TIDMSURE
RNS Number : 6756U
Sure Ventures PLC
31 July 2020
Sure Ventures plc
('Sure Ventures' or 'the Company')
Annual Report - for the year ended 31 March 2020
Sure Ventures plc, a venture capital fund which invests in early
stage software companies in the rapidly growing tech verticals of
augmented reality ('AR'), virtual reality ('VR'), and Internet of
Things ('IoT') and Artificial Intelligence (AI), is pleased to
announce its annual results for the first full year investment for
the year ending 31 March 2020.
The Company's annual report and audited financial statements
will be posted to shareholders shortly and will be made available
on the Company's website www.sureventuresplc.com
For further information , please visit www.sureventuresplc.com
or contact:
Gareth Burchell, Sure Ventures +44 (0) 20 7186 9918
Notes to Editors
Sure Ventures plc listed on the London Stock Exchange in January
2018 giving retail investors access to an asset class that is
usually dominated by private venture capital funds. Sure Ventures
is focusing on companies in the UK, Republic of Ireland and other
European countries, making seed and series A investments in
companies with first rate management teams, products which benefit
from market validation with target revenue run rates of at least
GBP400,000 over the next 12 months. Website:
http-s://www.sureventuresplc.com/
Chairman's Statement
Dear Shareholders.
On behalf of my fellow directors, I am delighted to present the
annual results of Sure Ventures plc (the 'Company') for the year
ended 31 March 2020.
FINANCIAL Performance
The Company's performance for the year produced a healthy net
asset value ('NAV') total return per share of +11.54% (31 March
2019 -9.87%), its best return since launch. Given the circumstances
of the global stock market collapse during March, this is a
pleasing result. While the return since inception is -7.40%, it
should be remembered that figure includes not only the March market
falls but also the Company's initial formation costs incurred at
incorporation. During the year the Company's NAV attributable to
shareholders grew steadily by GBP720k to GBP4.5m as at the year
end.
The Company's share price continues to trade at or around its
last published NAV, which the Company believes supports the
continued growth potential of its investments and demonstrates an
understanding among shareholders of the investment rationale and
horizon.
Portfolio Update
The Company's holdings comprise its 25.9% investment in Sure
Valley Ventures Sub-Fund of Suir Valley Fund ICAV (the 'Fund') to
which the Company has made a total commitment of EUR7m (increasing
its initial commitment from EUR4.5m in September 2019), as well as
investments the Company holds directly - in Immotion Group plc
('Immotion'), a listed immersive virtual reality ('VR")
entertainment group and VividQ Limited, a privately owned deep
technology company pioneering the application of holography in
augmented reality ('AR') and VR. The Fund portfolio includes one
listed entity, VR Education Holdings plc ('VR Education') a
developer of VR software and immersive experiences with a specific
focus on education, and as at the year end, a further nine
privately held companies in the AR, VR, internet of things ('IoT')
and artificial intelligence ('AI') space.
During the year the Fund announced the following additional
investments:
-- VividQ Limited (April 2019), alongside the Company's own
direct investment, thus increasing the Company's exposure to this
3D holography specialist
-- Ambisense (May 2019), a company that has developed an
environmental risk assessment platform encompassing IoT and AI
solutions
-- Getvisibility (March 2020) an AI security data software
development company providing visibility over unstructured
data.
Each of these investments brings its own unique qualities and
adds to the diverse and well-balanced composition of the Fund's
portfolio of investee companies. Shortly after the year end the
Fund announced an investment in Buymie, an AI app-based home
grocery delivery service, adding another exciting and relevant
portfolio company who have just teamed up with Co-op stores to
provide deliveries to over 200,000 households across Bristol.
The year also featured a Series A follow-on investment led by
Force Over Mass Capital for Admix, the advertising platform for
AR/VR developers. The funding round closed in March 2020 and
provided the Company with a substantial uplift from its original
investment.
Well ahead of schedule, given the Company's long-term investment
horizon, the Fund's first successful exit was announced during the
year. In December 2019 Artomatix, which provides an AI platform
automating the creation of 3D content was sold to Unity
Technologies at a multiple of approximately 5x the initial
investment, providing the Company with a significant cash return,
ensuring an important buffer for future investments.
As COVID-19 continues to negatively impact public markets, March
2020 witnessed one of the most volatile months in financial markets
history and so predictably the two listed investments, Immotion and
VR Education, came under selling pressure into the year end. Share
prices of both companies hit all-time lows during March which more
than offset the unrealized gains from the Admix uplift. However,
since trading at these lows, whilst Immotion's recovery is expected
to be more gradual, VR Education's share price has been given a
huge boost by a EUR3m investment announced in May 2020 from HTC
Corporation off the back of hosting HTC's annual conference
utilizing VR Education's ENGAGE platform. At the time of writing,
share price of VRE Education has rallied to 13p, while Immotion is
trading at 1.85p, in line with its year end mark.
Further information on the investment portfolio is provided in
the report of the Investment Manager which follows this
statement.
COMMITMENTS AND FUNDING
As mentioned above, on 2 September 2019 the Company announced an
increase in subscription to the Fund of EUR2.5m taking its total
commitment to EUR7m, thereby increasing its share in the Fund from
21.6% to 25.9%. This commitment was made shortly before the Fund
closed to new subscribers validating the Company's belief that the
Fund portfolio is now at a mature stage and, with a number of
investee companies preparing for further funding rounds, there is
demonstrable potential for further uplifts to occur from initial
valuations.
The Company believes that it will have sufficient access to
funding to meet its commitments to the Fund over the term of the
Fund's investment cycle, through a combination of available cash,
anticipated subscriptions and access to undrawn facilities.
Investment Environment
COVID-19 will continue to have a lasting impact on global
economies and the investment environment is likely to be
challenging for public and private markets investors alike. The
Company is confident that the Investment Manager will continue to
identify new businesses in which to invest within the Company's
chosen verticals of AR, VR, IoT and AI, and whilst COVID-19 has had
little effect on the majority of the portfolio companies, the
Company and Investment Manager remain vigilant of risks associated
with the pandemic on the portfolio companies.
Dividend
During the year to 31 March 2020, the Company has not declared a
dividend (31 March 2019: GBPnil). Pursuant to the Company's
dividend policy the directors intend to manage the Company's
affairs to achieve shareholder returns through capital growth
rather than income. During the current financial year, the Company
received income following a distribution from Sure Valley Ventures;
the Board considered that the working capital requirements and
anticipated draw down cycle of their current commitments did not
allow for sufficient excess liquidity as to declare a special
dividend.
The Company does not expect to receive a material amount of
dividends or other income from its direct or indirect investments.
It should not be expected that the Company will pay a significant
annual dividend, if any.
Gearing
The Company may deploy gearing of up to 20% of net asset value
(calculated at the time of borrowing) to seek to enhance returns
and for the purposes of capital flexibility and efficient portfolio
management. The Company's gearing is expected to primarily comprise
bank borrowings but may include the use of derivative instruments
and such other methods as the Board may determine. During the
period to 31 March 2020 the Company did not employ any borrowing
(31 March 2019: GBPnil).
The Board will continue to review the Company's borrowing, in
conjunction with the Company's Investment Manager on a regular
basis pursuant with the Company's overall cash management and
investment strategy.
Outlook
Several investee companies are at different stages of Series A
fundraising and upon completion the Company anticipates further
positive announcements to this effect within the next one-two
quarters. The investment pipeline remains strong and, as well as
Buymie, the Company anticipates news in the near term of further
portfolio additions, subject to the completion of the Investment
Manager's rigorous filter process and satisfactory due
diligence.
COVID-19 has forced structural changes in the way that we now
address everyday tasks in the workplace, in education and in
entertainment, with "virtual" being increasingly applied to a
greater variety of operations. With enforced physical restrictions
comes the need to develop technology to counter these measures and
the Company believes that its investment portfolio and investment
strategy is well placed to benefit from the adoption of these
technologies.
On 7 June 2019, the Company announced a placing of 305,208
ordinary shares, followed by a further placing of 250,000 on 19
March 2020 (ultimately allotted on 1 April 2020). As of 31 March
2020, other liabilities comprise of GBP250,000 of cash and
in-species subscriptions received in advance, which was issued by
the Company on 1 April 2020 post year-end. Refer note 11. The
ordinary shares were admitted to trading on the Specialist Fund
Segment of the London Stock Exchange on 10 June 2019, under the
existing ISIN: GB00BYWYZ460, taking the total shares in admission
as at 31 March 2020 to 4,869,956 (excluding 250,000 allotted 1
April 2020).
The Investment Manager's Report following this Statement gives
further detail on the affairs of the Company. The Board is
confident of the long-term prospects for the Company in pursuit of
its investment objectives.
Board
I am pleased that St. John Agnew was able to join the Board on
15 June 2019. He is a qualified solicitor and an investment manager
with more than 25 years of financial markets experience within the
asset management industry. He brings to the Board a wealth of
knowledge in investment funds and his legal background provides an
excellent addition of skill sets to the Company.
Perry Wilson
Chairman
30 July 2020
Income Statement
For the year ended 31 March 2020
2020 2019
====== ==================================
Notes Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
====================================== ====== ========== ========== ========== ========== ========== ==========
Income
====================================== ====== ========== ========== ========== ========== ========== ==========
Other net changes in fair value
on financial assets at fair value
through profit or loss - (237,271) (237,271) - (188,802) (188,802)
====================================== ====== ========== ========== ========== ========== ========== ==========
Distribution income 946,817 - 946,817 - - -
====================================== ====== ========== ========== ========== ========== ========== ==========
Interest income - - - 3,174 - 3,174
====================================== ====== ========== ========== ========== ========== ========== ==========
Rebate management fee 55,495 - 55,495 50,960 - 50,960
====================================== ====== ========== ========== ========== ========== ========== ==========
Total net income 1,002,312 (237,271) 765,041 54,134 (188,802) (134,668)
====================================== ====== ========== ========== ========== ========== ========== ==========
Expenses
====================================== ====== ========== ========== ========== ========== ========== ==========
Management fee 4 (13,452) (42,043) (55,495) (11,197) (34,996) (46,193)
====================================== ====== ========== ========== ========== ========== ========== ==========
Custodian, secretarial and
administration
fees (94,785) - (94,785) (84,603) - (84,603)
====================================== ====== ========== ========== ========== ========== ========== ==========
Other expenses 5 (169,280) - (169,280) (208,467) - (208,467)
====================================== ====== ========== ========== ========== ========== ========== ==========
Total operating expenses (277,517) (42,043) (319,560) (304,267) (34,996) (339,263)
====================================== ====== ========== ========== ========== ========== ========== ==========
Profit / (loss) before Taxation
and after finance costs 724,795 (279,314) 445,481 (250,133) (223,798) (473,931)
====================================== ====== ========== ========== ========== ========== ========== ==========
Taxation 6 - - - - - -
====================================== ====== ========== ========== ========== ========== ========== ==========
Profit / (loss) after taxation 724,795 (279,314) 445,481 (250,133) (223,798) (473,931)
====================================== ====== ========== ========== ========== ========== ========== ==========
Earnings per share 7 14.88 (5.73) 9.15 (5.48)p (4.90)p (10.38)p
====================================== ====== ========== ========== ========== ========== ========== ==========
The total column of this statement represents the Income
statement prepared in accordance with International Financial
Reporting Standards ("IFRS") as adopted by the European Union. The
supplementary revenue return and capital return columns are both
prepared under guidance issued by the Association of Investment
Companies. All items in the above statement derive from continuing
operations.
The Company does not have any income or expense that is not
included in net loss for the year. Accordingly, the net profit /
(loss) for the year is also the Total Comprehensive Income for the
year, as defined in IAS1 (revised).
Statement of Financial Position
As at 31 March 2020
Notes 31 March 31 March
2020 2019
GBP GBP
====== ==========
Non-current assets
======================================== ====== ========== ==========
Investments held at fair value through
profit or loss 8 3,078,560 1,700,900
======================================== ====== ========== ==========
3,078,560 1,700,900
======================================== ====== ========== ==========
Current assets
======================================== ====== ========== ==========
Receivables 9 18,620 -
======================================== ====== ========== ==========
Cash and cash equivalents 1,700,601 2,139,842
======================================== ====== ========== ==========
1,719,221 2,139,842
======================================== ====== ========== ==========
Total assets 4,797,781 3,840,742
======================================== ====== ========== ==========
Current liabilities
======================================== ====== ========== ==========
Other payables 10 (287,862) (50,654)
======================================== ====== ========== ==========
(287,862) (50,654)
======================================== ====== ========== ==========
Total assets less current liabilities 4,509,919 3,790,088
======================================== ====== ========== ==========
Total net assets 4,509,919 3,790,088
======================================== ====== ========== ==========
Shareholders' funds
======================================== ====== ========== ==========
Ordinary share capital 11 48,699 45,647
======================================== ====== ========== ==========
Share premium 11 4,699,588 4,428,290
======================================== ====== ========== ==========
Revenue reserves 223,375 (501,420)
======================================== ====== ========== ==========
Capital reserves (461,743) (182,429)
======================================== ====== ========== ==========
Total shareholders' funds 4,509,919 3,790,088
======================================== ====== ========== ==========
Net asset value per share 12 92.61p 83.03p
======================================== ====== ========== ==========
The financial statements on pages 50 to 63 were approved by the
board of directors and authorised for issue on 30 July 2020. They
were signed on its behalf by:
Statement of Changes in Equity
For the year ended 31 March 2020
Ordinary Share Revenue Capital Total Total
Share Premium Reserves Reserves Reserves Equity
Capital GBP GBP GBP GBP GBP
GBP
========= ========== ========== ========== ==========
Balance at 1
April 2019 45,647 4,428,290 (501,420) (182,429) (683,849) 3,790,088
================= ========= ========== ========== ========== ========== ==========
Ordinary shares
issued 3,052 289,948 - - - 293,000
================= ========= ========== ========== ========== ========== ==========
Ordinary shares
issue costs - (18,650) - - - (18,650)
================= ========= ========== ========== ========== ========== ==========
Profit/(loss)
after taxation - - 724,795 (279,314) 445,481 445,481
================= ========= ========== ========== ========== ========== ==========
Dividends paid - - - - - -
in the year
================= ========= ========== ========== ========== ========== ==========
Balance at 31
March 2020 48,699 4,699,588 223,375 (461,743) (238,368) 4,509,919
================= ========= ========== ========== ========== ========== ==========
For the year ended 31 March 2019
Ordinary Share Revenue Capital Total Total
Share Premium Reserves Reserves Reserves Equity
Capital GBP GBP GBP GBP GBP
GBP
========= ========== ========== ========== ==========
Balance at 1
April 2018 33,100 3,225,978 (251,287) 41,369 (209,918) 3,049,160
================= ========= ========== ========== ========== ========== ==========
Ordinary shares
issued 12,547 1,265,933 - - - 1,278,480
================= ========= ========== ========== ========== ========== ==========
Ordinary shares
issue costs - (63,621) - - - (63,621)
================= ========= ========== ========== ========== ========== ==========
(Loss) after
taxation - - (250,133) (223,798) (473,931) (473,931)
================= ========= ========== ========== ========== ========== ==========
Dividends paid - - - - - -
in the period
================= ========= ========== ========== ========== ========== ==========
Balance at 31
March 2019 45,647 4,428,290 (501,420) (182,429) (683,849) 3,790,088
================= ========= ========== ========== ========== ========== ==========
As at 31 March 2020 the Company had distributable reserves of
GBPnil (2019: GBPnil) for the payment of future dividends. The
distributable reserves are the revenue reserves GBPnil (2019:
GBPnil), realised capital reserves (GBPnil) (2018: (GBPnil)) and
the special distributable reserves (GBPnil) (2019: (GBPnil)).
Statement of Cash Flows
For the year ended 31 March 2020
Notes For the year For the year
ended ended
31 March 31 March
2020 2019
GBP GBP
====== =============
Cash flows from operating activities:
=========================================== ====== ============= =============
Gain/(loss) after taxation 445,481 (473,931)
=========================================== ====== ============= =============
Adjustments for:
=========================================== ====== ============= =============
Gain on sale on investment (946,817) -
=========================================== ====== ============= =============
(Increase)/decrease in receivables (18,620) 689,713
=========================================== ====== ============= =============
Increase in payables 10 237,208 7,338
=========================================== ====== ============= =============
Unrealised (gain)/loss on foreign
exchange 8 (76,430) 26,593
=========================================== ====== ============= =============
Net changes in fair value on financial
assets at fair value through profit
or loss 8 313,482 162,209
=========================================== ====== ============= =============
Net cash (outflow)/inflow from operating
activities (45,696) 411,922
=========================================== ====== ============= =============
Cash flows from investing activities:
=========================================== ====== ============= =============
Purchase of investments 8 (1,894,014) (2,650,429)
=========================================== ====== ============= =============
Sales of investments 8 1,226,119 1,499,985
=========================================== ====== ============= =============
Net cash (outflow) investing activities (667,895) (1,150,444)
=========================================== ====== ============= =============
Cash flows from financing activities*:
=========================================== ====== ============= =============
Proceeds from issue of ordinary shares 293,000 1,278,480
=========================================== ====== ============= =============
Share issue costs (18,650) (63,621)
=========================================== ====== ============= =============
Net cash inflow from financing activities 274,350 1,214,859
=========================================== ====== ============= =============
Net change in cash and cash equivalents (439,241) 476,337
=========================================== ====== ============= =============
Cash and cash equivalents at the
beginning of the year 2,139,842 1,663,505
=========================================== ====== ============= =============
Net cash and cash equivalents 1,700,601 2,139,842
=========================================== ====== ============= =============
*The Company has no borrowings or liabilities from financing
activities.
Notes to the Financial Statements
1) Principal Accounting Policies
Basis of accounting
The financial statements of Sure Ventures plc (the "Company")
have been prepared in accordance with International Financial
Reporting Standards (IFRS) and IFRIC interpretations (IFRS IC) as
adopted by the European Union and the Companies Act 2006 applicable
to companies reporting under IFRS.
The principal accounting policies adopted by the Company are set
out below. Where presentational guidance set out in the Statement
of Recommended Practice ('SORP') for investment trusts issued by
the Association of Investment Companies ('AIC') in October 2019 is
consistent with the requirements of IFRS, the directors have sought
to prepare the financial statements on a basis compliant with the
recommendations of the SORP.
All values are rounded to the nearest pound unless otherwise
indicated.
Foreign Currency
The presentation currency of the Company is pounds sterling, the
financial statements are prepared in this currency in accordance
with the Company's prospectus. The Company is required to nominate
a functional currency, being the currency in which the Company
predominantly operates. The board has determined that sterling is
the Company's functional currency.
Foreign exchange gains and losses relating to the financial
assets and liabilities carried at fair value through profit or loss
are presented in the income statement within 'other net changes in
fair value on financial assets and financial liabilities at fair
value through profit or loss'.
Presentation of Income statement
In order to better to reflect the activities of an investment
trust company and in accordance with guidance issued by the AIC,
supplementary information which analyses the of Income statement
between items of a revenue and capital nature has been presented
alongside the Income statement.
Income
Dividend income from investments is recognised when the
Company's right to receive payment has been established, normally
the ex-dividend date.
Interest income in profit or loss in the Income statement
includes bank interest. Interest income is recognised on an
accruals basis.
Capital income, all changes in fair value are recognised in
profit or loss in the Income statement as net gain on investment at
fair value through profit or loss.
Expenses
All expenses are accounted for on the 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:
Transaction costs which are incurred on the purchases or sales
of investments designated as fair value through profit or loss are
expensed to capital in the Income statement.
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
management fee for the financial year has been allocated 24.24%
(2019: 24.24%) to revenue and 75.76% (2019: 75.76%) to capital
(Investment held at fair value through profit or loss to the net
asset value of the Company), in order to reflect the directors'
long term view of the nature of the expected investment returns of
the Company.
Capital Reserves
Increases and decreases in the valuation of investments and
realised/unrealised foreign exchange gain/(loss) held at the year
end are accounted for in the capital reserves.
Taxation
In line with the recommendations of the SORP, the allocation
method used to calculate tax relief on expenses presented against
capital returns in the supplementary information in the Income
statement income is the 'marginal basis'. Under this basis, if
taxable income is capable of being entirely offset by expenses in
the revenue column of the Income statement, then no tax relief is
transferred to the capital return column.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit and is accounted for using the
Statement of Financial Position liability method. Deferred tax
liabilities are recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the revenue return
column of the Income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred
tax is also dealt with in equity.
Investment trusts which have approval under Part 24, Chapter 4
of the Corporation Tax Act 2010 are not liable for taxation on
capital gains.
Classification
Financial assets and financial liabilities
In accordance with IFRS, the Company has designated its
investments as financial assets at fair value through profit or
loss.
i) Financial assets at fair value through profit or loss
The Company has designated all of its investments upon initial
recognition as "financial assets at fair value through profit or
loss". Their performance is evaluated on a fair value basis, in
accordance with the risk management and investment strategies of
the Fund, as set out in the Company's supplement to the
Prospectus.
ii) Financial assets at amortised cost
Financial assets that are classified as "financial assets at
amortised cost" include cash and cash equivalents and
receivables.
iii) Financial liabilities at fair value through profit or loss
Financial liabilities that are not at fair value through profit
or loss include other payables.
Derecognition
Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or where the
group has transferred substantially all risks and rewards of
ownership. If substantially all the risks and rewards have been
neither retained nor transferred and the group has retained
control, the assets continue to be recognised to the extent of the
group's continuing involvement. Financial liabilities are
derecognised when they are extinguished.
Investments
All investments held by the Company have been designated at fair
value through profit or loss ('FVPL') but are also described in
these financial statements as investments held at fair value, and
are valued in accordance with the International Private Equity and
Venture Capital Valuation Guidelines ('IPEVCV') issued in December
2018 as endorsed by the British Private Equity and Venture Capital
Association.
Purchases and sales of unlisted investments are recognised when
the contract for acquisition or sale becomes unconditional.
Receivables
Receivables do not carry any interest and are short term in
nature. They are initially stated at their nominal value and
reduced by appropriate allowances for estimated irrecoverable
amounts (if any).
Cash and cash equivalents
Cash and cash equivalents (which are presented as a single class
of asset on the Statement of Financial Position) comprise cash at
bank and in hand and deposits with an original maturity of three
months or less. The carrying value of these assets approximates
their fair value.
Payables
Payables are non-interest bearing.
Dividends
Interim dividends are recognised in the year in which they are
paid. Final dividends are recognised when they have been approved
by shareholders.
New standards, amendments and interpretations effective from 1
January 2019
The following standards, amendments and interpretations, which
became effective in January 2019, are relevant to the Company.
IFRS 16, 'Leases'
IFRS 16 affects primarily the accounting by lessees and results
in the recognition of almost all leases on statement of financial
position. The standard removes the current distinction between
operating and financing leases and requires recognition of an asset
(the right to use the leased item) and a financial liability to pay
rentals for virtually all lease contracts. An optional exemption
exists for short term and low value leases. IFRS 16 is effective
for annual periods starting on or after 1 January 2019.
An assessment has been performed on the effects of applying the
new standard on the Company's financial statements and given the
Company does not transact in leases, no material impacts have been
identified.
IFRIC 23, 'Uncertainty over Income Tax Treatments'
The Company is tax-exempt and is only subject to withholding tax
on certain dividend and interest income in some countries. If a
fund is subject to income tax, including withholding taxes, then it
is required to provide specific disclosures under IAS 12 and IAS 1.
Additionally, if the Company is subject to income taxes in the
scope of IAS 12, including withholding taxes, then the ICAV should
consider if there are any uncertain tax treatments. IFRIC 23
Uncertainty over Income Tax Treatments is effective from 1 January
2019; earlier application is permitted.
The application of IFRIC 23 has had no material impact on the
financial statements.
There are no other standards, interpretations or amendments to
existing standards that are effective for the financial year
beginning on 1 January 2019 that have had a material impact on the
Company.
Adoption of New and Revised Standards
There are no standards, amendments to standards or
interpretations that are effective for annual periods beginning on
or after 1 January 2020 that are expected to have a material effect
on the financial statements of the Company.
CAPITAL STRUCTURE
Share Capital
Ordinary shares are classed as equity. The ordinary shares in
issue have a nominal value of one penny and carry one vote
each.
Share Premium
This reserve represents the difference between the issue price
of shares and the nominal value of shares at the date of issue, net
of related issue costs.
Capital Reserve
Unrealised gains and losses on investments held at the year end
arising from movements in fair value are taken to the capital
reserve.
Revenue Reserve
Net revenue profits and losses of the Company
2) Significant Accounting Judgements, Estimates and
Assumptions
The preparation of financial statements in conformity with IFRS
as adopted in the EU requires the Company to make judgements,
estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of income
and expenses during the reporting year. Although these estimates
are based on the directors' best knowledge of the amount, actual
results may differ ultimately from those estimates.
The areas requiring a higher degree of judgement or complexity
and areas where assumptions and estimates are significant to the
financial statements are in relation to investments at fair value
through profit or loss described below.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected.
Equity Investments
The unquoted equity assets are valued on periodic basis using
techniques including a market approach, costs approach and/or
income approach. The valuation process is collaborative, involving
the finance and investment functions within the manager with the
final valuations being reviewed by the manager's valuation
committee.
Shareholders should note that increases or decreases in any of
the inputs in isolation may result in higher or lower fair value
measurements. Changes in fair value of all investments held at fair
value are recognised in the Income statement as a capital item. On
disposal, realised gains and losses are also recognised in the
Income statement IFRS 9 was adopted but did not have a material
impact on the Company.
3) Segmental Reporting
The Company's board and the Investment Manager consider
investment activity in selected Equity Assets as the single
operating segment of the Company, being the sole purpose for its
existence. No other activities are performed.
The directors are of the opinion that the Company is engaged in
a single segment of business and operations of the Company are
wholly in the United Kingdom.
4) Management and Performance Fee
Management Fee
The management fee is payable quarterly in advance at a rate
equal to 1/4 of 1.25% per month of net asset value (the "Management
Fee"). The aggregate fee payable on this basis must not exceed
1.25% of the net assets of the Company in any year.
During the year the Company incurred GBP55,495 (2019: GBP46,193)
of fees and at 31 March 2020, there was GBPnil (2019: GBPnil)
payable to the Manager.
Performance Fee
The Manager is entitled to a performance fee, which is
calculated in respect of each twelve month period starting on 1
April and ending on 31 March in each calendar year ('Calculation
Period'), and the nal Calculation Period shall end on the day on
which the management agreement is terminated or, if earlier, the
business day immediately preceding the day on which the Company
goes into liquidation.
The Manager is entitled to receive a performance fee equal to
15% of any excess returns over a high watermark, subject to
achieving a hurdle rate of 8% in respect of each performance
period. There is no performance fee charged during the year ended
31 March 2020. (2019: GBPnil)
5) Other Expenses
For the For the
year year
ended ended
31 March 31 March
2020 2019
GBP GBP
==========
Auditor's remuneration - audit fees 29,940 20,000
===================================== ========== ==========
Directors' fees 55,609 67,324
===================================== ========== ==========
VAT Expense 12,285 22,283
===================================== ========== ==========
Legal and other professional 7,270 48,362
===================================== ========== ==========
Listing fees 24,433 39,719
===================================== ========== ==========
Service Fee Expense 8,879 6,846
===================================== ========== ==========
Other expenses 30,864 3,933
===================================== ========== ==========
Total Other expenses 169,280 208,467
===================================== ========== ==========
All expenses are inclusive of VAT where applicable. Further
details on directors' fees can be found in the directors'
remuneration report on page 36.
6) Taxation
As an investment trust the Company is exempt from corporation
tax on capital gains. The Company's revenue income is subject to
tax, but offset by any interest distribution paid, which has the
effect of reducing that corporation tax to nil (2019: nil). This
means the interest distribution may be taxable in the hands of the
Company's shareholders.
Any change in the Company's tax status or in taxation
legislation generally could affect the value of investments held by
the Company, affect the Company's ability to provide returns to
shareholders, lead the Company to lose its exemption from UK
Corporation tax on chargeable gains or alter the post-tax returns
to shareholders. It is not possible to guarantee that the Company
will remain a non-close company, which is a requirement to maintain
status as an investment trust, as the ordinary shares are freely
transferable. The Company, in the event that it becomes aware that
it is a close company, or otherwise fails to meet the criteria for
maintaining investment trust status, will as soon as reasonably
practicable, notify shareholders of this fact.
The Company has obtained this approval from HM Revenue &
Customs.
Factors affecting taxation charge for the year
The taxation charge for the year is lower than the standard rate
of UK corporation tax of 19.00% (2019: 19.00%). A reconciliation of
the taxation charge based on the standard rate of UK corporation
tax to the actual taxation charge is shown below.
31 March 2020 Revenue Capital Total
GBP GBP GBP
========== ==========
Return on ordinary activities
before taxation 724,794 (279,314) 445,480
======================================== ========== ========== =========
Return on ordinary activities
before taxation multiplied by
the standard rate of UK corporation
tax of 19% 137,711 (53,070) 84,641
======================================== ========== ========== =========
Effects of:
======================================== ========== ========== =========
Excess management expenses (utilised)/
not utilised (137,711) 53,070 (84,641)
======================================== ========== ========== =========
Interest distributions paid in
respect of the year - - -
======================================== ========== ========== =========
Total tax charge in income statement - - -
======================================== ========== ========== =========
31 March 2019 Revenue Capital Total
GBP GBP GBP
========== ==========
Return on ordinary activities before
taxation (250,133) (223,798) (473,931)
====================================== ========== ========== ==========
Return on ordinary activities before
taxation multiplied by the standard
rate of UK corporation tax of 19% (47,525) (42,522) (90,047)
====================================== ========== ========== ==========
Effects of:
====================================== ========== ========== ==========
Excess management expenses not
utilised 47,525 42,522 90,047
====================================== ========== ========== ==========
Interest distributions paid in
respect of the year - - -
====================================== ========== ========== ==========
Total tax charge in income statement - - -
====================================== ========== ========== ==========
Overseas taxation
The Company may be subject to taxation under the tax rules of
the jurisdictions in which it invests, including by way of
withholding of tax from interest and other income receipts.
Although the Company will endeavour to minimise any such taxes this
may affect the level of returns to shareholders.
7) Earnings per Share
For the financial year ended 31 Revenue Capital Total
from March 2020 pence pence pence
======== ========
Earnings per ordinary share 14.88p (5.74)p 9.15p
================================= ======== ======== =======
The calculation of the above is based on revenue returns of
GBP724,795 capital returns of (GBP279,314) and total returns of
GBP445,481 and the weighted average number of ordinary shares of
4,869,956 as at 31 March 2020.
For the financial period ended Revenue Capital Total
31 from March 2019 pence pence pence
======== ========
Earnings per ordinary share (5.48)p (4.90)p (10.38)p
================================ ======== ======== =========
The calculation of the above is based on revenue returns of
(GBP250,133) capital returns of (GBP223,798) and total returns of
(GBP473,931) and the weighted average (including pending issuances)
number of ordinary shares of 4,564,748 as at 31 March 2019.
8) Fair Value Measurements
(a) Movements in the year
As of 31 As of 31
March 2020 March 2019
GBP GBP
============
Opening cost
============================================== ============ ============
Opening fair value 1,700,900 739,258
============================================== ============ ============
Purchases at cost 1,894,014 2,740,917
============================================== ============ ============
Sale (279,301) (1,590,473)
============================================== ============ ============
Realised (loss)/gain (22,136) 3,400
============================================== ============ ============
Unrealised (loss) (291,347) (165,609)
============================================== ============ ============
Unrealised gain/(loss) on foreign exchange 76,430 (26,593)
============================================== ============ ============
Closing fair value at 31 March 2020 and 2019 3,078,560 1,700,900
============================================== ============ ============
(b) Accounting classifications and fair values
IFRS 13 requires the Company to classify its financial
instruments held at fair value using a hierarchy that reflects the
significance of the inputs used in the valuation methodologies.
These are as follows:
-- Level 1 - quoted prices in active markets for identical investments;
-- Level 2 - other significant observable inputs (including
quoted prices for similar investments, interest rates, prepayments,
credit risk, etc.); and
-- Level 3 - significant unobservable inputs (including the
Company's own assumptions in determining the fair value of
investments).
The following sets out the classifications used as at 31 March
2020 in valuing the Company's investments:
Carrying amount Fair value
------------------------------------------------------- ----------------------------------------
Financial
assets at Total
Mandatorily amortised Other financial carrying Level
31 March 2020 at FVTPL cost liabilities amount Level 1 2 Level 3 Total
----------------- ------------ ----------- ---------------- ---------- -------- ------ ---------- ----------
GBP GBP GBP GBP GBP GBP GBP GBP
------------ ----------- ---------------- ---------- -------- ------ ---------- ----------
Investments in
quoted equity
assets 148,796 - - 148,796 148,796 - - 148,796
Investments in
unquoted equity
assets 2,929,764 - - 2,929,764 - - 2,929,764 2,929,764
3,078,560 - - 3,078,560 148,796 - 2,929,764 3,078,560
----------------- ------------ ----------- ---------------- ---------- -------- ------ ---------- ----------
Financial assets
not measured
at fair value
Cash and cash
equivalents - 1,700,601 - 1,700,601
Receivables - 18,620 - 18,620
- 1,719,221 - 1,719,221
----------------- ------------ ----------- ---------------- ----------
Financial
liabilities not
measured at fair
value
Other payables - - 287,862 287,862
- - 287,862 287,862
----------------- ------------ ----------- ---------------- ----------
Carrying amount Fair value
--------------------------------------------------------- ----------------------------------------
Financial
assets at Other Total
Mandatorily amortised financial carrying Level
31 March 2019 at FVTPL cost liabilities amount Level 1 2 Level 3 Total
--------------- ------------ ----------- -------------- -------------- -------- ------ ---------- ----------
GBP GBP GBP GBP GBP GBP GBP GBP
------------ ----------- -------------- -------------- -------- ------ ---------- ----------
Investments in
quoted equity
assets 412,204 - - 412,204 412,204 - - 412,204
Investments in
unquoted
equity
assets 1,288,696 - - 1,288,696 - - 1,288,696 1,288,696
1,700,900 - - 1,700,900 412,204 - 1,288,696 1,700,900
--------------- ------------ ----------- -------------- -------------- -------- ------ ---------- ----------
Financial
assets not
measured
at fair value
Cash and cash
equivalents - 2,139,842 - 2,139,842
- 2,139,842 - 2,139,842
--------------- ------------ ----------- -------------- --------------
Financial
liabilities
not
measured at
fair value
Other payables - - 50,654 50,654
- - 50,654 50,654
--------------- ------------ ----------- -------------- --------------
9) Receivables
31 March 31 March
2020 2019
GBP GBP
=========
Prepayments 18,620 -
================== ========= =========
Total receivables 18,620 -
================== ========= =========
The above receivables do not carry any interest and are short
term in nature. The directors consider that the carrying values of
these receivables approximate their fair value.
10) Other Payables
31 March 31 March
2020 2019
GBP GBP
=========
Accruals and deferred income 37,863 50,654
============================== ========= =========
Other creditors 250,000 -
============================== ========= =========
Total other payables 287,863 50,654
============================== ========= =========
Other Creditors represents cash subscriptions received in
advance, which were issued as new shares by the company on 1 April
2020.
The above payables do not carry any interest and are short term
in nature. The directors consider that the carrying values of these
payables approximate their fair value.
11) Ordinary Share Capital
The table below details the issued share capital of the Company
as at the date of the Financial Statements.
Issued and allotted No. of shares GBP No. of shares
31 March 31 March GBP
2020 2019
============== ======= ==============
Ordinary shares of 1
penny each 4,869,956 48,699 4,564,748 45,647
====================== ============== ======= ============== =======
On incorporation, the issued share capital of the Company was
GBP0.01 represented by one ordinary share of GBP0.01. Redeemable
preference shares of 50,000 were also issued with a nominal value
of GBP1 each, of which 25% was paid. The redeemable shares were
issued to enable the Company to obtain a certificate of entitlement
to conduct business and to borrow under section 761 of the
Companies Act 2006. The redeemable shares were redeemed on listing
from the proceeds of the issue of the new ordinary shares upon
admission on 19 January 2018.
The following table details the subscription activity for the
year ended 31 March 2020.
31 March 31 March
2020 2019
==========
Balance as at 1 April 2019 4,564,748 3,310,000
============================= ========== ==========
Ordinary shares issued 305,208 1,254,748
============================= ========== ==========
Balance as at 31 March 2020 4,869,956 4,564,748
============================= ========== ==========
During the year ended 31 March 2020 and 2019, all proceeds from
this issue was received.
12) Net Asset Value per Ordinary Share
Year ended 31 March Year ended 31 March 2019
2020
===========================
Year ended 31 March Net asset Net assets Net asset Net assets
2020 value per attributable value per attributable
ordinary GBP ordinary GBP
share share
Pence Pence
===================== =========== ============== =========== ==============
Ordinary shares of
1 penny each 92.61p 4,509,919 83.03p 3,790,088
===================== =========== ============== =========== ==============
The net asset value per ordinary share is based on net assets at
the year ended of GBP4,509,919 (2019: GBP3,790,088) and on
4,869,956 (2019: 4,564,748) ordinary shares in issue at the year
end.
13) Contingent Liabilities and Capital Commitments
The Company may invest in Sure Valley Ventures or other
collective investment vehicles, subscriptions to which are made on
a commitment basis. The Company will be expected to make a
commitment that may be drawn down, or called, from time to time at
the discretion of the manager of the Fund or other collective
investment vehicle. The Company will usually be contractually
obliged to make such capital call payments and a failure to do so
would usually result in the Company being treated as a defaulting
investor by the Fund or other collective investment vehicle.
The Company's has to satisfy capital calls on its commitments
and will do through a combination of reserves, and where applicable
the realisation, of Cash and Cash Equivalents and Liquid
Investments (as each expression is defined in the prospectus dated
17 November 2017), anticipated future cash flows to the Company,
the use of borrowings and, potentially, further issues of
Shares.
As of 31 March 2020, the Company had outstanding commitments in
relation to the Fund in the amount of EUR 3.9 million (2019: EUR
2.9 million).
14) Related Party Transactions and Transactions with the
Manager
Directors - The remuneration of the directors is set out in the
directors' Remuneration Report on page 36. There were no contracts
subsisting during or at the end of the year in which a director of
the Company is or was interested and which are or were significant
in relation to the Company's business. There were no other
transactions during the year with the directors of the Company. The
directors do not hold any ordinary shares of the Company.
At 31 March 2020, there was GBP1,473 (2019: GBP1,192) payable to
the directors for fees and expenses.
Manager - Shard Capital AIFM LLP (the 'Manager'), a UK-based
company authorised and regulated by the Financial Conduct
Authority, has been appointed the Company's manager and authorised
investment fund manager for the purposes of the Alternative
Investment Fund Managers Directive. Details of the services
provided by the manager and the fees paid are given in Note 4.
During the year the Company incurred GBP55,495 (2019: GBP46,193)
of fees and at 31 March 2020, there was GBPnil (2019: GBPnil)
payable to the Manager.
During the year the Company paid GBP18,650 (2019: GBP63,621) of
placement fees to Shard Capital Partners LLP.
15) Financial Risk Management
The Company's investment objective is to achieve capital growth
for investors pursuant to the investment policy outlined in the
prospectus, this involves certain inherent risks. The main
financial risks arising from the Company's financial instruments
are market risk, credit risk and liquidity risk. The board reviews
and agrees policies for managing each of these risks as summarised
below.
Market risk
Market risk is the risk that the fair value of future cash flows
of a financial instrument will fluctuate. Market risk comprises
three types of risk, price risk, interest rate risk and currency
risk.
-- Price risk - the risk that the fair value or future cash
flows of financial instruments will fluctuate because of changes in
market prices (other than those arising from interest rate risk or
currency risk);
-- Interest rate risk - the risk that the fair value or future
cash flows of financial instruments will fluctuate because of
changes in market interest rates; and
-- Currency risk - the risk that the fair value or future cash
flows of financial instruments will fluctuate because of changes in
foreign exchange rates.
The Company's exposure, sensitivity to and management of each of
these risks is described below. Management of market risk is
fundamental to the Company's investment objective. The investment
portfolio is continually monitored to ensure an appropriate balance
of risk and reward within the parameters of the investment
restrictions outlined in the prospectus.
(a) Price risk
Price risk arises mainly from uncertainty about future prices of
financial instruments used in the Company's business. It represents
the potential loss the Company might suffer through holding market
positions in the face of price movements (other than those arising
from interest rate risk or currency risk) specifically in equity
investments purchased in pursuit of the Company's investment
objective, held at fair value through the profit and loss.
As at 31 March 2020 the Company held two direct private equity
investment in the participating shares of Sure Valley Ventures
(formerly Suir Valley Ventures), a sub-fund of Suir Valley Funds
ICAV and VividQ Limited. (2019: the Company held one direct private
equity investment in the participating shares of Sure Valley
Ventures (formerly Suir Valley Ventures), a sub-fund of Suir Valley
Funds ICAV).
As at 31 March 2020 and 2019 the investment in Sure Valley
Ventures (formerly Suir Valley Ventures) is valued at the net asset
value of the sub-fund, as calculated by its administrator.
At 31 March 2020, had the fair value of investments strengthened
by 10% with all other variables held constant, net assets
attributable to holders of participating shares would have
increased by GBP307,856 (2019: GBP170,090). A 10% weakening of the
market value of investments against the above would have resulted
in an equal but opposite effect on the above financial statement
amounts to the amounts shown above, on the basis that all other
variables remain constant. Actual trading results may differ from
this sensitivity analysis and the difference may be material.
(b) Interest rate risk
Interest rate risk arises from the possibility that changes in
interest rates will affect future cash flows or the fair values of
financial instruments.
The Company's currently employs no borrowings.
The Company finances its operations mainly through its share
capital and reserves, including realised gains on investments.
Exposure of the Company's financial assets and liabilities to
floating interest rates (giving cash flow interest rate risk when
rates are reset) and fixed interest rates (giving fair value risk)
as at 31 March 2020 and 31 March 2019 is shown below:
31 March 2020 31 March 2019
======================================
Financial instrument Fixed or Fixed or
Floating Administered Floating Administered
Rate Rate Total Rate Rate Total
GBP GBP GBP GBP GBP GBP
====================== ========== ============== ========== ========= ============== ==========
Cash and cash
equivalents - 1,700,601 1,700,601 - 2,139,842 2,139,842
======================= ========= ============== ========== ========= ============== ==========
Total exposure - 1,700,601 1,700,601 - 2,139,842 2,139,842
======================= ========= ============== ========== ========= ============== ==========
An administered rate is not like a floating rate, movements in
which are directly linked to LIBOR. The administered rate can be
changed at the discretion of the counterparty.
(c) Currency risk
As at 31st March 2020 the Company's largest investment is
denominated in euros whereas its functional and presentation
currency is pounds sterling. Consequently, the Company is exposed
to risks that the exchange rate of its currency relative to euros
may change in a manner that has an adverse effect on the fair value
of the Company's assets.
At the reporting date the carrying value of the Company's
financial assets and liabilities held in individual foreign
currencies as a percentage of its net assets were as follows:
Foreign currency exposure as a percentage 31 March 31 March
of net assets 2020 2019
=========
Euros 54% 34%
=========================================== ========= =========
Sensitivity analysis
If the euro exchange rates increased/decreased by 10% against
pounds sterling, with all other variables held constant, the
increase/decrease in the net asset attributable to the Company
arising from a change financial assets at fair value through profit
or loss, which are denominated in euros, would have been +/-
GBP242,976 (2019: GBP128,870).
16) Credit risk
Credit risk is the risk that one party to a financial instrument
will cause a financial loss for the other party by failing to
discharge an obligation.
The Company's credit risks arise principally through cash
deposited with banks, which is subject to risk of bank default.
The Company ensures that it only makes deposits with
institutions with appropriate financial standing.
Due to the low credit risk of the financial assets at amortised
cost, the Expected credit loss "ECL" was determined to be
immaterial and no impairment was recognised on the Fund in the year
ended 31 March 2020.
Liquidity risk
Liquidity risk is the risk that the Company will have difficulty
in meeting its obligations in respect of financial liabilities as
they fall due.
The Company manages its liquid resources to ensure sufficient
cash is available to meet its expected contractual commitments. It
monitors the level of short-term funding and balances the need for
access to short-term funding, with the long-term funding needs of
the Company.
Capital Management
The Company's capital is represented by ordinary shares and
reserves.
The Company's primary objectives in relation to the management
of capital are:
-- to maximise the long-term capital growth for its shareholders
pursuant to its investment objective;
-- to ensure its ability to continue as a going concern.
The Company manages its capital structure and liquidity
resources to meet it's obligations as described above.
Borrowing limits
Pursuant to the prospectus dated 17 November 2017 the Company
can deploy gearing up to 20% of the net asset value of the Company
(calculated at the time of borrowing) to seek to enhance returns
and for the purpose of capital flexibility and efficient portfolio
management. During the year ended 31st March 2020 and 2019 the
Company employed no gearing.
17) Ultimate Controlling Party
It is the opinion of the directors that there is no ultimate
controlling party.
18) Events after the Reporting Period
Sure Valley Ventures Fund participated in two new investments
post year-end. Investments of EUR300,000 and EUR750,000 were made
in Buymie Technologies Limited and Volograms Limited,
respectively.
Since the year end a further 480,769 ordinary shares of 1p have
been issued.
There have been no other subsequent events for the year ended 31
March 2020.
-ends-
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR BLGDRXDXDGGG
(END) Dow Jones Newswires
July 31, 2020 02:00 ET (06:00 GMT)
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