Proven Growth & Income VCT plc : Final Results

PROVEN GROWTH & INCOME VCT PLC

FINAL RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2013

FINANCIAL SUMMARY

As at 28 February	2013	2012
	Pence	Pence
Net asset value per Ordinary Share	87.7	82.2
Dividends paid since class launch (originally as 'C' Shares)	18.6	14.1
Total return (net asset value plus dividends paid since 'C' Share class launch)	106.3	96.3
Year on year change in:
Net asset value per share (adjusted for dividends paid)	7.6%

CHAIRMAN'S STATEMENT

I am pleased to present the Annual Report for ProVen Growth and Income VCT plc for the year ended 28 February 2013.

During the year, the Company merged the 'D' Shares into the Ordinary Shares, which has simplified reporting to Shareholders. There has been positive news from the Company's investment portfolio and I am also pleased to report that the Company has today announced proposals to merge with another VCT, which I believe brings benefits for Shareholders.

Net asset value
At 28 February 2013, the Company's Ordinary Share net asset value ("NAV") stood at 87.7p per share. This represents an increase of 10.0p (adjusted for dividends paid in the year) or 12.1% since 29 February 2012. The return for a Shareholder who started the year holding 'D' Shares was an increase of 15.4%.

The total return (NAV plus cumulative dividends paid) for Shareholders who invested in the Company's original Ordinary Share offer in 2001 now stands at 206.7p for an investment of £1 before taking account of any initial income tax relief.

Portfolio activity and valuation
The Company has an adequate level of funds available for investment and has seen a good level of investment activity during the year. A total of £6.6 million was invested in three new companies and seven existing companies. There were also several disposals and redemptions of loan stock which generated proceeds of £1.1 million.

The Board reviewed the valuations of the unquoted investments at the year end and made a number of adjustments to the previous carrying values. Net unrealised gains for the year were £3.7 million.

The most significant news from the portfolio has come since the year end when there have been two profitable disposals. Fjordnet was the subject of an acquisition by international consultancy, Accenture, giving rise to a realised gain of £4.2 million on completion and a possible further consideration of up to £0.6 million within the next twelve months. The valuation of the Company's investment in Fjordnet at the year end reflected the value subsequently realised on disposal. The investment in Tossed was sold for a realised gain of £158,000 and this was also reflected in the company's net asset value at the year end.

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

Results and dividends
The total return on ordinary activities for the year was £4.4 million, comprising a £752,000 revenue return and a £3.6 million capital return.

In line with the policy that I set out in my report last year, a dividend of 4p per share will be paid in respect of the year ended 28 February 2013. Based on the NAV of the Ordinary Shares at 29 February 2012, this equates to a yield of 4.9%. The dividend will be paid as an interim dividend on 2 August 2013 to Shareholders on the register at 5 July 2013.

'D' Share conversion
On 30 October 2012, the Company's 'D' Shares were converted into Ordinary Shares at the rate of 1.1427 Ordinary Shares per 'D' Share.

Former 'D' Shareholders will have received new share certificates shortly after the transaction and should note that their original 'D' Share certificates are now invalid and should be destroyed.

Fundraising activities and share issues
In January 2013, the Company launched an offer for subscription seeking to raise up to £15 million. All shares in respect of the offer were allotted after the year end. As at the date of this report, the offer had raised gross proceeds of approximately £9.0 million.

The Company allotted 50,565 Ordinary Shares under the Company's dividend reinvestment scheme in respect of the dividend paid on 31 August 2012. The shares were issued at 78.2p per share.

Enhanced buyback facility
The Company also offered an enhanced buyback facility during the year. This allowed Shareholders who had already held their shares for the required VCT holding period, to sell them back to the Company and reinvest the proceeds in new VCT shares, which are eligible for income tax relief. The Board was pleased with the take up of 4.8 million shares, in respect of which Shareholders have effectively committed to stay invested in the Company for a further five years to maintain the upfront income tax reliefs.

Share buybacks
In order to ensure liquidity in the market in the Company's shares, the Company has operated a policy of buying in its own shares that become available in the market.

During the year, the Company made market purchases of 952,352 Original Ordinary Shares and 19,300 'D' Shares prior to the consolidation of share classes for cancellation at an average price of 72.6p and 83.3p per share respectively.

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

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

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

Proposed merger
The Company has today announced proposals to merge with ProVen Health VCT plc. Subject to Shareholder approval, the merger will be effected by a S110 Insolvency Act Scheme of Arrangement under which ProVen Growth and Income VCT plc will acquire the assets and ProVen Health VCT plc and ProVen Health VCT plc shareholders will be new shares in ProVen Growth and Income VCT plc. ProVen Health VCT plc has net assets of £7.6 million. Assuming the merger completes, the increased size of the Company will have benefits in terms of reduced running costs and Shareholders will also have exposure to greater portfolio diversity.

Full details of the proposals are included within a prospectus and circular which has been issued by the Company today. A general meeting to seek approval for the merger proposals is scheduled to take place at 3.00 p.m., after the AGM, on 30 July 2013.

Investment policy amendment
In recent years, returns on cash and cash equivalents held by the Company have been very low. The Board believes that the performance of the Company could be improved if the scope of the investment policy in respect of non-qualifying investments were broadened to include investments in debt and debt-related securities in growth companies.

A proposed amendment to the investment policy has been set out in the circular issued in connection with the proposed merger as described above. Approval for the amendment will be sought at the general meeting on 30 July 2013.

Annual General Meeting
The Annual General Meeting ("AGM") of the Company will be held in The Forest Room at The Hospital Club, 24 Endell Street, Covent Garden, London WC2H 9HQ at 2.30p.m. on 30 July 2013.

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

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

In order to give the Board flexibility in considering fundraising options over the next year without necessarily having to incur the costs of preparing an additional shareholder circular, the Board is seeking authority to issue and allot up to 32 million new shares.

Shareholder event
I would also like to take this opportunity to draw your attention to the Investment Manager's annual Shareholder presentation which will be held at the British Museum, in central London on 22 October 2013, starting at 10.00 a.m. The event has been running for several years and has been well received by Shareholders. It provides attendees 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. A formal invite is being sent separately.

Outlook
The Board is pleased with the progress made by the Company over the last year and, with a significant level of new funds available for investment arising from the current share offer, we expect to see the Company being an active investor over the coming year, albeit in a volatile and competitive environment. Activity has picked up since the year end with the profitable disposals of Fjordnet and Tossed and further investments in Monica Vinader and Utility Exchange Online. The Board has encouraged the strategy of investing in more businesses in the media and digital services sectors and remain confident in the Manager's ability to find good companies in these sectors, then to nurture these investments and eventually exit at a profit. The proposed merger will also create a more diversified portfolio which will reduce risk and also lower running costs as a percentage of shareholder funds. I look forward to updating Shareholders on developments in my statement with the Half Yearly Report to 31 August 2013.

Marc Vlessing
Chairman

INVESTMENT MANAGER'S REVIEW

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

ProVen Growth and Income VCT has been managed by Beringea since its inception in 2001. From a modest initial fundraising of £7 million (which coincided with a general economic downturn and decline in VCT fundraising), the Company has grown to almost £50 million in net assets, including funds raised after the year end under the current fundraising. The Company has invested over £35 million in over 50 small and medium sized companies and at 28 February 2013 had investments in 30 companies, at an average investment cost of approximately £900,000.

Review of the year
The Company invested £6.6 million during the year, an increase of 90% on the comparable figure for 29 February 2012, including three investments in companies new to the portfolio and further funding to seven existing portfolio companies. The Company fully realised its investments in two companies during the year and there were partial loan repayments from a further four companies. At 28 February 2013, the Company held investments in 27 unquoted companies and 3 quoted companies at a cost of £21.1 million and a valuation of £ 26.9 million. In addition, the Company held cash of £11.5 million. As a result of the merger of the Ordinary and 'D' Share classes in October 2012; all Shareholders now have an interest in all portfolio investments.

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

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

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

Cognolink offers a broad range of "expert network" services to private equity firms, hedge funds, asset managers and large consulting businesses. These services assist these clients in their primary research by facilitating consultations with industry experts via one-to-one phone calls, in-person meetings and interactive conference calls.
Skills Matter supports a community of 35,000 software professionals with the learning and sharing of skills, via public/private training courses and conferences. The new funding will be used to provide even more opportunities for its community to collaborate with the world's top technology experts. In addition, the company will now be able to offer work and collaboration space.

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

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

At 28 February 2013, the venture capital portfolio showed a net unrealised gain across all investments of £3.7 million. It is worth reiterating that the portfolio companies are valued in accordance with established international valuation guidelines. This requires the application of a valuation methodology which gives a "fair value", the price at which an orderly transaction between a willing buyer and willing seller would take place, to each investment as at the valuation date. This is typically, for established businesses, by reference to comparable quoted companies with similar operations. The actual value can, however, only be established at the point of sale and potential acquirers may place different values on an investment for different reasons such as strategic importance or to complement existing businesses.

There were encouraging performances from a number of companies in the portfolio and this was complemented by broader positive movements in comparable company multiples. Fjordnet and Tossed saw increases in valuation which were crystallised on realisation after the year end. There were uplifts from Campden Media and Matssoft. Espresso and Donatantonio saw modest decreases in valuation. Donatantonio actually repaid significant accumulated loan interest which reduced its value at the valuation date but which contributes to its overall return.

Post year end developments
In May 2013, the investment in Fjordnet was the subject of an acquisition by Accenture Holdings B.V., a subsidiary of Accenture (NYSE: ACN) giving rise to a realised gain of £4.2 million upon completion and possible further consideration of up to £0.6 million within the next twelve months. This continues a list of notable successes in the digital media sector alongside Mergermarket, ILG Digital, Steak Media and Saffron Media.

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

Monica Vinader, the luxury jewellery retailer, continues to progress and a further £400,000 was invested by the Company in May 2013 and, in June 2013, an additional £353,000 was invested in Utility Exchange Online; both investments were to fund continued development. The company also received proceeds from the partial disposal of Cross Solar PV Limited in May 2013.

Outlook
We continue to be pleased with the overall performance of the venture capital portfolio. The recent profitable exits from Fjordnet and Tossed support our confidence in the portfolio. We are optimistic that further profitable exits, as well exciting new investments, lie ahead although, as befits a venture capital portfolio, the timing of these is uncertain and subject to wider economic conditions.

Beringea LLP

INVESTMENT PORTFOLIO

Investment activity during the year is summarised as follows:

Additions	Cost
	£'000
Cognolink Limited	1,732
Inskin Media Limited	1,115
Skills Matter Limited	866
Fjordnet Limited	861
Utility Exchange Online Limited	775
Vigilant Applications Limited*	381
Matssoft Limited	265
APM Healthcare Limited	238
Speed-Trap Holdings Limited	233
Campden Media Limited	83
Senselogix Limited	65
Total	6,614

Disposals	Cost	Market value at 01/03/12~	Disposal proceeds	(Loss)/gain against cost	Total realised gain during the year
	£'000	£000	£'000	£'000	£'000
Overtis Group Limited	1,095	-	-	(1,095)	-
Isango! Limited	650	-	23	(627)	23
Fjordnet Limited	310	310	310	-	-
Ashford Colour Press Limited	275	210	289	14	79
Campden Media Limited	83	83	83	-	-
Cross Solar PV Limited*	75	75	75	-	-
Sports Holdings Limited*	10	10	10	-	-
Steak Media Limited**	-	-	17	17	17
Saffron Media Limited**	-	-	291	291	291
Total	2,498	688	1,098	(1,400)	410

*        Non-qualifying investment
**        Investment previously disposed of but further proceeds received
~        Adjusted for purchases during the year

INVESTMENT PORTFOLIO

The following investments were held at 28 February 2013:

	Cost	Valuation	Valuation movement in year	% of portfolio by value
	£'000	£'000	£'000
Top ten venture capital investments (by value)
Fjordnet Limited**	2,226	6,227	3,929	16.2%
Espresso Group Limited**	1,583	2,313	(123)	6.0%
Donatantonio Limited	1,366	2,293	(44)	6.0%
Cognolink Limited	1,732	1,732	-	4.5%
Blis Media Limited**	621	1,439	66	3.7%
Matssoft Limited**	1,140	1,354	213	3.5%
Utility Exchange Online Limited	1,277	1,277	-	3.3%
Charterhouse House Leisure Limited**	1,000	1,177	121	3.1%
Inskin Media Limited	1,115	1,115	-	2.9%
Chess Technologies Limited	900	1,037	(59)	2.7%
	12,960	19,964	4,103	51.9%
Other venture capital investments	8,162	6,929	(376)	18.0%
Total venture capital investments	21,122	26,893	3,727	69.9%
Liquidity funds		-		-
Cash at bank and in hand		11,496		30.1%
Total investments		38,389		100.0%

Other venture capital investments as at 28 February 2013 comprise:
Campden Media Limited, Cross Solar PV Limited, Skills Matter Limited, Eagle-i Music Limited, SPC International Limited, Tossed Limited, Eagle Rock Entertainment Group Limited, APM Healthcare Limited, Monica Vinader Limited, Dianomi Limited, Speed-Trap Holdings Limited, Pilat Media Global plc**, UBC Media Group plc**, Immedia Group plc, Cinergy International Limited, Senselogix Limited, Sports Holdings Limited*, Long Eaton Healthcare Limited, Vigilant Applications Limited* and Baby Innovations S.A. t/a Steribottle*

*        Non-qualifying investment
**        Partially non-qualifying investment

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

All of the above investments, with the exclusion of Eagle-i Music Limited and Immedia Group plc, were also held by ProVen VCT plc.

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

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

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

Directors' responsibilities statement

The directors are responsible for preparing the directors' report and business review, the directors' remuneration report and the financial statements in accordance with applicable law and regulations. They are also responsible for ensuring that the annual report includes information required by the Listing Rules of the Financial Conduct Authority.

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

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

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

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

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

Statement as to disclosure of information to the 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 Auditor is 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. This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

INCOME STATEMENT

	Year ended 28 February 2013				Year ended 29 February 2012
	Revenue	Capital	Total		Revenue	Capital	Total
	£'000	£'000	£'000		£'000	£'000	£'000
Income	1,301	-	1,301		663	-	663
Gains on investments	-	4,137	4,137		-	236	236
	1,301	4,137	5,438		663	236	899
Investment management fees	(172)	(516)	(688)		(179)	(539)	(718)
Other expenses	(377)	(8)	(385)		(322)	-	(322)
Return/(loss) on ordinary activities before tax	752	3,613	4,365		162	(303)	(141)
Tax on ordinary activities	-	-	-		-	-	-
Return/(loss) attributable to equity shareholders	752	3,613	4,365		162	(303)	(141)
Basic and diluted return/(loss) per share:
Ordinary Share	1.9p	9.2p	11.1p		0.6p	(0.2p)	0.4p
'D' Share	n/a	n/a	n/a		(0.5p)	(2.7p)	(3.2p)

All revenue and capital items above 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. The supplementary revenue and capital columns are presented for information purposes in accordance with the Statement of Recommended Practice issued by The Association of Investment Companies.

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

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

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

	Year ended 28 February 2013		Year ended 29 February 2012
	£'000		£'000
Opening Shareholders' funds	35,384		28,241
Issue of shares	40		10,020
Share issue costs	-		(549)
Movement in share capital to be issued	781		-
Purchase of own shares	(711)		(640)
Distributions	(1,520)		(1,547)
Total recognised gains/(losses) for the year	4,365		(141)
Closing Shareholders' funds	38,339		35,384

BALANCE SHEET

	28 February 2013		29 February 2012
	£'000		£'000
Fixed assets
Investments	26,893		17,621
Current assets
Debtors	268		1,208
Current investments	-		2,500
Cash at bank and in hand	11,496		14,402
	11,764		18,110
Creditors: amounts falling due within one year	(318)		(347)
Net current assets	11,446		17,763
Total assets less current liabilities	38,339		35,384
Capital and reserves
Called up share capital	693		638
Capital redemption reserve	982		966
Unallotted share capital	781		-
Share premium	17,727		17,758
Special reserve	11,272		14,513
Capital reserve - realised	723		1,459
Revaluation reserve	6,142		614
Revenue reserve	19		(564)
Total equity shareholders' funds	38,339		35,384
Basic and diluted net asset value per share	87.7p		82.2p

CASH FLOW STATEMENT

	Year ended 28 February 2013		Year ended 29 February 2012*
	£'000		£'000
Net cash inflow/(outflow) from operating activities	42		(370)
Capital expenditure
Purchase of investments	(5,136)		(3,514)
Sale of investments	1,098		2,019
Net cash outflow from capital expenditure	(4,038)		(1,495)
Equity dividends paid	(1,520)		(1,547)
Management of liquid resources
Withdrawal from liquidity funds	2,500		-
Net cash inflow from liquid resources	2,500		-
Net cash outflow before financing	(3,016)		(3,412)
Financing
Proceeds from share issue	40		10,020
Share issue costs	-		(549)
Purchase of own shares	(711)		(511)
Unallotted share capital	781		(1,279)
Net cash inflow from financing	110		7,681
(Decrease)/increase in cash	(2,906)		4,269

*        As restated

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 28 FEBRUARY 2013

1        Accounting policies

Basis of accounting

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

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

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

Going concern

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

Presentation of Income Statement

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

Fixed assets investments

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 the International Private Equity and Venture Capital Valuation Guidelines ("IPEV Guidelines") together with FRS26 - Financial Instruments: Recognition and Measurement.

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

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

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

The methodology applied takes account of the nature, facts and circumstances of the individual investment and uses reasonable data, market inputs, assumptions and estimates in order to ascertain fair value.

Fixed asset investments are derecognised when the contractual rights to the cashflows from the asset expire or it transfers the asset and substantially all the risks and rewards of ownership of the asset to another entity.

Where an investee company has gone into receivership or liquidation, or the loss in value below costs is considered to be permanent, or there is little likelihood of a recovery from a company in administration, the loss on the investment, although not physically disposed of, is treated as being realised.

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

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

Current asset investments

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

Income

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

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

Expenses

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

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

Taxation

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

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

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

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

Other debtors and other creditors

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

Share issue costs

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

2        Basic and diluted return per share

	Year ended 28 February 2013		Year ended 29 February 2012
	Ordinary Shares		Ordinary Shares*
Revenue return per share based on:
Net revenue after taxation (£'000)	752		162
Weighted average number of shares in issue	39,094,427		40,642,846
Pence per share	1.9p		0.4p
Capital return/(loss) per share based on:
Net capital gain/(loss) for the financial year (£'000)	3,613		(303)
Weighted average number of shares in issue	39,094,427		40,642,846
Pence per share	9.2p		(0.8p)

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

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

3         Basic and diluted net asset value per share

				2013			2012
	Shares in issue			Net asset value			Net asset value
	2013	2012		per share	£'000		per share	£'000
Ordinary Shares	42,829,594	34,341,341		87.7p	37,558		82.2p	28,233
'D' Shares	n/a	8,236,814		n/a	n/a		86.8p	7,151
Ordinary share capital to be issued					781			-
					38,339			35,384

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

4        Principal risks and management objectives

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

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

The Board regularly reviews these risks and the policies in place for managing them. There have been no significant changes to the nature of the risks that the Company is exposed to over the year and there have also been no significant changes to the policies for managing those risks during the year.

The risk management policies used by the Company in respect of the principal financial risks and a review of the financial instruments held at the year end are provided below:

Market risks

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

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

*        Market price risk; and
*        Interest rate risk.

Market price risk

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

Interest rate risk

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

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

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

The Company monitors the level of income received from fixed, floating and no interest rate assets and, if appropriate, may make adjustments to the allocation between the categories, in particular should this be required to ensure compliance with the VCT regulations.

Based on the assumption that the yield of all floating rate financial instruments would change by an amount equal to the movement in prevailing interest rates, it is estimated that an increase of 1% in interest rates would have increased total return before taxation for the year by £119,000. As the Bank of England base rate stood at 0.5% per annum throughout the year, it is believed that a reduction from this level is unlikely.

Credit risk

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

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

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

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

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

Liquidity risk

Liquidity risk is the risk that the Company encounters difficulties in meeting obligations associated with its financial liabilities. Liquidity risk may also arise from either the inability to sell financial instruments when required at their fair values or from the inability to generate cash inflows as required. The Company maintains a relatively low level of creditors (£318,000 at 28 February 2013) and has no borrowings. Also, liquidity funds and some quoted investments held by the Company are considered to be readily realisable.

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

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

Although the Company's investments are not held to meet the Company's liquidity requirements, the table below shows an analysis of the loan notes, highlighting the length of time that it could take the Company to realise its assets if it were required to do so.

5        Post balance sheet events

Between 4 April 2013 and the date of this report, the Company issued 9,741,612 Ordinary Shares for an aggregate consideration of £8.1million. Share issue costs thereon amounted to £377,000.

On 22 May 2013, Fjordnet Limited was the subject of an acquisition by Accenture, giving rise to possible total realised gain of up to £4.8 million within the next twelve months. On 18 April 2013, the investment in Tossed Limited was sold for a realised gain of £158,000.

As at the date of this announcement, the Company announced proposals to merge with ProVen Health VCT plc. Subject to shareholder approval, ProVen Growth and Income VCT plc will acquire the assets of ProVen Health VCT plc and ProVen Health VCT plc shareholders will be issued new shares in ProVen Growth and Income VCT plc.

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

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

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

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This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.

Source: Proven Growth & Income VCT plc via Thomson Reuters ONE

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