TIDMSURE
RNS Number : 0050H
Sure Ventures PLC
24 July 2023
Sure Ventures plc
Annual Report and Audited Financial Statements
For the year ended 31 March 2023
Company Number: 10829500
Table of Contents
1 Investment Objective, Policy and Performance Summary 1
2 Chairman's
Statement..........................................................................
3
3 Investment Manager's Report.............................................................. 7
4 Strategic
Report.................................................................................
12
Business Review 13
Principal Risks and Uncertainties 15
Key Performance Indicators 7
Promoting the Success of the Company
5 Directors' Report 9
Board of Directors
Statutory Information 21
Corporate Governance Statement 5
Report of the Audit Committee 32
Statement of Directors' Responsibilities 5
Directors' Remuneration Report 6
6 Independent Auditor's Report............................................................ 39
7 Financial Statements 6
Income Statement 7
Statement of Financial Position 8
Statement of Changes in Equity 9
Statement of Cash Flows 50
Notes to the Financial Statements 1
8 Alternative Performance Measures (APMs)
9 Glossary
10 Shareholders' Information 8
Directors, Portfolio Manager and Advisers 69
11 Investment Policy 70
1 Investment Objective, Policy and Performance Summary
Investment Objective
The investment objective of the Company is to achieve capital
growth for investors.
Investment Policy
The Company's Investment Policy can be found at page 70 of this
Annual Report.
Performance Summary
31 March 2023 31 March 2022
Number of ordinary shares in
issue 6,646,472 6,013,225
Market capitalisation
- Ordinary shares (in sterling) 6,314,148 6,133,500
Net asset value ("NAV") attributable
to ordinary shareholders
- Ordinary shares GBP 7,963,207 GBP 7,751,596
NAV per share attributable
to ordinary shareholders
- Ordinary shares (in sterling) 119.81p 128.91p
Ordinary share price (bid price)
in sterling 95.00p 102.00p
Ordinary share price deficit
to NAV
in sterling (20.71%) (20.87%)
Investments held at fair value
through profit and loss GBP 8,196,153 GBP 7,516,667
Cash and cash equivalents GBP 36,697 GBP282,178
Dividend History
There were no dividends paid during the period (2022 -
None).
Listing Information
The Company's shares are admitted to trading on the Specialist
Fund Segment (SFS) of the London Stock Exchange.
The ISIN number for the GBP shares is GB00BYWYZ460, Ticker:
SURE.
Website
The Company's website address is http://www.sureventuresplc.com
.
2 Chairman's Statement
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 2023.
FINANCIAL PERFORMANCE
The Company's performance for the year to 31 March 2023 returned
a net asset value ('NAV') total return per
share of - 7.06 % (31 March 2022 : +40.03%), broadly in line with expectations.
The performance remains largely unchanged throughout the current
financial year, from the impressive full year results to 31 March
2022, due to limited changes in valuation of the underlying
portfolio of unlisted investee companies.
Since the Company's incorporation in 2017, through its indirect
AIFM-managed investments funds and direct investments, it has
created a balanced, and now seasoned portfolio of exciting
early-stage technology companies in sectors that are developing at
an incredibly fast pace.
The pandemic highlighted the need for virtual communication and
the Company's investments have benefited from that. Now, in the
current economic environment of higher inflation and higher
interest rates, the Company is deriving further benefit from the
increasing need for corporate cost savings. Accordingly, investment
in new technologies is a good area to find those cost savings, a
prime example is artificial intelligence (AI) in the workplace.
Goldman Sachs estimates that up to 300m full time jobs worldwide
could be exposed by generative AI. The launch of ChatGPT in 2022
was one of the most pivotal innovations in the technology space for
years and has contributed to the huge rally in AI focused tech
stocks in the first half of 2023.
At the time of writing, Apple has just announced the
long-awaited release of its Augmented Reality (AR)/Virtual Reality
(VR) immersive spatial computing headset, Apple Vision Pro. The
headset allows the real world to merge seamlessly with the digital
world. It has the potential to change the AR/VR landscape and could
propel AR/VR into the mainstream of everyday use by consumers. UBS
has predicted that the new headset will generate USD 6 b illion for
Apple in the coming year, which in turn, the Company believes will
have a meaningful impact on the AR/VR focused investee companies
within the portfolio.
The Company is confident that its carefully constructed
portfolio is extremely well positioned to reali s e further gains
in all its chosen investment themes of AI, AR, VR, internet of
things (IoT) and cybersecurity.
During the year however, there were limited net movements in the
portfolio valuation among the private companies except for a
further funding round for CameraMatics. The indirect listed holding
in ENGAGE XR PLC and the direct listed holding of Let's Explore
Group PLC (formerly known as Immotion Group PLC ) underperformed,
largely due to market sentiment heading into the year end. In the
past two months both these listed companies have begun to recover.
Meanwhile, Smarttech247 listed on the AIM market in December 2022
and was trading over 15% higher as at the year end.
The sale of Buymie was concluded during the year and its value
has been written down to zero as a prudent approach to the
transaction. This investment represents the first investment write
down of the Company, which is inevitable when considering the
nature of the early-stage technology startup investment strategy,
and the phase in the investment cycle that the Company is
positioned currently.
The Company had invested NDRC@Arclabs. This was an "accelerator"
investment and is a vehicle for identifying potential investments
for the Company. This has now come to its natural end which means
the investment has been written down to zero.
The investment portfolio for Fund I (as further defined below)
is now complete, and no new investments will be made, with the
remaining capital allocated to follow-on rounds of the fourteen
investee companies in the portfolio. By contrast, Fund II (also
defined below) is in the early stages of investment origination,
and to date investments have been made in just two companies.
In the period to 31 March 2023 the Company's NAV attributable to
shareholders grew by GBP220k to GBP7.9 6 m through a combination of
NAV performance and new subscriptions.
In common with the current market trend of listed trusts, the
Company's share price now trades at a discount to its last
published NAV, currently around 20%. However, in June 2022 and
January 2023 the Company was able to validate its share price by
raising new subscriptions through private placements at the
mid-market share price.
PORTFOLIO UPDATE - FUND I
The Company's first fund investment was in Sure Valley Ventures
Sub-Fund of Suir Valley Fund ICAV ('Fund I'). Its holdings comprise
25.9% of Fund I (out of a total of EUR27m) and the commitment to
this percentage ensures the Company's investments in Fund I are not
diluted. The Company has made a total commitment of EUR7m,
increasing its initial commitment from EUR4.5m in September
2019.
The Company holds direct investments outside of Fund I. Let's
Explore Group PLC , a listed immersive VR entertainment group and
VividQ Limited, that is a privately owned deep technology company
pioneering the application of holography in augmented reality AR
and VR. The Fund I portfolio also includes two listed entities;
i) ENGAGE XR Holdings PLC (formerly VR Education Holdings PLC )
(ENGAGE) a developer of VR software and immersive experiences with
a specific focus on education
ii) Smarttech247, a security managed detection and response
company and market leader in security operations utilizing AI and
cybersecurity cloud technologies.
As at the year end, the Company has a further eleven privately
held companies in the AR, VR, IoT and AI space. The Company has,
with its investment in Artomatix concluded its first successful
portfolio company exit in 2019 for x5 return of the original
investment.
During the year, Fund I concluded its final portfolio investment
in Everyangle, a Dublin-based AI business utilizing CCTV cameras
and computer vision applications to simplify complex visual data
and transform it into crystal clear, actionable insights, enabling
its customers to reduce losses and improve efficiencies.
The year also featured an EUR3m equity financing round from
existing investors for CameraMatics that closed in Q4 and resulted
in a significant uplift in valuation of 83%, making it one of the
top two holdings of Fund I by valuation, behind Getvisibility which
continues to perform very well.
As previously mentioned, the first write downs since inception
occurred in the year for Buymie and NDRC@Arclabs. Buymie was
acquired in the year and the Company has taken the prudent approach
to the transaction to write the investment down to zero. The
investment in NDRC was an incubator and accelerator programme that
has finished and is the rationale behind writing off the full value
of this investment.
Smarttech247 listed on the AIM market in December 2022 which
valued the company at GBP37m, giving an uplift to the Q3 NAV and
its stock price has since traded higher post IPO.
The Company's other listed investment holdings, Let's Explore
Group and ENGAGE, had a mixed year with both share prices trading
lower into the year end. However, the holdings in both companies
have been reduced to levels that are less impactful of the
Company's NAV, creating lower volatility through dilution of these
holdings.
PORTFOLIO UPDATE - FUND II
In March 2022 the Company announced its commitment of GBP5m to
the Sure Valley Ventures Enterprise Capital Fund. This is a GBP85m
first close launch of a total GBP95m UK software technology fund,
investing in AR, VR and the Metaverse, including AI, IoT and
Cybersecurity in investee companies throughout the UK (Fund II).
The British Business Bank is the GBP50m cornerstone investor
through its Enterprise Capital Funds programme and it is envisaged
that investment in up to 25 software companies will be made during
the investment period.
As at the year end, the first portfolio Fund II investments had
been made in Retinize, a Belfast-based creative tech company
developing an Animotive software, harnessing VR technology to
transform the 3D animation production process. An investment in
Jaid was also made which is an innovative technology company
providing AI-powered human communications solutions. As at the year
end 5% of total commitments had been drawn and the pipeline for new
investments remains extremely healthy.
Further information on the investment portfolio is provided in
the report of the Investment Manager which follows this
statement.
COMMITMENTS AND FUNDING
As previously mentioned, in 2019 the Company announced an
increase in subscription to Fund I 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 I portfolio is at a mature stage with several investee
companies preparing for further funding rounds. There is potential
here for further uplifts to occur from initial valuations. Limited
new funding rounds occurred in this financial year however others
are still at the negotiation stage and the Company expects further
positive Fund I uplifts to occur in the coming quarters.
The Company's commitment to Fund II is GBP5m over the duration
of the Fund's investment period and the forecast capital calls
throughout the investment period was a key consideration prior to
agreeing to the Company's commitment to Fund II.
The Company believes that it will have sufficient access to
funding to meet its remaining commitments to Fund I and to its
anticipated commitments to Fund II over the terms of each Funds'
investment cycle, through a combination of available cash and
liquid investments, anticipated subscriptions and access to loans
and equity subscription facilities.
INVESTMENT ENVIRONMENT
The Company is excited by the constituent investments of Fund I
and the potential of these investee businesses to deliver higher
valuations this year and negotiated exits over the next one to two
years. The pace of change in the technology shows no signs of
abating. The Company has a carefully constructed, diverse portfolio
with exposure to some of the most in-demand areas of technology.
The Investment Manager is ahead of target to reap the rewards of
being an early mover in these areas. The initial investments
identified for Fund II, and the varied deal pipeline that has been
identified is also particularly pleasing.
DIVID
During the year to 31 March 2023, the Company has not declared a
dividend (31 March 2022: 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. 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 liquidity, 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 2023 the Company had
borrowings of GBP200,000 drawn from a GBP1,000,000 loan facility
provided by Shard Merchant Capital Limited (31 March 2022:
GBPNil).
The Board will continue to review the Company's borrowing, in
conjunction with the Investment Manager on a regular basis pursuant
with the Company's overall cash management and investment strategy.
The Board would look to extinguish borrowing should it receive a
premium from the sales of any of its portfolio investments. There
is always a good probability that this will happen, and this
justifies the use of leverage.
CAPITAL RAISING
On 31 May 2022, the Company announced a placing of 441,860
ordinary shares that were admitted to trading on the Specialist
Fund Segment of the London Stock Exchange and a further placing of
191,387 ordinary shares announced on 12 January 2023, under the
existing ISIN: GB00BYWYZ460, taking the total shares in admission
as at 31 March 2023 to 6,646,472.
Post year end, on 5 May 2023, the Company announced a further
placing of 200,000 ordinary shares that were admitted to trading on
the Specialist Fund Segment of the London Stock Exchange on or
around 12 May 2023, under the existing ISIN: GB00BYWYZ460, taking
the total shares in admission to 6,846,472.
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.
OUTLOOK
The portfolio construction of Fund I is now complete and is at
the realization stage with several companies attracting interest
from potential suitors. Others continue to prepare for follow-on
funding rounds with the potential of higher valuations. Fund II is
at the early stage of the investment cycle and the investment team
is encouraged not only with the quality of its first investments,
but with the deal pipeline that has developed.
The year's performance was a steady, consolidation year, in what
has been a challenging economic environment of higher inflation and
higher interest rates, against a backdrop of continued conflict in
Ukraine. Notwithstanding the recent rally in AI-related equities,
these factors have influenced sentiment in public and private
markets which in turn has impacted private market deal activity and
fundraising ability across all markets. However, the Company is
confident it is well placed to benefit from the surge of interest
in AI, AR/VR, and its other chosen verticals, and that its pursuit
of portfolio exits will provide investors with rewards for their
commitment to this longer-term investment strategy.
Perry Wilson
Chairman
11 July 2023
3 Investment Manager's Report
Investment Manager's Report
THE COMPANY
Sure Ventures plc (the "Company") was established to enable
investors to gain access to early-stage technology companies in the
four exciting and expansive market verticals of augmented reality
and virtual reality (AR/VR), artificial intelligence (AI),
Cybersecurity and the Internet of Things (IoT).
The Company gains access to deal flow ordinarily reserved for
venture capital funds and ultra-high net worth angel investors,
establishing a diversified software-centric portfolio with a clear
strategy. Listing the fund on the London Stock Exchange offers
investors:
-- Relative liquidity
-- A quoted share price
-- A high level of corporate governance.
It is often too expensive, too risky and too labour-intensive
for investors to build a portfolio of this nature themselves. We
are leveraging the diverse skillsets of an experienced management
team who have the industry network to gain access to quality deal
flow, the expertise to complete extensive due diligence in target
markets and the entrepreneurial skills to help these companies to
mature successfully. Those investing in the Company will get
exposure to Sure Valley Ventures which in turn makes direct
investments in the above sectors in the UK and Ireland.
Augmented Reality & Virtual Reality
The Immersive Technologies market has had a significant growth
boost during the COVID-19 pandemic, with people looking for new
ways to connect and entertain themselves. In 2021, the Global AR/VR
market was valued at USD 11.83 billion. By 2030, it is projected to
reach USD 139.5 billion, registering a Compound Annual Growth Rate
(CAGR) of 30%. There are a number of factors driving the growth of
the AR/VR market. One is the growth of the mobile gaming industry.
Mobile gaming is a major driver of AR/VR adoption, as it allows
users to experience immersive games and experiences without having
to purchase expensive hardware. Another factor driving the growth
of the AR/VR market is the increase in internet connectivity. As
internet speeds and availability improve, AR/VR applications become
more feasible. This is leading to increased adoption of AR/VR in a
variety of industries, including education, healthcare, and
manufacturing.
The increasing use of consumer electronic devices is also
driving the growth of the AR/VR market. As more and more people own
smartphones, tablets, and other devices that can be used to access
AR/VR content, the market for AR/VR headsets and other hardware is
expected to grow.
Some recent developments in the AR/VR market include:
-- Meta has had great success with its Quest 2 VR headset and
plans to launch a new high-end metaverse headset in Q2 2023.
-- Apple announced its Vision Pro headset on June 5, 2023. The
Apple Vision Pro is a very powerful mixed reality headset with a
sleek design, eye and hand tracking and sharp micro-OLED displays.
This device offers immersive video watching, serious multitasking,
lots of games and reimagined FaceTime calls. The Apple Vision Pro
is so ambitious Apple does not call it a VR or AR headset. It is a
spatial computer that Apple is calling the "most advanced personal
electronics device ever." The Vision Pro headset is expected to be
released in early 2024 with a price of USD 3,500.
-- Microsoft unveiled fresh, immersive features for its
Microsoft Mesh-powered Team platform, it announced at its Build
2023 event in June 2023. With the update, users can add immersive
experiences to private previews on the platform, leading to greater
engagement while attending meetings. Teams users can now connect in
immersive spaces with realistic interactivity. Meeting attendees
can now walk over to groups, wave to others, and similar
activities.
-- Google is working on a new AR headset called Project Iris
which is expected to be release in 2024.
These developments are expected to help accelerate growth in the
AR/VR market even further.
In addition, the AR/VR market is expected to be further boosted
by the development of the metaverse. The metaverse is a virtual
world that is created by the convergence of AR, VR, and other
technologies. It is expected to be a major driver of growth in the
AR/VR market, as it will provide a new platform for gaming,
entertainment, education, and work.
The metaverse is still in its early stages of development, but
it has the potential to be a major disruptive force in the tech
industry. As it continues to develop, it is likely to have a
significant impact on the AR/VR market.
Internet of Things
The Internet of Things (IoT) market is expected to grow
significantly in the coming years. According to a report by Allied
Market Research, the global IoT market size was valued at USD
544.38 billion in 2022 and is projected to reach USD 3,352.97
billion by 2030, exhibiting a CAGR of 26.1% during the forecast
period (2023-2030). The growth of the IoT market is being driven by
a number of factors, including the increasing demand for connected
devices, the growth of the cloud computing market, and the
development of new IoT technologies. The increasing demand for
connected devices is one of the key drivers of the IoT market.
Connected devices are used in a variety of applications, including
smart homes, smart cities, and industrial automation. The growth of
the cloud computing market is also contributing to the growth of
the IoT market. Cloud computing provides a platform for storing and
processing data from IoT devices. Furthermore, the development of
new IoT technologies is also contributing to the growth of the
market. These new technologies include 5G, artificial intelligence,
and machine learning. 5G will enable faster and more reliable
connections between IoT devices. Artificial intelligence and
machine learning will be used to analyze data from IoT devices and
make predictions.
Cybersecurity
The global artificial intelligence (AI) in cybersecurity market
size was evaluated at USD 17.4 billion in 2022 and is expected to
hit around USD 102.78 billion by 2032, growing at a CAGR of 19.43%
between 2023 and 2032. The growth of the cyber security market is
being driven by a number of factors, including the increasing
number of cyber-attacks, the growing adoption of cloud computing,
and the increasing use of IoT devices. Cyber-attacks are becoming
more sophisticated and targeted, and they are causing significant
financial and reputational damage to organizations. The growing
adoption of cloud computing is also contributing to the growth of
the cyber security market. Cloud computing provides a new attack
surface for cyber criminals, and it is important for organizations
to have the right security measures in place to protect their data.
The increasing use of IoT devices is also contributing to the
growth of the market. IoT devices are often connected to the
internet, which makes them vulnerable to cyber attacks. It is
important for organizations to secure their IoT devices to protect
their data and systems. The future prediction for growth of the
cyber security market is very positive. The market is expected to
continue to grow at a significant rate in the coming years. This
growth will be driven by the increasing number of cyber-attacks,
the growing adoption of cloud computing, and the increasing use of
IoT devices.
Artificial Intelligence
The global artificial intelligence market size was valued at USD
428.00 billion in 2022. The market is projected to grow from USD
515.31 billion in 2023 to USD 2,025.12 billion by 2030, exhibiting
a CAG of 21.6% during the forecast period. Artificial intelligence
is the simulation of human intelligence processes using various
machines by means of creating intelligent software and hardware
capable of replicating human behavior such as learning and
problem-solving. The report covers Al-based solutions such as AWS
Chatbots, OpenAl Codex, and Azure Al, and others. The global market
is set to grow drastically with the surge in artificial
intelligence applications, increased number of relevant
partnerships and collaborations, rise in small-scale Al providers,
changing complexities of business structure, and hyper-personalized
service demands. Additionally, government initiatives and
investments in Al technologies for enterprises and end users create
benefits.
The benefit of investing in companies in these four key sectors
at a Seed stage are that:
Sure Valley Ventures can invest in these companies at attractive
valuations of between GBP2 to GBP8m and get up to 20% of the
company for initial investment amounts of between GBP0.75m to
GBP1.25m.
-- The investment sectors (AR/VR, IoT, AI, and Cybersecurity)
have massive growth potential ahead of them which creates a
tailwind behind the companies that are creating these new
markets.
-- These sectors are also ones that have the potential of
creating the next big European Companies and build on Europe's
existing technology strengths.
-- These companies have the potential to get to exponential
growth and of achieving an IPO or being acquired by one of the
Silicon Valley giants who are all investing in these sectors.
-- The Sure Valley Ventures Platform and Network can help
fast-track the development of these companies across the chasm to
the Series A investment round, which in turn increases the
potential for an outsized return and also reduces the risk of the
failure of a portfolio company.
In summary, Sure Ventures plc can gain exposure to all of these
benefits through its participation in the Sure Valley Ventures
Funds, as further outlined below.
PORTFOLIO BREAKDOWN
On 6 February 2018, the Company entered into a EUR4.5m
commitment to Sure Valley Ventures ("Fund I"), the sole sub-fund of
Suir Valley Funds ICAV and its investment was equalised into Fund I
at that date. On 31 August 2019 a further EUR2.5m was committed to
Fund I, taking the total investment in Sure Valley Ventures to
EUR7m. The first drawdown was made on 5 March 2018 and as at 31
March 2023, a total of EUR6,309,394 had been drawn down against
this commitment.
On 26 April 2019, the Company made a direct investment of
GBP500,000 into VividQ Limited, a deep tech start-up with world
leading expertise in 3D holography. VividQ Limited completed an
additional funding round in May 2021 which saw the valuation of
this investment rise to GBP794k, representing a 59% unrealised
gain. This investment represents the second direct investment of
the Company, alongside Let's Explore Group PLC (formerly Immotion
Group PLC), which was announced on 24 April 2018.
On 25 February 2022, Sure Ventures plc committed to invest GBP5m
into the second fund of Sure Valley Ventures ("Fund II"). Fund II
completed an GBP85m first close of a GBP95m UK software technology
fund, which aims to increase the supply of equity capital to
high-potential, early-stage UK companies. The first drawdown was
made on 23 February 2022 and as at 31 March 2023, a total of
GBP250,000 had been drawn down against this commitment.
As detailed in the Statement of Financial Position included in
the following financial statements, these two Sure Valley Ventures
Fund investments alongside the two direct investments, represent
the entire portfolio of Sure Ventures plc as at 31 March 2023.
On 31 May 2022, the Company announced a placing of 441,860
ordinary shares, followed by a further placing of 191,387 ordinary
shares, announced on 12 January 2023. The ordinary shares were
admitted to trading on the Specialist Fund Segment of the London
Stock Exchange on 10 June 2022 and 18 January 2023 respectively,
under the existing ISIN: GB00BYWYZ460, taking the total shares in
admission as at 31 March 2023 to 6,646,472.
SUIR VALLEY FUNDS ICAV
Suir Valley Funds ICAV (the "ICAV") is a close-ended Irish
collective asset-management vehicle with segregated liability
between sub-funds incorporated in Ireland pursuant to the Irish
Collective Asset-management Vehicles Act 2015 and constituted as an
umbrella fund insofar as the share capital of the ICAV is divided
into different series with each series representing a portfolio of
assets comprising a separate sub-fund.
The ICAV was registered on 18 October 2016 and authorised by the
Central Bank of Ireland as a qualifying investor alternative
investment fund ("QIAIF") on 10 January 2017. The initial sub-fund
of the ICAV is Sure Valley Ventures, or Fund I, which had an
initial closing date of 1 March 2017. Fund I invests in a broad
range of software companies with a focus on companies in the AR/VR,
AI and IoT sectors.
As at 31 March 2023, Fund I had commitments totalling EUR27m and
had made seventeen direct investments into companies spanning the
AR/VR, AI and IoT sectors. One of these investments was sold in
2019, giving Fund I its first realised gain on exit of around 5X
return on investment. On 12 March 2018, Immersive VR Education
Limited, Fund I's first investment, completed a flotation on the
London Stock Exchange (AIM) and the Dublin Stock Exchange (ESM).
The public company is now called ENGAGE XR Holdings PLC - ticker
EXR (Formally VR Education Holdings PLC - VRE). EXR was the first
software company to list on the ESM since that market's inception.
In July 2020, following an improvement in share price, Fund I
decided to sell sufficient shares to recover its initial
investment. This resulted in a realised gain of EUR73k being
payable to Sure Ventures plc, along with its share of the initial
investment, and some Escrow funds from the aforementioned exit. The
final Escrow payment from the sale was settled in July 2021, seeing
another EUR151k flowing to the plc. Total distributions from Fund I
to the plc as at 31 March 2023 was EUR1,759,630.
SURE VALLEY VENTURES ENTERPRISE CAPITAL LP
Sure Valley Ventures Enterprise Capital Fund LP is a close-ended
UK based GP/LP Fund which completed its first close on 1 March
2022. The total commitments for this first close were GBP85m. The
British Business Bank are the cornerstone investor of this Fund,
committing GBP50m of the initial GBP85m, with Sure Ventures plc
committing a total of GBP5m.
Fund II has a similar investment strategy to the first Fund,
being a seed capital investor in high growth software companies
that are focused on bringing a disruptive innovation to market. It
plans to invest into 25 software companies from across the UK
through its new fund. As well as being based in London, Dublin, and
Cambridge, the Sure Valley team has recently opened an office in
Manchester to help access deals in the significant and exciting
innovation clusters that have developed around creative
technologies in the North of England and in the Metaverse and AI
opportunities in cities such as Manchester, Leeds, Sheffield and
Newcastle.
As at 31 March 2023, the Fund had drawn down a total of GBP4.25m
and has made its first two investments into a Belfast based company
called Retinize, for an amount of GBP1m and a London based company
called Jaid t/a Opsmatix Limited for GBP1m with the option to
invest a further GBP350k. The total invested capital to date for
Sure Ventures plc was GBP250,000.
PERFORMANCE
In the year to 31 March 2023, the Company's performance remained
strong, as it returned a net asset value of GBP1.20/unit,
representing a 7.06% decline from the audited March 2022 NAV of
GBP1.29p. The NAV remains largely unchanged as a result of minimal
fluctuations in valuation of any of the portfolio companies from
year end, against a backdrop of the usual cost base. The two direct
investments have had mixed results, with Let's Explore Group PLC
(formerly Immotion Group PLC), closing the year at 3.6p, down from
4.7p at the year-end; indicative of a tough few months in the
public markets and wider economy. VividQ remains unchanged, having
closed a new funding round to give Sure Ventures plc an unrealised
gain of 59% on its initial holding in the previous financial year.
Given the lack of revenue to support the ongoing operational costs
of the plc, these unrealised gains are key to maintaining a steady
NAV, until the point that we see more exits and realised gains.
FUTURE INVESTMENT OUTLOOK
Fund I has achieved one very positive realised gain, recovered
its full investment in its listed portfolio company, as well as
seeing a number of unrealised gains across the portfolio. The
portfolio of current investments is continuing to mature, with more
companies completing series A funding rounds, which has started to
provide the NAV growth that was set out to achieve from inception.
As the investment period of this Fund has now closed, there are no
more new investments to be made, with all remaining capital being
allocated to follow-on funding of existing investments, as these
companies continue to grow and provide the Fund with opportunities
to exit.
We remain confident in the future outlook of the Company for the
next financial year, particularly with the launch of the new
Enterprise Capital Fund, whilst also reserving the right to make
further direct investments provided there is sufficient working
capital to do so.
Shard Capital AIFM LLP
Investment Manager
10 May 2023
4 Strategic Report
Business Review
The strategic report on pages 12 to 18 has been prepared to help
shareholders assess how the Company operates and how it has
performed. The strategic report has been prepared in accordance
with the requirements of Section 414 A-D of the Companies Act 2006
(the "Act") and best practice. The business review section of the
strategic report discloses the Company's risks and uncertainties as
identified by the board, the key performance indicators used by the
board to measure the Company's performance, the strategies used to
implement the Company's objectives, the Company's environmental,
social and ethical policy and the Company's future
developments.
PrincipaL activity
The Company carries on business as an investment trust and its
principal activity is to invest in companies in accordance with the
Company's investment policy with a view to achieving its investment
objective.
Strategic and investment policy
Investment Policy
The Company's Investment Policy can be found at page 70 of this
Annual Report.
Future developments
While the future performance of the Company is dependent, to a
large degree, on the performance of the Fund which, in turn, is
subject to many external factors, the board's intention is that the
Company will continue to pursue its stated investment objective as
outlined on page 2. The Company's future developments and outlook
are discussed in more detail in the Chairman's Statement on page 4
and the Investment Manager's Report on pages 7 to 11.
Premium/Discount management
The board closely monitors the premium or discount at which the
Company's ordinary shares trade in relation to the Company's
underlying net asset value and takes action accordingly. Throughout
the period under review the Company's ordinary shares traded at
discount to its underlying net asset value. The board is of the
view that an increase of the Company's ordinary shares in issue
provides benefits to shareholders, including a reduction in the
Company's administrative expenses on a per share basis and
increased liquidity in the Company's shares.
Whilst the board believes that it is in the shareholders' best
interests to prevent the Company's shares trading at a discount to
net asset value as shareholders will be unable to realise the full
value of their investments, the current trend is for listed
investment trusts to trade at a discount to net asset value.
Notwithstanding this current discount to net asset value, the
Company may from time to time acquire its own shares, should there
be sufficient liquidity to do so.
Corporate and operational structure
Operational and portfolio management
The Company has outsourced its operations and portfolio
management to various service providers as detailed below:
-- Shard Capital AIFM LLP is appointed as the Company's manager
(the "Manager" or "Investment Manager") and Alternative Investment
Fund Manager ("AIFM") for the purposes of the Alternative
Investment Fund Managers Directive ("AIFMD");
-- Apex Fund Services (Ireland) Limited is appointed to act as the Company's administrator;
-- Apex Secretaries LLP is appointed as the Company's secretary.
-- INDOS Financial Limited is appointed as the Company's depositary;
-- Computershare Investor Services PLC is appointed as the Company's share registrar;
-- Shard Capital Partners LLP is appointed to act as the Company's placing agent; and
-- PKF Littlejohn LLP is appointed to act as the Company's auditors.
Alternative Investment Fund Managers Directive
In accordance with the AIFMD, the Company has appointed Shard
Capital AIFM LLP to act as the Company's AIFM for the purposes of
the AIFMD. The AIFM ensures that the Company's assets are valued
appropriately in accordance with the relevant regulations and
guidance. In addition, the Company has appointed INDOS Financial
Limited as depositary, to provide depositary services to the
Company as required by the AIFMD.
Donations
The Company made no political or charitable donations during the
period under review to organisations either within or outside the
EU (2022: none).
Environment, human rights, employee, social and community
issues
The Company is required by law to provide details of
environmental matters (including impact of the Company's business
on the environment), employee, human rights, social and community
issues (including information about any policies it has in relation
to these matters and the effectiveness of those policies). The
Company does not have any employees and the board comprises
non-executive directors. As an investment trust, its activities do
not have a direct impact on the environment. The Company aims to
minimise any detrimental effect that its actions may have by
adhering to applicable social legislation, and as a result does not
maintain specific policies in relation to these matters.
The Company has no operations and therefore no greenhouse gas
emissions to report nor does it have responsibility for any other
emissions producing sources under the Companies Act 2006 (Strategic
Report and Directors' Report) Regulations 2013, including those
within its underlying investment portfolio. However, the Company
believes that high standards of corporate social responsibility
such as the recycling of paper waste will support its strategy and
make good business sense.
In carrying out its investment activities and in relationships
with suppliers, the Company aims to conduct itself responsibly,
ethically and fairly.
Modern slavery
Due to the nature of the Company's business, the board does not
consider the Company to be directly within the scope of modern
slavery regulations. The board considers the Company's supply
chains, being with professional service providers within the UK or
the EU to be low risk in relation to this matter.
Anti-bribery and corruption
It is the Company's policy to conduct its business in an ethical
manner. The Company takes a zero tolerance approach to bribery and
corruption and is committed to acting professionally, fairly and
with integrity in its business dealings.
Principal Risks and Uncertainties
The board has carried out a robust assessment of its risks and
controls as detailed below. The day-to-day risk management
functions of the Company have been delegated to Shard Capital AIFM
LLP (the "Manager"), which reports to the board.
OperationaL Risks
Third Party Service Providers
The Company has no employees and the directors have all been
appointed on a non-executive basis. Whilst the Company has taken
all reasonable steps to establish and maintain adequate procedures,
systems and controls to enable it to comply with its obligations,
the Company is reliant upon the performance of third-party service
providers for its executive function. In particular, the Manager,
Depositary, Administrator and Registrar amongst others, will be
performing services which are integral to the day-to-day operation,
including IT, of the Company.
The termination of service provision by any service provider, or
failure by any service provider to carry out its obligations to the
Company, or to carry out its obligations to the Company in
accordance with the terms of its appointment, could have a material
adverse effect on the Company's operations and its ability to meet
its investment objective.
Mitigation
Day-to-day oversight of third-party service providers is
exercised by the Manager and reported to the board on a quarterly
basis. As appropriate to the function being undertaken, each of the
service providers is subject to regular performance and compliance
monitoring. The performance of Shard Capital AIFM LLP in its duties
to the Company is subject to ongoing review by the board on a
quarterly basis as well as formal annual review by the Company's
management engagement committee.
The appointment of each service provider is governed by
agreements which contain the ability to terminate each of these
counterparties with limited notice should they continually or
materially breach any of their obligations to the Company.
Reliance on key individuals
The Company will rely on key individuals at the Manager to
identify and select investment opportunities and to manage the
day-to-day affairs of the Company. There can be no assurance as to
the continued service of these key individuals at the Manager. The
departure of key individuals from the Manager without adequate
replacement may have a material adverse effect on the Company's
business prospects and results of operations. Accordingly, the
ability of the Company to achieve its investment objective depends
heavily on the experience of the Manager's team, and more generally
on the ability of the Manager to attract and retain suitable
staff.
Mitigation
The interests of the Manager are closely aligned with the
performance of the Company through the management and performance
fee structures in place and direct investment by certain key
individuals of the Manager. Furthermore, investment decisions are
made by a team of professionals, mitigating the impact loss of any
single key professional within the Manager's organisation. The
performance of the Manager in its duties to the Company is subject
to ongoing review by the board as well as formal annual review by
the management engagement committee.
Fluctuations in the market price of Issue Shares
The market price of the issued shares may fluctuate widely in
response to different factors and there can be no assurance that
the issued shares will be repurchased by the Company even if they
trade materially below their net asset value. Similarly, the shares
may trade at a premium to net asset value whereby the shares can
trade on the open market at a price that is higher than the value
of the underlying assets. There can be no assurance, express or
implied, that shareholders will receive back the amount of their
investment in the issued shares.
Mitigation
The Manager and the board closely monitor the level of discount
or premium at which the shares trade on the open market. Subject to
shareholders' approval, and compliance with the relevant companies
legislation, the Company may purchase the shares in the market with
the intention of enhancing the net asset value per ordinary share,
however there can be no assurance that any purchases will take
place or that any purchases will have the effect of narrowing any
discount to net asset value at which the ordinary shares may trade.
When the shares trade at a premium the Company may issue shares to
reduce the premium at which shares trade. As at 31 March 2023 the
shares were trading at a discount to net asset value.
Investments
Achievement of the Investment Objective
There can be no assurance that the Manager will continue to be
successful in implementing the Company's investment objective.
Mitigation
The Company's investment decisions are delegated to the Manager.
Performance of the Company against its investment objectives is
closely monitored on an ongoing basis by the Manager and the board
and is reviewed in detail at each board meeting. Any action
required to mitigate underperformance is taken as deemed
appropriate by the Manager.
Borrowing
The Company may use borrowings in connection with its investment
activities including, where the Manager believes that it is in the
interests of shareholders to do so, for the purposes of seeking to
enhance investment returns. Such borrowings may subject the Company
to interest rate risk and additional losses if the value of its
investments falls. Whilst the use of borrowings should enhance the
net asset value of the issued shares when the value of the
Company's underlying assets is rising, it will have the opposite
effect where the underlying asset value is falling. In addition, in
the event that the Company's income falls for whatever reason, the
use of borrowings will increase the impact of such a fall on the
Company's return and accordingly will have an adverse effect on the
Company's ability to pay dividends to shareholders.
Mitigation
The Manager and the board closely monitor the level of gearing
of the Company. The Company has a maximum limitation on borrowings
of 20% of net asset value (calculated at the time of borrowing)
which the Manager may affect at its discretion. During the year
ended 31 March 2019 the Company entered into a loan facility
agreement of GBP1,000,000 with Shard Merchant Capital Limited.
During the year the Company drew down GBP200,000 of this amount
(see note 11 for further details).
Liquidity of Investments
The Company expects to have a material level of exposure to
unquoted companies that are aligned with the Company's strategy and
that present opportunities to enhance the Company's return on its
investments. Such investments, by their nature, involve a higher
degree of valuation and performance uncertainties and liquidity
risks than investments in listed and quoted securities and they may
be more difficult to realise. The illiquidity of such investments
may make it difficult for the Company to sell them if the need
arises and may result in the Company realising significantly less
than the value at which it had previously recorded such
investments. Investments in unlisted equity securities, by their
nature, involve a higher degree of valuation and performance
uncertainties and liquidity risks than investments in listed
securities and therefore may be more difficult to realise.
Mitigation
The Company has established investment restrictions on the
extent to which it can invest up to 15% of net asset value in a
single investment. However, this restriction does not apply to
investments in the Fund or any Further Funds or collective
investment vehicles managed by third parties. Compliance with these
restrictions is monitored by the Manager and by the board on an
ongoing basis.
Regulations
Tax
Any changes in the Company's tax status or in taxation
legislation could affect the value of investments held by the
Company, affect the Company's ability to provide returns to
shareholders and affect the tax treatment for shareholders of their
investments in the Company.
Mitigation
The Company intends at all times to conduct its affairs so as to
enable it to qualify as an investment trust for the purposes of
Chapter 4 of Part 24 of the Corporation Tax Act 2010. Both the
board and the Manager are aware of the requirements which are to be
fulfilled in any accounting period for the Company to maintain its
investment trust status. Adherence to the conditions required to
satisfy the investment trust criteria are monitored by the
compliance function of the Manager and reviewed by the board on a
regular basis.
Breach of applicable legislative obligations
The Company and its third-party service providers are subject to
various legislation and regulations, including, but not limited to
The Data Protection Act 2018 and the General Data Protection
Regulation. Any breach of applicable legislative obligations could
have a negative impact on the Company and impact returns to
shareholders.
Mitigation
The Company engages only with third party service providers
which hold the appropriate regulatory approvals for the function
they are to perform, and can demonstrate that they can adhere to
the regulatory standards required of them. Each appointment is
governed by agreements which contain the ability to terminate each
of these counterparties with limited notice should they continually
or materially breach any of their legislative obligations, or their
obligations to the Company more broadly. Additionally, each of the
counterparties is subject to regular performance and compliance
monitoring by the Manager, as appropriate to their function, to
ensure that they are acting in accordance with applicable
regulations and are aware of any upcoming regulatory changes which
may affect the Company. Performance of third party service
providers is reported to the board on a quarterly basis, whilst the
performance of the Manager in its duties to the Company is subject
to ongoing review by the board on a quarterly basis as well as
formal annual review by the management engagement committee.
Key Performance Indicators
The board monitors success in implementing the Company's
strategy against a range of key performance indicators ("KPIs"),
which are viewed as significant measures of success over the longer
term. Although performance relative to the KPIs is also monitored
over shorter periods, it is success over the long term that is
viewed as more important, given the inherent volatility of
short-term investment returns. The principal KPIs are set out
below:
KPI Performance
Year ended 31 Year ended 31
March 2023 March 2022
--------------------- ---------------------
Movement in net asset value Decreased by Increased by
per ordinary share 7.06% 40.03%
--------------------- ---------------------
Premium/discount (after deducting Traded at a discount Traded at a discount
borrowings at fair value) of 20.71% at of 20.87% at
the year end the year end
--------------------- ---------------------
Movement in the share price Decreased by Decreased by
6.86% 2.9%
--------------------- ---------------------
The Company does not currently follow any benchmark. Similarly,
Sure Valley Ventures (the "Fund") does not follow any benchmark.
Accordingly, the portfolio of investments held by the Company and
Sure Valley Ventures will not mirror the stocks and weightings that
constitute any particular index or indices, which may lead to the
Company's shares failing to follow either the direction or extent
of any moves in the financial markets generally (which may or may
not be to the advantage of shareholders).
Promoting the success of the Company
Under Section 172 of the Companies Act 2006, the board has a
duty to promote the long-term success of the Company for the
benefit of its shareholders as a whole and, in doing so, have
regard to the likely consequences of its decisions in the long-term
upon the Company's other stakeholders and the environment.
The Company's objective is to achieve capital growth for
investors through exposure to early stage technology companies,
with a focus on software-centric businesses in its chosen target
markets.
The board believes that the values of integrity, accountability
and transparency form the basis of the Company's corporate culture
and promote good standards of governance.
The board has identified the Company's main stakeholders to be
its shareholders, Investment Manager and other key service
providers. The board seeks to understand the priorities of its
stakeholders and engages with them through the communication and
governance processes that it has put in place.
Shareholders
The board believes that transparent communication with
shareholders is important. In addition to the Annual Report and the
half-yearly report, the Company publishes quarterly portfolio
updates which are available on the Company's website together with
other information that the board believes shareholders will find
useful. The board welcomes feedback from shareholders and the
Investment Manager provides such feedback to the board on a regular
basis.
During the year, the Company issued 633,247 new ordinary shares
in response to investor demand. The board believes that share
issues are in the interests of shareholders as a whole as they
provide additional finance for investment opportunities, enable the
Company's fixed costs to be spread over a wider base and provide a
source of liquidity in the Company's shares.
Investment Manager
The Investment Manager has a fundamental role in promoting the
long-term success of the Company. The board regularly reviews the
performance of the investment portfolio at quarterly board meetings
and performs a formal annual evaluation of the performance of the
Investment Manager. This contact enables constructive regular
dialogue between the Investment Manager and the board.
Other key service providers
The board believes that strong relationships with its other key
service providers (Company Secretary, Administrator, Depositary and
Registrar) are also important for the long-term success of the
Company. There is regular contact between the board and the
Company's other key service providers. The board performs an annual
review of the services provided by the Company Secretary,
Administrator, Depositary and Registrar to ensure that these are in
line with the Company's requirements.
Environmental, Social and Governance ("ESG")
The board and the Investment Manager recognise the importance of
the impact of the Company's decisions and ESG factors are
integrated in the investment process.
Approval
The Strategic Report was approved by the board of directors on
11 July 2023 and signed on its behalf by:
Perry Wilson
Chairman
5 Directors' Report
Bo a rd of Directors
Perry Wilson
Chairman of the board and the management engagement committee
and a member of the audit committee.
Perry Wilson (Chairman) (independent)
Perry Wilson is a financial services professional with over 25
years' experience in investment banking and fund management,
responsible for running portfolio risk positions in global markets.
He started his career in accountancy before joining the asset
trading group at Lazard in 1987, focusing on illiquid credit and
structured products and going on to become a director of the
bank.
In 2003 Mr Wilson joined Argo Capital as executive director, an
AIM listed alternative investment fund management firm and was part
of a small team of portfolio managers that oversaw the group's
fiftyfold AUM growth to USD 1.3bn at it's height. After leaving
Argo in 2010 Mr Wilson joined Integra Capital to implement a liquid
credit strategy before setting up a fixed income sales and trading
operation for a Central Asian investment bank, Visor Capital in
2013.
Since 2015 Mr Wilson has been on the board of a number of UK and
offshore financial services firms and investment funds, as
independent non-executive director, and also acted as chair of
trustees for a UK pension plan, providing corporate governance and
oversight utilising his extensive financial markets background and
experience.
St. John Agnew
St. John Agnew
St. John trained as a solicitor and was an in-house Commercial
and Banking Counsel for TSB Bank. His responsibilities included
drafting and negotiating legal documentation in relation to all
Bank lending and commercial arrangements. This included many types
of commercial contracts and involved a close working relationship
with the technology team who required advice on a steady flow of
technology contracts.
He became an Investment Manager in 2000 and set up a fund in the
Cayman Islands in 2004 based on Technical Analysis which he
successfully operated and closed in late 2007. He continues to
advise on investment and is currently an Investment Manager
registered with Credo Capital with his own private clients.
St. John has also served as Trustee on a Pension fund for a
Charity and, using his legal and investment knowledge, he helped to
restructure the board to allow it to recognise and meet its
extensive ongoing Pension obligations. He is also currently a
non-executive director of a food company, The Big Prawn Company,
where he uses his knowledge and experience to help guide this
company.
gareth burchell
Gareth Burchell
Gareth Burchell began his career in the insurance industry and
spent three years at RBS Insurance prior to beginning his career in
investment advice and management. Mr. Burchell is currently Head of
Shard Capital Stockbrokers and chairs an investment committee that
specialises in providing funding for both listed and unlisted small
companies. Mr Burchell has had a focus on the small cap arena for
15 years and he and his team have provided GBP100m+ of funding to
300+ companies. He has an in-depth knowledge of the UK listing
process of various small cap exchanges.
Statutory information
Board members, and directors' and officers' insurance
The names and biographical details of the board members who
served on the board as at the year end can be found on page 20.
During the year under review the Company's directors' and
officers' liability insurance for its directors and officers as
permitted by section 233 of the Companies Act 2006 was covered and
maintained by Shard Capital AIFM LLP.
Status of the Company
The Company is an investment company within the meaning of
section 833 of the Companies Act 2006.
The Company operates as an investment trust in accordance with
Chapter 4 of Part 24 of the Corporation Tax Act 2010 and the
Investment Trust (Approved Company) (Tax) Regulations 2011. The
Company has obtained its initial approval as an investment trust
from HM Revenue & Customs. In the opinion of the directors, the
Company has conducted its affairs since its initial approval as an
investment trust in order that it is able to maintain its status as
an investment trust.
The Company is an externally managed closed-ended investment
company with an unlimited life and has no employees.
Internal controls and risk management
Details of the Company's principal risks and uncertainties can
be found in the Strategic Report on pages 12 to 18 inclusive of
details of the Company's internal controls. Details of the
Company's application of hedging arrangements, if any, are set out
on page 72, the Investment Policy section of these financial
statements.
Share capital - voting and dividend
As at 31 March 2023, the Company had 6,646,472 (2022: 6,013,225)
ordinary shares in issue. There are no other classes of shares in
issue and no shares are held in treasury.
The maximum number of shares which can be admitted to trading on
the LSE without the publication of a prospectus is 20% of the
ordinary shares in issue on a rolling 12 month basis at the time of
admission of the shares.
During the year under review a total of 633,247 (2022: 662,500)
ordinary shares were issued as detailed below:
Date Shares issued Price paid per Discount to net
share (pence) asset value (%)
(1)
============== ===============
May 2022 441,860 107.5 16.6%
========== ============== =============== =================
Jan 2023 191,387 104.5 13.2%
========== ============== =============== =================
(1) Last published NAV at time of issue
As at 31 March 2023 there were 6,646,472 ordinary shares of 1p
in issue. Since the year end a further 200,000 ordinary shares have
been issued.
The ordinary shares carry the right to receive dividends and
have one voting right per ordinary share. There are no shares which
carry specific rights with regard to the control of the Company.
The shares are freely transferable. There are no restrictions or
agreements between shareholders on the voting rights of any of the
ordinary shares or the transfer of shares.
The Company has been incorporated with an unlimited life.
On a winding up or a return of capital by the Company, the
ordinary shareholders are entitled to the capital of the
Company.
No final dividend is being recommended. The Company's policy is
to pay dividends, if any, on an annual basis, as set out in the
Company's prospectus dated 17 November 2017 and the supplementary
prospectus dated 2 January 2018 (the "Prospectus"). There were no
dividends paid in respect of the year ended 31 March 2023 (2022 -
None).
The Company will pay out such dividends as are required for it
to maintain its investment trust status.
Substantial share interests
The Company has received the following notification in
accordance with the Disclosure and Transparency Rule 5.1.2R of an
interest in the voting rights attaching to the Company's issued
share capital.
The Company received a notification on 8 March 2021 that Pires
Investments plc had acquired an interest in 1,500,000 ordinary
shares in the Company, representing 22.57% of the Company's
ordinary shares in issue at 31 March 2023.
Independent auditor
The Company's independent auditor, PKF Littlejohn LLP ("PKF"),
was appointed by the members on 16 April 2018 and has expressed its
willingness to continue to act as the Company's auditor for the
forthcoming financial year. The audit committee has carefully
considered the auditor's appointment, as required in accordance
with its terms of reference, and, having regard to its
effectiveness and the services it has provided the Company during
the period under review, has recommended to the board that the
independent auditor be appointed at the forthcoming Annual General
Meeting ("AGM"). At the AGM resolutions will be proposed for the
appointment of the independent auditor and to authorise the
directors to agree its remuneration for the forthcoming financial
year. In reaching its decision, the audit committee considered the
points detailed on pages 32 to 34 of the Audit Committee's
report.
Audit information
As r equi r e d b y section 4 1 8 o f t h e C om p ani e s A c t
2 0 06, t h e directors wh o he l d offi ce a t t h e d a te o f t
hi s repor t each confir m that , s o far as the y are awar e ,
there is no rele vant aud i t information o f w hich the C om p an
y 's au d itor is un aware a n d e ac h director ha s t a k e n al
l t h e s t ep s r e qui r e d o f a director to ma k e t h e m s
elve s a w a r e o f a n y r e l ev a n t a u d i t i n f o r m a t
io n a n d t o e s t ablish tha t t h e C om p an y ' s audi t o r
is awa re of that info r ma t ion.
Articles of Association
An y amendmen t s to t h e C om p an y ' s ar t icle s of a s so
cia t io n mus t b e mad e b y spe cia l r e s ol u t ion.
Going concern
The directors have reviewed the financial projections of the
Company from the date of this report, which shows that the Company
will be able to generate sufficient cash flows in order to meet its
liabilities as they fall due. Accordingly, the directors are
satisfied that the going concern basis remains appropriate for the
preparation of the financial statements. The Company also has
detailed policies and processes for managing the risks, set out in
the Investment Policy on pages 71 to 72.
Viability statement
In accordance with the revised Association of Investment
Companies Code of Corporate Governance published in February 2019
and revised UK Corporate Governance Code, published by the
Financial Reporting Council in July 2018, the directors have
assessed the prospects of the Company over a three-year period
ending March 2026. The board believes this period to be appropriate
taking into account the current trading position and the potential
impact of the principal risks that could affect the viability of
the Company. At 31 March 2023, the Company's cash less liabilities
amounted to (GBP235,186) which may pose a potential risk to the
viability of the Company.
Analysis to assess viability has focused on the risks in
delivery of the growth of the business and a series of projections
have been considered changing funding levels and the performance of
the assets acquired.
The analysis demonstrates that, the Company would be able to
withstand the impact of the risks identified. Based on the robust
assessment of the principal risks, prospects and viability of the
Company, the board confirms that they have reasonable expectation
that the Company will be able to continue in operation and meet its
liabilities as they fall due over the three-year period ending
March 2026.
Management and administration
Company Secretary
Apex Secretaries LLP (the "Company Secretary") is the company
secretary of the Company.
Administrator
Apex Fund Services (Ireland) Ltd (the "Administrator"), is the
administrator of the Company. The Administrator provides the
day-to-day administration of the Company. The Administrator is also
responsible for the Company's general administrative functions,
such as the calculation of the net asset value and maintenance of
the Company's accounting records.
Under the terms of the administration agreement, the
Administrator is entitled to an annual administration fee equal to
the greater of: (i) EUR28,000 per annum; and (ii) an amount equal
to 0.08% of the portion of NAV up to and including EUR100 million,
0.06% of the portion of NAV between EUR100 million and EUR200
million and 0.05% of the portion of NAV above EUR200 million
(exclusive of VAT and out of pocket expenses). The Administrator is
also entitled to reimbursement of all reasonable out of pocket
expenses incurred by it in connection with the performance of its
duties. The administration agreement can be terminated by either
party by providing 90 days' written notice.
Manager
Shard Capital AIFM LLP (the "Manager"), a UK-based company
authorised and regulated by the Financial Conduct Authority, is the
Company's manager and alternative investment fund manager ("AIFM")
for the purposes of the Alternative Investment Fund Managers
Directive ("AIFMD"). The Manager is responsible for the
discretionary management of the Company's assets and ensures that
these are valued appropriately in accordance with the relevant
regulations and guidance.
Under the terms of the management agreement, the Manager is
entitled to a management fee and a performance fee together with
reimbursement of reasonable expenses incurred by it in the
performance of its duties. From the period from first admission,
the management fee payable was based on 1.25% of the NAV. The
Manager is also 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. Further
details on the management fee and the performance fee can be found
in Note 4 to the financial statements. The management agreement can
be terminated by either party providing twelve months' written
notice.
Depositary
The Company's depositary is INDOS Financial Limited (the
"Depositary"), a company authorised and regulated by the Financial
Conduct Authority. Under the terms of the depositary services
agreement the Depositary is entitled to a monthly depositary fee
equal to the greater of: (i) GBP2,000 and GBP2,917 per month
(depending on the activity of the Company); and (ii) an amount
equal to 1/12 of 0.03% of NAV (exclusive of VAT and out of pocket
expenses). The depositary services agreement can be terminated by
either party by providing 90 days' written notice.
Change of control
There are no agreements which the Company is party to that might
be affected by a change of control of the Company.
Subsequent events
Following the year end, Sure Ventures plc raised gross proceeds
of GBP200,000 by way of a private placing. The ordinary shares were
issued at 100p per share, representing the closing mid-price on 5
May 2023.
Future developments
Indications of likely future developments in the business of the
Company are set out in the Strategic Report on pages 12 to 18.
By order of the board
Apex Secretaries LLP
Company Secretary
Date: 11 July 2023
Corporate Governance Statement
The corporate governance statement explains how the board has
sought to protect shareholders' interests by protecting and
enhancing shareholder value. The directors are ultimately
responsible for the stewardship of the Company and this section
explains how they have fulfilled their corporate governance
responsibilities. This corporate governance statement forms part of
the directors' report.
As set out in the Prospectus, the Company's Specialist Fund
Segment securities are not admitted to the Official List of the UK
Listing Authority. Therefore the Company has not been required to
satisfy the eligibility criteria for admission to listing on the
Official List and is not required to comply with the Financial
Conduct Authority's Listing Rules. The board is committed to high
standards of corporate governance and have adopted the UK Corporate
Governance Code (the "UK Code") published by the Financial
Reporting Council ("FRC"). The Disclosure Guidance and Transparency
Rules ("DTR") require companies to disclose how they have applied
the principles and provisions of the UK Code. A copy of the UK Code
is available from the website of the Financial Reporting Council at
https://www.frc.org.uk/directors/corporate-governance-and-stewardship/uk-corporate-governance-code
.
The Association of Investment Companies ("AIC") has published
its own Code on Corporate Governance (the "AIC Code"). The FRC has
confirmed that AIC member companies who report against the AIC Code
will be meeting their obligations in relation to the UK Code and
the associated disclosure requirements of the DTR. The AIC Code is
available from the AIC's website at www.theaic.co.uk.
The board has considered the principles and provisions of the
AIC Code. The AIC Code addresses the principles and provisions set
out in the UK Code, as well as setting out additional principles
and provisions on issues that are of specific relevance to the
Company.
The board considers that voluntarily reporting against the
principles and provisions of the AIC Code, which has been endorsed
by the Financial Reporting Council, provides more relevant
information to shareholders.
Statement of compliance
The Company has complied with the recommendations of the AIC
Code and the relevant provisions of the UK Code, except as set out
below.
The UK Code includes provisions relating to:
-- The role of the chief executive;
-- Executive directors' remuneration;
-- The appointment of a senior independent director; and
-- The need for an internal audit function.
The board considers these provisions are not relevant to the
Company, being an externally managed investment company with no
executive directors. In particular, all of the Company's day-to-day
management and administrative functions are outsourced to third
parties. As a result, the Company has no executive directors,
employees or internal operations. The Company has therefore not
reported further in respect of these provisions.
In addition, the board does not, at present, consider that
separate nomination and remuneration committees would be
appropriate given the board's size, being three members in total.
Currently, decisions concerning the board's remuneration,
nomination and board appraisals are undertaken by the board as a
whole. However, the need for separate nomination and remuneration
committees and an internal audit function will be kept under
review.
The Board of Directors
The board consists of three directors, all of whom are
non-executive directors. Biographies of the directors are shown on
page 20 and demonstrate the wide range of skills and experience
that they bring to the board. The directors possess business and
financial expertise relevant to the direction of the Company and
consider themselves to be committing sufficient time to the
Company's affairs.
None of the directors has a service contract with the Company,
nor are any such contracts proposed. Each director has been
appointed pursuant to a letter of appointment entered into with the
Company. The directors' appointment can be terminated in accordance
with the articles of association and without compensation. There
are no agreements between the Company and any director which
provide for compensation for loss of office in the event that there
is a change of control of the Company.
Copies of the letters of appointment will be available at the
AGM.
The Chairman, Perry Wilson, is independent and considers himself
to have sufficient time to commit to the Company's affairs. The
Chairman's other commitments are detailed in his biography on page
20.
The directors have determined that the size of the Company's
board does not warrant the appointment of a senior independent
director at this time. All of the directors are available to
address shareholder queries or engage in consultation as
required.
The operation of the Board
The board of directors meets at least four times a year and more
often if required.
The table below sets out the directors' attendance at board and
audit committee meetings held in the financial year ended 31 March
2023, against the number of meetings each board or audit committee
member was eligible to attend.
Director Board Audit Committee
======
Perry Wilson 8/8 3/3
================= ====== ================
Gareth Burchell 8/8 -
================= ====== ================
St. John Agnew 6/8 3/3
================= ====== ================
No individuals other than the committee or board members are
entitled to attend the relevant meetings unless they have been
invited to attend by the board or relevant committee.
Directors are provided with a comprehensive set of papers for
each board or committee meeting, which equips them with sufficient
information to prepare for the meetings.
The board has a formal schedule of matters specifically reserved
to it for decision to ensure effective control of strategic,
financial, operational and compliance issues, which includes:
-- The Company's structure including share issues and setting a
discount/premium management programme;
-- Risk management;
-- Appointing the Manager and other service providers and setting their fees;
-- Approving board changes including the audit committee and management engagement committee;
-- Considering and authorising board conflicts of interest;
-- Approving the Company's annual accounts and half yearly
accounts including accounting policies;
-- Approving the Company's level of gearing;
-- The approval of terms of reference and membership of board committees; and
-- Approving liability insurance.
There is a procedure in place for the directors to take
independent professional advice at the expense of the Company. No
such professional advice has been taken by the directors during the
period under review.
The directors' and officers' liability insurance covered by
Shard Capital AIFM LLP shall be maintained for the full term of
each director's appointment.
Division of Responsibilities
The Chairman leads the board and is responsible for its overall
effectiveness in directing the Company. He ensures that the
directors' views are taken into consideration as part of the
board's decision making process. The Chairman promotes a culture of
openness and debate at the Company's board meetings and ensures
that an appropriate amount of time is devoted to each matter on the
agenda for the board's consideration. He ensures that the board
receives accurate, timely and clear information in order for the
directors to discharge their duties. The Chairman is also available
to facilitate the board's relations with shareholders and the
Company's other stakeholders.
The Company has established audit and management engagement
committees which deal with matters determined by terms of reference
issued by the board.
The board ensures that an appropriate amount of time is spent on
board matters. The board receives papers ahead of board meetings,
which are reviewed by the directors to enable them to participate
effectively and efficiently at meetings. Other information is
received by the board between meetings and input is provided by
board members as required.
Independence of Directors
Both Perry Wilson and St. John Agnew were considered, on
appointment, to be independent of Shard Capital AIFM LLP and free
from any business or other relationship that could materially
interfere with the exercise of his independent judgement and
remained so throughout the financial year under review.
Gareth Burchell is a member of the Shard Capital AIFM LLP
investment committee and is therefore not considered to be
independent. Mr. Burchell is also currently Head of Shard Capital
Stockbrokers and chairs an investment committee that specialises in
providing funding for both listed and unlisted small companies. The
board believes that having Mr. Burchell on the board is beneficial
to the board as it provides the board with added insight on the
Company's investment portfolio. Mr. Burchell does not participate
in discussions on, or vote on, matters where there would be a
conflict or potential conflict of investment, including but not
limited, the evaluation of the Investment Manager.
There are no other relationships or circumstances relating to
the Company that are likely to affect the judgement of any of the
directors.
Composition
The board believes that during the year ended 31 March 2023, its
composition was appropriate for an investment company of the
Company's nature and size. Care will be taken at all times to
ensure that the board is composed of members who, as a whole, have
the required knowledge, abilities and experience to properly fulfil
their role and are sufficiently independent.
Directors' interests
No director holds shares in the Company.
Board evaluation
The most recent board evaluation was completed September 2022.
The results of the evaluation were reviewed by the Chairman and
discussed with the board. The conclusions from the board evaluation
demonstrated that the directors showed the necessary commitment for
effective fulfilment of their duties.
Board training and induction
The Company Secretary, the board or the Manager upon request of
the board or any director individually, will offer induction
training to new directors about the Company, its key service
providers, the directors' duties and obligations and other matters
as may be relevant from time to time.
The board members are encouraged to keep up to date and attend
training courses on matters which are directly relevant to their
involvement with the Company.
Board appointment, election and tenure
The rules concerning the appointment and replacement of
directors are contained in the Company's articles of association
and the Companies Act 2006.
The board takes into account the requirements of the AIC Code
with regards to tenure. The board recognises the benefits to the
Company of having longer serving directors together with
progressive refreshment of the board. None of the directors
consider length of service as an impediment to independence or good
judgement but, if they felt that this had become the case, the
relevant director would stand down. The Company was incorporated in
June 2017, therefore no director has served for more than nine
years. The board is currently developing a succession plan.
The directors of the Company and their biographies are set out
on page 20. At the forthcoming AGM, in accordance with the AIC
Code, all members of the board will put themselves forward for
re-election.
The board considers that all of the current directors contribute
effectively to the operation of the board and the strategy of the
Company. The board has considered each board member's independence
of the Company and Manager. As such the board believes that it is
in the best interests of shareholders that each of the directors be
re-elected.
Basis of Directors' appointment
Consideration is given to the recommendations of the AIC Code on
diversity. The board seeks to appoint new directors on the basis of
merit as a primary consideration, with the aim of bringing an
appropriate range of skills, diversity and experience together.
Management agreement and continuing appointment
Details of the Manager's agreement and fees are set out in Note
4 to the financial statements.
The board keeps the performance of the Manager under continual
review through the Company's management engagement committee. The
most recent evaluation of the Manager was completed September 2022,
following which the board has concluded that due to its specialist
knowledge of the sectors in which the Company invests and the
Company's performance to date, the continuing appointment of the
Manager is in the best interests of shareholders as a whole.
Conflicts of interest
The articles of association provide that the directors may
authorise any actual or potential conflict of interest that a
director may have, with or without imposing any conditions that
they consider appropriate on the director. Directors are not able
to vote in respect of any contract, arrangement or transaction in
which they have a material interest, and, in such circumstances,
they are not counted in the quorum at the relevant board meeting. A
process has been developed to identify any of the directors'
potential or actual conflicts of interest. This includes declaring
any potential new conflicts before the start of each board
meeting.
Audit Committee
The board has delegated certain responsibilities to its audit
committee. The committee comprises two or more independent
directors. The Chairman of the board may be a member of the
committee and due to the size of the board, the Chairman of the
board, Perry Wilson acts as chairman of the audit committee. The
board has established formal terms of reference for the audit
committee which are available from the Company Secretary upon
request. An outline of the remit of the audit committee and its
activities during the year are set out below.
The audit committee is chaired by Perry Wilson and meets at
least twice a year. It is responsible for ensuring that the
financial performance of the Company is properly reported and
monitored and provides a forum through which the Company's external
auditor may report to the board. The audit committee reviews and
recommends to the board the annual and half-yearly reports and
financial statements, financial announcements, internal control
systems, risk metrics, decisions requiring a significant element of
judgement and procedures and accounting policies of the
Company.
Further details on the work of the audit committee can be found
in the report of the audit committee on pages 32 to 34.
Management Engagement Committee
The Chairman of the Company acts as chairman of the management
engagement committee. The management engagement committee meets
once a year. Its principal duties are to formally review the
actions and judgements of the Manager, the terms of its management
agreement and to review the performance and services of the
Company's other key service providers. The committee reports to the
board on its proceedings after it's meeting.
The most recent evaluation of the Manager and other key service
providers was completed September 2022.
The terms of reference of the committee are available from the
Company Secretary.
Company secretary
The board has direct access to the advice and services of the
Company Secretary, which is responsible for ensuring that the board
and Committee procedures are followed, and that applicable rules
and regulations are complied with. The Company Secretary is also
responsible for ensuring good information flows between all
parties.
Review of shareholder profile
The board reviews reports provided by qualified independent
industry consultants and Shard Capital Partners LLP on the
Company's shareholder base and its underlying beneficial owners.
The Manager and Shard Capital Partners LLP disclose any concerns
raised by shareholders to the board.
Stewardship responsibilities and the use of voting rights
The Financial Reporting Council (FRC) introduced a Stewardship
Code which sets out the responsibilities of institutional
shareholders in respect of investee companies. Under the
Stewardship Code, Managers should:
-- Publicly disclose their policy on how they will discharge
their stewardship responsibilities to their clients;
-- Disclose their policy on managing conflicts of interest;
-- Monitor their investee companies;
-- Establish clear guidelines on how they escalate evaluation;
-- Be willing to act collectively with other investors where appropriate;
-- Have a clear policy on proxy voting and disclose their voting record; and
-- Report to clients.
The Company recognises that with respect to its equity assets
one of the important obligations that it has as a shareholder is
the right to vote on issues submitted to shareholders. These issues
may include the election of directors and other important matters
that affect the structure of the investee company. The Manager acts
on behalf of the Company in these matters and will exercise its
voting rights, supported by independent providers, if considered
appropriate.
Relations with shareholders
The notice of Annual General Meeting ("AGM") will be sent out
separately in due course. The notice of the AGM, which is sent out
at least 21 clear days in advance of the AGM, sets out the business
of the meeting and any item not of an entirely routine nature is
explained in the directors' report. Separate resolutions are
proposed in respect of each substantive issue.
Any questions that shareholders wish to raise at the AGM can be
emailed to info@sureventuresplc.com and the board and/or the
Manager will respond as appropriate.
Proxy voting figures will be published on the Company's website
following the AGM.
The Manager holds regular discussions with major shareholders,
the feedback from which is provided to and greatly valued by the
board. The directors are available to enter into dialogue and
correspondence with shareholders regarding the progress and
performance of the Company. Further information about the Company
can be found on the Company's website
http://www.sureventuresplc.com .
Internal control review
The board has elected not to have an internal audit function as
the Company delegates its operations to third-party service
providers and does not employ any staff. Instead it has been agreed
that the Company will rely on the internal controls which exist
within its third-party providers.
The Administrator, Depositary and Manager have established
internal control frameworks to provide reasonable assurance on the
effectiveness of the internal controls operated on behalf of their
clients. The Manager, the Administrator, the Depositary and the
Company Secretary will report on any breaches of law or regulation,
if and when they arise, periodically in scheduled board reports.
The audit committee considers annually whether there is any need
for an internal audit function, and it has agreed that it is
appropriate for the Company to rely on the internal audit controls
which exist within its third-party providers.
The board keeps under review the effectiveness of the
Administrator and the Manager's systems of internal control and
risk management. During the period under review, the board has not
identified any significant failings or weaknesses in the internal
control systems of its service providers. Details of the Company's
risks can be found on pages 15 to 17 of the Strategic Report,
together with an explanation of the controls that have been
established to manage each risk. The risk matrix provides a basis
for the audit committee and the board to regularly monitor the
effective operation of the controls and to update the matrix when
new risks are identified.
The system of internal control and risk management is designed
to meet the Company's particular needs and the risks to which it is
exposed. The board recognises that these control systems can only
be designed to manage, rather than eliminate, the risk of failure
to achieve business objectives and to provide reasonable, but not
absolute, assurance against material misstatement or loss.
Alternative Investment Fund Management Directive Disclosure
Quantitative remuneration disclosure
In accordance with 3.3.5 (5) of the Financial Conduct
Authority's Investment Funds Sourcebook ("FUND") and in accordance
with the Financial Conduct Authority's Finalised guidance - General
guidance on the AIFM Remuneration Code (SYSC 19B) ("the
Guidelines"), dated January 2014, the total amount of remuneration
paid by or paid to Shard Capital AIFM LLP, for the financial period
to the 31 March 2023 in respect of the Company was GBP149,907
(2022: GBP87,219) . Shard Capital AIFM LLP out of its own resources
decided to pay rebates out of the management fee. For the financial
period to the 31 March 2023, the Company incurred rebate income
from Shard Capital AIFM LLP GBP99,907 (2022: GBP87,219) . There was
no performance fee payable in respect of the year ended 31 March
2023 or 31 March 2022. Shard Capital AIFM LLP does not consider
that any individual member of staff or partner of Shard Capital
AIFM LLP has the ability to materially impact the risk profile of
the Company.
Other disclosures
The AIFMD requires that Shard Capital AIFM LLP ensures that
certain other matters are actioned and or reported to investors.
Each of these is set out below:
-- Provision and content of an annual report (FUND 3.3.2 and
3.3.5). The publication of the annual report and accounts of the
Company satisfies these requirements.
-- Material change of information. The AIFMD requires certain
information to be made available to investors in the Company before
they invest and requires that material changes to this information
be disclosed in the annual report.
Periodic disclosure (FUND 3.2.5 and 3.2.6)
There are no assets subject to special arrangements due to their
illiquid nature and no new arrangements for the managing of the
liquidity of the Company.
There is no change to the arrangements, as set out in the
Prospectus, for managing the Company's liquidity.
The current risk profile of the Company is set out in the
Strategic Report: Principal Risks and Uncertainties on pages 15 to
17 and in Note 16 of the Financial Statements, 'Financial Risk
Management'.
The Company is permitted to be leveraged and the table below
sets out the current maximum permitted and actual leverage.
As a percentage of net asset Gross method Commitment method
value
=============
Maximum l e ve l of l e verage 150% 150%
================================ ============= ==================
Le verage as at 3 1 March 2023 103% 103%
================================ ============= ==================
Following the partial drawdown of the loan facility in the year,
the Company breached (103%) its Gross method maximum leverage level
(100%), for one quarter. This resulted in an application being made
to the FCA in March 2023, to increase the maximum level of leverage
under the Gross method to 150%, which was duly approved.
Other matters
Shard Capital AIFM LLP has confirmed that all required reporting
to the Financial Conduct Authority has been undertaken in
accordance with FUND 3.4.
Approval
This Report was approved by the board of directors on 11 July
2023.
On behalf of the board
Perry Wilson
Chairman
Report of the Audit Committee
As Chairman of the audit committee I am pleased to present the
audit committee report for the year ended 31 March 2023.
Membership of the Audit Committee
As the board is small with only three members, St. John Agnew
and Perry Wilson are both appointed members of the audit committee.
As chairman of the audit committee, I can confirm that I have
relevant financial experience to fulfil my obligations in this
capacity.
The role of the Audit Committee
The role of the audit committee is defined in its terms of
reference, which can be obtained from the Company Secretary.
In summary, the role of the audit committee includes the
following:
-- To monitor the financial reporting process;
-- To review and monitor the integrity of the half-year and
annual financial statements and review and challenge where
necessary the accounting policies and judgements of the Manager and
Administrator;
-- To review the adequacy and effectiveness of the Company's
internal financial and internal control and risk management
systems;
-- To make recommendations to the board on the re-appointment or
removal of the external auditor and to approve its remuneration and
terms of engagement;
-- To review and monitor the external auditor's independence and objectivity; and
-- To review and consider on an annual basis the need for an internal audit function.
Matters considered during the year
The audit committee has met three times during the year under
review and considered the following items:
-- The Company's audit plan with the external auditor;
-- The policy on non-audit services; and
-- The dividend policy.
The audit committee also reviewed the following items:
-- Whether there was a requirement for an internal audit function;
-- The Company's risk matrix and the internal controls implemented to manage those risks; and
-- The appropriateness of the Company's accounting policies and
whether appropriate estimates and judgements have been made.
UK non-audit services
In relation to non-audit services, the audit committee has
reviewed and implemented a policy on the engagement of the auditor
to supply non-audit services and this is reviewed on an annual
basis. All requests or applications for other services to be
provided by the auditor are submitted to the audit committee and
will include a description of the services to be rendered and an
anticipated cost. The Company's policy follows the requirements of
the Financial Reporting Council's Revised Ethical Standard 2019.
The policy specifies a number of prohibited services which it is
not permitted for the auditor to provide under the revised Ethical
Standard.
For the year ended 31 March 2023, there were no non-audit
services rendered to the Company and none for the year ended 31
March 2022.
The audit committee reviewed the level of non-audit services and
were satisfied that the auditors maintained their independence.
Significant accounting matters
The audit committee met on 11 July 2023 to review the report and
accounts for the year to 31 March 2023. The audit committee
considered the following significant issues, including principal
risks and uncertainties in light of the Company's activities and
issues communicated by the auditors during their review, all of
which were satisfactorily addressed:
Issues considered How the issue was addressed
Retention of investment T he aud it comm i ttee rece i v ed assu
trust status rance from t he C om p an y 's Investment
Manager t hat the Company has remained compliant
with the requirements to maintain its investment
trust status. The directors regularly review
the investments and their mix to ensure they
remain diversified, its retained income levels
to ensure sufficient distributions are made
and the Company's shareholdings to determine
if the Company has become a close company.
============================== ====================================================
R i sk of mi s a T h e audit com mit t e e r e v ie w s r
pp r o p r i at io e p o r t s fr o m it s s e r v i ce p r
n of a s se t s a o v id ers on k e y cont rols ove r the as
nd owner shi p o f sets o f the Com p any . Any si g n ific
inve s tment s ant i s s ues a re r e p o rted to t he bo
ard by t he Manager and/ or t he C om p an
y's Depositary. T he Manager h as p ut in
p l ace proce du r es to e n su re t h at
i nve s t m e n ts c an on ly be m ade to
t he e xte nt t h at t he appropr iate contractual
and legal a rran g ements a re in place to
p r o t e c t t h e C om p an y ' s assets.
The Company's Depositary issues a quarterly
report on the status of the assets to the
directors for review.
============================== ====================================================
The r i sk t h at The board regularly reviews income forecasts.
i n c o me is ov e The external audit includes checks on the
r s t a t ed, incomplete completeness and accuracy of income and also
or in a c c u ra te checks that this has been recognised in accordance
t h r o u gh f ailu with stated accounting policies.
re to r e c o g ni
se p r o p er i n
c o me e nt i tl e
m e n ts or to app
ly t he approp r i
ate acco u n t ing
t r e atm e n t for
r e c o g n i t i
on of i n c o m e.
============================== ====================================================
The r i sk t h at T he aud it comm i ttee rece i v es assu
valuation of the Investments rance from t he C om p an y's Admini s trator
held may be not be and Manager t hat the Company's valuation
correct. policy is followed at all times.
============================== ====================================================
External auditor
The Company's external auditor, PKF Littlejohn LLP ("PKF"), was
appointed pursuant to the engagement letter dated 10 May 2023. The
audit committee intends to re-tender within the timeframe set by
the Financial Reporting Council.
The individual at PKF who acts as the Company's appointed audit
partner is Azhar Rana, whose appointment is reviewed annually. In
accordance with UK legislation, the audit partner must rotate at
least every five years. As this is Azhar Rana's first year as audit
partner, he will be due to rotate out of this role following the
completion of the audit for the year ended 31 March 2028.
The audit fees for the period under review can be found in Note
5 to the financial statements on page 55.
The audit committee monitors the auditor's objectivity and
independence on an ongoing basis. In determining PKF's
independence, the audit committee has assessed all relationships
with PKF and received confirmation from PKF that it is independent
and that no issues of conflicts arose during the period. The audit
committee is therefore satisfied that PKF is independent.
The audit committee monitors and reviews the effectiveness of
the external audit process on an annual basis and makes
recommendations to the board on its re-appointment, remuneration
and terms of engagement of the auditor. The audit committee has met
with the audit partner and assessed PKF's performance to date and
to discuss the Company's audit and other matters concerning the
Company. I can confirm that Azhar Rana did not raise any issues of
concern during our meeting. The review has involved an examination
of the auditor's remuneration, the quality of its work including
the quality of the audit report, the quality of the audit partner
and audit team, the expertise of the audit firm and the resources
available to it, the identification of audit risk, the planning and
execution of the audit and the terms of engagement.
The audit committee has direct access to the Company's auditor
and provides a forum through which the auditor reports to the
board. Representatives of PKF attend the audit committee meetings
at least twice annually.
Internal audit
The audit committee believes that the Company does not require
an internal audit function, principally because the Company
delegates its day-to-day operations to third parties, which are
monitored by the audit committee, and which provide control reports
on their operations at least annually.
This report was approved by the audit committee on 11 July
2023.
Perry Wilson
C hai r m a n of t he Au d it C om m i ttee
Statement of Directors' Responsibilities
The directors are responsible for preparing the Annual Report,
the directors' remuneration report and the financial statements in
accordance with applicable law and regulations.
Applicable law requires the directors to prepare financial
statements for each financial year. As such the directors have
prepared the financial statements in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006. 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 year. In preparing these financial
statements, the directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable international accounting standards
have been followed, subject to any material departures disclosed
and explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements and the directors' remuneration report
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 the maintenance and integrity
of the Company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
The directors consider that the Annual Report and financial
statements, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to assess a
company's performance, business model and strategy.
Each of the directors, whose names and functions are listed in
the directors' report, confirms that, to the best of their
knowledge:
-- the financial statements, which have been prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006, give a true and
fair view of the assets, liabilities, financial position and profit
of the Company;
-- the Strategic Report includes a fair review of the
development and performance of the business and the position of the
Company, together with a description of the principal risks and
uncertainties that it faces;
-- so far as the director is aware, there is no relevant audit
information of which the Company's auditors are unaware; and
-- they have taken all the steps that they ought to have taken
as a director in order to make themselves aware of any relevant
audit information and to establish that the Company's auditors are
aware of that information.
Directors' Remuneration Report
Statement from the Chairman
I am pleased to present the directors' remuneration report for
the year ended 31 March 2023, prepared in accordance with The Large
and Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013 and the Companies Act 2006. The
Company's auditor is required to verify certain information within
this report subject to statutory audit by the Companies Act 2006.
Where information set out below has been audited it is indicated as
such.
We are required to seek shareholder approval of the directors'
remuneration policy at least every third year and the remuneration
report annually. Any changes to the directors' remuneration policy
will require shareholder approval. The Company's remuneration
policy is set out below and was last approved by shareholders at
the AGM held in September 2021. An ordinary resolution to approve
the directors' remuneration policy will be put to shareholders at
least once every three years. At the AGM, shareholders will also be
asked to consider an advisory resolution on the contents of the
directors' remuneration report.
As at 31 March 2023, the board comprised three non-executive
directors, two of whom are independent of the Manager.
Given the size of the board, and as the Company has no
employees, it is not considered appropriate for the Company to
establish separate remuneration and nomination committees. It is,
therefore, the Company's practice for the board to consider and
approve directors' remuneration. Post the Company's incorporation,
Directors' fees are set at the rate of GBP26,100 per director per
annum for Perry Wilson and St. John Agnew. Prior to the Company's
incorporation Directors' fees were set at the rate of GBP24,000 per
director per annum for Perry Wilson. Gareth Burchell has agreed to
waive his director's fee.
As the board's fees were considered prior to its listing as an
investment company, the appointment of external remuneration
consultants was not considered necessary. Furthermore, the board
took the decision not to revise the board's fees because they did
not feel it was appropriate, given the Company's short existence.
Many parts of the Large and Medium-sized Companies and Groups
(Accounts and Reports) (Amendment) Regulations 2013 do not apply to
the Company as the board is comprised entirely of non-executive
directors and the Company has no employees.
Directors' remuneration policy
The remuneration policy was approved at the Company's Annual
General Meeting held on 15 September 2021, with all shareholders
present voting in favour of the resolution on a show of hands.
The maximum fees for the board as a whole are limited by the
Company's Articles of Association to GBP300,000 per annum. Subject
to this limit, the board's policy is that remuneration of
non-executive directors should reflect the experience of the board
member and the time commitment required by board members to carry
out their duties, and is determined with reference to the
appointment of directors of similar investment companies. The level
of remuneration has been set with the aim of promoting the future
success of the Company. With this in mind the board considers
remuneration in order to attract individuals of a calibre
appropriate to promote the long-term success of the Company and to
reflect the specific circumstances of the Company and its field of
investment, the duties and responsibilities of the directors and
the value and amount of time commitment required of directors to
the Company's affairs.
Due regard is taken of the board's requirement to attract and
retain individuals with suitable knowledge and experience and the
role that individual directors fulfil. There are no specific
performance-related conditions attached to the remuneration of the
board and the board members are not eligible for bonuses, pension
benefits, share options, long-term incentive schemes or other
non-cash benefits or taxable expenses. No other payments are made
to directors other than reasonable out-of-pocket expenses which
have been incurred as a result of attending to the affairs of the
Company.
In addition to the board's remuneration, board members are
entitled to such fees as they may determine in respect of any extra
or special services performed by them, having been called upon to
do so. Such fees would only be incurred in exceptional
circumstances. An example of such a circumstance would be if the
Company was to undertake a corporate action, which would require
the board to dedicate additional time to review associated
documents and to attend additional meetings. Such fees would be
determined at the board's absolute discretion and would be set at a
similar rate to other comparable investment companies who have
undertaken equivalent activities. The fees would be set with the
Company's long-term success in mind and the interests of the
Company's members as a whole would be considered prior to the
setting of such fees.
The directors are entitled to be paid all expenses properly
incurred by them in attending meetings with shareholders or other
directors or otherwise in connection with the discharge of their
duties as directors. Shareholders have the opportunity to express
their views in respect of directors' remuneration at the Company's
AGM. The Company has not sought shareholder views on its
remuneration policy. Any comment volunteered by shareholders on the
remuneration policy will be carefully considered and appropriate
action taken. No communications have been received from
shareholders on the Company's remuneration policy.
The Company's remuneration policy and its implementation are
reviewed by the board as a whole on an annual basis. Directors do
not vote on their own fees. Reviews are based on third parties'
information on the fees of other similar investment trusts.
None of the directors has a service contract with the Company,
nor are any such contracts proposed. Instead, directors are
appointed pursuant to a letter of appointment entered into with the
Company. There is no notice period specified in the letters of
appointment or articles of association for the removal of
directors. Directors are not appointed for a specific term. Copies
of the directors' letters of appointment are available at each of
the Company's AGMs.
The directors are not entitled to exit payments and are not
provided with any compensation for loss of office.
As with most investment trusts there is no chief executive
officer and no employees. The Company's remuneration policy will
apply to new board members, who will be paid the equivalent amount
of fees as current board members holding similar roles.
Voting at 15 September 2021
As stated above an ordinary resolution for the approval of the
proposed directors' remuneration policy was last approved by
shareholders at the AGM held in September 2021.
The directors' remuneration report, including the implementation
of the directors' remuneration policy, is subject to an annual
advisory vote via an ordinary resolution. An advisory vote is a
non-binding resolution. At the meeting of the Company held on 15
September 2021, the vote to approve the Directors' Remuneration
Report was passed with all shareholders presented voted in favour
of the relation by a show of hand and the resolution was
passed.
Directors' fees (audited)
Single total aggregate directors' remuneration for the year
under review was GBP48,000 (2022: GBP48,000). The directors who
served during the year under review received the following
emoluments:
Director Fees paid during Taxable Non-taxable Total year
the benefits benefits to
year under review 31 March 2023
(1 April 2022
to 31 March 2023)
=================== ========== ============
St. John Agnew GBP24,000 GBP- GBP- GBP24,000
=============== =================== ========== ============ ===============
Perry Wilson GBP24,000 GBP- GBP- GBP24,000
(Chair)
=============== =================== ========== ============ ===============
Total GBP48,000 GBP- GBP- GBP48,000
=============== =================== ========== ============ ===============
Director Fees paid during Taxable Non-taxable Total year
the benefits benefits to
year under review 31 March 2022
(1 April 2021
to 31 March 2022)
=================== ========== ============
St. John Agnew GBP24,000 GBP- GBP- GBP24,000
=============== =================== ========== ============ ===============
Perry Wilson GBP24,000 GBP- GBP- GBP24,000
(Chair)
=============== =================== ========== ============ ===============
Total GBP48,000 GBP- GBP- GBP48,000
=============== =================== ========== ============ ===============
No payments were made to past directors for loss of office. In
the absence of further major increases in the workload and
responsibility involved, the board does not expect fees to increase
significantly over the next three years. The overall remuneration
of each director will continue to be monitored by the board, taking
into account those matters referred to in the annual statement
above. The Company did not pay any other benefits including
bonuses, pension benefits, share options, long-term incentive
schemes or other non-cash benefits or taxable benefits.
The Company has not made any loans to the directors, nor has it
ever provided any guarantees for the benefit of any director or the
directors collectively nor does it intend to.
Company Performance
The board is responsible for the Company's investment strategy
and performance, although day-to-day management of the Company's
affairs, including the management of the Company's portfolio, has
been delegated to third-party service providers. An explanation of
the performance of the Company is given in the Chairman's statement
and the Investment Manager's report on pages 4 and 8.
Expenditure by the Company on Directors' remuneration compared
with distributions to shareholders
The following table is provided in accordance with The Large and
Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013 which sets out the relative importance
of spend on pay in respect of the year ended 31 March 2023. The
table shows the remuneration paid to directors for the period under
review, compared to the distribution payments to shareholders.
Year from
1 April 2022 to 31 March 2023
Total remuneration paid to directors GBP48,000
===================================== ===============================
Shareholder distribution - dividends GBP-
or share buybacks
===================================== ===============================
Year from
1 April 2021 to 31 March 2022
Total remuneration paid to directors GBP48,000
===================================== ===============================
Shareholder distribution - dividends GBP-
or share buybacks
===================================== ===============================
Directors' interests (audited)
The Company does not have any requirement for any director to
own shares in the Company.
As at 31 March 2023, the directors do not hold shares in the
Company.
There have been no changes to any holdings between 31 March 2023
and the date of this report.
The Annual Report on remuneration was approved by the board on
11 July 2023 and signed on its behalf by:
Perry Wilson
Chairman
6 Independent Auditor's Report
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF SURE VENTURES
PLC
Opinion
We have audited the financial statements of Sure Ventures plc
(the 'Company') for the year ended 31 March 2023 which comprise the
Income Statement, the Statement of Financial Position, the
Statement of Changes in Equity, the Statement of Cash Flows and
notes to the financial statements, including significant accounting
policies. The financial reporting framework that has been applied
in their preparation is applicable law and UK-adopted international
accounting standards.
In our opinion, the financial statements:
-- give a true and fair view of the state of the Company's
affairs as at 31 March 2023 and of its loss for the year then
ended;
-- have been properly prepared in accordance with UK-adopted
international accounting standards; and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the Company
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the Company's ability to
continue to adopt the going concern basis of accounting
included:
a. reviewing management's assessment of going concern, including
reviewing and challenging any management assessment immediately
following the approval of the financial statements. Our review
focused on the levels of expenditure and anticipated investor
commitments over the twelve months following the approval of the
financial statements and whether the directors had demonstrated
that the Company would have sufficient funds available to meet
these obligations;
b. reviewing the impact of external factors such as the
Russia-Ukraine crisis and the impact of rising inflation, and we
have not noted any significant impact to the business to date;
c. determining if all relevant information was included in
management's assessment of going concern; and
d. reviewing the Company's ongoing maintenance of its investment trust status.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Company's ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
In relation to the entity's reporting on how they have applied
the UK Corporate Governance Code, we have nothing material to add
or draw attention to in relation to the directors' statement in the
financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Our application of materiality
We define materiality as the magnitude of misstatement,
including omission, either individually or in aggregate, that makes
it probable that the economic decisions of a reasonably
knowledgeable person would be changed or influenced. Importantly,
misstatements below this level will not necessarily be evaluated as
immaterial as we also take account of the nature of identified
misstatements, and the particular circumstance of their occurrence,
when evaluating their effect on the financial statements. We use
materiality both in planning the scope of our audit work and in
evaluating the results of our work.
Based on our professional judgement, we determine materiality
for the financial statements as a whole as follows:
Year ended 31 March 2023 Year ended 31 March 2022
Materiality GBP79,000 GBP77,000
==================================== ====================================
Basis for determining Materiality was determined on the basis of 1% of
materiality net assets in both years.
==========================================================================
Rationale for In both years, net assets was the benchmark for
the benchmark materiality given the nature of the business, which
applied is asset focused, particularly in respect of the
following:
* the value of the invested assets;
* the level of judgement inherent in the valuation; and
* the range of reasonable alternative valuations.
We believe that using a materiality based on this
benchmark reflects the critical underlying measures
of the Company given net assets is the critical
element of the business.
==========================================================================
We also determine a level of performance materiality which we
use to assess the extent of testing needed to reduce to an
acceptably low level, the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality for
the financial statements as a whole. Performance materiality is set
based on the audit materiality as adjusted for the judgements made
as to the entity risk and our evaluation of the specific risk of
each audit area having regards to the internal control environment.
In this respect, performance materiality was set to 70% of the
above materiality levels, to GBP55,300 (2022: GBP53,900).
There were no revisions in materiality during the course of the
audit.
We agreed with the Audit Committee that we would report to the
Committee all audit differences in excess of GBP3,950 (2022:
GBP3,850) as well as differences below that threshold that, in our
view, warranted reporting on qualitative grounds. We also report to
the Audit Committee on disclosure matters that we identified when
assessing the overall presentation of the financial statements.
Our approach to the audit
Our audit approach was developed by updating our understanding
of the Company's activities and the overall control environment.
Based on this understanding, we assessed those aspects of the
Company's transactions and balances which were most likely to give
rise to a material misstatement and were most susceptible to
irregularities including fraud or error. We looked at areas
involving significant accounting estimates and judgement by the
directors, being the valuation of investments held at fair value
through profit or loss, as detailed within our Key Audit Matter,
and considered future events that are inherently uncertain. We also
addressed the risk of management override of internal controls,
including evaluating whether there was evidence of bias by the
directors that represented a risk of material misstatement due to
fraud. We identified what we considered to be key audit matters in
the next section and planned our audit approach accordingly.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key Audit Matter How our scope addressed this matter
The valuation of investments held
at fair value through profit or
loss (Note 9)
========================================================================
Our work in this area included:
The valuation of investments at
31 March 2023 was GBP8,196,153 * Understanding and evaluating the design and
(2022: GBP7,516,667) consisting implementation of controls in place over the
of a portfolio of listed, unlisted valuation of investments;
and fund investments.
The valuation of the assets held * Reviewing the assumptions and underlying evidence
in the investment portfolio is supporting the year-end valuations to ensure that
the key driver of the Company's they were in line with UK-adopted international
net assets value. Incorrect investment accounting standards;
valuations could materially affect
the overall investment portfolio
valuation and subsequently the * Updating our understanding of the valuation process
return generated for the shareholders. applied by the Company;
The investments valued at fair
value through profit or loss in * Agreeing the value of the Company's investments in
the Company's non-current assets the funds to the audited financial statements of the
at the year-end are largely driven funds for the year ended 31 March 2023;
by the audited Net Asset Value
('NAV') of the Investee Fund's
portfolio. * Reviewing the valuation methodology applied for each
investment and considering whether it was appropriate
The Investee Fund has holdings based on the investment's individual circumstances
in private equity companies, being and not inconsistent with observed industry best
level 3 investments (as defined practice and the provisions of the International
by IFRS 13 Fair Value measurement) Private Equity and Venture Capital Valuation
that are valued according to a Guidelines;
specific investment methodology.
As the investments are material * Agreeing key inputs which drive the overall valuation
to the overall performance of the to source documentation;
Company and significant judgement
is applied in valuing these, there
is a risk that the underlying investments * Considering the adequacy, appropriateness and
are inappropriately valued. relevance of disclosures in accordance with IFRS 9
Financial Instruments and IFRS 13.
Based on the procedures performed,
we concluded that the valuations
attributable to the Company's investments
were reasonable.
========================================================================
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information contained within the annual report. Our opinion
on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion the part of the directors' remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the strategic report or
the directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the financial statements and the part of the directors'
remuneration report to be audited are not in agreement with the
accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Corporate governance statement
We have reviewed the directors' statement in relation to going
concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Company's compliance with the
provisions of the UK Corporate Governance Code.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements or our knowledge obtained during the audit:
-- Directors' statement with regards the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identified set out on page 22;
-- Directors' explanation as to their assessment of the entity's
prospects, the period this assessment covers and why the period is
appropriate set out on page 23;
-- Directors' statement on whether they have a reasonable
expectation that the company will be able to continue in operation
and meet its liabilities set out on page 23;
-- Directors' statement that they consider the annual report and
the financial statements, taken as a whole, to be fair, balanced
and understandable set out on page 35;
-- Board's confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on page
15;
-- The section of the annual report that describes the review of
effectiveness of risk management and internal control systems set
out on page 30; and
-- The section describing the work of the Audit Committee set out on page 32.
Responsibilities of directors
As explained more fully in the Statement of Directors'
Responsibilities, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view, and for such internal control as the
directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
-- We updated our understanding of the Company and the sector in
which it operates to identify laws and regulations that could
reasonably be expected to have a direct effect on the financial
statements. We obtained our understanding in this regard through
discussions with management, industry research, application of
cumulative audit knowledge and experience of listed entities and
the investment trust sector.
-- We determined the principal laws and regulations relevant to
the Company in this regard to be those arising from the Companies
Act 2006, UK-adopted international accounting standards, FCA Rules,
UK-tax law including section 1158 of the Corporation Tax Act 2010
covering the company's qualification as an investment trust, and
the UK Corporate Governance Code.
-- We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by
the Company with those laws and regulations. These procedures
included, but were not limited to:
o r eviewing the financial statement disclosures and testing to
supporting documentation to assess compliance with the relevant
laws and regulations listed above;
o using appropriate checklists and application of cumulative
audit knowledge and experience of the sector to assess compliance
with the relevant laws and regulations listed above;
o reviewing minutes of meetings of the Board and the Audit
Committee;
o reviewing RNS announcements; and
o reviewing legal and regulatory correspondence.
All engagement team members were briefed on relevant laws and
regulations and potential fraud risks at the planning stage of the
audit and reconsidered these throughout the audit and at the
completion stage of the audit. However, the primary responsibility
for the prevention and detection of fraud rests with those charged
with governance of the Company.
-- We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to
the non-rebuttable presumption of a risk of fraud arising from
management override of controls, that the potential for management
bias which could materially impact the financial statements existed
in the following areas:
o valuation of the investments held at fair value through profit
or loss; and
o revenue recognition.
We addressed the risk of bias by challenging the key assumptions
and judgements made by management in each of the above noted
areas.
-- As in all of our audits, we addressed the risk of fraud
arising from management override of controls by performing audit
procedures which included, but were not limited to: the testing of
journals; reviewing accounting estimates for evidence of bias; and
evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk
that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or
non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and
transactions reflected in the financial statements, as we will be
less likely to become aware of instances of non-compliance. The
risk is also greater regarding irregularities occurring due to
fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities .
This description forms part of our auditor's report.
Other matters which we are required to address
We were appointed by the Audit Committee on 16 April 2018 to
audit the financial statements for the period ending 31 March 2018
and subsequent financial periods. Our total uninterrupted period of
engagement is six years, covering the periods ending 31 March 2018
to 31 March 2023.
The non-audit services prohibited by the FRC's Ethical Standard
were not provided to the Company and we remain independent of the
Company in conducting our audit.
Our audit opinion is consistent with the additional report to
the Audit Committee.
Use of our report
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone, other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Azhar Rana (Senior Statutory Auditor) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
11 July 2023
7 Financial Statements
Income Statement
For the year ended 31 March 2023
2023 2022
====== ==================================
Notes Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
====================================== ====== ========== ========== ========== ========== ========== ==========
Income
====================================== ====== ========== ========== ========== ========== ========== ==========
Gains on disposal of investments - - - - 128,800 128,800
====================================== ====== ========== ========== ========== ========== ========== ==========
Other net changes in fair value
on financial assets at fair value
through profit or loss - (100,248) (100,248) - 2,359,478 2,359,478
====================================== ====== ========== ========== ========== ========== ========== ==========
Rebate management fee 99,907 - 99,907 87,219 - 87,219
====================================== ====== ========== ========== ========== ========== ========== ==========
Total net income/(loss) 99,907 (100,248) (341) 87,219 2,488,278 2,575,497
====================================== ====== ========== ========== ========== ========== ========== ==========
Expenses
====================================== ====== ========== ========== ========== ========== ========== ==========
Management fee 4 (149,907) - (149,907) (84,576) (2,643) (87,219)
====================================== ====== ========== ========== ========== ========== ========== ==========
Custodian, secretarial and
administration
fees (110,274) - (110,274) (106,458) - (106,458)
====================================== ====== ========== ========== ========== ========== ========== ==========
Other expenses 5 (161,958) - (161,958) (185,363) - (185,363)
====================================== ====== ========== ========== ========== ========== ========== ==========
Total operating expenses (422,139) - (422,139) (376,397) (2,643) (379,040)
====================================== ====== ========== ========== ========== ========== ========== ==========
Interest expense 6 (7,158) - (7,158) - - -
====================================== ====== ========== ========== ========== ========== ========== ==========
(Loss)/profit before taxation and
after finance costs (329,390) (100,248) (429,638) (289,178) 2,485,635 2,196,457
====================================== ====== ========== ========== ========== ========== ========== ==========
Taxation 7 - - - - - -
====================================== ====== ========== ========== ========== ========== ========== ==========
(Loss)/profit after taxation (329,390) (100,248) (429,638) (289,178) 2,485,635 2,196,457
====================================== ====== ========== ========== ========== ========== ========== ==========
(Deficit)/earnings per share 8 (5.14) (1.56) (6.70) (4.92) 42.28 37.36
====================================== ====== ========== ========== ========== ========== ========== ==========
The total column of this statement represents the income
statement prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act
2006. 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 the income statement for the year. Accordingly, the net
(loss)/profit for the year is also the total Comprehensive Income
for the year, as defined in IAS 1 (revised).
The notes on pages 51 to 64 form an integral part of the
financial statements.
Statement of Financial Position
As at 31 March 2023 Company No. 10829500
Notes 31 March 31 March
2023 2022
GBP GBP
====== ============
Non - current assets
======================================== ====== ============ ============
Investments held at fair value through
profit or loss 9 8,196,153 7,516,667
======================================== ====== ============ ============
8,196,153 7,516,667
======================================== ====== ============ ============
Current assets
======================================== ====== ============ ============
Receivables 10 2,240 1,600
======================================== ====== ============ ============
Cash and cash equivalents 36,697 282,178
======================================== ====== ============ ============
38,937 283,778
======================================== ====== ============ ============
Total assets 8,235,090 7,800,445
======================================== ====== ============ ============
Non - current liabilities
======================================== ====== ============ ============
Interest
payable 11 (7,145) -
======================================== ====== ============ ============
Loan payable 11 (200,000) -
======================================== ====== ============ ============
(207,145) -
======================================== ====== ============ ============
Current liabilities
======================================== ====== ============ ============
Other payables 12 (64,738) (48,849)
======================================== ====== ============ ============
(64,738) (48,849)
======================================== ====== ============ ============
Total assets less current liabilities 8,170,352 7,751,596
======================================== ====== ============ ============
Total net assets 7,963,207 7,751,596
======================================== ====== ============ ============
Shareholders' funds
======================================== ====== ============ ============
Ordinary share capital 13 66,464 60,132
======================================== ====== ============ ============
Share premium 6,403,697 5,768,780
======================================== ====== ============ ============
Revenue reserves (1,645,078) (1,315,688)
======================================== ====== ============ ============
Capital reserves 3,138,124 3,238,372
======================================== ====== ============ ============
Total shareholders' funds 7,963,207 7,751,596
======================================== ====== ============ ============
Net asset value per share 14 119.81p 128.91p
======================================== ====== ============ ============
The notes on pages 51 to 64 form an integral part of the
financial statements.
The financial statements on pages 46 to 64 were approved by the
board of directors and authorised for issue on
11 July 2023 . They were signed on its behalf by:
Perry Wilson, Chairman
Statement of Changes in Equity
For the year ended 31 March 2023
Ordinary Share Revenue Capital Total Total
Share Premium Reserves Reserves Reserves Equity
Capital
GBP GBP GBP GBP GBP GBP
========= ========== ============ ========== ==========
Balance at 1 April
2022 60,132 5,768,780 (1,315,688) 3,238,372 1,922,684 7,751,596
===================== ========= ========== ============ ========== ========== ==========
Ordinary shares
issued 6,332 668,667 - - - 674,999
===================== ========= ========== ============ ========== ========== ==========
Ordinary shares
issue costs - (33,750) - - - (33,750)
===================== ========= ========== ============ ========== ========== ==========
Loss after taxation - - (329,390) (100,248) (429,638) (429,638)
===================== ========= ========== ============ ========== ========== ==========
Dividends paid in - - - - - -
the year
===================== ========= ========== ============ ========== ========== ==========
Balance at 31 March
2023 66,464 6,403,697 (1,645,078) 3,138,124 1,493,046 7,963,207
===================== ========= ========== ============ ========== ========== ==========
For the year ended 31 March 2022
Ordinary Share Revenue Capital Total Total
Share Premium Reserves Reserves Reserves Equity
Capital
GBP GBP GBP GBP GBP GBP
========= ========== ============ ========== ==========
Balance at 1 April
2021 53,507 5,146,030 (1,026,510) 752,737 (273,773) 4,925,764
===================== ========= ========== ============ ========== ========== ==========
Ordinary shares
issued 6,625 655,875 - - - 662,500
===================== ========= ========== ============ ========== ========== ==========
Ordinary shares
issue costs - (33,125) - - - (33,125)
===================== ========= ========== ============ ========== ========== ==========
Profit/(loss) after
taxation - - (289,178) 2,485,635 2,196,457 2,196,457
===================== ========= ========== ============ ========== ========== ==========
Dividends paid - - - - - -
in the year
===================== ========= ========== ============ ========== ========== ==========
Balance at 31 March
2022 60,132 5,768,780 (1,315,688) 3,238,372 1,922,684 7,751,596
===================== ========= ========== ============ ========== ========== ==========
As at 31 March 2023 the Company had distributable revenue
reserves of GBPNil (2022: GBPNil). The distributable reserves are
the capital reserves GBP3,338,620 (2022: GBP881,667).
The notes on pages 51 to 64 form an integral part of the
financial statements.
Statement of Cash Flows
For the year ended 31 March 2023
Notes For the year For the year
ended ended
31 March 31 March
2023 2022
GBP GBP
====== =============
Cash flows from operating activities:
=========================================== ====== ============= =============
(Loss)/profit after taxation (429,638) 2,196,457
=========================================== ====== ============= =============
Adjustments for:
=========================================== ====== ============= =============
Gain on sale on investment - (128,800)
=========================================== ====== ============= =============
Increase in receivables (640) (1,600)
=========================================== ====== ============= =============
Increase/(decrease) in payables 12 23,034 (5,197)
=========================================== ====== ============= =============
Unrealised gain/(loss) on foreign
exchange 9 (204,145) 50,284
=========================================== ====== ============= =============
Net
changes
in
fair
value
on
financial
assets
at
fair
value
through
profit
or
loss 9 304,393 (2,409,762)
=========================================== ====== ============= =============
Net cash (outflow) from operating
activities (306,996) (298,618)
=========================================== ====== ============= =============
Cash flows from investing activities:
=========================================== ====== ============= =============
Purchase of investments 9 (779,734) (1,693,939)
=========================================== ====== ============= =============
Sales of investments 9 - 390,161
=========================================== ====== ============= =============
Net cash (outflow) from investing
activities (779,734) (1,303,778)
=========================================== ====== ============= =============
Cash flows from financing activities:
=========================================== ====== ============= =============
Proceeds from issue of ordinary shares 674,999 662,500
=========================================== ====== ============= =============
Proceed from loans 400,000 -
=========================================== ====== ============= =============
Repayment of loans (200,000) -
=========================================== ====== ============= =============
Share issue costs (33,750) (33,125)
=========================================== ====== ============= =============
Net cash inflow from financing activities 841,249 629,375
=========================================== ====== ============= =============
Net change in cash and cash equivalents (245,481) (973,021)
=========================================== ====== ============= =============
Cash and cash equivalents at the
beginning of the year 282,178 1,255,199
=========================================== ====== ============= =============
Net cash and cash equivalents 36,697 282,178
=========================================== ====== ============= =============
The notes on pages 51 to 64 form an integral part of the
financial statements.
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 UK-adopted international
accounting standards in accordance with the requirements of the
Companies Act 2006.
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 the applicable international
accounting standards, the directors have sought to prepare the
financial statements on a basis compliant with the recommendations
of the SORP.
The financial statements have been prepared on a going concern
basis under the historical cost convention, as modified by the
inclusion of investments and financial instruments at fair value
through profit or loss.
All values are rounded to the nearest pound unless otherwise
indicated.
Going Concern
The directors have assessed the going concern assumption.
Following the assessment, the directors have a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future. For this reason,
they have adopted the going concern basis in preparing the
financial statements.
Foreign Currency
The presentation currency of the Company is pounds sterling
("GBP"), 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 at fair value through profit or
loss'.
Presentation of Income statement
In order to better reflect the activities of an investment trust
company and in accordance with guidance issued by the AIC,
supplementary information which analyses the 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 distributions and all changes in fair value of
investments held at fair value through profit or loss are
recognised in the capital column of the income statement.
Management fee rebate
Any management fee and performance fee payable by the Company in
accordance with the Management Agreement shall be reduced by an
amount equal to any management fee and performance fee received by
the Manager and AIFM, or any member of its group, from the Fund or
any further Fund in respect of the Company's investment in the Fund
or any further Fund.
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 under other
expenses.
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 100.00%
(2022: 96.97%) to revenue and 0% (2022: 3.03%) to capital, 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 (loss)/gain held at the year
end are accounted for in the capital reserves. This reserve
includes the proportion of expenses that have been presented as
capital items in the income statement.
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 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 UK-adopted international accounting standards
and in conformity with the requirements of the Companies Act 2006,
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 Company.
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 amortised cost
Financial liabilities at amortised cost include other payables,
loan payable and interest payable.
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 are held 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
2022 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 to
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.
Loan payable
Loan payable is classified and measured at amortised cost; any
difference between the proceeds (net of transaction costs) and the
redemption value is recognised over the period of the loan using
the effective interest rate method. The Company initially
recognises a loan payable when the Company becomes a party to the
contractual provisions of a loan payable. The Company subsequently
measures a loan payable at amortised cost and any interest expenses
on a loan is recognised in the income statement using the effective
interest rate method.
New standards, amendments and interpretations effective from 1
April 2022
New or amended accounting standards and interpretations that
have been issued and are effective from 1 April 2022
Up to the date of issue of these financial statements, the IASB
has issued new and amended accounting standards and interpretations
which are effective for the year beginning 1 April 2022 and which
have been adopted in these financial statements.
Reference to the Conceptual Framework - Amendments to IFRS 3
Business Combinations
Minor amendments were made to IFRS 3, Business Combinations to
update the references to the Conceptual Framework for Financial
Reporting and add an exception for the recognition of liabilities
and contingent liabilities within the scope of IAS 37 Provisions,
Contingent Liabilities and Contingent Assets and Interpretation 21
Levies. The amendments also confirm that contingent assets should
not be recognised at the acquisition date.
Onerous Contracts - Cost of Fulfilling a Contract Amendments to
IAS 37
The amendment to IAS 37 clarifies that the direct costs of
fulfilling a contract include both the incremental costs of
fulfilling the contract and an allocation of other costs directly
related to fulfilling contracts. Before recognising a separate
provision for an onerous contract, the entity recognises any
impairment loss that has occurred on assets used in fulfilling the
contract.
The amendments noted above are effective from 1 January 2022 and
the Company has adopted these, where relevant, as of 1 April 2022
and it has not resulted in any change to the presentation of these
financial statements.
New or revised accounting standards and interpretations that
have been issued but not yet effective for the year ended 31 March
2023
The following new standards, amendments to standards and
interpretations have been issued to date and are not yet effective
for the year ended 31 March 2023 and have not been applied nor
early adopted, where applicable in preparing these financial
statements.
Effective for accounting
period beginning
on or after
Amendments to IAS 1 - Presentation of Financial
Statements and Practice Statement 2: Disclosure
of accounting policies 1 January 2023
-------------------------
Amendments to IAS 8 - Accounting Policies,
Changes in Accounting Estimates and Errors:
Definition of accounting estimate 1 January 2023
-------------------------
The directors of the Company anticipate that the adoption of
these new standards, interpretations and amendments that were in
issue at the date of authorisation of these financial statements
will have no material impact on the financial statements in the
year of initial application.
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, and realised gains and losses
on disposal of investments are taken to the capital reserve. This
reserve includes the proportion of expenses that have been
presented as capital items in the income statement.
Revenue Reserve
Net revenue profits and losses of the Company.
2) Significant Accounting Judgements, Estimates and
Assumptions
The preparation of financial statements in accordance with
UK-adopted international accounting standards in conformity with
the requirements of the Companies Act 2006, 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 a 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.
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 GBP149,907 (2022:
GBP87,219) of fees and at 31 March 2023, there was GBP12,500 (2022:
GBPNil) payable to the Manager.
Management fee is allocated to revenue and capital expenses in
order to reflect the directors' long term view of the nature of the
expected investment returns of the Company. The revenue expense is
the percentage of investment held at fair value through profit or
loss to the net asset value of the Company. The management fee for
the financial year has been allocated 100.00% (2022: 96.97%) to
revenue and 0% (2022: 3.03%) to capital. During the year the
Management fee rebate amounted to GBP99,907 (2022: GBP87,219).
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 2023 (2022: GBPNil).
5) Other Expenses
For the For the
year year
ended ended
31 March 31 March
2023 2022
GBP GBP
==========
Auditor's remuneration - audit fees 32,850 22,800
===================================== ========== ==========
Directors' fees 48,000 48,000
===================================== ========== ==========
VAT expense 35,524 30,843
===================================== ========== ==========
Legal and other professional 20,609 22,890
===================================== ========== ==========
Listing fees (2,193) 37,671
===================================== ========== ==========
Service fee expense 8,800 8,556
===================================== ========== ==========
Other expenses 18,368 14,603
===================================== ========== ==========
Total other expenses 161,958 185,363
===================================== ========== ==========
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) Interest Expense
Interest income and interest expense are accounted for on an
accruals basis and recognised in the Statement of Profit or Loss
and Other Comprehensive Income
Interest expense for the year ended 31 March 2023 was GBP7,158
(2022: GBPNil).
7) 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 (2022: 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 initial approval of investment trust
status from HM Revenue & Customs and the directors believe that
the Company has met the ongoing investment trust requirements since
the date of initial approval.
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% (2022: 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 2023 Revenue Capital Total
GBP GBP GBP
========== ==========
Return on ordinary activities
before taxation (329,390) (100,248) (429,638)
====================================== ========== ========== ==========
Return on ordinary activities
before taxation multiplied by
the standard rate of UK corporation
tax of 19.00% (62,584) (19,047) (81,631)
====================================== ========== ========== ==========
Effects of:
====================================== ========== ========== ==========
Excess management expenses not
utilised 62,584 19,047 81,631
====================================== ========== ========== ==========
Total tax charge in income statement - - -
====================================== ========== ========== ==========
31 March 2022 Revenue Capital Total
GBP GBP GBP
========== ==========
Return on ordinary activities before
taxation (289,178) 2,485,635 2,196,457
=========================================== ========== ========== ==========
Return on ordinary activities before
taxation multiplied by the standard
rate of UK corporation tax of 19.00% (54,944) 472,271 417,327
=========================================== ========== ========== ==========
Effects of:
=========================================== ========== ========== ==========
Excess management expenses (utilised)/not
utilised 54,944 (472,271) (417,327)
=========================================== ========== ========== ==========
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.
Factors that may affect future tax charges
At 31 March 2023, the Company had unrelieved losses of
GBP1,719,383 (2022: GBP1,389,993) available to offset future
taxable revenue. A deferred tax asset of GBP429,846 (2022:
GBP347,498) has not been recognised because the Company is not
expected to generate sufficient taxable income in future periods in
excess of the available deductible expenses and accordingly, the
Company is unlikely to be able to reduce future tax liabilities
through the use of existing surplus losses.
The 2023 deferred tax asset not recognised has been calculated
at 25% (2022: 25%), being the substantively enacted corporation tax
rate expected to be applicable at the date of reversal of the
Company's unrelieved losses, should this reversal occur. Due to
historic reallocations of income statement items between those of a
revenue nature and a capital nature, the comparative unrelieved
losses and deferred tax asset not recognised have been
restated.
Deferred tax is not provided on capital gains and losses arising
on the revaluation or disposal of investments because the Trust
meets (and intends to continue for the foreseeable future to meet)
the conditions for approval as an Investment Trust company.
8) Earnings per Share
For the financial year ended 31 Revenue Capital Total
March 2023 pence pence pence
======== ========
Earnings per ordinary share (5.14p) (1.56p) (6.70p)
================================= ======== ======== ========
The calculation of the above is based on revenue returns of
(GBP329,390), capital returns of (GBP100,248) and total returns of
(GBP427,988) and the weighted average number of ordinary shares of
6,413,341 as at 31 March 2023.
For the financial period ended Revenue Capital Total
31 March 2022 pence pence pence
======== ========
Earnings per ordinary share (4.92p) 42.28p 37.36p
================================ ======== ======== =======
The calculation of the above is based on revenue returns of
(GBP289,178), capital returns of GBP2,485,635 and total returns of
GBP2,196,457 and the weighted average number of ordinary shares of
5,878,910 as at 31 March 2022.
9) Fair Value Measurements
(a) Movements in the year
As of 31 As of 31
March 2023 March 2022
GBP GBP
============
Opening cost
============================================ ============ ============
Opening fair value 7,516,667 3,724,611
============================================ ============ ============
Purchases at cost 779,734 1,693,939
============================================ ============ ============
Sale - (261,361)
============================================ ============ ============
Realised gain - 2,773
============================================ ============ ============
Unrealised (loss)/gain (304,393) 2,406,989
============================================ ============ ============
Unrealised gain/(loss) on foreign exchange 204,145 (50,284)
============================================ ============ ============
Closing fair value at 31 March 2023 and
2022 8,196,153 7,516,667
============================================ ============ ============
(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
2023 in valuing the Company's investments:
Carrying amount Fair value
------------------------------------------------------- ----------------------------------------
Financial
assets at Total
Mandatorily amortised Other financial carrying Level
31 March 2023 at FVTPL cost liabilities amount Level 1 2 Level 3 Total
----------------- ------------ ----------- ---------------- ---------- -------- ------ ---------- ----------
GBP GBP GBP GBP GBP GBP GBP GBP
------------ ----------- ---------------- ---------- -------- ------ ---------- ----------
Financial assets
measured
at fair value
Investments in
quoted equity
assets 140,814 - - 140,814 140,814 - - 140,814
Investments in
unquoted equity
assets 8,055,339 - - 8,055,339 - - 8,055,339 8,055,339
8,196,153 - - 8,196,153 140,814 - 8,055,339 8,196,153
----------------- ------------ ----------- ---------------- ---------- -------- ------ ---------- ----------
Financial assets
not measured
at fair value
Cash and cash
equivalents - 36,697 - 36,697
Receivables - 2,240 - 2,240
- 38,937 - 38,937
----------------- ------------ ----------- ---------------- ----------
Financial
liabilities not
measured at fair
value
Loan payable - - 200,000 200,000
Interest payable - - 7,145 7,145
Other payables - - 64,738 64,738
- - 271,883 271,883
----------------- ------------ ----------- ---------------- ----------
Carrying amount Fair value
------------------------------------------------------- ----------------------------------------
Financial
assets at Total
Mandatorily amortised Other financial carrying Level
31 March 2022 at FVTPL cost liabilities amount Level 1 2 Level 3 Total
----------------- ------------ ----------- ---------------- ---------- -------- ------ ---------- ----------
GBP GBP GBP GBP GBP GBP GBP GBP
------------ ----------- ---------------- ---------- -------- ------ ---------- ----------
Financial assets
measured
at fair value
Investments in
quoted equity
assets 183,841 - - 183,841 183,841 - - 183,841
Investments in
unquoted equity
assets 7,332,826 - - 7,332,826 - - 7,332,826 7,332,826
7,516,667 - - 7,516,667 183,841 - 7,332,826 7,516,667
----------------- ------------ ----------- ---------------- ---------- -------- ------ ---------- ----------
Financial assets
not measured
at fair value
Cash and cash
equivalents - 282,178 - 282,178
Receivables - 1,600 - 1,600
- 283,778 - 283,778
----------------- ------------ ----------- ---------------- ----------
Financial
liabilities not
measured at fair
value
Other payables - - 48,849 48,849
- - 48,849 48,849
----------------- ------------ ----------- ---------------- ----------
10) Receivables
31 March 31 March
2023 2022
GBP GBP
=========
Prepayments 2,240 1,600
=================== ========= =========
Total receivables 2,240 1,600
=================== ========= =========
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.
11) Loan Payable
The Company entered into a loan facility agreement of
GBP1,000,000 with Shard Merchant Capital Limited dated 23 April
2018. The maturity date of the loan agreement is 23 April 2024.
During the year the Company drew down GBP200,000 of this amount at
an interest rate of 8% per annum.
The below table shows the details of the loan payable with
interest payable as at 31 March 2023.
As at 31 March 2023
Nominal Interest
========== ====================== =====================
GBP GBP
========== ====================== =====================
Loan
payable 200,000 7,145
========== ====================== =====================
12) Other Payables
31 March 31 March
2023 2022
GBP GBP
=========
Accruals and deferred income 64,738 48,849
============================== ========= =========
Total other payables 64,738 48,849
============================== ========= =========
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.
13) 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 No. of shares
31 March GBP 31 March GBP
2023 2022
============== ======= ==============
Ordinary shares of 1
penny each 6,646,472 66,464 6,013,225 60,132
====================== ============== ======= ============== =======
The following table details the subscription activity for the
year ended 31 March 2023.
31 March 31 March
2023 2022
==========
Balance as at 1 April 2022 6,013,225 5,350,725
============================= ========== ==========
Ordinary shares issued 633,247 662,500
============================= ========== ==========
Balance as at 31 March 2023 6,646,472 6,013,225
============================= ========== ==========
During the year ended 31 March 2023 and 2022, all proceeds from
this issue were received.
14) Net Asset Value per Ordinary Share
Year ended 31 March Year ended 31 March 2022
2023
===========================
Net asset Net assets Net asset Net assets
value per attributable value per attributable
ordinary GBP ordinary GBP
share share
pence pence
==================== =========== ============== =========== ==============
Ordinary shares of
1 penny each 119.81p 7,963,207 128.91p 7,751,596
==================== =========== ============== =========== ==============
The net asset value per ordinary share is based on net assets at
the year ended of GBP 7,963,207 (2022: GBP7,751,596) and on
6,646,472 (2022: 6,013,225 ) ordinary shares in issue at the year
end.
15) Contingent Liabilities and Capital Commitments
The Company may invest in Sure Valley Ventures, Sure Valley
Ventures Enterprise Capital LP 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 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 collective investment
vehicle.
The Company 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 2023, the Company had outstanding commitments in
relation to the Sure Valley Ventures in the amount of EUR0.7
million (2022: EUR1.4 million) and for Sure Valley Ventures
Enterprise Capital LP in the amount of GBP 4.8 million (2022: GBP
4.9 million ).
16) 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 2023, there was GBP1,239 (2022: GBP1,445) payable to
the Her Majesty's Revenue and Customs ("HMRC") for taxes on the
Directors' 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 GBP149,907 (2022:
GBP87,219) of fees and at 31 March 2023, there was GBP12,500 (2022:
GBPNil) payable to the Manager.
During the year the Company paid GBP23,750 (2022: GBP33,125) of
placement fees to Shard Capital Partners LLP.
The Company paid corporate broking retainer fees of GBP12,110
(2022: GBP12,000) (excluding VAT) to Shard Capital Partners LLP
during the year ended 31 March 2023.
The Company has investments in Sure Valley Ventures, the
sub-fund of Suir Valley Funds ICAV and Sure Valley Ventures
Enterprise Capital LP, amounting to GBP7,139,802 and GBP121,367
respectively. These funds are also managed by Shard Capital AIFM
LLP.
17) 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 2023 and 2022 the Company held three direct
private equity investments in the participating shares of Sure
Valley Ventures (formerly Suir Valley Ventures), a sub-fund of Suir
Valley Funds ICAV, Sure Valley Ventures Enterprises Capital LP and
VividQ Limited.
As at 31 March 2023 and 2022 the investments in Sure Valley
Ventures (formerly Suir Valley Ventures) and Sure Valley Ventures
Enterprises Capital LP are valued at the net asset values of the
entities, as calculated by their administrators. As at 31 March
2023 and 2022, the investment in VividQ Limited is valued at the
last round of investment.
At 31 March 2023, 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 GBP819,615 (2022: GBP751,667). 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 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 2023 and 31 March 2022 is shown below:
31 March 2023 31 March 2022
======================================
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 - 36,697 36,697 - 282,178 282,178
======================= ========= ============== ========== ========= ============== ========
Loan payable - (200,000) (200,000) - - -
======================= ========= ============== ========== ========= ============== ========
Total exposure - (163,303) (163,303) - 282,178 282,178
======================= ========= ============== ========== ========= ============== ========
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 31 March 2023 the Company's largest investment is
denominated in Euro 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 the
Euro 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 2023 2022
=========
Euro 90% 83%
=========================================== ========= =========
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 Euro, would have been +/-
GBP713,980 (2022: +/- GBP644,366).
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 Company in the
year ended 31 March 2023.
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; and
-- to ensure its ability to continue as a going concern.
The Company manages its capital structure and liquidity
resources to meet its 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 31 March 2023 the Company
obtained a loan of GBP 200,000 from Shard Marchant Capital Limited.
During the year ended 31 March 2022 the Company did not employ any
gearing.
18) Ultimate Controlling Party
It is the opinion of the directors that there is no ultimate
controlling party.
19) Events after the Reporting Period
Subsequent to the year end up until the date of signing these
financial statements, the Company had the following significant
events:
-- Following the year end, Sure Ventures plc raised gross
proceeds of GBP200,000 by way of a private placing. The ordinary
shares were issued at 100p per share, representing the closing
mid-price on 5 May 2023.
8 Alternative Performance Measures ("APMs")
APMs are often used to describe the performance of investment
companies although they are not specifically defined under
UK-adopted international accounting standards. Calculations for
APMs used by the Company are shown below.
Ongoing charges
A measure expressed as a percentage of average net assets, of
the regular, recurring annual costs of running an investment
company, calculated in accordance with the AIC methodology.
Year ended 31 March 2023 Page
Average NAV (GBP'000) a not applicable GBP7,969
----- ---------------- ---------
Recurring costs (GBP'000) b 46 GBP328
----- ---------------- ---------
b/a 4.12%
----------------------- -------------------------- ---------
Year ended 31 March 2022 Page
Average NAV (GBP'000) a not applicable GBP6,959
----- ---------------- ---------
Recurring costs (GBP'000) b 46 GBP294
----- ---------------- ---------
b/a 4.23%
----------------------- -------------------------- ---------
Premium/(Discount)
The amount, expressed as a percentage, by which the share price
is more than the NAV per share.
As at 31 March 2023 Page
NAV per ordinary share a not applicable 119.81p
--------- ---------------- ---------
Share price b not applicable 95p
--------- ---------------- ---------
(b-a)/a (20.71%)
--------------------------- ----------------------- ---------
As at 31 March 2022 Page
NAV per ordinary share a not applicable 128.91p
--------- ---------------- ---------
Share price b not applicable 102p
--------- ---------------- ---------
(b-a)/a (20.88%)
--------------------------- ----------------------- ---------
Total return
A measure of performance that includes both income and capital
returns. This takes into account capital gains and reinvestment of
any dividends paid out by the Company, with reinvestment on
ex-dividend date
Year ended 31 March 2023 Page NAV Share price
Opening as at 1 April 2022
(p) a 2 128.91 102.00
--------- ----- -------- ------------
Closing at 31 March 2023
(p) b 2 119.81 95
--------- ----- -------- ------------
Dividend reinvestment factor c n/a 1 1
--------- ----- -------- ------------
Adjusted closing (d = b
x c) d 119.81 95
--------- ----- -------- ------------
Total return (d-a)/a (7.06%) (6.86%)
--------- ----- -------- ------------
Year ended 31 March 2022 Page NAV Share price
Opening as at 1 April 2021
(p) a 2 92.06 105.00
--------- ----- ------- ------------
Closing at 31 March 2022
(p) b 2 128.91 102.00
--------- ----- ------- ------------
Dividend reinvestment factor c n/a 1 1
--------- ----- ------- ------------
Adjusted closing (d = b
x c) d 128.91 102.00
--------- ----- ------- ------------
Total return (d-a)/a 40.03% (2.90%)
--------- ----- ------- ------------
9 Glossary
AIC Association of Investment Companies
Alternative Investment An investment vehicle under AIFMD. Under
Fund or AIFMD (see below) Sure Ventures plc is classified
"AIF" as an AIF.
---------------------------------------------------
Alternative Investment A European Union directive which came into
Fund force on 22 July 2013 and has been implemented
Managers Directive in the UK.
or "AIFMD"
---------------------------------------------------
Annual General Meeting A meeting held once a year which shareholders
or "AGM" can attend and where they can vote on resolutions
to be put forward at the meeting and ask
directors questions about the company in
which they are invested.
---------------------------------------------------
The Company Sure Ventures plc.
---------------------------------------------------
Custodian An entity that is appointed to safeguard
a company's assets.
---------------------------------------------------
Discount The amount, expressed as a percentage, by
which the share price is less than the net
asset value per share.
---------------------------------------------------
Depositary Certain AIFs must appoint depositaries under
the requirements of AIFMD. A depositary's
duties include, inter alia, safekeeping
of a company's assets and cash monitoring.
Under AIFMD the depositary is appointed
under a strict liability regime.
---------------------------------------------------
Dividend Income receivable from an investment in
shares.
---------------------------------------------------
Ex-dividend date The date from which you are not entitled
to receive a dividend which has been declared
and is due to be paid to shareholders.
---------------------------------------------------
Financial Conduct The independent body that regulates the
Authority or financial services industry in the UK.
"FCA"
---------------------------------------------------
Gearing effect The effect of borrowing on a company's returns.
---------------------------------------------------
Index A basket of stocks which is considered to
replicate a particular stock market or sector.
---------------------------------------------------
Investment company A company formed to invest in a diversified
portfolio of assets.
---------------------------------------------------
Investment trust An investment company which is based in
the UK and which meets certain tax conditions
which enables it to be exempt from UK corporation
tax on its capital gains. The Company is
an investment trust.
---------------------------------------------------
Liquidity The extent to which investments can be sold
at short notice.
---------------------------------------------------
Net assets or net An investment company's assets less its
asset value ("NAV") liabilities.
---------------------------------------------------
NAV per ordinary share Net assets divided by the number of ordinary
shares in issue (excluding any shares held
in treasury).
---------------------------------------------------
Ordinary shares The Company's ordinary shares in issue.
---------------------------------------------------
Portfolio A collection of different investments held
in order to deliver returns to shareholders
and to spread risk.
---------------------------------------------------
Relative performance Measurement of returns relative to an index.
---------------------------------------------------
Share buyback A purchase of a company's own shares. Shares
can either be bought back for cancellation
or held in treasury.
---------------------------------------------------
Share price The price of a share as determined by a
relevant stock market.
---------------------------------------------------
Treasury shares A company's own shares which are available
to be sold by a company to raise funds.
---------------------------------------------------
Volatility A measure of how much a share moves up and
down in price over a period of time.
---------------------------------------------------
10 Shareholders' Information
Directors, Portfolio Manager and Advisers
Directors Administrator
Perry Wilson Apex Fund Services (Ireland) Limited
Gareth Burchell 2nd Floor, Block 5
St. John Agnew Irish Life Centre
Abbey Street Lower
Dublin 1
DO1 P767
Ireland
Registered Office Company Secretary
International House Apex Secretaries LLP
36-38 Cornhill 6th Floor
London EC3V 3NG 125 London Wall
United Kingdom London EC2Y 5AS
United Kingdom
Manager and AIFM Registrar
Shard Capital AIFM LLP Computershare Investor Services PLC
International House The Pavilions, Bridgewater Road
36-38 Cornhill Bristol BS99 6ZZ
London EC3V 3NG United Kingdom
United Kingdom
Placing Agent Depositary
Shard Capital Partners LLP INDOS Financial Limited
International House 27-28 Clements Lane
36-38 Cornhill London EC4N 7AE
London EC3V 3NG United Kingdom
United Kingdom
Website Independent Auditor
http://www.sureventuresplc.com PKF Littlejohn LLP
15 Westferry Circus
Canary Wharf
London E14 4HD
Share Identifiers United Kingdom
ISIN: G B 0 0 BYWYZ460
SEDOL: BYWYZ46
EPIC: SURE
11 Investment Policy
Investment Policy
Asset allocation
The investment policy of the Company is to seek exposure to
early stage technology companies, with a focus on software-centric
businesses in four chosen target markets:
* Augmented reality and virtual reality (AR/VR)
* Financial technology (FinTech)
* The internet of things (IoT)
* Artificial Intelligence (AI)
The Company may invest directly in investee companies or obtain
exposure to such companies through investment in collective
investment vehicles, including Sure Valley Ventures (the "Fund")
and any further funds, which have investment policies that are
complementary to that of the Company. Investments may be made using
such instruments as the Company in conjunction with Shard Capital
AIFM LLP may determine but are expected to predominantly comprise
equities and equity-linked securities (including shares, preference
shares, convertible debt instruments, payment-in-kind notes,
debentures, warrants and other similar securities) and may include
derivative instruments, contractual rights and other similar
interests that grant the Company rights equivalent or similar to
those conferred by equity and equity-linked securities.
The Company may implement its investment policy by investing in
class A shares of the Fund and by investing in any further funds
and collective investment vehicles managed by third parties. The
Company will have discretion as to how to make investments,
although it is anticipated that investments in the Fund will
represent between 10% and 100% of the Company's portfolio at any
given time, and that investments in any further funds and
collective investment vehicles managed by third parties may
similarly constitute a material proportion of the Company's net
asset value subject to the Company's investment restrictions.
Diversification
The Company will seek to hold a diversified portfolio of
investments and, once the assets of the Company, the Fund and any
other collective investment vehicles through which the Company
invests are each fully invested, expects to have a direct or
indirect holding of between 20 and 30 investments. It is intended
that the Company would ordinarily acquire a significant interest,
consisting generally of between 20% and 50% of an investee
company's equity capital. The Company does not envisage taking
management control of a portfolio company other than in exceptional
circumstances and on a temporary basis, and only if it is
considered that such action would be necessary to secure the
interests of the Company. The Company has the option to invest
directly in quoted companies. Furthermore, a portfolio company may
seek a flotation in which case: (i) the Company may continue to
hold such investments without restriction; and (ii) the Company may
make follow-on investments in such portfolio companies.
The Company's investments will not be constrained by
geographical limits. However, it is expected that the Company's
portfolio will predominantly be exposed to companies that have
their principal operations in the UK, Republic of Ireland or
elsewhere in the EEA. In addition, the Company will aim to satisfy
the following guideline criteria for its portfolio:
-- no more than 15% of the Company's NAV in a single investment
and no more than 60% of the Company's NAV invested in a further
fund or collective investment vehicle managed by a third party,
-- invest in a further fund or collective investment vehicle
managed by a third party only if such further fund or collective
investment vehicle has an investment policy that is consistent with
the investment policy of the Company,
-- no investment in companies whose primary business is
acquisition or development of real estate,
-- no investments in real estate assets,
-- no more than 15% of the Company's NAV to a counterparty in
relation to the utilisation of derivatives (including for
investment and hedging purposes).
Borrowing
The Company may borrow (through bank or other facilities) a
maximum of 20% of net asset value in aggregate (calculated at the
time of borrowing) to seek to enhance returns and for the purpose
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. The board will review the
Company's borrowing policy, in conjunction with Shard Capital AIFM
LLP, on a regular basis.
Hedging
Fluctuations in interest rates are influenced by factors outside
the Company's control, and can adversely affect the Company's
results and profitability in a number of ways. The Company's
investment in the Fund will be denominated in Euro. The Company may
use derivatives, including forward foreign exchange contracts and
contracts for difference, to seek to hedge against any currency
risk between the currency of the Company's investment in the Fund
and Pound sterling, the base currency of the Company. Shareholders
should note that there is no guarantee that such hedging
arrangements will be utilised or, if so, will be successful.
Cash management
The Company may hold cash on deposit and may invest in cash
equivalent investments, including short-term investments in money
market type funds, tradeable debt securities and government bonds
and securities ("Cash and Cash Equivalents"). There is no
restriction on the amount of cash and cash equivalents that the
Company may hold and there may be times when it is appropriate for
the Company to have a significant cash or cash equivalent position
instead of being fully or near fully invested. In order to
efficiently allocate all of the Company's available funds, the
Company may make short and medium term investments in relatively
liquid assets that are in accordance with the Company's investment
policy ("Liquid Investments"). Such Liquid Investments may include
shares, bonds and other debt instruments issued by companies as
well as shares, units or other interests in collective investment
schemes, other investment funds, exchange traded funds and fixed
income investments. Prior to the full drawdown of the Company's
commitment to the Fund, the cash held by the Company will be
utilised in accordance with the Company's stated investment policy
and cash management policy. The directors, on advice from the
Manager, consider that it is the interests of shareholders for the
cash held by the Company in respect of its commitment to the Fund
to potentially be available for investment in suitable investment
opportunities pending drawdown by the Fund.
Website
The Company's website can be found at
http://www.sureventuresplc.com. The site provides visitors with
Company information and literature downloads.
The Company's profile is also available on third-party sites
such morningstar.co.uk.
Annual report
Copies of the annual report may be obtained from the Company
Secretary or by visiting www.sureventuresplc.com.
Share prices and net asset value information
The Company's ordinary shares of 1p each are quoted on the
London Stock Exchange:
-- ISIN: G B 0 0 BYWYZ460
-- SEDOL: BYWYZ46
-- EPIC: SURE
The codes above may be required to access trading information
relating to the Company on the internet.
Electronic communications with the Company
The Company's Annual Report and Accounts, half-yearly reports
and other formal communications are available on the Company's
website. To reduce costs the Company's half-yearly accounts are not
posted to shareholders but are instead made available on the
Company's website.
Whistleblowing
As the Company has no employees, the Company does not have a
whistleblowing policy. The audit committee reviews the
whistleblowing procedures of the Manager and Administrator to
ensure that the concerns of their staff may be raised in a
confidential manner.
Warning to shareholders - share fraud scams
Fraudsters use persuasive and high-pressure tactics to lure
investors into scams. They may offer to sell shares that turn out
to be worthless or non-existent, or to buy shares at an inflated
price in return for an upfront payment. While high profits are
promised, if you buy or sell shares in this way, you will probably
lose your money.
How to avoid share fraud
-- Keep in mind that firms authorised by the Financial Conduct
Authority are unlikely to contact you out of the blue with an offer
to buy or sell shares.
-- Do not get into a conversation, note the name of the person
and firm contacting you and then end the call.
-- Check the Financial Services Register from www.fca.org.uk to
see if the person and firm contacting you is authorised by the
Financial Conduct Authority.
-- Beware of fraudsters claiming to be from an authorised firm,
copying its website or giving you false contact details.
-- Use the firm's contact details listed on the register
maintained by the Financial Conduct Authority if you want to call
it back.
-- Call the Financial Conduct Authority on 0800 111 6768 if the
firm does not have contact details on the register or you are told
they are out of date.
-- Search the list of unauthorised firms to avoid at www.fca.org.uk/scams.
-- Consider that if you buy or sell shares from an unauthorised
firm you will not have access to the Financial Ombudsman Service or
Financial Services Compensation Scheme.
-- Think about getting independent financial and professional
advice before you hand over any money.
-- Remember: if it sounds too good to be true, it probably is.
5,000 people contact the Financial Conduct Authority about share
fraud each year, with victims losing an average of GBP20,000.
Report a scam
If you are approached by fraudsters, please tell the FCA using
the share fraud reporting form at fca.org.uk /scams, where you can
find out more about investment scams.
You can also call the FCA Consumer Helpline on 0800 111
6768.
If you have already paid money to share fraudsters, you should
contact Action Fraud on 0300 123 2040.
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END
FR EALXLALDDEFA
(END) Dow Jones Newswires
July 24, 2023 11:02 ET (15:02 GMT)
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