Sure Ventures plc
Annual Report and Audited Financial Statements
For the year ended 31 March 2021
Company Number: 10829500
Table of Contents
1 Investment Objective, Policy and Performance Summary1
2 Chairman's Statement.......................................................................... 3
3 Investment Manager's Report.............................................................. 7
4 Strategic Report................................................................................. 10
Business Review11
Principal Risks and Uncertainties13
Key Performance Indicators5
Promoting the Success of the Company
5 Directors' Report7
Board of Directors8
Statutory Information19
Corporate Governance Statement4
Report of the Audit Committee31
Statement of Directors' Responsibilities
Directors' Remuneration Report5
6 Independent Auditors' Report............................................................ 39
7 Financial Statements6
Income Statement7
Statement of Financial Position8
Statement of Changes in Equity9
Statement of Cash Flows0
Notes to the Financial Statements
8 Alternative Performance Measures (APMs)
9 Glossary
Directors, Portfolio Manager and Advisers68
11 Investment Policy
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 68 of this Annual Report.
Performance Summary
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| 31 March 2021 | 31 March 2020 |
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| Number of ordinary shares in issue | 5,350,725 | 4,869,956 |
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| Market capitalisation |
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| - Ordinary shares (in sterling) | 5,618,000 | 5,120,000 |
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| Net asset value ("NAV") attributable to ordinary shareholders |
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| - Ordinary shares | £4,925,764 | £4,509,919 |
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| NAV per share attributable to ordinary shareholders |
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| - Ordinary shares (in sterling) | 92.06p | 92.61p |
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| Ordinary share price (bid price) |
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| in sterling | 105.00p | 105.13p |
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| Ordinary share price premium to NAV |
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| in sterling | 14.06% | 13.52% |
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| Investments held at fair value through profit and loss | £3,724,611 | £3,078,560 |
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| Cash and cash equivalents | £1,255,199 | £1,700,601 |
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Dividend History
There were no dividends paid during the period (2020 - 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 2021.
FINANCIAL Performance
The Company's performance for the year to 31 March 2021 was broadly in line with expectations, returning a net asset value ('NAV') total return per share of -0.58% (31 March 2020 +11.54%). In a year that witnessed a strong recovery in public markets from the March 2020 COVID-19 crisis sell-off, global private equity and venture capital activity dropped dramatically in the Spring and Summer of 2020, to then follow the public markets' positive recovery into the second half of 2020. Given that the overall private market deal count remained low in most sectors last year, it is anticipated that 2021 will be a strong year of pent-up demand as capital is put to work in the private markets, and particularly in high-growth technology sectors. Against this backdrop it has been a year of consolidation for the Company in which the portfolio has seen some exciting new additions to its seasoned mix of investee companies, many of which are preparing for their next funding rounds that are anticipated to generate significant valuation uplifts into the remainder of the current financial year.
In the period to 31 March 2021 the Company's NAV attributable to shareholders grew steadily by £425k to £4.92m with only a limited marketing activity being employed by the Investment Manager.
The Company's share price continues to trade at a healthy premium to its last published NAV, which the Company believes supports the continued growth potential of its investments and demonstrates an understanding among shareholders of the investment rationale and investment horizon.
Portfolio Update
The Company's holdings comprise its 25.9% investment in Sure Valley Ventures. This is a Sub-Fund of Suir Valley Fund ICAV (the 'Fund') to which the Company has made a total commitment of €7m (increasing its initial commitment from €4.5m in September 2019). As well as these investments the Company directly holds - Immotion Group plc ('Immotion'), which is a listed immersive virtual reality ('VR") entertainment group and VividQ Limited, a privately owned deep technology company pioneering the application of holography in augmented reality ('AR') and VR. The Fund portfolio includes one listed entity, VR Education Holdings plc ('VR Education') a developer of VR software and immersive experiences with a specific focus on education, and as at the year end, a further twelve privately held companies in the AR, VR, internet of things ('IoT') and artificial intelligence ('AI') space, having concluded its first successful portfolio company exit in the previous financial year for x5 return of the original investment.
During the year the Fund announced the following additional investments:
· Buymie (April 2020), an AI app-based on-demand home grocery delivery service available in Dublin and Bristol allowing customers to order groceries from Tesco, Co-op and Asda, and have them delivered by a personal shopper within as little as an hour
· Volograms (July 2020), an AR capture and volumetric video company enabling users to capture volumetric holograms of real people for use in apps, social media and VR headsets
· Virtex (January 2021), a VR application that enables eSports organisers to host their exisiting formats on a 3D entertainment platform
· Polience, t/a PreCog (March 2021), an InfoSec company that has developed a proprietary system to counter terrorism, by supporting border control agencies to prevent people trafficking
Each of these investments brings its own unique qualities and adds to the diverse and well-balanced composition of the Fund's portfolio of investee companies.
The year also featured a Series A follow-on investment for Buymie led by a new investor, Wheatcroft Group, the food and agricultural arm of the Grosvenor Estate. The funding round closed in June 2020 and provided the Company with a 200% uplift from its original investment in only three months.
In January 2021 the Company announced a Series A follow-on round for CameraMatics, the IoT fleet and vehicle safety technology specialist. Led by Puma Investments, an investment consortium of original investors including the Fund raised in excess of €4m, representing a fourfold uplift from the original investment made in November 2017.
Both of the Company's listed investment holdings, Immotion and VRE Education (held by the Fund), suffered bouts of volatility throughout the year with Immotion's share price trading in the 2p to 6p range, closing at 5p at the year end and VRE trading in the 5p to 23p range, closing at 10p at the year end. Shortly after 31 March 2021, the Company reduced its holding of Immotion shares whilst retaining a level of exposure equivalent to its initial investment, thus benefitting from any potential upside from Immotion's concerted efforts to diversify its revenue streams. During the financial year the Fund decided to sell sufficient VRE shares to recoup its initial investment and the strategy for now is to maintain the current level of holdings given the further possible momentum from the investment by HTC in VRE.
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 the Fund of €2.5m taking its total commitment to €7m, thereby increasing its share in the Fund from 21.6% to 25.9%. This commitment was made shortly before the Fund closed to new subscribers validating the Company's belief that the Fund portfolio is at a mature stage and, with a number of investee companies preparing for further funding rounds, there is demonstrable potential for further uplifts to occur from initial valuations. Several of these funding rounds are currently in the negotiation stage and the Company expects to announce further updates in the next one-two quarters.
The Company believes that it will have sufficient access to funding to meet its commitments to the Fund over the term of the Fund's investment cycle, through a combination of available cash, anticipated subscriptions and access to undrawn facilities.
Investment Environment
The Company is impressed by how the Investment Manager has navigated through a challenging investment environment as it has steadily grown the investment portfolio with other complimentary businesses in diverse sectors. Its experienced team has been on hand to provide advice and guidance to its investee companies and it is a testament to the Investment Manager's comprehensive investment filter processes that the performance of the portfolio has largely been unaffected to the downside by COVID-19, and certain companies such as Buymie, Admix and Ambisense have benefitted from accelerated growth as a consequence of the COVID-19 environment. The post-pandemic world will change enormously with businesses increasingly improving efficiencies with AI and IoT technology as consumer behaviour experiences a significant change towards online consumption and the global commercial environment embraces technological changes at a faster pace than ever previously envisaged. However, whilst the portfolio has largely been insulated by the effects of COVID-19, the Company and the Investment Manger continue to remain vigilant of the risks associated with the pandemic.
Dividend
During the year to 31 March 2021, the Company has not declared a dividend (31 March 2020: £nil). 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 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 2021 the Company did not employ any borrowing (31 March 2020: £nil).
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.
CAPITAL RAISING
On 1 April 2020 and 3 July 2020, the Company announced placings of 250,000 and 230,769 ordinary shares respectively, which were admitted to trading on the Specialist Fund Segment of the London Stock Exchange, under the existing ISIN: GB00BYWYZ460, taking the total shares in admission as at 31 March 2021 to 5,350,725.
Post year end, on 8 June 2021, the Company announced a placing of 662,500 ordinary shares that were admitted to trading on the Specialist Fund Segment of the London Stock Exchange on 14 June 2021, under the existing ISIN: GB00BYWYZ460, taking the total shares in admission as at 14 June 2021 to 6,013,225
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
Several portfolio companies are at different stages of further fundraising rounds and upon completion the Company anticipates further positive announcements to this effect within the next one-two quarters.
The portfolio construction of the Fund is expected to be completed and reach the optimum number of companies within the current financial year with other potential investment targets currently undergoing the rigorous due diligence process. Additionally, the Company continues to explore its robust pipeline of potential direct investments.
With a now well established, diverse portfolio of exciting, early-stage, high-growth technology companies, the Company believes that this next year to eighteen months will be a transformational period as the efforts of the Investment Manager in assembling this high-quality portfolio translate into shareholder rewards from valuation uplifts and, ultimately, future exits at significant premiums to current valuations.
Perry Wilson
Chairman
29 July 2021
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 three exciting and expansive market verticals of augmented reality and virtual reality (AR/VR), artificial intelligence (AI) 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 & Ireland.
Augmented Reality & Virtual Reality
The AR/VR market is evolving at a rapid pace. The market is expected to grow into a US$298 billion industry by 2023 , growing at a CAGR of over 60% during the forecast time frame [1]. Significant investment in hardware capability and headset development has been made by major industry players such as Facebook (through its Oculus division), Microsoft, Sony (through its PlayStation division), HTC, Samsung and others. This investment has ignited a new and exciting industry within the technology sector. Hardware manufacturers and AR/VR users are now searching for software capabilities/support and content, and we believe that exposure to this industry via the Fund and direct investment into software companies in the space will offer significant upside potential for investors. Through our network of technology accelerators, angel investor partners and industry contacts in the AR/VR space, we expect to have a strong chance of discovering the industry leaders of tomorrow.
Internet of Things
The Internet of Things (IoT) as a segment of the market is a broad investment area; it is defined as the interconnection, via the internet, of computing devices embedded in everyday objects, enabling them to send and receive data. The market was estimated to be worth US$212 billion dollars by the end of 2019 and is predicted to reach a size of US$1.6 trillion by 2025[2]. The global growth and advancement of internet coverage, the increased speed and capability of connectivity and the mass market penetration of smartphones/tablet sales has created significant opportunities for software companies. Businesses from many industries are embracing the efficiencies, cost savings and the "direct to consumer" penetration this technological advancement has offered. We see continued growth in this area and believe that investor returns will benefit from exposure to the space.
Artificial Intelligence
According to the market research firm Tractica, the global artificial intelligence software market is expected to experience massive growth in the coming years, with revenues increasing from around US$9.5 billion in 2018 to an expected US$118.6 billion by 2025[3]. The overall AI market includes a wide array of applications such as natural language processing, robotic process automation, and machine learning. McKinsey did an analysis comparing the value created by advanced analytics versus AI and machine learning across common enterprise use cases. McKinsey found that 82% of enterprises adopting machine learning and AI have gained a financial return from their investments. For companies across all industries, the median return on investment from cognitive technologies is 17%. AI and machine learning have the potential to create an additional US$2.6T in value by 2020 in Marketing and Sales, and up to US$2.0T in manufacturing and supply chain planning.
[[1] ARC market research Sep 2019
[2] Statista 2019
[3] Tractica 2019
PORTFOLIO BREAKDOWN
On 6 February 2018 the Company entered into a €4.5m commitment to Sure Valley Ventures (the "Fund"), the sole sub-fund of Suir Valley Funds ICAV and its investment was equalised into the Fund at that date. On 31 August 2019 a further €2.5m was committed to the Fund, taking the total investment in Sure Valley Ventures to €7m. The first drawdown was made on 5 March 2018 and as at 31 March 2021, a total of €3,717,320 had been drawn down against this commitment.
On 26 April 2019 the Company made a direct investment of £500,000 into VividQ Limited, a deep tech start up with world leading expertise in 3D holography. This investment represents the second direct investment of the Company, alongside Immotion Group PLC, which was announced on 24th April 2018. As detailed in the Statement of Position included in the following financial statements, these two investments alongside the Fund investment represent the entire portfolio of Sure Ventures plc as at 31 March 2021.
On 3 July 2020, the Company announced a placing of 230,769 ordinary shares. The ordinary shares were admitted to trading on the Specialist Fund Segment of the London Stock Exchange on 9 July 2020, under the existing ISIN: GB00BYWYZ460, taking the total shares in admission as at 31 March 2021 to 5,350,725.
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 the Fund, which had an initial closing date of 1 March 2017. The Fund 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 2021 the Fund had commitments totaling €27m and had made fifteen direct investments into companies spanning the AR/VR, AI and IoT sectors. One of these investments was sold in the prior year, giving the Fund its first realised gain on exit of around 5X return on investment. On 12 March 2018, Immersive VR Education Limited, the Fund's first investment, completed a flotation on the London Stock Exchange (AIM) and the Dublin Stock Exchange (ESM). The public company is now called VR Education Holdings PLC - ticker VRE. VRE was the first software company to list on the ESM since that market's inception. In July 2020, following an improvement in share price, the sub-Fund decided to sell sufficient shares to recover its initial investment. This resulted in a realised gain of €73k being payable to Sure Ventures PLC, along with its share of the initial investment, and some Escrow Funds from the aforementioned exit. Total capital distributions from the sub-Fund to the PLC for the year ended March 2021 was €166k.
performance
In the year to 31 March 2021 the Company's performance was broadly in line with expectations, returning a net asset value of £0.92 per unit, which is materially unchanged from the 31 March 2020 audited year end figure. The NAV has been helped by the share price improvement of Immotion Group PLC, closing the year at 5.05p (2020: 1.85p) which has recovered from the initial impact of the Covid-19 pandemic. The share price has continued to improve since year end and is now trading around 6p. 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
The Fund 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 Fund continues to have access to quality deals in our chosen high growth sectors. The portfolio of current investments is continuing to mature and approaching series A funding rounds, which if successful, will begin to provide the NAV growth that was set out to achieve from inception.
We remain confident in the future outlook of the Company in the forthcoming financial year and in line with the prospectus, reserve the right to make further direct investments provided there is sufficient working capital to do so.
Shard Capital AIFM LLP
Investment Manager
2 June 2021
4 Strategic Report
Business Review
The strategic report on pages 10 to 16 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 68 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 page 7 - 9.
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 a premium or 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.
The board believes that it is in shareholders' best interests to prevent the Company's shares trading at a discount to net asset value because shareholders will be unable to realise the full value of their investments.
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") 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;
· Effective from 1 January 2021, Throgmorton Secretaries LLP is appointed as the Company's secretary. Up to 31 December 2020, Apex Fund Services (Ireland) Limited was Company secretary of the Company;
· 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 (2020 - 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 Reports) 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, 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 (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 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, 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 2021 the shares were trading at a premium 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. As at the date of this report, the Company had no current borrowings outstanding.
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 March 2021 | Year ended 31 March 2020 |
| Movement in net asset value per ordinary share | Decreased by 0.58% | Increased by 11.54% |
| Premium/discount (after deducting borrowings at fair value) | Traded at a premium of 14.05% at the year end | Traded at a premium of 13.52% at the year end |
| Movement in the share price | Decreased by 0.12% | Decreased by 0.41% |
The Company does not currently follow any benchmark. Similarly, Sure Valley Ventures 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 480,769 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 29 July 2021 and signed on its behalf by:
Perry Wilson
Chairman
5 Directors' Report
Board 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 US$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 acts 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 £90 million of funding across 221 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 18.
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 were 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 so 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 13 to 15 inclusive of details of the Company's internal controls. Details of the Company's application of hedging arrangements are set out on page 70, the Investment Policy section of these financial statements.
Share capital - voting and dividend
As at 31 March 2021, the Company had 5,350,725 (2020: 4,869,956) ordinary shares in issue. There are no other classes of shares in issue and no shares are held in treasury.
At the Company's last Annual General Meeting held on 24 September 2020, the board was granted authorities to issue up to 48,000,000 ordinary shares of 0.01 each in the capital of the Company and the right to subscribe for or to convert any security into ordinary shares for any purpose, up to an aggregate nominal amount of up to 98.56% of current shares in issue, such authority to apply until the end of next year's Annual General Meeting (or, if earlier, until the close of business on 30 September 2021).
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.
The price of any Ordinary Shares issued to Shard Capital Limited ("SCL") under the SCL Agreement will be not less than the NAV per Ordinary Share at the time of issue plus a premium to cover the expenses of such issue.
During the year under review a total of 480,769 (2020: 305,208) ordinary shares were issued as detailed below:
|
| Shares issued | Price paid per share (pence) | Premium to |
| 1 April 2020 | 250,000 | 100.00 | 7.98% |
| 1 July 2020 | 230,769 | 97.50 | -1.42% |
(1) Last published NAV at time of issue
As at 31 March 2021 there were 5,350,725 ordinary shares of 1p in issue. Since the year end a further 662,500 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 2021 (2020 - 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 28.0% of the Company's ordinary shares in issue at 31 March 2021.
Independent auditor
The Company's independent auditor, PKF Littlejohn LLP ("PKF"), was appointed in the prior year 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 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 31 to 33 of the Audit Committee's report.
Audit information
As required by section 418 of the Companies Act 2006, the directors who held office at the date of this report each confirm that, so far as they are aware, there is no relevant audit information of which the Company's auditor is unaware and each director has taken all the steps required of a director to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
Articles of Association
Any amendments to the Company's articles of association must be made by special resolution.
brexit
The broader impacts of Brexit may have an effect on the financial statements and operations in the future, though it is not possible to quantify likely impacts at this stage, any effects will be reflected in the Company's underlying investments future price movements. The board and all relevant parties continue to monitor the implications for the Company and implement certain internal controls to mitigate any risks that may arise in the future.
COVID-19 Pandemic
There has been a global outbreak of a coronavirus disease 2019 (COVID-19), which the World Health Organization has declared a "Public Health Emergency of International Concern". The impact of COVID-19 may adversely affect the Company's investments, given that the Company's operations and profitability could be negatively impacted by the regional and global outbreak of COVID-19. The extent of the impact to the financial performance of the Company will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and actions taken to contain COVID-19 or its impact.
The announcement of vaccines of 95% efficacy to combat COVID-19 rebounded the market. The world leaders are executing necessary procedures to vaccinate their citizens in an attempt to overcome the coronavirus.
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 68 to 69.
Viability statement
In accordance with the revised Association of Investment Companies Code of Corporate Governance published in February 2020 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 2023. 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 2021, the Company had cash balances of £1,201,153 (2020: £1,412,739) in excess of all liabilities. There are therefore limited risks 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 2023.
Management and administration
Company Secretary
Effective from 1 January 2021, Throgmorton Secretaries LLP (the "Company Secretary") is the company secretary of the Company. Up to 31 December 2020, Apex Fund Services (Ireland) Ltd (the "Company Secretary") was 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) €28,000 per annum; and (ii) an amount equal to 0.08% of the portion of NAV up to and including €100 million, 0.06% of the portion of NAV between €100 million and €200 million and 0.05% of the portion of NAV above €200 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 net asset value. 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) £2,000 and £2,917 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
There have been no other subsequent events for the year ended 31 March 2021.
Future developments
Indications of likely future developments in the business of the Company are set out in the Strategic Report on pages 10-16.
regulatory disclosures
The disclosures below are made in compliance with the requirements of Listing Rule 9.8.4.
| Listing Rule |
|
| 9.8.4 (1) - capitalised interest | The Company has not capitalised any interest in the year under review. |
| 9.8.4(2) - unaudited financial information | The Company has not published any unaudited financial information in either a class 1 circular or a prospectus or in respect of any profit forecast or profit estimate in accordance with listing rule 9.2.18. |
| 9.8.4 (3) - deleted | This provision has been deleted. |
| 9.8.4 (4) - incentive schemes | The Company has no long-term incentive schemes in operation. |
| 9.8.4 (5) and (6) - waiver | No director of the Company has waived or agreed to waive any current or future emoluments from the Company. |
| 9.8.4 (7), (8) and (9) | During the year under review, the Company issued a total of 480,769 (2020: 305,208) ordinary shares with a nominal value of £0.01 and an average price of 98.75 pence per share for a total consideration of £475,000 (2020: £293,000) excluding commission and issue costs. Further details can be found on page 47. |
| 9.8.4 (8) and 9.8.4 (9) - relate to companies that are part of a group of companies | The Company is not part of a group of companies. These Listing Rules therefore, do not apply. |
| 9.8.4 (10) - contract of significance | During the year under review, there were no contracts of significance subsisting to which the Company is a party and in which a director of the Company is or was materially interested or between the Company and a controlling shareholder. |
| 9.8.4 (11) | The Company is not party to any contracts for the provision of services to the Company by a controlling shareholder. |
| 9.8.4 (12) and (13) - waiving dividends | During the year under review, there were no arrangements under which a shareholder has waived or agreed to waive any dividends or future dividends. |
| 9.8.4 (14) | As set out in the prospectus dated 17 November 2017, the Company has not voluntarily adopted Listing Rule 9.8.4(14). |
By order of the board
Throgmorton Secretaries LLP
Company Secretary
Date: 29 July 2021
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 has adopted certain key provisions of the UK Listing Rules in accordance with the London Stock Exchange (LSE) listings. Pursuant to the Listing Rules as voluntarily adopted by the Company, companies must "comply or explain" against each of the provisions of the UK Corporate Governance Code (the "UK Code") published by the Financial Reporting Council ("FRC"). The board is committed to high standards of corporate governance. The Listing Rules and 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 18 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 18.
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 2021, against the number of meetings each board or audit committee member was eligible to attend.
| Director | Board | Audit Committee |
| Perry Wilson | 7/7 | 2/2 |
| Gareth Burchell | 7/7 | 2/2 |
| St John Agnew | 7/7 | 2/2 |
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
Each of 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 2021, 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 in July 2021. 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 18. 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 on 21 July 2021, 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 31 - 33.
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 each meeting.
The most recent evaluation of the Manager and other key service providers was completed July 2021.
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, ahead of voting.
Relations with shareholders
All shareholders have the opportunity to attend and vote, in person or by proxy, at the AGM. However, given the current restrictions as a result of COVID-19, it is recommended that shareholders vote by proxy as attendance at the AGM may not be possible.
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 13 to 15 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 2021 in respect of the Company was £.63,311. The 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 2021, the Company incurred rebate income from Shard Capital AIFM LLP £63,311. There was no performance fee payable in respect of the year ended 31 March 2020. 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 13 to 15 and in note 15 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 value | Gross | Commitment |
| Maximum level of leverage | 100% | 150% |
| Leverage as at 31 March 2021 | 75.61% | 101.10% |
There have been no breaches of the permitted leverage limits within the reporting period and no changes to maximum level of leverage employed by the Company.
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 29 July 2021.
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 2021.
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 twice 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;
· The dividend policy; and
· The accounting restatement of the Income Statement for the year ended 31 March 2020.
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 will be 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 2021, there were no non-audit fees services rendered to the Company and none for the year ended 31 March 2020.
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 21 July 2021 to review the report and accounts for the year to 31 March 2021. 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 trust status | The audit committee received assurance from the Company's Investment Manager that 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. |
| Risk of misappropriation of assets and ownership of investments
| The audit committee reviews reports from its service providers on key controls over the assets of the Company. Any significant issues are reported to the board by the manager and/ or the Company's depositary. The Manager has put in place procedures to ensure that investments can only be made to the extent that the appropriate contractual and legal arrangements are in place to protect the Company's assets. The Company's depositary issues a quarterly report on the status of the assets to the directors for review. |
| The risk that income is overstated, incomplete or inaccurate through failure to recognise proper income entitlements or to apply the appropriate accounting treatment for recognition of income. | The board regularly reviews income forecasts. The external audit includes checks on the completeness and accuracy of income and also checks that this has been recognised in accordance with stated accounting policies. |
| The risk that valuation of the Investments held may be not be correct. | The audit committee receives assurance from the Company's administrators and manager that the Company's valuation policy is followed at all times. |
| The accounting restatement of the Income Statement for the year ended 31 March 2020. | Through restatement in current year. |
External auditor
The Company's external auditor, PKF Littlejohn LLP ("PKF"), was appointed pursuant to the engagement letter dated 17 June 2021. 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 Ian Cowan, whose appointment is reviewed annually. In accordance with UK legislation, the audit partner must rotate at least every five years. As this is Ian Cowan's fourth 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 2022.
The audit fees for the period under review can be found in note 5 to the financial statements on page 54.
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 Ian Cowan 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 29 July 2021.
Perry Wilson
Chairman of the Audit Committee
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 2021, 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 2020. 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 2021, 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. Prior to the Company's incorporation, directors' fees were set at the rate of £24,000 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 24 September 2020, 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 £300,000 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 Annual General Meeting
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 2020.
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 last Annual General Meeting of the Company held on 24 September 2020, 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 £52,200 (2020 £55,609). The directors who served during the year under review received the following emoluments:
| Director | Fees paid during the | Taxable | Non-taxable | Total year to |
| John St Agnew (1) | £26,100 | £- | £- | £26,100 |
| Perry Wilson (Chair) | £26,100 | £- | £- | £26,100 |
| Total | £52,200 | £- | £- | £52,200 |
| Director | Fees paid during the | Taxable | Non-taxable | Total year to |
| Chris Boody (1) | £8,315 | £- | £- | £8,315 |
| John St Agnew (1) | £21,173 | £- | £- | £21,173 |
| Perry Wilson (Chair) | £26,121 | £- | £- | £26,121 |
| Total | £55,609 | £- | £- | £55,609 |
(1) Chris Boody resigned on 14 June 2019. John St Agnew appointed on 14 June 2019.
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 9.
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 2021. The table shows the remuneration paid to directors for the period under review, compared to the distribution payments to shareholders.
|
| Year from |
| Total remuneration paid to Directors | £52,200 |
| Shareholder distribution - dividends or share buybacks | £- |
|
| Year from |
| Total remuneration paid to Directors | £55,609 |
| Shareholder distribution - dividends 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 2021, the directors do not hold shares in the Company.
There have been no changes to any holdings between 31 March 2021 and the date of this report.
Approval of the Annual Report on remuneration and the Directors' remuneration policy
The Annual Report on remuneration was approved by the board on 29 July 2021 and signed on its behalf by:
Perry Wilson
Chairman
6 Independent Auditors' Report
INDEPENDENT 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 2021 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 a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and international accounting standards in conformity with the requirements of the Companies Act 2006.
In our opinion, the financial statements:
· give a true and fair view of the state of the company's affairs as at 31 March 2021 and of its profit for the year then ended;
· have been properly prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006; 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 director's use of 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 forecasts over the twelve months immediately following the approval of the financial statements
b. Reviewing management's assessment of the Covid-19 impact on the realisation of investments.
c. Determining if all relevant information has been included in the assessment of going concern.
d. Reviewing the Company's ongoing maintenance of 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.
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 apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. For planning, we consider materiality to be the magnitude by which misstatements, including omissions, either individually or in aggregate, could reasonably be expected to influence the economic decisions of users that are taken on the basis of the financial statements. 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. The application of these key considerations gives rise to two levels of materiality, the quantum and purpose of which are tabulated below.
| Materiality measure | Purpose | Amount | Key considerations and benchmarks |
| Overall financial statement materiality-Based on 1.5% of net assets | Assessing whether the financial statements, as a whole present a true and fair view. | £49,250 (2020: £67,600) | We used net assets as benchmark given the nature of the business, which is asset focused, particularly in respect of the following: · The value of the invested assets · The level of judgment inherent in the valuation · The range of reasonable alternative valuations |
We also determine a level of performance materiality which we use to assess the extent of testing needed to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. Performance materiality was set at £34,475, being 70% of materiality for the financial statements as a whole.
There were also no revisions in materiality in the course of the audit.
We have agreed with the audit committee that we would report to the committee as individual audit differences in excess of £2,462 (2020: £3,400) as well as differences below these thresholds that, in our view, warranted reporting on qualitative grounds.
Our approach to the audit
Our audit approach was developed by obtaining an 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 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 the scope of our audit addressed the key audit matter |
| The valuation of investments held at fair value through profit or loss. (Note 8).
The valuation of investments at 31 March 2021 was £3,724,611 (2020 - £3,078,560) consisting of a portfolio of listed, unlisted and fund investments.
The valuation of the assets held in the investment portfolio is the key driver of the Company's net asset value. Incorrect investment valuations could materially affect the overall investment portfolio valuation and subsequently the return generated for the shareholders.
The investments valued at fair value through profit or loss in the Company's Non-Current assets at the period end, are largely driven by the audited Net Asset Value ("NAV") of the investee Fund's portfolio.
The Investee Fund has holdings in private equity companies being Level 3 investments that are valued according to a specific investment methodology.
As the investments are material to the overall performance of the Company and significant judgement is applied in valuing these, there is a risk that the underlying investments are inappropriately valued.
| We considered the design and implementation of controls in place over the valuation of investments and also reviewed the assumptions and underlying evidence supporting the year end valuations to ensure that they are in line with IFRS.
We obtained an understanding of the valuation process applied by the company.
We agreed the value of the company's investment in the Sure Valley Ventures Fund to the Fund's audited financial statements for the year ended 31 March 2021.
We reviewed the valuation methodology applied for each investment to consider whether it was appropriate based on the investment's individual circumstances and not inconsistent with observed industry best practice and the provisions of the International Private Equity and Venture Capital Valuation Guidelines.
We agreed the inputs which drive the overall valuation to source documentation.
We considered the appropriateness and relevance of disclosures in accordance with relevant accounting standards.
We concluded that the valuations attributed to the Company's investments were appropriate. |
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. 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. In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is 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.
Corporate governance statement
The Listing Rules require us to review 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 Statement specified for our review.
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 21];
· Directors' explanation as to its assessment of the entity's prospects, the period this assessment covers and why they period is appropriate [set out on page 21].
· 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 34];
· Board's confirmation that it has carried out a robust assessment of the emerging and principal risks [set out on page 13];
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 period for which the financial statements are prepared is consistent with the financial statements;
· 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;
· a corporate governance statement has not been prepared by the company; or
· we have not received all the information and explanations we require for our audit.
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 obtained an 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 the sector.
· We determined the principal laws and regulations relevant to the company in this regard to be those arising from taxation, the Listing Rules and the Companies Act 2006.
· 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 Reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with relevant laws and regulations discussed above;
o Using appropriate checklists and our experience to assess the Company's compliance with the Companies Act 2006 and the Listing Rules;
o Reading minutes of meetings of those charged with governance; and
o Reviewing any legal or regulatory correspondence
All engagement team members were briefed on relevant laws and regulations and potential fraud risks at the planning stage of the audit. However, the primary responsibility for the prevention and detection of fraud rest 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 a potential management bias was identified in relation to the following areas:
o Valuation of the investments
o Revenue recognition
o We addressed the risk of bias by challenging the assumptions and judgements made by management in each of the above noted areas.
o 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 members 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 four years covering the periods ending 31 March 2018 to 31 March 2021.
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.
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our sector experience and through discussion with the directors. We have identified the requirements of the Disclosure Guidance and Transparency Rules, the UK Corporate Governance Code and the Companies Act 2006 to be significant in the context of this entity. We considered the extent of compliance with those laws and regulations as part of our procedures on the related financial statements items.
We communicated laws and regulations throughout our audit team and remained alert to any indications of non-compliance throughout the audit.
As with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. 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.
Ian Cowan (Senior Statutory Auditor) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
30 July 2021
7 Financial Statements
Income Statement
For the year ended 31 March 2021
|
|
| 2021 | 2020 Restated | ||||
|
| Notes | Revenue £ | Capital | Total | Revenue £ | Capital | Total |
| Income |
|
|
|
|
|
|
|
| Gains on disposal of investments |
| - | 79,883 | 79,883 | - | 946,817 | 946,817 |
| Other net changes in fair value on financial assets at fair value through profit or loss |
| - | 178,793 | 178,793 | - | (237,271) | (237,271) |
| Rebate management fee |
| 63,311 | - | 63,311 | 55,495 | - | 55,495 |
| Total net income |
| 63,311 | 258,676 | 321,987 | 55,495 | 709,546 | 765,041 |
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|
|
|
|
|
|
|
| Expenses |
|
|
|
|
|
|
|
| Management fee | 4 | (47,869) | (15,442) | (63,311) | (37,881) | (17,614) | (55,495) |
| Custodian, secretarial and administration fees |
| (98,625) | - | (98,625) | (94,785) | - | (94,785) |
| Other expenses | 5 | (195,456) | - | (195,456) | (169,280) | - | (169,280) |
| Total operating expenses |
| (341,950) | (15,442) | (357,392) | (301,946) | (17,614) | (319,560) |
|
|
|
|
|
|
|
|
|
| (Loss) / profit before Taxation and after finance costs |
| (278,639) | 243,234 | (35,405) | (246,451) | 691,932 | 445,481 |
| Taxation | 6 | - | - | - | - | - | - |
| (Loss) / profit after taxation |
| (278,639) | 243,234 | (35,405) | (246,451) | 691,932 | 445,481 |
|
|
|
|
|
|
|
|
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| Earnings per share | 7 | (5.21) | 4.55 | (0.66) | (5.06) | 14.21 | 9.15 |
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 net loss for the year. Accordingly, the net (loss) / profit for the year is also the Total Comprehensive Income for the year, as defined in IAS1 (revised).
The notes on pages 50 to 63 form an integral part of the financial statements.
Statement of Financial Position
As at 31 March 2021 Company No. 10829500
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| Notes | 31 March 2021 | 31 March 2020 |
| Non-current assets |
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|
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| Investments held at fair value through profit or loss | 8 | 3,724,611 | 3,078,560 |
|
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| 3,724,611 | 3,078,560 |
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| Current assets |
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| Receivables | 9 | - | 18,620 |
| Cash and cash equivalents |
| 1,255,199 | 1,700,601 |
|
|
| 1,255,199 | 1,719,221 |
|
|
|
|
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| Total assets |
| 4,979,810 | 4,797,781 |
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|
|
|
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| Current liabilities |
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|
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| Other payables | 10 | (54,046) | (287,862) |
|
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| (54,046) | (287,862) |
|
|
|
|
|
| Total assets less current liabilities |
| 4,925,764 | 4,509,919 |
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|
|
|
|
| Total net assets |
| 4,925,764 | 4,509,919 |
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|
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|
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| Shareholders' funds |
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|
|
| Ordinary share capital | 11 | 53,507 | 48,699 |
| Share premium |
| 5,146,030 | 4,699,588 |
| Revenue reserves |
| (1,026,510) | (747,871) |
| Capital reserves |
| 752,737 | 509,503 |
| Total shareholders' funds |
| 4,925,764 | 4,509,919 |
|
|
|
|
|
| Net asset value per share | 12 | 92.06p | 92.61p |
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|
|
The notes on pages 50 to 63 form an integral part of the financial statements.
The financial statements on pages 46 to 63 were approved by the board of directors and authorised for issue on 29 July 2021. They were signed on its behalf by:
Perry Wilson, Chairman
Statement of Changes in Equity
For the year ended 31 March 2021
|
| Ordinary Share Capital £ | Share Premium £ | Revenue Reserves £ | Capital Reserves £ | Total Reserves £ | Total Equity £ |
| Balance at 1 April 2020 | 48,699 | 4,699,588 | (747,871) | 509,503 | (238,368) | 4,509,919 |
| Ordinary shares issued | 4,808 | 470,192 | - | - | - | 475,000 |
| Ordinary shares issue costs | - | (23,750) | - | - | - | (23,750) |
| (Loss)/profit after taxation | - | - | (278,639) | 243,234 | (35,405) | (35,405) |
| Dividends paid in the year | - | - | - | - | - | - |
| Balance at 31 March 2021 | 53,507 | 5,146,030 | (1,026,510) | 752,737 | (273,773) | 4,925,764 |
For the year ended 31 March 2020
|
| Ordinary Share Capital £ | Share Premium £ | Revenue Reserves £ | Capital Reserves £ | Total Reserves £ | Total Equity £ |
| Balance at 1 April 2019 | 45,647 | 4,428,290 | (501,420) | (182,429) | (683,849) | 3,790,088 |
| Ordinary shares issued | 3,052 | 289,948 | - | - | - | 293,000 |
| Ordinary shares issue costs | - | (18,650) | - | - | - | (18,650) |
| Profit/(loss) after taxation | - | - | (246,451) | 691,932 | 445,481 | 445,481 |
| Dividends paid in the year | - | - | - | - | - | - |
| Balance at 31 March 2020 | 48,699 | 4,699,588 | (747,871) | 509,503 | (238,368) | 4,509,919 |
As at 31 March 2021 the Company had distributable revenue reserves of £nil (2020: £nil) for the payment of future dividends. The distributable reserves are the revenue reserves £nil (2020: £nil) capital reserves £752,737 (2020: £509,503).
The notes on pages 50 to 63 form an integral part of the financial statements.
Statement of Cash Flows
For the year ended 31 March 2021
|
| Notes | For the year ended 31 March 2021 | For the year ended 31 March 2020 |
| Cash flows from operating activities: |
|
|
|
| Loss/(profit) after taxation |
| (35,405) | 445,481 |
| Adjustments for: |
|
|
|
| Gain on sale on investment |
| (79,883) | (946,817) |
| Decrease/(increase) in receivables |
| 18,620 | (18,620) |
| (Decrease)/increase in payables | 10 | (233,816) | 237,208 |
| Unrealised loss/(gain) on foreign exchange | 8 | 119,496 | (76,430) |
| Net changes in fair value on financial assets at fair value through profit or loss | 8 | (298,289) | 313,482 |
| Net cash (outflow) from operating activities |
| (509,277) | (45,696) |
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|
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| Cash flows from investing activities: |
|
|
|
| Purchase of investments | 8 | (534,171) | (1,894,014) |
| Sales of investments | 8 | 146,796 | 1,226,119 |
| Net cash (outflow) investing activities |
| (387,375) | (667,895) |
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|
|
|
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| Cash flows from financing activities*: |
|
|
|
| Proceeds from issue of ordinary shares |
| 475,000 | 293,000 |
| Share issue costs |
| (23,750) | (18,650) |
| Net cash inflow from financing activities |
| 451,250 | 274,350 |
|
|
|
|
|
| Net change in cash and cash equivalents |
| (445,402) | (439,241) |
| Cash and cash equivalents at the beginning of the year |
| 1,700,601 | 2,139,842 |
| Net cash and cash equivalents |
| 1,255,199 | 1,700,601 |
\* The Company has no borrowings or liabilities from financing activities.
The notes on pages 50 to 63 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 international accounting standards and interpretations in conformity 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.
Foreign Currency
The presentation currency of the Company is pounds sterling, the financial statements are prepared in this currency in accordance with the Company's prospectus. The Company is required to nominate a functional currency, being the currency in which the Company predominantly operates. The board has determined that sterling is the Company's functional currency.
Foreign exchange gains and losses relating to the financial assets and liabilities carried at fair value through profit or loss are presented in the income statement within 'other net changes in fair value on financial assets and financial liabilities at fair value through profit or loss'.
Presentation of Income statement
In order to better 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 coloumn of the Income statement.
Expenses
All expenses are accounted for on the accruals basis. In respect of the analysis between revenue and capital items presented within the Income statement, all expenses have been presented as revenue items except as follows:
Transaction costs which are incurred on the purchases or sales of investments designated as fair value through profit or loss are expensed to capital in the Income statement.
Expenses are split and presented partly as capital items where a connection with the maintenance or enhancement of the value of the investments held can be demonstrated and, accordingly, the management fee for the financial year has been allocated 75.61% (2020: 68.26%) to revenue and 24.39% (2020: 31.74%) 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 gain/(loss) held at the year end are accounted for in the capital reserves.
Taxation
In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented against capital returns in the supplementary information in the Income statement 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 international accounting standards 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 fair value through profit or loss
Financial liabilities that are not at fair value through profit or loss include other payables.
Derecognition
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or where the group has transferred substantially all risks and rewards of ownership. If substantially all the risks and rewards have been neither retained nor transferred and the group has retained control, the assets continue to be recognised to the extent of the group's continuing involvement. Financial liabilities are derecognised when they are extinguished.
Investments
All investments held by the Company have been designated at fair value through profit or loss ('FVPL') but are also described in these financial statements as investments held at fair value, and are valued in accordance with the International Private Equity and Venture Capital Valuation Guidelines ('IPEVCV') issued in December 2018 as endorsed by the British Private Equity and Venture Capital Association.
Purchases and sales of unlisted investments are recognised when the contract for acquisition or sale becomes unconditional.
Receivables
Receivables do not carry any interest and are short term in nature. They are initially stated at their nominal value and reduced by appropriate allowances for estimated irrecoverable amounts (if any).
Cash and cash equivalents
Cash and cash equivalents (which are presented as a single class of asset on the Statement of Financial Position) comprise cash at bank and in hand and deposits with an original maturity of three months or less. The carrying value of these assets approximates their fair value.
Payables
Payables are non-interest bearing.
Dividends
Interim dividends are recognised in the year in which they are paid. Final dividends are recognised when they have been approved by shareholders.
New standards, amendments and interpretations effective from 1 January 2020
The following standards, amendments and interpretations, which became effective in January 2020, are relevant to the Company.
IAS 1 - Presentation of Financial Statements, IAS 8 - Accounting Policies, Changes in Accounting Policies
The International Accounting Standards Board has issued 'Definition of Material (Amendments to IAS 1 and IAS 8)' to clarify the definition of 'material' and to align the definition used in the Conceptual Framework and the standards themselves. The amended definition is; Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.
The amendment is effective from 1 January 2020 and the Company has adopted the amendment and it has not resulted in any change to the presentation of these financial statements.
Adoption of New and Revised Standards
There are no standards, amendments to standards or interpretations that are effective for annual periods beginning on or after 1 January 2021 that are expected to have a material effect on the financial statements of the Company.
CAPITAL STRUCTURE
Share Capital
Ordinary shares are classed as equity. The ordinary shares in issue have a nominal value of one penny and carry one vote each.
Share Premium
This reserve represents the difference between the issue price of shares and the nominal value of shares at the date of issue, net of related issue costs.
Capital Reserve
Unrealised gains and losses on investments held at the year end arising from movements in fair value, gains on disposal of investments are taken to the capital reserve.
Revenue Reserve
Net revenue profits and losses of the Company.
2) Significant Accounting Judgements, Estimates and Assumptions
The preparation of financial statements in conformity with 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 £63,311 (2020: £55,495) of fees and at 31 March 2021, there was £nil (2020: £nil) 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 75.61% (2020: 68.26%) to revenue and 24.39% (2020: 31.74%) to capital.
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 final 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 2021. (2020: £nil)
5) Other Expenses
|
| For the year ended 31 March 2021 | For the year ended 31 March 2020 |
| Auditor's remuneration - audit fees | 22,700 | 29,940 |
| Directors' fees | 52,200 | 55,609 |
| VAT Expense | 26,954 | 12,285 |
| Legal and other professional | 19,039 | 7,270 |
| Listing fees | 50,689 | 24,433 |
| Service Fee Expense | 8,987 | 8,879 |
| Other expenses | 14,887 | 30,864 |
| Total Other expenses | 195,456 | 169,280 |
All expenses are inclusive of VAT where applicable. Further details on directors' fees can be found in the directors' remuneration report on page 35.
6) Taxation
As an investment trust the Company is exempt from corporation tax on capital gains. The Company's revenue income is subject to tax, but offset by any interest distribution paid, which has the effect of reducing that corporation tax to nil (2020: 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% (2020: 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 2021 | Revenue | Capital | Total |
| Return on ordinary activities before taxation | (278,639) | 243,234 | (35,405) |
| Return on ordinary activities before taxation multiplied by the standard rate of UK corporation tax of 19% | (52,941) | 46,214 | (6,727) |
| Effects of: |
|
|
|
| Excess management expenses (utilised)/ not utilised | 52,941 | (46,214) | 6,727 |
| Interest distributions paid in respect of the year | - | - | - |
| Total tax charge in income statement | - | - | - |
| 31 March 2020 Restated | Revenue | Capital | Total |
| Return on ordinary activities before taxation | (246,451) | 691,932 | 445,481 |
| Return on ordinary activities before taxation multiplied by the standard rate of UK corporation tax of 19% | (46,826) | 131,467 | 84,641 |
| Effects of: |
|
|
|
| Excess management expenses not utilised | 46,826 | (131,467) | (84,641) |
| Interest distributions paid in respect of the year | - | - | - |
| Total tax charge in income statement | - | - | - |
Overseas taxation
The Company may be subject to taxation under the tax rules of the jurisdictions in which it invests, including by way of withholding of tax from interest and other income receipts. Although the Company will endeavour to minimise any such taxes this may affect the level of returns to shareholders.
Factors that may affect future tax charges
At 31 March 2021, the Company had unrelieved losses of £809,433 (2020: £515,352) available to offset future taxable revenue. A deferred tax asset of £153,792 (2020: £97,917) 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.
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.
7) Earnings per Share
| For the financial year ended 31 March 2021 | Revenue | Capital | Total |
| Earnings per ordinary share | (5.21)p | 4.55p | (0.66)p |
The calculation of the above is based on revenue returns of (£278,639) capital returns of £243,234 and total returns of (£35,405) and the weighted average number of ordinary shares of 5,350,725 as at 31 March 2021.
| For the financial period ended 31 March 2020 Restated | Revenue | Capital | Total |
| Earnings per ordinary share | (5.06)p | 14.21p | 9.15p |
The calculation of the above is based on revenue returns of (£246,451) capital returns of £691,932 and total returns of £445,481 and the weighted average number of ordinary shares of 4,869,956 as at 31 March 2020.
8) Fair Value Measurements
(a) Movements in the year
|
| As of 31 March 2021 £ | As of 31 March 2020 |
| Opening cost |
|
|
| Opening fair value | 3,078,560 | 1,700,900 |
|
|
|
|
| Purchases at cost | 534,171 | 1,894,014 |
| Sale | (66,913) | (279,301) |
| Realised (loss) | (1,790) | (22,136) |
| Unrealised gain/(loss) | 300,079 | (291,347) |
| Unrealised (loss)/gain on foreign exchange | (119,496) | 76,430 |
| Closing fair value at 31 March 2021 and 2020 | 3,724,611 | 3,078,560 |
(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 2021 in valuing the Company's investments:
|
| Carrying amount |
| Fair value | ||||||
| 31 March 2021 | Mandatorily at FVTPL | Financial assets at amortised cost | Other financial liabilities | Total carrying amount |
| Level 1 | Level 2 | Level 3 | Total |
|
| £ | £ | £ | £ |
| £ | £ | £ | £ |
| Investments in quoted equity assets | 406,172 | - | - | 406,172 |
| 406,172 | - | - | 406,172 |
| Investments in unquoted equity assets | 3,318,439 | - | - | 3,318,439 |
| - | - | 3,318,439 | 3,318,439 |
|
| 3,724,611 | - | - | 3,724,611 |
| 406,172 | - | 3,318,439 | 3,724,611 |
| Financial assets not measured at fair value |
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents | - | 1,255,199 | - | 1,255,199 |
|
| |||
|
| - | 1,255,199 | - | 1,255,199 |
|
| |||
| Financial liabilities not measured at fair value |
|
|
|
|
|
| |||
| Other payables | - | - | 54,045 | 54,045 |
|
| |||
|
| - | - | 54,045 | 54,045 |
|
| |||
|
| Carrying amount |
| Fair value | ||||||
| 31 March 2020 | Mandatorily at FVTPL | Financial assets at amortised cost | Other financial liabilities | Total carrying amount |
| Level 1 | Level 2 | Level 3 | Total |
|
| £ | £ | £ | £ |
| £ | £ | £ | £ |
| Investments in quoted equity assets | 148,796 | - | - | 148,796 |
| 148,796 | - | - | 148,796 |
| Investments in unquoted equity assets | 2,929,764 | - | - | 2,929,764 |
| - | - | 2,929,764 | 2,929,764 |
|
| 3,078,560 | - | - | 3,078,560 |
| 148,796 | - | 2,929,764 | 3,078,560 |
| Financial assets not measured at fair value |
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents | - | 1,700,601 | - | 1,700,601 |
|
| |||
| Receivables | - | 18,620 | - | 18,620 |
|
| |||
|
| - | 1,719,221 | - | 1,719,221 |
|
| |||
| Financial liabilities not measured at fair value |
|
|
|
|
|
| |||
| Other payables | - | - | 287,862 | 287,862 |
|
| |||
|
| - | - | 287,862 | 287,862 |
|
| |||
9) Receivables
|
| 31 March 2021 | 31 March 2020 |
| Prepayments | - | 18,620 |
| Total receivables | - | 18,620 |
The above receivables do not carry any interest and are short term in nature. The directors consider that the carrying values of these receivables approximate their fair value.
10) Other Payables
|
| 31 March 2021 | 31 March 2020 |
| Accruals and deferred income | 54,046 | 37,863 |
| Other creditors | - | 250,000 |
| Total other payables | 54,046 | 287,863 |
Other Creditors represents cash subscriptions received in advance, which were issued as new shares by the company on 1 April 2020.
The above payables do not carry any interest and are short term in nature. The directors consider that the carrying values of these payables approximate their fair value.
11) Ordinary Share Capital
The table below details the issued share capital of the Company as at the date of the Financial Statements.
| Issued and allotted | No. of shares
|
£ | No. of shares
|
|
| Ordinary shares of 1 penny each | 5,350,725 | 53,507 | 4,869,956 | 48,699 |
The following table details the subscription activity for the year ended 31 March 2021.
|
| 31 March 2021 | 31 March 2020 |
| Balance as at 1 April 2020 | 4,869,956 | 4,564,748 |
| Ordinary shares issued | 480,769 | 305,208 |
| Balance as at 31 March 2021 | 5,350,725 | 4,869,956 |
During the year ended 31 March 2021 and 2020, all proceeds from this issue was received.
12) Net Asset Value per Ordinary Share
|
| Year ended 31 March 2021 | Year ended 31 March 2020 | ||
| Year ended 31 March 2021 | Net asset | Net assets | Net asset | Net assets |
| Ordinary shares of 1 penny each | 92.06p | 4,925,764 | 92.61p | 4,509,919 |
The net asset value per ordinary share is based on net assets at the year ended of £4,925,764 (2020: £4,509,919) and on 5,350,725 (2020: 4,869,956) ordinary shares in issue at the year end.
13) Contingent Liabilities and Capital Commitments
The Company may invest in Sure Valley Ventures or other collective investment vehicles, subscriptions to which are made on a commitment basis. The Company will be expected to make a commitment that may be drawn down, or called, from time to time at the discretion of the manager of the Fund or other collective investment vehicle. The Company will usually be contractually obliged to make such capital call payments and a failure to do so would usually result in the Company being treated as a defaulting investor by the Fund or other collective investment vehicle.
The Company 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 2021, the Company had outstanding commitments in relation to the Fund in the amount of €3.3 million (2020: €3.9 million).
14) Related Party Transactions and Transactions with the Manager
Directors - The remuneration of the directors is set out in the directors' Remuneration Report on page 35. 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 2021, there was £1,441 (2020: £1,473) payable to the directors for fees and expenses.
Manager - Shard Capital AIFM LLP (the 'Manager'), a UK-based company authorised and regulated by the Financial Conduct Authority, has been appointed the Company's manager and authorised investment fund manager for the purposes of the Alternative Investment Fund Managers Directive. Details of the services provided by the manager and the fees paid are given in Note 4.
During the year the Company incurred £63,311 (2020: £55,495) of fees and at 31 March 2021, there was £nil (2020: £nil) payable to the Manager.
During the year the Company paid £23,750 (2020: £18,650) of placement fees to Shard Capital Partners LLP.
The Company paid Corporate Broking Retainer fees of £12,000 (excluding VAT) to Shard Capital Partners LLP during the year ended 31 March 2021.
15) Financial Risk Management
The Company's investment objective is to achieve capital growth for investors pursuant to the investment policy outlined in the prospectus, this involves certain inherent risks. The main financial risks arising from the Company's financial instruments are market risk, credit risk and liquidity risk. The board reviews and agrees policies for managing each of these risks as summarised below.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate. Market risk comprises three types of risk, price risk, interest rate risk and currency risk.
· Price risk - the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk);
· Interest rate risk - the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in market interest rates; and
· Currency risk - the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in foreign exchange rates.
The Company's exposure, sensitivity to and management of each of these risks is described below. Management of market risk is fundamental to the Company's investment objective. The investment portfolio is continually monitored to ensure an appropriate balance of risk and reward within the parameters of the investment restrictions outlined in the prospectus.
(a) Price risk
Price risk arises mainly from uncertainty about future prices of financial instruments used in the Company's business. It represents the potential loss the Company might suffer through holding market positions in the face of price movements (other than those arising from interest rate risk or currency risk) specifically in equity investments purchased in pursuit of the Company's investment objective, held at fair value through the profit and loss.
As at 31 March 2021 the Company held two direct private equity investments in the participating shares of Sure Valley Ventures (formerly Suir Valley Ventures), a sub-fund of Suir Valley Funds ICAV and VividQ Limited. (2020: the Company held two direct private equity investment in the participating shares of Sure Valley Ventures (formerly Suir Valley Ventures), a sub-fund of Suir Valley Funds ICAV).
As at 31 March 2021 and 2020 the investment in Sure Valley Ventures (formerly Suir Valley Ventures) is valued at the net asset value of the sub-fund, as calculated by its administrator.
At 31 March 2021, 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 £372,461 (2020: £307,856). 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 currently employs no borrowings.
The Company finances its operations mainly through its share capital and reserves, including realised gains on investments.
Exposure of the Company's financial assets and liabilities to floating interest rates (giving cash flow interest rate risk when rates are reset) and fixed interest rates (giving fair value risk) as at 31 March 2021 and 31 March 2020 is shown below:
|
|
| 31 March 2021 | 31 March 2020 | ||||
| Financial instrument |
| Floating Rate | Fixed or | Total | Floating Rate | Fixed or | Total |
| Cash and cash equivalents |
| - | 1,255,199 | 1,255,199 | - | 1,700,601 | 1,700,601 |
| Total exposure |
| - | 1,255,199 | 1,255,199 | - | 1,700,601 | 1,700,601 |
An administered rate is not like a floating rate, movements in which are directly linked to LIBOR. The administered rate can be changed at the discretion of the counterparty.
(c) Currency risk
As at 31st March 2021 the Company's largest investment is denominated in Euros whereas its functional and presentation currency is Pounds sterling. Consequently, the Company is exposed to risks that the exchange rate of its currency relative to Euros may change in a manner that has an adverse effect on the fair value of the Company's assets.
At the reporting date the carrying value of the Company's financial assets and liabilities held in individual foreign currencies as a percentage of its net assets were as follows:
| Foreign currency exposure as a percentage of net assets | 31 March 2021 | 31 March 2020 |
| Euros | 57% | 54% |
Sensitivity analysis
If the Euro exchange rates increased/decreased by 10% against Pounds sterling, with all other variables held constant, the increase/decrease in the net asset attributable to the Company arising from a change financial assets at fair value through profit or loss, which are denominated in Euros, would have been +/- £281,844 (2020: £242,976).
16) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.
The Company's credit risks arise principally through cash deposited with banks, which is subject to risk of bank default.
The Company ensures that it only makes deposits with institutions with appropriate financial standing.
Due to the low credit risk of the financial assets at amortised cost, the Expected credit loss ("ECL") was determined to be immaterial and no impairment was recognised on the Fund in the year ended 31 March 2021.
Liquidity risk
Liquidity risk is the risk that the Company will have difficulty in meeting its obligations in respect of financial liabilities as they fall due.
The Company manages its liquid resources to ensure sufficient cash is available to meet its expected contractual commitments. It monitors the level of short-term funding and balances the need for access to short-term funding, with the long-term funding needs of the Company.
Capital Management
The Company's capital is represented by ordinary shares and reserves.
The Company's primary objectives in relation to the management of capital are:
· to maximise the long-term capital growth for its shareholders pursuant to its investment objective;
· to ensure its ability to continue as a going concern.
The Company manages its capital structure and liquidity resources to meet 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 31st March 2021 and 2020 the Company employed no gearing.
17) Prior year restatements
There is an adjustment to the classification of Income within the Financial Statements for the year ending 31 March 2020. Sure Ventures owns units in Sure Valley Ventures (SVV) which is an Irish fund. SVV sold its stake in Artomatix for EUR 6.2m, with an initial cash payment of EUR 5.65m on completion, resulting in a capital distribution of EUR 1.4m payable to Sure Ventures.
An amount of £946,817 in respect of the above capital distribution was allocated to the revenue column of the Income Statement contained in the audited financial statements of the Company for the year ended 31 March 2020. Following a review of the position, the Board considers that this treatment does not accurately reflect the capital nature of the Artomatix distribution. The comparative figures for the year ended 31 March 2020 will be restated to reflect the above distribution as capital rather than revenue.
Management fee distribution of 24.24% and 75.76% revenue and capital expenses respectively have been restated as 68.26% and 31.74% to revenue and capital expenses respectively.
The above restatement had no impact on the Net Asset Value of the Company.
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 till the date of signing these financial statements, the Company had the following significant events:
· 662,500 ordinary shares at £1 per share have been issued
· investments of £261,361 in Immotion Group plc were sold.
8 Alternative Performance Measures (APMs)
APMs are often used to describe the performance of investment companies although they are not specifically defined under IFRS. 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 2021
|
| Page |
|
| Average NAV (£'000) | a | not applicable | £5,059 |
| Recurring costs (£'000) | b | 47 | £231 |
|
| b/a |
| 4.6% |
Premium
The amount, expressed as a percentage, by which the share price is more than the NAV per share.
| As at 31 March 2021
|
| Page |
|
| NAV per ordinary share | a | not applicable | 92.06p |
| Share price | b | not applicable | 105p |
|
| (b-a)/a |
| 14.06% |
|
|
|
|
|
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 2021
|
| Page | NAV | Share price |
| Opening as at 1 April 2020 (p) | a | 2 | 92.61 | 105.13 |
| Closing at 31 March 2021 (p) | b | 2 | 92.06 | 105.00 |
| Dividend reinvestment factor | c | n/a | 1 | 1 |
| Adjusted closing (d = b x c ) | d |
| 92.06 | 105.00 |
| Total return | (d-a) / a |
| -0.59% | -0.12% |
9 Glossary
| AIC | Association of Investment Companies |
| Alternative Investment Fund or "AIF" | An investment vehicle under AIFMD. Under AIFMD (see below) Sure Ventures plc is classified as an AIF. |
| Alternative Investment Fund Managers Directive or "AIFMD" | A European Union directive which came into force on 22 July 2013 and has been implemented in the UK. |
| Annual General Meeting or "AGM" | A meeting held once a year which shareholders 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 Authority or "FCA" | The independent body that regulates the financial services industry in the UK. |
| 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 asset value ('NAV') | An investment company's assets less its 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. |
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10 Shareholders' Information
Directors, portfolio manager and advisers
| Directors | Administrator |
| Perry Wilson | Apex Fund Services (Ireland) Limited |
| Gareth Burchell | 2nd Floor, Block 5 |
| John St Agnew | Irish Life Centre |
|
| Abbey Street Lower |
|
| Dublin 1 |
|
| DO1 P767 |
|
| Ireland |
|
|
|
| Registered Office | Company Secretary |
| 23rd Floor | From 1 January 2021 |
| 20 Fenchurch Street | Throgmorton Secretaries LLP |
| London EC3M 3BY | 6th Floor, 125 Wood Street |
| England | London |
|
| EC2V 7AN |
| Manager and AIFM | United Kingdom, |
| Shard Capital AIFM LLP |
|
| 23rd Floor | Upto 31 December 2020 |
| 20 Fenchurch Street | Apex Fund Services (Ireland) Limited |
| London EC3M 3BY | 2nd Floor, Block 5 |
| England | Irish Life Centre |
|
| Abbey Street Lower |
| Placing Agent | Dublin 1 |
| Shard Capital Partners LLP | DO1 P767 |
| 23rd Floor | Ireland |
| 20 Fenchurch Street |
|
| London EC3M 3BY | Registrar |
| England | Computershare Investor Services PLC |
|
| The Pavilions, Bridgewater Road |
| Website | Bristol BS99 6ZZ |
| http://www.sureventuresplc.com | England |
|
|
|
|
| Depositary |
|
| INDOS Financial Limited |
|
| 27-28 Clements Lane |
|
| London EC4N 7AE |
|
| United Kingdom |
|
|
|
|
| Independent Auditor |
| Share Identifiers | PKF Littlejohn LLP |
| ISIN: GB00BYWYZ460 | 15 Westferry Circus |
| Sedol: BYWYZ46 | Canary Wharf |
| Ticker: SURE | London E14 4HD |
|
| England |
|
|
|
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 ("SCAIFM") 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 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 euros. 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 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:
· SEDOL number: BYWYZ46
· ISIN number: GB00BYWYZ460
· EPIC code: 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 £20,000.
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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