelligence Services Limited 1,000
The Vending Corporation Limited 1,000
Eagle Rock Entertainment Group Limited 680
Saffron Media Group Limited 670
Heritage Partners Limited 650
Charterhouse Leisure Limited 529
Steak Media Limited 375
Dianomi Limited 324
Coolabi plc 300
5,528
Disposals
Market Total
value at realised
1 March Disposal Gain/(loss) gain/
Cost 2007 Proceeds against cost (loss )
£'000 £'000 £'000 £'000 £'000
Ordinary Share
Portfolio
Cardpoint plc 129 176 173 44 (3)
Oasis Healthcare plc 170 172 389 219 217
299 348 562 263 214
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. The unaudited interim results cover the six months to 31 August
2007 and have been prepared in accordance with the accounting
policies set out in the statutory accounts for the year ended 28
February 2007 which were prepared under UK Generally Accepted
Accounting Practice ("UK GAAP") and in accordance with the Statement
of Recommended Practice "Financial Statements of Investment Trust
Companies" revised December 2005 ("SORP").
2. All revenue and capital items in the Income Statement derive from
continuing operations.
3. There are no recognised gains or losses other than those disclosed
in the Income Statement.
4. The Company has only one class of business and derives its income
from investments made in shares, securities and bank deposits.
5. The comparative figures were in respect of the period ended 31
August 2006 and the year ended 28 February 2007 respectively.
6. Net Asset Value per share calculations are based on the
following:
Ordinary 'C'
Shares Shares
Net Assets (£'000) 7,895 23,902
Number of shares in issue at period end 6,267,239 24,979,862
7. Return per share calculations are based on the following:
Ordinary 'C'
Shares Shares
Revenue return per share based on:
Net revenue profit after taxation (£'000) 19 294
Weighted average number of shares in issue 6,270,752 24,979,862
Capital return per share based on:
Net capital gain/(loss) after taxation (£'000) 186 (169)
Weighted average number of shares in issue 6,270,752 24,966,242
8. Dividends
28 Feb
31 August 2007 31 August 2006 2007
Paid in year Revenue Capital Total Revenue Capital Total Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Ordinary Share
dividends
2007 second 63 376 439 - - - -
interim
2007 first interim - - - - - - 3,150
2006 second - - - 32 191 223 223
interim
63 376 439 32 191 223 3,373
'C' Share
dividends
2007 first interim 500 - 500 - - - -
9. Reserves
Capital Capital Capital
Share Special redemption Share reserve reserve Revenue
Capital reserve reserve premium - - Reserve
unrealised realised
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 March 1,312 4,977 8 22,384 2,337 722 682
2007
Shares (1) (5) 1 - - - (11)
repurchased
Expenses - - - - - (219) -
capitalised
Gains on - - - - 23 213 -
investments
Realisation
of - - - - (49) 49 -
revaluations
from previous
years
Distributions - - - - - (376) (563)
paid
Transfer - (67) - - - 67 -
between
reserves
Retained net - - - - - - 313
revenue for
the period
At 31 August 1,311 4,905 9 22,384 2,311 456 421
2007
Analysed as:
Ordinary £'000 £'000 £'000 £'000 £'000 £'000 £'000
Shares
At 1 March 63 4,977 8 27 2,013 897 149
2007
Shares - (5) - - - - -
repurchased
Expenses - - - - - (137) -
capitalised
Gains on - - - - 110 213 -
investments
Realisation
of - - - - (49) 49 -
revaluations
from previous
years
Distributions - - - - - (376) (63)
paid
Transfer - (67) - - - 67 -
between
reserves
Retained net - - - - - - 19
revenue for
the period
At 31 August 63 4,905 8 27 2,074 713 105
2007
'C' Shares £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 March 1,249 - - 22,357 324 (175) 533
2007
Shares (1) - 1 - - - (11)
repurchased
Expenses - - - - - (82) -
capitalised
Losses on - - - - (87) - -
investments
Distributions - - - - - - (500)
paid
Retained net - - - - - - 294
revenue for
the period
At 31 August 1,248 - 1 22,357 237 (257) 316
2007
The Special Reserve is a distributable reserve that allows the
Company to make market purchases of its own shares and to pay
distributions. The Ordinary Capital reserve - realised and Revenue
Reserves are also distributable reserves.
10. The unaudited financial statements set out herein do not
constitute statutory accounts within the meaning of Section 240 of
the Companies Act 1985 and have not been delivered to the Registrar
of Companies. The figures for the year ended 28 February 2007 have
been extracted from the financial statements for that year, which
have been delivered to the Registrar of Companies; the auditors'
report on those financial statements was unqualified.
11. On 4 October 2007, Shareholder approval was granted for a minor
amendment to the Performance Incentive Fee Arrangements with the
Investment Manager, Beringea Limited. The amendment replaced a
hurdle that was based on net asset value in the original arrangements
with an equivalent hurdle based on a performance value calculated by
adding net asset value to cumulative dividends paid. The adoption of
this amendment helps avoid a possible situation that could arise
where the Investment Manager might not have been incentivised to
support the payment of a dividend, although has this no material
affect on the current financial position of the Company.
12. The Directors confirm that, to the best of their knowledge, the
half-yearly financial statements have been prepared in accordance
with the "Statement: Half-Yearly Financial Reports" issued by the UK
Accounting Standards Board and the half-yearly financial report
includes a fair review of the information required by:
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
DTR 4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have taken place in the first six months of
the current financial year and that have materially affected the
financial position or performance of the entity during that period,
and any changes in the related party transactions described in the
last annual report that could do so.
13 Copies of the unaudited interim results will be sent to
shareholders shortly. Further copies can be obtained from the
Company's Registered Office.
---END OF MESSAGE---