Annual report
and financial
statements
for the year ended 31 March 2023
P E M B R O K E V C T . C O M
22
Financial Highlights
Investment Objective
Financial Summary
Chair’s Statement
The Board
Key Performance Indicators (KPIs)
Investment Portfolio
Investment Manager’s Review
Investment Review
Strategic Report
Directors’ Report
Directors’ Remuneration Report
3
4
5
7
9
11
15
16
23
42
50
52
Corporate Governance Statement
Statement of Directors’ Responsibilities
56
59
Independent Auditor’s Report
61
Income Statement
Balance Sheet
Statement of Changes in Equity
Statement of Cash Flow
Notes to the Financial Statements
Notice of Annual General Meeting
Corporate Information
68
69
70
71
72
85
89
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Financial Highlights
Net asset value per share
0
0
4
1
1
5
0
.
1
p
Net asset value total
return per share
0
3
1
4
4
5
0
.
1
p
Dividend paid per share
4
5
9
p.
0
(2022: 126.0p)
(2022: 151.0p)
See KPI section on page 11
(2022: 7.0p)
3
Increase of portfolio
5
value over cost2
%
6
3
(2022: 45%)
Total value of investments
6
6
9
0
m.
£
0
7
7
1
(2022: £161.4m)
Cash invested in six
new investments
0
£
1
0
.
1
2
3
m
Cash invested in
12 follow-on investments
3
0
0
£ .
4
1
1
m
£
1
2
1
2
6
.
7
Total cash invested
during the year
m
(2022: £9.5m invested in
seven new investments)
(2022: £26.9m invested in
21 follow-on investments)
(2022: £36.3m)
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
4
Investment Objective
Pembroke VCT plc (the “Company”) is a generalist VCT focused on
early-stage investments in founder-led businesses.
The Company invests in a diversified portfolio of small, principally
unquoted companies, and selects those which Pembroke Investment
Managers LLP (the “Investment Manager”) believes provide the
opportunity for value appreciation.
The Investment Manager supports the success of the VCT through
fundraising, fund management, marketing, investment management
including investment pipeline, portfolio management, and liaising
with professional advisors.
The Board of Directors of the Company (the “Board”) believes that the
Company can benefit from leveraging the previous sector experience
of the Investment Manager and also that there are likely to be
synergistic advantages from grouping similar businesses.
Consequently, most investments fall within one of six sectors:
• Wellness
• Food, Beverage & Hospitality
• Education
• Design
• Media
• Digital Services
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Financial Summary
Pembroke VCT plc performance
5
The graph compares the total returns on an investment of
100p in the B Ordinary Shares of the Company for five years
(being the minimum holding period under VCT rules),
assuming all dividends are reinvested, with the total
shareholder return on a notional investment of 100p in two
FTSE indices. The FTSE UK Small Cap Total Return index
was chosen for comparison purposes as it is the most
relevant to the Company’s investment portfolio. FTSE AIM
Total Return Index was presented as an additional
benchmark illustration.
200p
190p
180p
170p
160p
150p
140p
130p
120p
110p
100p
90p
80p
70p
60p
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
31 Mar
2018
30 Sep
2018
31 Mar
2019
30 Sep
2019
31 Mar
2020
30 Sep
2020
31 Mar
2021
30 Sep
2021
31 Mar
2022
30 Jun
2022
30 Sep
2022
31 Dec
2022
31 Mar
2023
B Ordinary share total return + tax benefits*
B Ordinary share total return
FTSE AIM total return
FTSE UK SmallCap total return
* Tax benefits reflect a 30% initial tax credit on invested cost and an assumed 45% marginal income
tax exemption on dividends.
Financial Summary
Portfolio performance vs cost
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Wellness
Food, Beverage & Hospitality
Education
Design
Media
Digital Services
All figures in £’m
Cost of investment
Fair value as at 31 March 2023
Increase in fair value
Decrease in fair value
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
7
Chair’s Statement
I am pleased to present the annual results for
Pembroke VCT plc for the year ended 31 March 2023.
Overview
The Company recently closed a £32.8 million fundraise.
We thank existing shareholders for their continued support
and we also welcome our new shareholders.
The Company’s net asset value (“NAV”) at 31 March 2023
is £216.1 million (2022: £200.5 million) and continues
an upward trend reflecting the underlying fundraising.
The increase in the year is after returning £8.3 million to
shareholders through dividends. Since the year end the
Company has returned a further £10.6 million to
shareholders through a £5.9 million share buyback in April
2023 and a further £4.7 million dividend in May 2023.
During the period, the Total Return (NAV plus cumulative
dividends paid) per share decreased 5.9 pence, or 4%, from
151.0 pence per share to 145.1 pence per share. This is
mainly as a result of the Company’s £9.3 million loss in the
year to March 2023 (2022: £24.0 million profit) arising from
unrealised valuation changes on the investment portfolio.
A 5.0 pence per share dividend was paid in 2022, meeting
the Company’s annual dividend target for the year to March
2023. Since the year end, a 2.5 pence per share dividend was
paid in May 2023 which is already halfway to meeting the
Company’s dividend target for the year to March 2024. The
Company continues with its policy to pay special dividends
when investment exits are achieved.
Investment Portfolio Overview
The Board is pleased with the overall performance of the
investment portfolio given the challenging market
conditions in which the underlying companies are operating.
Some portfolio companies continue to exceed expectations
and attract further, third party, investment at higher
valuations. Others have found market conditions
challenging. This has, unfortunately, resulted in Stitch
& Story going into liquidation and exiting our investment
in Second Home at a loss.
A number of our portfolio companies have continued to
thrive. OnePlan has secured the event planning contract for
the 2024 Paris Olympic and Paralympic games with their
mapping software used for the 3D plotting of all the venues.
Lyma was recently awarded the King’s Award for Innovation
and has doubled its turnover in 2022 compared to the year
before. Secret Food Tours, which decided to suspend its
activities during the Covid-19 Government restrictions, has
recovered with revenues now exceeding pre-pandemic
levels. These examples of positive business developments
illustrate the portfolio’s ability to continue to adapt and grow.
During the year the Company invested £11.3 million in six
new companies: Auddy, Bloobloom, My Expert Midwife,
Ro&Zo, Seatfrog and Vieve. The Company also made follow
on investments totalling £11.4 million into 12 portfolio
companies to continue our support of their growth.
For further details, see the Investment Portfolio and
Investment Managers Review on pages 15 to 40.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
8
Chair’s Statement
Environmental, Social and Governance (“ESG”)
We are proud that the Pembroke portfolio now includes
seven registered B Corp companies; LYMA, N Family Club,
Troubadour, COAT Paints, Rubies in the Rubble, Beryl and
Dropless. The main purpose of a B Corp is to meet standards
of social and environmental performance, transparency,
and accountability through positive business practices.
The Board of Pembroke VCT has kept up to date on ESG
reporting requirements within the venture capital sector.
We shall continue to develop our strategy and seek to
embed ESG at Pembroke VCT and continue to raise its profile
with our portfolio companies. In 2022 we became a member
of ESG_VC and have shared the ESG_VC framework across
the portfolio in order to collect company level ESG data.
ESG_VC is a voluntary organisation and provides its
members with regular updates, invitations to workshops,
training and industry events. The members may also be
asked to submit data from across their own portfolio
companies using the ESG_VC Measurement Framework.
Also in 2022 the Board adopted its ESG responsible
investment policy. We will continue to report to
shareholders on ESG matters and share case studies,
in our newsletters.
Dividends & Share Buybacks
In the year to March 2023 the Company has paid a total of
£8.3 million in dividends. The dividend was 5.0 pence per
share in July 2022, following the profitable sale of Me+Em.
This meets the 5.0 pence per share annual dividend target
for the year ended March 2023; which the Board increased
from 3.0 pence per share during 2022.
In addition a 2.5 pence per share dividend, totalling
£4.7 million was paid to shareholders in May 2023.
Shortly after the March 2023 year end, the Company bought
back 5,234,964 shares at 112.86 pence per share and for an
aggregate consideration of £5.9 million. This price was at
a 5% discount to NAV in line with Company policy.
As interests in portfolio companies are sold, the Company
intends to continue paying special dividends and conducting
share buybacks, but always subject to the requirements
and best interests of the Company, the rules, and regulations
to which it is subject and the Company having sufficient
cash resources.
VCT Qualifying Status
Philip Hare & Associates provides both the Board and the
Investment Manager with advice about ongoing compliance
with HMRC rules and regulations concerning VCTs.
The Board has been advised that Pembroke VCT continues
to comply with the HMRC conditions for maintaining its
approval as a venture capital trust.
Outlook
The Company begins the new financial year in a strong
position, with £40 million of liquidity to take advantage
of new high quality investment opportunities as well as
supporting the continued growth of its existing portfolio
businesses. To support this the Investment Manager has also
continued its own business growth and since April 2022,
has increased its team to 15 people with hires across the
investment, portfolio and operations teams.
Nevertheless, the Board and the Investment Manager are
conscious of the current macro-economic environment and
the continued inflationary pressures in the UK.
Annual General Meeting
The Annual General Meeting (“AGM”) will be held at the
Company’s offices at 3 Cadogan Gate, London SW1X 0AS
on 28 September 2023 at 10.00 a.m.
Jonathan Djanogly
Chair
29 June 2023
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
9
The Board
Jonathan Djanogly
Independent non‑ executive Chair
Jonathan is a non-practising solicitor and was, for over ten
years, a corporate partner at City law firm SJ Berwin LLP.
He specialised in mergers and acquisitions, private equity
and joint ventures as well as fund raising on public markets.
Jonathan has been a Member of Parliament since 2001,
in which capacity he served as a Member of the Trade and
Industry Select Committee and currently as a member of the
Public Accounts Select Committee. He also served on the
Opposition front bench as shadow Solicitor General, as
a shadow Minister for Trade and Industry with responsibility
for employment law and corporate governance and as a
Justice Minister for over two years.
Laurence Blackall
Independent non‑ executive Director
Laurence has had a 30-year career in the information, media
and communication industries. After an early career at Virgin
and the SEMA Group he was a director of Frost & Sullivan
before moving to McGraw Hill where he was a vice-president
in its computer and communications group. He then went on
to found AIM listed Internet Technology Group plc in 1995
and successfully negotiated its sale in 2000 for a
consideration of almost £150 million. Laurence was also
instrumental in the creation of Pipex Communications plc.
He has interests in a range of leisure and TMT businesses
and currently holds a number of directorships in public and
private UK companies.
Jonathan Djanogly
Laurence Blackall
Mark Stokes
Louise Wolfson
David Till
Mark Stokes
Independent non‑executive Director
David Till
Non‑ independent non‑ executive Director
David Till co-founded the Oakley Capital Group in 2002.
David plays a key role within the group and has overall
responsibility for operations, finance, due diligence,
compliance and fund formation. Oakley Capital Private
Equity invests in, and supports, the continued growth and
development of some of Europe’s leading companies and
seeks to build long-term relationships with talented
entrepreneurial founders and managers. Over the past 20
years, Oakley has built expertise in three core sectors: TMT,
Digital Consumer and Education, and has strong credentials
and networks in these areas. Oakley Capital comprises five
mid market private equity funds. The Funds generate strong
returns for their Limited Partners as well as Oakley Capital
Investments Limited, a listed investment vehicle that invests
in Oakley Private Equity Funds.
David holds a BA (Hons) in Economics from Essex University.
He started his career in the British Army, then later qualified
as a chartered accountant with Coopers & Lybrand and
worked in industry as a finance director before returning
to the profession holding senior M&A roles.
Mark Stokes has over 30 years experience in financial
services, and 20 years at Executive Committee level.
He is currently Chief Commercial Officer at United Trust
Bank, and previously held Managing Director positions at
Lloyds Corporate and Commercial Banking, Williams & Glyn,
and Metro Bank. He has a deep understanding of business
strategy, execution, performance management, risk
management, and governance. Mark has a broad business
experience from a career lending into commercial and SME
markets, and consumer and asset finance markets, that
includes M&A execution and capital markets fund raising.
He has also previously served as a Non-Executive Director
Alternate with Motobility Operations Group plc. Mark is a
member of the Chartered Institute of Bankers, and has
completed their Green and Sustainable Finance certification.
Louise Wolfson
Independent non‑executive Director
Louise Wolfson is a senior corporate lawyer who was
previously a partner at Allen & Overy LLP and Pinsent
Masons LLP. She has a particular focus on corporate finance
transactions, and has wider experience including mergers
and acquisitions, joint ventures, strategic investments,
capital raisings and listings. Louise currently works as
a freelance legal consultant and sits as a tribunal judge
hearing social security and immigration appeals. Louise
is also a director of Women's Pioneer Housing, a housing
association which supports women in West London.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
10
Board Summary
Independent NEDs
Year appointed
Age
Experience
Qualifications
Jonathan Djanogly
Nov-12
Laurence Blackall
Nov-12
Louise Wolfson
Jan-21
Mark Stokes
Jan-21
58
72
51
61
Non-Independent
L
B
L
CF
LC
SE
CF
E
LC
SE
CF
LC
SE
G
G
G
BA(Hons), Qualified Solicitor, ICAEW Corporate Finance Qualification
MA
Qualified Solicitor
CF
LC
SE
IM
G
Chartered Banker, CBI Green & Sustainable Finance Certificate,
IoD Diploma in Company Direction
David Till
Aug-18
59
CF
E
LC
SE
AA
IM
G
Chartered Accountant, FCA
L
B
Legal
Banking
E
Entrepreneur
AA
Accounting & Audit
LC
Listed Corporate
IM
Investment Management
CF
Corporate Finance
SE
Senior Executive
G
Governance
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
11
Key Performance Indicators (KPIs)
As a VCT, the Company’s objective is to provide shareholders with an attractive income and capital return
by investing its funds in unquoted companies which meet the relevant criteria for VCTs.
The Board has agreed upon the following five key performance measures to assess the Company’s success
in meeting these objectives. Some of these are classified as alternative performance measures (“APMs”)
in line with Financial Reporting Council (“FRC”) guidance.
1. NAV per share;
2. Total return per share;
3. Dividends per share paid in the year:
4. Annual Recurring Costs; and
5. Qualifying percentages under VCT rules
1. NAV per share
The NAV per share of the Company is the sum of the
underlying assets less the liabilities of the Company divided
by the total number of shares in issue. The Company’s target
is for the NAV per share to remain level or increase after
adjusting for dividends paid.
2. Total return per share
This is the most widely used measure of performance
in the VCT sector. Total return per share is an APM that is
calculated as the NAV per share plus cumulative dividends
paid per share. Total return per share enables shareholders
to evaluate more clearly the performance of the Company,
as it reflects the overall return and value of shareholders’
interest. The Company’s target is for the Total return per
share to increase by 3 pence per year from August 2021
(124.1p) which represents one of the hurdles for the
Investment Manager to be paid a Performance Incentive
Fee (“PIF”) when a profitable exit is achieved.
2023
2022*
Reason for movement
Total return pence per share:
115.1p 121.0p
NAV per share decreased 5.9 pence, or
5%, from 121.0 pence per share to 115.1
pence per share. This is mainly as a result
of the Company’s £9.4 million loss in the
year to March 2023 (2022: £24.0 million
profit) as a result of unrealised valuation
changes in the investment portfolio.
*Adjusted for dividends paid in the year of 5p.
Cumulative dividends paid at the beginning of the period
Dividends paid during the year
Total dividends paid since launch
Closing NAV per share
Total return per share
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Target vs actual total return per share
155p
150p
145p
140p
135p
PVCT
Targets
2023
145.1p
139.6p
2022
151.0p
136.6p
2023
25.0
5.0
30.0
115.1
145.1
2022
18.0
7.0
25.0
126.0
151.0
12
Key Performance Indicators (KPIs)
3. Dividends per share paid in the year
The Company has a target of paying an annual dividend of
5.0 pence per share. This dividend target was increased from
3.0 pence per share in 2022.
The Company paid 5.0 pence per share (2022: 7.0 pence
per share) of dividends in the current period which is
consistent with the Board’s target of 5.0 pence per share
(2022: 3.0 pence per share) annual dividend.
4. Annual Running Costs
The Company is indemnified by the Investment Manager
by such amount equal to the excess by which the Annual
Running Costs of the Company exceed 0.5% of the
Company’s NAV, calculated on an annual basis. The Board
monitors its costs carefully (as an APM) and seeks to
maintain the Annual Running Costs below 0.5% of NAV.
The Board monitors the Annual Running Costs as follows:
Target vs Actual Dividend Paid
8p
7p
6p
5p
4p
3p
2p
1p
0p
PVCT
Targets
2023
5p
5p
2022
7p
3p
Annual Running Costs (£’000)
Net Asset Value (£’000)
Annual Running Costs as a
percentage of NAV
See Notes 5 and 8.
2023
2022
735
216,080
660
200,585
0.34%
0.33%
This is within the Company’s annual limit of 0.5% of NAV.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Key Performance Indicators (KPIs)
5. Qualifying percentages under VCT rules*
5. Qualifying percentages under VCT rules*
The Company complies with the UK VCT which requires it to maintain the following criteria.
E
Maximum retention
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
70%
60%
50%
40%
30%
20%
10%
0%
PVCT 2022
PVCT 2023
Minimum
criteria
A
99%
88%
70%
B
98%
91%
80%
C
85%
83%
70%
D
(FY2022 Fund raise)
62%
30%
D
(FY2023 Fund raise)
51%
30%
PVCT
Minimum
criteria
* The values on these APMs are computed based on specific HMRC rules and are not in line with any GAAP.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
13
2023
15%
0%
2022
15%
0%
PVCT
Legend
A
B
C
The Company’s income in the period has
been derived wholly or mainly (70% plus)
from shares or securities.
At least 80% of the value of the Company’s
investments has been represented
throughout the period by shares or
securities comprised of qualifying
holdings of the company.
For funds raised after 5 April 2011, at least
70% by value of the company’s qualifying
holdings has been represented throughout
the period by holdings of eligible shares.
D
(FY 2022
Fund Raise)
D
(FY 2023
Fund Raise)
E
At least 30% of the funds raised in
FY 2021/2022 are invested in qualifying
holdings by 31 March 2023.
At least 30% of the funds raised in
FY 2022/2023 are invested in qualifying
holdings by 31 March 2024.
The Company has not retained more
than 15% of its income from shares
and securities.
The Company continues to meet the requirements of the
VCT rules and is confident there continues to be sufficient
investment opportunities to maintain this.
Investments
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
15
As at 31 March 2023
As at 31 March 2022
Cost
£’000
Fair value
£’000
Media
Boat
Stillking
Popsa
Roto VR
Auddy
Subtotal
Digital Services
Rated People
Wishi
Unbolted
HotelMap
Floom
Credentially
Dropless
OnePlan
Coat
Peckwater Brands
Seatfrog
Subtotal
Total Portfolio before interest
Interest*
Total Portfolio including interest
Other Net Assets
Total NAV
3,250
1,452
5,200
1,750
1,800
13,452
641
153
400
1,500
4,560
3,000
4,375
3,750
3,000
4,000
3,000
28,379
130,141
130,141
39,051
169,192
6,950
6,075
14,525
883
1,800
30,233
621
1,143
553
2,400
624
2,625
4,098
7,734
3,562
7,486
3,000
33,846
171,236
5,793
177,029
39,051
216,080
*Added to investments in the Financial Statements
% of
NAV
3.2%
2.8%
6.7%
0.4%
0.8%
14.0%
0.3%
0.5%
0.3%
1.1%
0.3%
1.2%
1.9%
3.6%
1.6%
3.5%
1.4%
15.7%
79.2%
2.7%
81.9%
18.1%
100.0%
Cost
£’000
Fair value
£’000
3,250
1,452
5,200
1,750
–
11,652
641
153
400
1,500
4,415
3,000
3,750
3,750
3,000
1,000
–
21,610
111,108
111,108
39,140
150,248
6,950
5,720
13,684
774
–
27,128
1,057
1,143
553
1,500
5,914
3,962
3,750
7,426
5,260
4,486
–
35,053
156,587
4,858
161,445
39,140
200,585
% of
NAV
3.5%
2.9%
6.8%
0.4%
0.0%
13.5%
0.5%
0.6%
0.3%
0.7%
3.0%
2.0%
1.9%
3.7%
2.6%
2.2%
0.0%
17.5%
78.1%
2.4%
80.5%
19.5%
100.0%
Investment Portfolio
As at 31 March 2023
Cost
£’000
Fair value
£’000
% of
NAV
As at 31 March 2022
Cost
£’000
Fair value
£’000
% of
NAV
Wellness
United Fitness Brands
KX
Beryl
KXU
Lyma
Thriva
Eave
Cydar
My Expert Midwife
Subtotal
Food, Beverage & Hospitality
Chilango
Five Guys
Chucs Restaurants
Second Home
Sourced Market
Secret Food Tours
Rubies In The Rubble
Hackney Gelato
Subtotal
Education
N is for Nursery
Kinteract
Stitch & Story
Toucantech
Smartify
Annie Mals
Subtotal
Design
Kat Maconie
Troubadour
Bella Freud
Alexa Chung
Heist
PlayerLayer
JustWears
Tala
Bloobloom
Ro&Zo
Vieve
Subtotal
5,276
700
553
1,034
2,000
1,330
3,900
3,000
1,500
19,293
635
3,311
2,220
–
7,447
2,000
1,227
3,200
20,040
3,000
3,635
4,100
1,000
1,500
500
13,735
2,850
2,540
4,329
4,122
8,349
5,852
2,000
200
2,500
1,500
1,000
35,242
318
1,654
1,889
790
29,684
6,543
1,684
3,000
1,500
47,062
–
9,498
2,051
–
–
5,125
920
3,968
21,562
7,297
2,064
–
1,754
1,500
500
13,115
3,769
3,926
7,094
–
3,429
–
2,000
200
2,500
1,500
1,000
25,418
0.1%
0.8%
0.9%
0.4%
13.7%
3.0%
0.8%
1.4%
0.7%
21.8%
0.0%
4.4%
0.9%
0.0%
0.0%
2.4%
0.4%
1.8%
10.0%
3.4%
1.0%
0.0%
0.8%
0.7%
0.2%
6.1%
1.7%
1.8%
3.3%
0.0%
1.6%
0.0%
0.9%
0.1%
1.2%
0.7%
0.5%
11.8%
5,276
700
553
1,034
2,000
1,330
2,750
3,000
–
16,643
635
3,311
2,220
1,485
7,447
2,000
732
2,700
20,529
5,200
2,935
4,000
1,000
1,000
500
14,635
1,850
2,540
3,227
4,122
6,249
5,852
2,000
200
–
–
–
26,039
2,891
1,654
1,889
790
19,613
10,376
2,166
3,000
–
42,378
–
8,048
3,762
294
–
1,637
732
2,800
17,272
9,273
2,958
1,592
1,431
1,000
500
16,755
2,550
4,274
6,318
–
2,658
–
2,000
200
–
–
–
18,000
1.4%
0.8%
0.9%
0.4%
9.8%
5.2%
1.1%
1.5%
0.0%
21.1%
0.0%
4.0%
1.9%
0.1%
0.0%
0.8%
0.4%
1.4%
8.6%
4.6%
1.5%
0.8%
0.7%
0.5%
0.2%
8.4%
1.3%
2.1%
3.2%
0.0%
1.3%
0.0%
1.0%
0.1%
0.0%
0.0%
0.0%
9.0%
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
16
Investment Manager’s Review
Portfolio summary and performance
The movement in the value of the Company’s portfolio is summarised as:
(2.2)
11.4
(5.9)
11.3
171.2
Over the past year, the Investment Manager has focused
on helping the portfolio companies to grow while assisting
their founders and senior management teams to strategically
address operational challenges, cost pressures, challenging
market conditions and making key people appointments.
Although there are uncertainties for 2023, our portfolio
companies continually evolve their strategies to overcome
challenges and to take advantage of new opportunities.
Today we have 11 portfolio companies that are individually
valued above £50 million, compared to only two companies
in 2019. This is in addition to the Me+Em exit in 2022
at a £135 million valuation. These companies represent
54% of the total value of our portfolio and illustrates the
opportunity within.
m
£
n
i
s
t
n
u
o
m
A
185
180
175
170
165
160
155
150
156.6
Valuation at
31 March 2022
New
investments
Follow-on
investments
Repayments/
exits
Valuation
change
Valuation at
31 March 2023
Increase
Decrease
Total
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
17
54%
11
In many of our portfolio companies, there have been
significant wins in acquiring direct customers but also striking
collaborations and Business-to-Business (B2B) deals; which
all contribute to enhancing their growth potential.
Our founders and management teams continue to seek
new ways to acquire consumers, from collaborations with
other brands and influencers through to B2B strategies.
For example, Dropless was previously a Direct-to-Customer
(D2C) car washing service which is now focused on B2B
fleet washing services. We also have a number of portfolio
businesses partnering with each other to develop new and
scalable income streams.
Investment Manager’s Review
Companies with >£50m Enterprise Value (EV)
m
£
n
i
s
t
n
u
o
m
A
100
90
80
70
60
50
40
30
20
10
0
EV at
Exit
Exit
date
PVCT Exit
proceeds
48%
Pasta Evangelists
£37m Jan-21
£4.5m
Me&Em
Plenish
Total
£135m Mar-22
£15.4m
£24m Apr-21
£8.8m
£28.7m
Each exit was followed by a dividend.
10
16%
2
8%
2
11%
3
March 2019
March 2020
March 2021
March 2022
March 2023
Value held in companies >£50m EV
Number of companies valued above £50m EV
Percentages represent the valuation of companies with >£50m EV compared to the total portfolio (excluding exits).
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Investment Manager’s Review
18
• HotelMap has bounced back from the
Covid-19 lockdowns to all-time highs.
It is currently fundraising to meet the
business demands of its expanding
market share.
• Peckwater has secured funding from
TDR Capital and is integrating its
business into TDR’s Stonegate pub chain
to further accelerate growth.
• Peckwater Brands has an EV above
£50 million.
• Cydar has appointed a new Chair,
Kenneth Hitchner, who brings over 30
years of premier healthcare advisory,
fundraising and transactional expertise.
Kenneth was a member of the Goldman
Sachs Global Management committee
and was Chair and CEO of the Asia
Pacific region from 2013 to 2019.
• Smartify has doubled its revenue in
2022 and expanded the business by
offering merchandise.
• Secret Food Tours has recovered
strongly with revenues above
pre-pandemic levels and generating
positive cash flows.
Strong performers in the Pembroke portfolio
We would like to highlight that many of our portfolio companies continue to grow and generate
positive business developments. With Lyma, Secret Food Tours, Five Guys, HotelMap, and Popsa
continuing to grow and leading the group of companies that contribute to valuation increases
within our portfolio.
We have included some of the strong performers in the Pembroke portfolio:
Some portfolio companies are finding the current climate challenging. There are disappointing
outcomes for Stitch & Story entering into liquidation in the year and the Company sold its
investment in Second Home at a loss. Floom, Thriva, United Fitness Brands, Chucs Restaurants,
Coat, Eave, Kinteract, and Credentially encountered obstacles in implementing their growth
strategies during the year, which resulted in a decline in valuation.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
• Oneplan has secured the Paris 2024 Olympic
• LYMA has expanded its business to the
and Paralympic contract, its mapping
software will be used for 3D plotting of
sports venues and the surrounding areas.
US and has doubled its revenue in 2022.
The business is aiming to further increase
its revenues in 2023 by more than 100%.
• The business has more than 5x its
• The business is now a certified
revenues in 2022 compared to the previous
year and continues to gain traction in
securing contacts for large events.
B corporation.
• LYMA has an EV above £100 million.
Investment Manager’s Review
Current portfolio analysis
The following pie charts show the split of the portfolio valuation as at 31 March 2023 and 31 March 2022 by: sector (excluding cash and net assets), stage of investment, the age of companies and
value compared to cost. This is a useful way of assessing diversity within the portfolio.
19
Portfolio Valuation
by Sector
Portfolio Valuation
by Age of Company
Portfolio Valuation
by Stage of the Business
Portfolio Valuation
Compared to Cost
£33.8m
20%
£47.1m
27%
2023
£30.2m
18%
£21.6m
12%
8%
29%
9%
4%
11%
12%
2023
32%
2023
37%
2023
50%
77%
£25.4m
15%
£13.1m
8%
31%
17%
12%
9%
16%
£17.9m
12%
£42.4m
27%
£27.1m
17%
2022
2022
2022
29%
£17.3m
11%
28%
43%
46%
£33.4m
22%
£16.8m
11%
Wellness
Food, Beverages & Hospitality
Education
Design
Media
Digital services
1 to 3 years
4 to 6 years
7 to 9 years
10+ years
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Early stage
Revenue less than £1m
Growth
Revenue between £1m and £5m
Scale up
Revenue between £5m and £50m
Mature
Revenue over £50m
8%
8%
2022
84%
Below cost
Above cost
At cost
20
Investment Manager’s Review
Investment activity
The Company invested £11.3 million (2022: £9.5 million)
in six (2022: seven) new companies during the year and has
invested a further £11.4 million (2022: £26.9 million) across
12 (2022: 21) existing portfolio companies.
The six new investments were Auddy, Bloobloom, My Expert
Midwife, Ro&Zo, SeatFrog and Vieve, all of which are
unquoted, with investments made in the form of new equity
shares with full voting rights.
Auddy
Andrew Craissati launched Auddy in 2020 with three
founders from EMI, Netflix and Warner Music and following
on from a 20-year fascination with audio (including the
founding of Virgin Radio International). Andrew and his
co-founders saw, early on, that despite their enthusiasm
for the podcast medium, creators, publishers, and
organisations all faced considerable challenges due
to the complex and fragmented nature of the ecosystem,
hence the birth of Auddy.
Andrew Craissati and the team around him have built an
innovative company that is well-placed to benefit from
continuing rapid growth of the podcasting market. Auddy
offers its clients the tools and expertise to navigate the
complex and fragmented podcasting ecosystem and the fact
that Auddy has positioned itself as ‘audio-first’ not ‘audio-
only’ provides further upside potential.
Bloobloom
Abbas and Fares Manai are the founding brothers behind
Bloobloom, a company committed to creating affordable
eyewear with unique designs using the finest materials
with shapes and colours that inspire. They built a team
and hand-picked factories to find the ones with the same
ethical standards as they have; the ones who care about
their employees’ lives, the environment and making
top-quality products.
Abbas and Fares are building a brand that resonates with
consumers, and in doing so Management believes it is
important to make a positive impact. The company therefore
created Bloobloom’s ‘Pair for Pair’ programme where it
donates the cost of a pair of glasses for each pair purchased.
It makes this donation to its charity partner Vision for a
Nation, an international organisation that supports health
ministries to provide local eye care services in Rwanda
and Ghana.
My Expert Midwife
My Expert Midwife was launched in 2016 by registered
midwife Lesley Gilchrist, who has experience in both private
and NHS care provision, and Claire Charlton a pre- and
post-natal baby massage specialist. Lesley also holds a
master’s degree in Clinical Research. As Clinical Director and
CEO, Lesley leads the new product development agenda
focusing on product efficacy, informed by her expert clinical
knowledge of what women need during pregnancy,
childbirth and recovery.
Leslie’s credentials and network allow the company to
develop products that truly address a need and in doing so
develop deep consumer trust. There is a large opportunity
to leverage My Expert Midwife’s brand and continue to grow
its product range beyond just pregnancy, lengthening its
customer lifetime value and frequency of purchase.
Ro&Zo
Ro&Zo was founded in October 2020 by Rosie Bowden and
Zoe De Abreu who met while working at Cover Up Clothing,
a clothing manufacturing company supplying retailers
such as Evans and Wallis. Rosie and Zoe are supported by
CEO and third co-founder, Rachel Heather who co-founded
Cover Up Clothing and plus-sized women’s fashion brand
Live Unlimited.
Rachel, Rosie, and Zoe make a strong founding team who
have built a brand while focusing meticulously on the
quality and value of garments to meet the consumer
demand for an ‘accessible premium’ price point. Ro&Zo
has demonstrated the ability to sell garments with strong
margins across all channels and has an opportunity to grow
both the online and offline business simultaneously.
SeatFrog
Iain Griffin and Dirk Stewart founded SeatFrog in 2016 with
a mission to build a better future for rail and its passengers
with its consumer-facing app. Prior to founding the business
Iain and Dirk worked at a digital marketing agency with Iain
leading the management team in taking the business into
the world’s top five agencies within in three years. While
Dirk previously held senior engineering roles, building
scalable technology platforms as a Senior Programmer.
SeatFrog’s world-class founding and Management team has
built a technology platform that is a ‘win-win’ for both train
operating companies and consumers. SeatFrog can take a
meaningful share of the rail ticket sales market by first
engaging with customers via its first-class upgrade and
ticket-swapping services and then selling regular tickets.
SeatFrog is currently launching its offerings in the UK and
across Europe.
Vieve
Founded by Jamie Genevieve, a professional makeup artist
and beauty influencer. She is credited with being one of the
most influential voices in the digital beauty space and has
a combined reach of over three million followers. Jamie was
voted VOGUE Beauty Influencer of the Year 2021 and is a
member of the British Beauty Council’s advisory board.
Jamie has strong credibility in cosmetics and the community
to build a brand that resonates with the consumer. Coupled
with the Management team she has built around her to bring
the operational rigour and expertise to grow a large brand,
Vieve is well-positioned to succeed in a competitive market.
Repayments
In April 2022, the Company received £2.2 million from
N is for Nursery as repayment of its debt investment.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Investment Manager’s Review
Current portfolio analysis
ESG forms part of the Investment Manager’s investment considerations, and the Investment Manager believes that investing responsibly,
seeking to make a positive social and environmental impact, is essential to its long-term success. These factors have been integrated into its
investment and asset management processes. The Company, together with its Investment Manager, continues to refine its evaluation of the
ESG considerations of all of its investments to comprehensively demonstrate the environmental benefits and social contribution of the
Company’s portfolio.
We like to invest in companies which have ESG credentials at the heart of what they do.
The following companies in our portfolio are registered B Corp organisations.
21
• Aims to become the go-to brand for
sustainable condiments.
• Every Rubies product makes use of
otherwise discarded fruit and vegetables
that are not aesthetically pleasing, or
under-utilised by-products of food
production. To date, the company has
prevented 473 tonnes of fruit and
vegetables from going to waste, which
is over four million pieces of fruit
and vegetables.
• Recently introduced 100% recycled and
recyclable squeezy ketchup bottles into
Waitrose, Morrisons and Ocado.
• Beryl uses its proprietary technology and
other advancements to empower more
people to cycle via bike share schemes and
e-scooter hire across the UK.
• Beryl has become the leading
micromobility provider in the UK as it
continues to launch its cycle and e-scooter
hire schemes in UK cities.
• BCP Council recently celebrated riders
taking over one million journeys which
equates to 138 tonnes of carbon dioxide
emissions saved.
• Coat is the world’s only Climate Positive
Certified paint company. A regenerative
business that doesn’t subscribe to
greenwashing. Made to order, fresh paint
meaning zero waste, fewer harmful
ingredients, and bespoke to the customer.
• Joining just 0.009% of businesses
worldwide, it achieved an impressive
B Impact score of 94.8.
• Environmental impact is incorporated into
the ethos of the Troubadour brand.
• Troubadour Goods is a sustainable
London based luxury men’s and women’s
accessories brand specialising in
designing and creating superior
handcrafted leather and textile goods,
including an affordable range of products.
Troubadour has recently opened its first
London store in Beak Street, with the
entire collection on display.
•
It partners with its customers to take
mutual responsibility for the lifecycle
of its products by helping with repairs,
reuse, and recycling.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Investment Manager’s Review
22
• LYMA is the first WellTech brand in the
world to join the list of B Corp certified
companies.
• N Family Club is the highest scoring
B Corp™ in the UK’s pre-school and
primary education sector.
•
Its game-changing formula is the most
scientifically validated nutraceutical ever
produced, clinically proven to actively
tackle inflammation – the root cause
of ageing and disease. Its hand-held
home-use skin laser is just as
revolutionary and Lyma continues to
develop and launch new products.
• Founded in 2017, N Family Club set out
to rethink early years education –
developing a progressive curriculum,
building a sector-leading team culture,
and a service that adds real value for
families. It currently has 21 nurseries
across London, Kent, Surrey, Cambridge
and the West Midlands, and was rated the
highest quality nursery group in the UK by
Nursery World earlier this year. N Family
Club has further plans to expand across
the UK, with a target to reach 80 nurseries
by 2025.
• Dropless has revolutionised the car wash
sector by introducing innovative and
eco-conscious methods, providing
water-free and environmentally safe
alternatives for cleaning domestic and
commercial vehicles.
• Their efforts have conserved tens of
millions of litres of water, and their
recognition as a B Corp UK demonstrates
their steadfast dedication to fostering
beneficial social and environmental
change. Since forming their waterless
valeting service, they have saved tens
of millions of litres of water.
•
Just Wears is a disruptive, direct-to-
consumer brand changing how you think
about pants. They received a score of
95.5, which recognises that they provide
the most comfortable underwear for their
customers in the most sustainable way
possible. It also considers their impact
elsewhere; such as their diverse
workforce, incredible customer service,
tree planting, underwear donations, and
so much more.
Diversity and inclusion
The Company with the Investment Manager continue to
promote and monitor the diversity and inclusion of its
portfolio. Further details can be found in the Strategic
Report on page 48.
Valuation
Investments held by the Company have been valued in
accordance with the International Private Equity and Venture
Capital (IPEVC) valuation guidelines December 2018
developed by the British Venture Capital Association and
other organisations. Through these guidelines, investments
are valued as defined at ‘fair value’.
In determining fair value, the Investment Manager uses
various valuation approaches, including a combination of
the price of recent investment and a market-based approach.
The market approach ascribes a value to a business interest
or shareholding by comparing it to similar businesses,
using the principle of substitution: that is, that a prudent
purchaser would pay no more for an asset than it would
cost to acquire a substitute asset with the same utility
and income earning potential. Price of recent value will
only be used as fair value after careful consideration
of all the facts and circumstances concerning the
underlying investment.
The portfolio valuations are prepared by the Investment
Adviser, before being reviewed and approved by the
Board each quarter and subject to audit annually.
Further details may be found in the Investment Portfolio
and Investment Manager’s Review on pages 15 to 40.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Wellness
United Fitness Brands (UFB) is the UK’s first fitness
supergroup – offering its portfolio of premium studios
accelerated growth, scale and commercial prowess within
the industry and beyond. UFB brings together the Boom
Cycle, Kobox, Barrecore, and Triyoga fitness brands.
Cost
Valuation
Interest rolled up in fixed income investment
£5.3m
£0.3m
£0.1m
Basis of valuation
Equity holding
Most Recent Round
5.8%
23
21.8%
of net assets
KX Urban (KXU) is a pay-as-you-go development of the
established KX luxury gym brand. It offers a range of gym
classes including Hiit & Run, Body Barre, yoga, boxing and
spinning within a high-quality gym environment with a
healthy food and beverage offering.
Cost
Valuation
Basis of valuation
Equity holding
£1.0m
£0.8m
Multiples
10.3%
KX Gym, founded in 2002, is a private members’ gym and spa,
which includes a restaurant and clubroom, located in Chelsea,
London. KX offers members an exclusive holistic approach to
wellbeing, incorporating fitness, diet, and relaxation.
Cost
Valuation
Basis of valuation
Equity holding
£0.7m
£1.7m
Multiples
11.8%
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
24
Beryl is focused on changing the way cities move. Beryl's
focus is on bike-sharing and e-scooter systems in urban
environments. Partnering with local authorities such as TFL,
Transport for Greater Manchester, Transport for West
Midlands, Hackney Council and many more.
Cost
Valuation
Basis of valuation
Equity holding
£0.6m
£1.9m
Most recent round
3.5%
LYMA is a luxury wellness brand. The company works closely
with the world’s leading nutritional scientists, combining
intensive R&D with the latest technological advances to
produce a unique and high-quality, evidence-based
nutritional supplement. It also launched a world-first
medical-grade laser that can be used safely at home in
conjunction with a newly formulated serum and mist.
LYMA has gained a reputation for excellence in the wellness
industry and has been recognized with numerous awards
and accolades.
Cost
Valuation
Basis of valuation
Equity holding
£2.0m
£29.7m
Multiples
19.7%
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Thriva is a proactive healthcare service, which offers
at-home blood tests for a range of health markers such
as Vitamin B12, Vitamin D, liver function, omega, and
iron. Consumers receive the testing kit in the post with
NHS-grade results. Post-blood test, Thriva offers a range
of supplements they can recommend and offer to
consumers based on test results. The company is also
working with several government agencies to support their
health programs.
Cost
Valuation
Basis of valuation
Equity holding
£1.3m
£6.5m
Multiples
5.2%
Eave aims to help prevent avoidable deafness through the
monitoring of, and protection against, damaging noise levels
at work. Its first product is a pair of smart ear defenders
designed for the construction industry.
Unlike traditional passive hearing protection, these work
as part of a complete solution to protect workers from
hearing damage, as well as to detect and report noise levels.
This hardware and software combination is enabling Eave
to pivot to data-driven monitoring.
Cost
Valuation
Interest rolled up in fixed income investment
£3.9m
£1.7m
£35.0k
Basis of valuation
Equity holding
Investment in the year at cost
Most recent round
34.4%
£1.1m
25
My Expert Midwife (MEM) is a pregnancy, post-birth
and baby brand offering award-winning products and
midwife-led educational services. My Expert Midwife's
products are developed in collaboration with experienced
midwives and are designed to be safe and effective for
both mother and baby.
Cost
Valuation
Basis of valuation
Equity holding
Investment in the year at cost
£1.5m
£1.5m
Most recent round
13.6%
£1.5m
NEW
Cydar is a medical software company that improves patient
outcomes by providing a ‘sat nav for surgeons’ which uses
Artificial Intelligence (AI) to enhance image-guided surgery.
The first application of the software is in the field of
endovascular surgery. Cydar feeds the data received from
these surgeries into the Cydar Surgical Intelligence system
which develops a deeper understanding of the variables that
affect patient outcomes and aims to improve outcomes
going forward.
Cost
Valuation
Basis of valuation
Equity holding
£3.0m
£3.0m
Most recent round
6.0%
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Food, Beverage
Hospitality
10.0%
of net assets
26
Five Guys was founded in the US. The company serves a
range of hand-made burgers made with fresh locally sourced
beef and cooked on a grill, along with fresh-cut fries, served
with unlimited toppings. It now has over 150 outlets in the
UK and is expanding in Europe.
Cost
Valuation
Interest rolled up in fixed income investment
Basis of valuation
Equity holding
£3.3m
£9.5m
£3.3m
Multiples
1.0%
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Chucs Restaurants was founded with the goal of creating
a unique dining experience that combines Italian-inspired
cuisine with a modern, luxurious atmosphere with locations
open across West London. Serving Brunch, Lunch and Dinner.
The restaurant's concept reflects the style and branding of
the Italian Riviera.
Cost
Valuation
Basis of valuation
Equity holding
£2.2m
£2.1m
Multiples
25.0%
27
Rubies in the Rubble produces sustainable condiments.
Every Rubies product makes use of otherwise discarded
ingredients: aesthetically rejected fruit and vegetables, or
under-utilised by-products of food production. The business
has focused on the OOH (out-of-home) market, whilst also
being stocked in leading supermarkets. Their range includes
mayo, relishes and ketchup that contains 3x more fruit and
50% less sugar than competitors.
Cost
Valuation
Basis of valuation
Equity holding
Investment in the year at cost
£1.2m
£0.9m
Most recent round
14.4%
£0.5m
Secret Food Tours is a rapidly growing food and beverage
tour company that has developed a scalable and profitable
approach to global expansion. Its flagship events centre on
high-end food tours, culinary events, and nightlife tours.
The company operates tours across five continents.
Cost
Valuation
Basis of valuation
Equity holding
£2.0m
£5.1m
Multiples
20.5%
Hackney Gelato produces artisanal gelato that specialises in
creating unique and delicious flavours using high-quality,
locally sourced ingredients. It was established in 2015 by
two chefs, Sam and Enrico, who learnt the craft from the
master Gualtieri of Sicily. The brand has quickly become one
of the leading suppliers to high-end London restaurants, as
well as retail customers through multiple channels including
Ocado, Waitrose, Tesco, Whole Foods, Gorillas and
independent retail outlets. Hackney Gelato has won 40
Great Taste awards in five years.
Cost
Valuation
Basis of valuation
Equity holding
Investment in the year at cost
£3.2m
£4.0m
Most recent round
36.1%
£0.5m
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Education
28
6.1%
of net assets
Kinteract is a digital education platform that enables
collaboration between teachers, students and parents and
provides guidance to aid child development. It is aimed at
those throughout the education and learning sector, both
in the UK and internationally. Kinteract is delivered through
a simple and elegant interface on desktop, tablet and
mobile versions, and allows practitioners, parents and
students to record events linked to their learning and
development collaboratively.
N Nursery & Family Club is a 7-day-a-week neighbourhood
club, which offers a nursery (N Nursery) during the week and a
family club space (N Family Club) at weekends. N Nursery &
Family Club is open 51 weeks per year, closing only between
Christmas and New Year and, to provide parents with a flexible
offering, the nursery is open from 7am to 7pm. The business
has more than 30 live sites including its latest additions.
Cost
Valuation
Interest rolled up in fixed income investment
£3.6m
£2.1m
£1.9k
Cost
Valuation
Basis of valuation
Basis of valuation
Equity holding
Investment in the year at cost
Most recent round
Equity holding
48.8%
£0.7m
£3.0m
£7.3m
Most recent round
6.7%
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
29
ToucanTech is a software-as-a-service (SaaS) CRM and
website-builder used by schools, charities and companies
to run their communities. It allows organisations to manage
marketing, fundraising, alumni communications and events
in one easy-to-use, vertically integrated platform.
ToucanTech has created a user-friendly, cost-effective
community management software platform that
encompasses a wide range of features.
Smartify is an award-winning digital platform used by some
of the world’s most popular art and cultural institutions to
bring their content to life. Smartify gives its users access to
audio tours, a ‘Shazam for art’ feature covering over 2 million
artworks, and a suite of distance learning tools which have
been produced in association with the world’s leading cultural
institutions. Smartify was launched in 2017 by Tate trustee
Anna Lowe and digital entrepreneur Thanos Kokkiniotis.
The company’s app is the #1 UK museum app.
Annie Mals was incorporated in 2021 by Emily Samuels,
an award-winning charity fundraiser and Oxbridge classics
graduate. Emily has drafted a series of 15-20 illustrated
children’s books for 4-6-year-olds. The first book has been
published with the rest to follow. Emily plans to license
the characters for television animation and short-form
YouTube content with toys, clothing, and accessories
in the proposed pipeline.
Cost
Valuation
Basis of valuation
Equity holding
£1.0m
£1.8m
Cost
Valuation
Multiples
Interest rolled up in fixed income investment
£1.5m
£1.5m
£20.0k
Cost
Valuation
Basis of valuation
12.2%
Basis of valuation
Most recent round
Equity holding
£0.5m
£0.5m
Most recent round
20.0%
Equity holding
Investment in the year at cost
20.0%
£0.5m
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
30
Design
Troubadour Goods is a sustainable London based luxury
men’s and women’s accessories brand specialising in
designing and creating superior handcrafted leather and
textile goods, including an affordable range of products.
Troubadour has recently opened its first London store
in Beak Street, with the entire collection on display.
Cost
Valuation
Interest rolled up in fixed income investment
£2.5m
£3.9m
£0.2m
Basis of valuation
Equity holding
Most recent round
37.3%
11.8%
of net assets
Kat Maconie designs and manufactures distinctive ladies’
boots and shoes which are sold online, in department
stores and boutiques globally. The brand's signature style is
characterised by bold colours, unique prints, and innovative
design details, such as patterns and metallic accents.
The company has stores in London and Puerto Rico.
Cost
Valuation
Interest rolled up in fixed income investment
£2.9m
£3.8m
£0.4m
Basis of valuation
Equity holding
Investment in the year at cost
Most Recent Round
31.6%
£1.0m
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Bella Freud is a fashion designer label producing a range
of high-end men’s and women’s clothing and homeware.
The collections are available at the Flagship store on
Chiltern Street in London, online and through a range of
luxury retail boutiques and department stores in the UK, and
around the world. Bella Freud's mission is to create clothing
and accessories that are both stylish and comfortable, and
that reflect the brand's unique, irreverent spirit.
Cost
Valuation
Interest rolled up in fixed income investment
£4.3m
£7.1m
£0.2m
Basis of valuation
Equity holding
Investment in the year at cost
Most recent round
46.4%
£1.1m
31
NEW
Bloobloom sells premium glasses and sunglasses at a fair
price, via a seamless buying experience. Bloobloom sells
direct-to-consumer (DTC) both online and offline through a
growing store network and offers a free Home Try On service
for online customers who select five styles to be sent to
their homes. The business is rolling out stores over London
as they continue to grow.
Cost
Valuation
Basis of valuation
Equity holding
Investment in the year at cost
£2.5m
£2.5m
Most Recent Round
14.1%
£2.5m
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Heist is a UK-based fashion brand that specialises in creating
high-quality, comfortable, and stylish hosiery for women.
The company was founded with the goal of rethinking the
traditional hosiery industry. Heist uses innovative materials
and design techniques to create hosiery that is both
comfortable and stylish, with features like a waistband that
does not roll down, a seamless design that eliminates
bulges, and a range of skin-tone shades that are inclusive.
The company also places a strong emphasis on
sustainability, using recycled materials and reducing waste
in their production process.
Cost
Valuation
Interest rolled up in fixed income investment
£8.3m
£3.4m
£0.2m
Basis of valuation
Equity holding
Investment in the year at cost
Most recent round
40.2%
£2.1m
32
NEW
Ro&Zo is a womenswear brand selling accessible,
trend-led pieces that flatter women of all ages and sizes.
Ro&Zo’s key product categories include dresses and
occasion wear, alongside a range of tops, trousers, and
loungewear, all of which are designed to be versatile,
comfortable, and fashionable.
Cost
Valuation
Basis of valuation
Equity holding
Investment in the year at cost
£1.5m
£1.5m
Most recent round
21.4%
£1.5m
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
33
VIEVE is an online first, female cosmetics brand founded by
Jamie Genevieve, a professional makeup artist and beauty
influencer. Jamie has a cult following of over three million
social media followers, was voted beauty influencer of the
year in 2021 by VOGUE and is a member of the British
Beauty Council’s advisory board.
JustWears is a men’s basics brand looking to disrupt a
£31 billion category that is dominated by stagnant legacy
brands and unsustainable products. JustWears is currently
selling its maiden product, men’s underwear. The brand
prides itself on the use of innovative materials, with a focus
on ergonomic designs and comfort, made using sustainable,
biodegradable, high-performance fabrics.
We Are Tala (TALA) is a sustainable activewear brand
focused on ‘Gen Z’ (the generation that was born between
1997 and 2012) females. TALA was founded by fitness
influencer Grace Beverley, who has amassed a loyal social
media following of over a million followers on her personal
Instagram account.
Cost
Valuation
Basis of valuation
Equity holding
Investment in the year at cost
£1.0m
£1.0m
Cost
Valuation
£2.0m
£2.0m
Cost
Valuation
Most recent round
Basis of valuation
Most recent round
Basis of valuation
3.8%
£1.0m
Equity holding
15.3%
Equity holding
£0.2m
£0.2m
Most recent round
1.2%
NEW
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Media
14.0%
of net assets
NEW
34
Boat International Media provides information and data
services across traditional print, digital media, and
high-quality events. Boat's superyacht database leverages
its large collection of information on superyachts and
the industry.
Cost
Valuation
Interest rolled up in fixed income investment
Basis of valuation
Equity holding
£3.3m
£7.0m
£1.1m
Multiples
17.9%
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Auddy was launched in 2021 to help companies and build
and distribute audio content whilst carefully placing
targeted advertisements (ads) therein. Auddy delivers
end-to-end premium audio podcast publishing solutions for
both creators and organisations. The business is focused on
targeted audiences, highly responsive advertising solutions
and deep analytics.
Cost
Valuation
Basis of valuation
Equity holding
Investment in the year at cost
£1.8m
£1.8m
Most Recent Round
8.7%
£1.8m
Popsa is a photobook app that, using proprietary machine
learning algorithms, has reduced the time it takes for
customers to produce photobooks from 2 hours to an
average of just 5 minutes. Popsa operates in a billion-dollar
global industry that has been built on a clunky and
frustrating process. By automating the selection of a
customer's most relevant photos, Popsa's disruptive
software removes this frustration.
Cost
Valuation
Basis of valuation
Equity holding
£5.2m
£14.5m
Multiples
18.0%
Stillking Films is a prolific producer of commercials,
TV series, feature films and music videos. The company has
created commercials for almost all Dow Jones and FTSE
advertisers. They have co-produced several successful
feature films, including Spider-Man: Far from Home,
The Falcon and the Winter Soldier, Casino Royale and
created music videos for artists including Beyoncé,
Kanye West, Blur, Madonna, and One Direction.
Cost
Valuation
Basis of valuation
Equity holding
£1.5m
£6.1m
Multiples
4.9%
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
35
Roto VR’s flagship product is an interactive virtual reality
(VR) chair. The chair synchs what users feel with what they
see, by auto rotating wherever the user looks. This
phenomenon known as gravitational presence is achieved
by incorporating accelerometers, gyroscopes and
magnetometers inside the Roto Head tracker; a small device
that clips onto the user’s own VR headset. The Company has
developed a VR immersion chair which boasts a smaller form
factor allowing consumers to enter the VR world with the
same benefits as the VR chair.
Cost
Valuation
Basis of valuation
Equity holding
£1.8m
£0.9m
Most recent round
22.1%
Digital services
36
15.7%
of net assets
Rated People, founded in 2005, is one of the UK’s leading
online marketplaces for homeowners to find tradesmen
for home improvement jobs. Trust pilot review Rated People
at “Excellent” with a rating of 4.4 out of 5.
Cost
Valuation
Basis of valuation
Equity holding
£0.6m
£0.6m
Multiples
1.1%
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Wishi is an innovative fashion technology business that
brings together personal styling and online wardrobe
management functionality to help fully exploit an
individual’s current wardrobe and provide new clothing
suggestions personalized to their look. The business
has recently launched its first white-label partnership
with a major international online fashion retailer.
Cost
Valuation
Basis of valuation
Equity holding
£0.2m
£1.1m
Most recent round
1.2%
37
HotelMap is a worldwide platform for managing hotel
bookings exclusively for business events such as
conferences, professional congresses, conventions,
and trade shows. The company seeks to exploit the
advantages associated with hotel booking for business
events by creating a completely autonomous on-demand
platform. HotelMap aims to become the dominant global
brand in the sector, enabling the platform to aggregate
buying power with hotel suppliers because of its ability
to manoeuvre the world’s largest audience of business
event delegates to HotelMap’s official hotels.
Cost
Valuation
Basis of valuation
Equity holding
£1.5m
£2.4m
Most recent round
5.2%
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Unbolted provides a platform for peer-to-peer secured
lending, offering short-term liquidity to individuals seeking
bridging facilities, or advance sale loans for personal or
small business use. In late 2019, the company launched their
first mortgage product to complement the asset-back
lending product.
Cost
Valuation
Basis of valuation
Equity holding
£0.4m
£0.6m
Multiples
5.9%
38
Credentially aims to ease the administrative burden placed
on both medical and clerical staff when applying for and
filling job vacancies in Health and Social Care. This
application process is resource-intensive and can take
up to six months. To reduce this burden, Credentially has
developed software that automates the sign-up, verification,
and ongoing compliance of employees in Health and Social
Care. With the success in the UK market, they are currently
expanding in the US.
Cost
Valuation
Basis of valuation
Equity holding
£3.0m
£2.6m
Most recent round
17.5%
Floom is a curated global marketplace platform for
independent florists; its mission is to become the primary
destination for customers looking to send flowers
worldwide. It also encompasses FloomX which provides
a complete back-office function for independent florists
to make their work more streamlined, efficient, and
enjoyable. Floom is expanding its US operations by
collaborating with small independent florists and working
to secure increased subscriptions.
Cost
Valuation
Interest rolled up in fixed income investment
Basis of valuation
Equity holding
Investment in the year at cost
£4.6m
£0.6m
£7.0k
Market Value
24.4%
£0.1m
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Dropless has developed an eco-friendly, non-hazardous nano
car cleaning solution which has helped save over 200 litres of
water every wash. The company launched a scratch and dent
repair service in 2020 and the Dropless Hydroloop, the world’s
first closed-loop HGV and LCV wash system. They have grown
rapidly, expanding beyond London to Bristol and Manchester
through its regional B2B customers.
Cost
Valuation
Interest rolled up in fixed income investment
£4.4m
£4.1m
£0.2m
Basis of valuation
Equity holding
Investment in the year at cost
Most recent round
22.6%
£0.6m
39
OnePlan has built a collaborative, easy-to-use, real-time
platform for event and venue planning. OnePlan combines
the world’s best selection of 2D, 3D, satellite, and aerial
maps into its platform to provide planners with fully
customizable solutions to suit their event planning needs.
The user-friendly design allows employees of all skill levels
to use the platform without specialist training. The company
has recently been awarded a contract for planning the 2024
Olympic and Paralympic Games in Paris.
Cost
Valuation
Basis of valuation
Equity holding
£3.8m
£7.7m
Most recent round
14.1%
COAT Paints is a paint brand disrupting a market dominated
by ageing incumbents. COAT provides premium,
environmentally friendly paint at a cost approximately
20% lower than its direct competitors.
Coat’s entire range is water-based and solvent-free, low
VOC (volatile organic compounds), 100% vegan and 100%
animal cruelty-free.
Cost
Valuation
Interest rolled up in fixed income investment
Basis of valuation
Equity holding
£3.0m
£3.6m
£35.9k
Multiples
27.7%
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
40
Seatfrog is a two-sided technology business with a mission
to build a better future for rail operators and their
passengers with its consumer-facing application. Seatfrog
provides enterprise software to train operating companies
that increases revenue, creates new incremental revenue
sources and improves customer satisfaction scores.
Together, Seatfrog’s consumer app aims to provide rail
passengers with a superior customer experience as the only
app that allows one to buy a ticket, upgrade to first-class
and switch to any train.
Cost
Valuation
Basis of valuation
Equity holding
Investment in the year at cost
£3.0m
£3.0m
Most recent round
11.5%
£3.0m
NEW
Peckwater Brands develops virtual food brands for delivery-
only restaurant franchises which are operated by existing
restaurant owners allowing them to increase their revenue
from their existing kitchens. Since its commercial launch in
2020, Peckwater has developed multiple brands, ranging
from Korean fried chicken and wings to a plant-based hot
dog brand in partnership with Unilever.
Cost
Valuation
Basis of valuation
Equity holding
Investment in the year at cost
£4.0m
£7.5m
Most recent round
11.6%
£3.0m
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Statutory Reports
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
42
Strategic Report
This report has been prepared by the Directors in accordance
with the requirements of s414 of the Companies Act 2006 and
incorporates the Financial Highlights, Chair’s Statement and
Investment Portfolio section.
The aim of the Strategic Report is to provide shareholders
with the ability to assess how the Directors have performed
their duty to promote the success of the Company for
shareholders’ collective benefit.
Investment overview
The Investment objective of the Company is to generate
tax-free capital gains and income on investors’ funds through
investment, primarily in companies that are founder led,
whilst mitigating risk appropriately within the framework
of the structural requirements imposed on all VCTs.
Investment policy
Investment objectives
The Company will seek to invest in a diversified portfolio of
smaller companies, principally unquoted companies but
possibly also including stocks quoted on AIM or Aquis, selecting
companies which the Investment Manager believes provide the
opportunity for value appreciation. Pending investment in
suitable Qualifying Investments, the Investment Manager will
invest in investments intended to generate a positive return,
which may include certain money market securities, gilts, listed
securities and cash deposits. The Company will continue to
hold up to 20% of its net assets in such products after it is fully
invested under the VCT rules.
Investment strategy
For its “qualifying investments” (being investments which
comprise Qualifying Investments for a venture capital trust
as defined in Chapter 4 Part 6 of the Income Tax Act 2007)
(“Qualifying Investments”), the Company is expected to invest
primarily in unquoted companies, although it may also invest
in companies whose shares are traded on AIM or Aquis.
The Company will invest in a diverse range of businesses,
predominantly those which the Investment Manager considers
are capable of organic growth and, in the long term,
sustainable cash flow generation. It is likely that investment
will be biased towards founder led and innovative businesses
with an established brand or where brand development
opportunities exist. The Company will invest in a small
portfolio of carefully selected Qualifying Investments where
the Investment Manager should be able to exert influence
over key elements of each investee company’s strategy and
operations. The companies may be at any stage in their
development from start-up to established businesses.
It is anticipated that, at any time, up to 20% of investments
will be held in non-VCT qualifying investments, recognising
that no single investment will represent more than 15% of net
assets (at the time of investment). Until suitable Qualifying
Investments are identified, up to 20% of the net proceeds of
any offer will be invested in other funds, with the balance
being invested in other investments which may include
certain money market securities, and cash deposits.
Asset allocation
Qualifying Investment portfolio
Under current VCT legislation, the Company must at all times
hold at least 80% of its funds in Qualifying Investments.
Funds raised in a period of up to three years are excluded
from this requirement, but at least 30% of funds raised in any
accounting period must be invested in Qualifying Investments
by the anniversary of the end of the accounting period in
which those funds were raised.
For its Qualifying Investments, the Company will invest
primarily in companies whose shares are not traded on any
exchange, although it may also invest in companies whose
shares are traded on AIM or Aquis, and will invest up to a
maximum of 15% (at the time of investment) in any single
Qualifying Investment. The Investment Manager will seek to
construct a portfolio comprising a diverse range of
businesses. It is expected that a substantial proportion of the
Qualifying Investments will be in the form of ordinary shares,
and in some cases preference shares or loans.
Non‑Qualifying Investment portfolio
Under current VCT legislation, the Company must have
invested at least 80% of funds raised in Qualifying
Investments within three years of the funds being raised (70%
until 31 March 2020). However, this programme of investment
in Qualifying Investments will take time to complete; thus in
the first three years following a fund raise, a considerable
proportion of those funds will need to be invested elsewhere,
in Non-Qualifying Investments such as certain money market
securities, listed securities and cash deposits. At any time
after the end of the three years of initial investment in
Qualifying Investments, the Company will hold no more than
20% of its funds in Non-Qualifying Investments.
The portfolio of Non-Qualifying Investments will be managed
with the intention of generating a positive return. Until
suitable Qualifying Investments are identified, up to 20% of
the net proceeds of any offer will be invested in other funds,
with the balance being invested in other investments which
may include money market securities and cash deposits.
Risk diversification
The Directors will control the overall risk of the portfolio by
ensuring that the Company has exposure to a diversified
range of unquoted companies, in particular, through targeting
a variety of sectors. The Company may invest in a diverse
range of securities: unquoted Qualifying Investments will
typically be structured as a combination of ordinary shares,
preference shares, convertible shares and loans. In order to
limit concentration risk in the portfolio, at the time of
investment no more than 15% by value of the relevant share
pool of the Company will be invested in any single portfolio
company. Further, at the time the investment is made, no
more than 10% in aggregate of the NAV of the Company may
be invested in other listed closed-ended investment funds.
Borrowing
In common with many other VCTs, although currently the
Board does not intend that the Company will borrow funds,
the Company has the ability to borrow funds provided that
the aggregate principal amount outstanding at any time does
not exceed 25% of the value of the adjusted capital and
reserves of the Company at the time the borrowings are
incurred. In summary, this is when the aggregate of (a) the
issued share capital, plus (b) any amount standing to the
credit of the Company’s reserves less (c) any distributions
declared and intangible assets and adjusting for any variation
to the above since the date of the relevant balance sheet.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
43
Strategic Report
Business review
A detailed review of the Company’s development and
performance during the year and consideration of its future
prospects may be obtained by reference to this Report, the
Chair’s Statement (pages 7 and 8) and the Investment
Manager’s Review (pages 16 to 22. Details of the
investments made by the Company are given in the
Investment Portfolio section (pages 23 to 40). A summary
of the Company’s key financial measures is given on pages 5
and 6.
The Directors consider the following Key Performance
Indicators (KPIs) to assess whether the Company is achieving
its strategic objectives:
• NAV per share (page 11)
• Total return per share (page 11)
• Dividends per share paid in the year (page 12)
• Annual Running Costs (page 12)
• Qualifying percentages under VCT rules (page 13)
The Directors believe these measures help shareholders
assess how effectively the Company is applying its
investment policy and are satisfied the results give a good
indication of whether the Company is achieving its
investment objectives and policy. The KPIs are established
industry measures and have been discussed in detail in the
Chair’s Statement and Investment Manager’s Review on
pages 7 & 8 and 16 to 22.
Management agreement
Pembroke Investment Managers LLP (the “Investment
Manager”), which is authorised and regulated by the
Financial Conduct Authority to conduct investment business,
is the Investment Manager of the Company under the terms
of an investment management agreement entered into on
15 February 2013, novated to the Investment Manager on
1 July 2014 and varied on 1 March 2013, 3 October 2014,
1 December 2017 and 16 July 2020 (the “IMA”). Pursuant to
the IMA, the Investment Manager provides discretionary and
advisory investment management services to the Company
in respect of its portfolio of investments. The Investment
Manager acts as the Alternative Investment Fund Manager
to the Company.
The Investment Manager provides services in accordance
with the IMA for which it receives a management fee of 2%
of the Company’s NAV. The effect of the cost cap is to restrict
the management fee to 2% of NAV less the extent to which
the Company’s ordinary course annual costs and expenses
exceed 0.5% of NAV. The cost cap does not apply to costs
and expenses which are not in the ordinary course of the
Company's business (for example, costs related to a share
offer, any performance incentive fee and costs) and expenses
outside an agreed list of standard ordinary course costs.
Contrary to many other Investment Managers, the
Investment Manager does not take any arrangement fees,
or exit fees from any of the portfolio companies or the
Company itself. From April 2023, the Investment Manager
has introduced a portfolio support fee, payable by the
portfolio companies, up to a maximum of £30,000 per year
for the first three years, for new investments where the
overall investment cost is in excess of £1 million.
As is customary in the venture capital industry, the
Investment Manager will be incentivised with a performance
fee to align the interests of the Investment Manager and
shareholders.
At a General Meeting held on 14 August 2020, a Deed of
Amendment & Restatement dated 16 July 2020 was
approved thereby revising the IMA and introducing a revised
performance incentive fee, which can only be paid once a
profitable exit has been achieved. The key features of the
revised fee are:
• performance incentive fees are only payable to the
Manager if the Company’s cumulative realised investment
gains are greater than its cumulative realised investment
losses. This high watermark net realised investment gain
approach requires all realised investment losses, past and
future, to be recovered before any performance incentive
fees are paid;
• a Total Return hurdle of 3 pence per year from 14 August
2020 must be achieved before a performance incentive
fee is paid to the Manager;
• the relevant performance incentive fees remain
unchanged at 20%, of the amount by which cumulative
realised investment gains exceed cumulative realised
investment losses, less previous performance incentive
fees paid to the Manager;
• the relevant performance incentive fees will be calculated
at each financial year end and half year balance sheet
dates using information disclosed in the relevant year end
or half year financial statements;
• unless all the above conditions are met, no performance
incentive fee will be payable to the Manager.
The adopted Deed of Amendment & Restatement also
revised the duration of the Investment Manager’s
appointment under the IMA. Under the pre-14 August 2020
IMA, there was another three years to run on the initial fixed
ten year term (after which the IMA would be terminated on
one-year’s notice by either the Company or the Manager).
It was resolved to revise these arrangements so that
although the Company’s current assets and funds would
continue to be subject to a one year rolling notice period,
in future the Manager would have the benefit of a five-year
term in relation to any new funds (“New Funds”) raised by
the Company (and any investments acquired from New
Funds). This would revert to a rolling term with termination
on one year’s notice by either the Company or the Manager
after the expiry of the relevant five-year period, although
notice to terminate in respect of New Funds given by the
Manager would not take effect until such time as the
Manager ceases to manage any New Funds.
The Directors are of the opinion that the Investment
Manager continues to raise, invest and manage funds for the
Company successfully and that the continuing appointment
of the Investment Manager on the terms agreed is in the
interests of all shareholders.
Venture Capital Trust status
The Company was granted approval as a Venture Capital
Trust by HM Revenue & Customs under s274 of the Income
Tax Act 2007. The Directors have managed the affairs of the
Company in compliance with this section throughout the
year under review and intend to continue to do so.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
44
Strategic Report
Risk management
The Board has carried out a robust assessment of the principal and emerging risks facing the Company through a risk management programme whereby it continually identifies the principal risks and
uncertainties faced by the Company, including those that would threaten its business model, future performance, solvency or liquidity and reviews both the nature and effectiveness of the internal
controls adopted to protect the Company from such risks as far as is possible. The principal risks facing the Company are Venture Capital Trust status risk and investment valuation and liquidity risk.
The Investment Manager is also a member of the Venture Capital Trust Association whose aim is to promote and preserve the contributions of the VCT sector to the UK investment community and
UK economy.
The tax rules, or their interpretation, in relation to an investment in the Company and/or the rates of tax may change during the life of the Company and may apply retrospectively, which may
adversely affect an investment in the Company. In 2015 a sunset clause for VCT income tax relief was introduced. This provides that income tax relief will no longer be given to subscriptions made on
or after 6 April 2025, unless the legislation is renewed by an HM Treasury order. HM Treasury continue to indicate their support for extending or renewing this clause. The Company is monitoring this
risk and the potential impact on the Company.
Principal Risks
Description and Potential Negative Impact
Controls & Mitigation
Venture Capital Trust
status risk
The risk of breaching HMRC VCT Compliance rules poses significant
consequences, including the potential loss of our VCT status and exemption on
capital gains. Such a breach could require Pembroke to provide compensation to
affected funds, leading to financial liabilities and straining of resources. Moreover,
the loss of capital gains exemption could have further detrimental effects on the
Company's financial position and investor confidence.
To mitigate the risk of breaching VCT rules, we have implemented the
following measures:
Collaborative Monitoring: Our Investment Manager liaises with Philip Hare &
Associates to assess the VCT status of potential investee companies before
making any investments.
Quarterly VCT Status Reports: Philip Hare & Associates provides comprehensive
reports on our VCT status to the Board every quarter.
Rigorous Review: We carefully review estimated income and proposed dividends
and share buybacks to ensure compliance with VCT regulations.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Strategic Report
45
Principal Risks
Description and Potential Negative Impact
Controls & Mitigation
Investment valuation
and liquidity risk
PVCT faces the risk of errors, process failures, or incorrect assumptions in valuing
its portfolio holdings, particularly since the majority of its assets are invested in
unquoted companies. Valuing such companies can be inherently challenging
under the IPEV guidelines. Having to liquidate these holdings in a non optimal
moment may produce lower than expected returns given their lack of liquidity.
Loss of Value for Investors: Inaccurate valuations can result in decreased
investment value, potentially impacting investor returns and satisfaction.
Poor Market Track Record and Fundraising Challenges: Valuation issues can
contribute to a poor track record, making it more challenging for PVCT to attract
new investment opportunities and secure future fundraising.
Reduced Distributable Reserves due to Loss-Making Exits: Loss-making exits can
diminish PVCT's distributable reserves, affecting the availability of funds for
shareholder distributions.
Damage to Reputation and Fundraising Ability: Valuation inaccuracies can harm
PVCT's reputation, making it harder to attract new investors and establish
valuable partnerships for future fundraising.
Litigation Risks from Investors: Inaccurate valuations may expose PVCT to the risk
of litigation from investors who suffer losses or perceive wrongdoing, potentially
resulting in financial and reputational consequences.
Valuations prepared by PIM, following IPEV guidelines are reviewed and approved
quarterly by PVCT Board, with annual audit.
The Investment Manager's performance is formally reviewed annually and
informally at each board meeting, incentivised through an exit-based
performance incentive scheme (and not based on valuations during the
investment hold period).
The Investment Manager maintains hands-on portfolio management, monitoring
businesses monthly as a minimum.
These measures promote accurate valuations, oversight by the Board
of the Company, aligned incentives for successful exits, and a proactive
portfolio management.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Strategic Report
46
Principal Risks
Description and Potential Negative Impact
Controls & Mitigation
Economic risk
PVCT faces various market and economic risks that can impact its valuation and
investment performance:
To mitigate the market and economic risks, PVCT has implemented the following
measures:
Economic conditions and interest rate movements can impact smaller companies'
valuations, potentially reducing PVCT's asset value.
Inflation, geopolitical uncertainty, and interest rate changes can increase NAV
volatility. There is a heightened emphasis on assessing the medium-term impact
of inflation on asset valuations, particularly considering the short-term drivers
such as higher energy prices and increasing costs.
Events like the war in Ukraine, COVID-19 pandemic, Brexit, economic recessions,
supply shortages, or currency and interest rate movements may affect trading
conditions for smaller companies and the value of PVCT's investments.
Movements in UK stock market indices can affect PVCT's investment valuations,
as well as the company's own share price and discount to net asset value.
Operational risk
PVCT monitors various operational risks, including fraud, business continuity,
external reporting, delegation, key person risk, conflicts, outsourcing, cyber
threats, marketing, systems, and controls. By proactively addressing these risks,
PVCT aims to prevent breaches or issues that could negatively impact the
accuracy of financial statements and the overall value for investors.
Regular Reporting: The Board receives quarterly reports from the Investment
Manager, ensuring ongoing monitoring and oversight of the portfolio's
performance and market conditions.
Diversified Portfolio: PVCT maintains a diversified portfolio within sub-sectors,
aiming to minimise the impact of market cyclicality. This diversification strategy
helps spread the risk and provides stability during different market conditions.
Adequate Liquidity Levels: PVCT ensures it maintains adequate liquidity levels to
address any potential stress situations that may arise within the portfolio
companies. This approach enables PVCT to support its investments during
challenging market scenarios.
Proactive Portfolio Follow-up: PVCT's portfolio companies receive regular
follow-up and support from the Investment Manager. This proactive approach
ensures ongoing engagement and monitoring of portfolio companies'
performance, reducing the likelihood of adverse impacts.
PVCT regularly reviews the performance of the mitigation strategy to the
aforementioned risks. Some controls and mitigations are cited below:
Segregation of duties, and initial and ongoing due diligence monitoring of third
parties to prevent Fraud.
Business continuity assessment conducted at a group level to test response
effectiveness.
Conflict policy, and governance protocols to manage conflict risks.
The Investment Manager monitors the key service providers with periodic
compliance and performance reviews. The Board reviews the assessment.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Strategic Report
47
Principal Risks
Description and Potential Negative Impact
Controls & Mitigation
Social, environmental,
community and human
rights issues
The Company recognises the significance of social, environmental, community,
and human rights issues and conducts assessments of the environmental
practices of its investments to mitigate risks related to employee welfare,
community engagement, and ethical business conduct to mitigate any potential
reputational risk while safeguarding the valuation of PVCT's NAV. However, as
an externally managed investment company without direct employees, it does
not currently have specific policies dedicated to these matters, which is not
considered a risk. Nonetheless, the Company remains committed to promoting
and supporting these issues throughout its portfolio companies.
Loss of key people:
Sufficient number of Board members and employees (at all levels) within the
Investment Manager with diversity of skills to allow for adequate cover.
Gender Diversity: The Company has five Directors, including one female,
demonstrating a commitment to gender diversity in its leadership.
Electronic Communication and Payments: The Company promotes the wider
adoption of electronic communication and electronic payments among its
shareholders, aiming to reduce paper usage and environmental impact.
Recycled Paper: For printed documents that are still necessary, the Company uses
recycled paper, contributing to sustainable practices.
While the Company does not have specific policies, it takes actions to address
social, environmental, community, and human rights concerns within its capacity
and encourages responsible practices within its portfolio companies.
PVCT has implemented the following measures to address key person risk:
Sufficient Board Members: PVCT ensures that it has an adequate number of Board
members to provide cover and redundancy in case of key person departures.
This helps maintain continuity and expertise within the Company.
Diverse Skills: PVCT seeks to have a diverse range of skills among its Board
members and among the Investment Manager's employees. This diversity of skills
ensures that there are individuals capable of stepping in and providing necessary
expertise if key personnel are no longer available.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Strategic Report
Pembroke Diversity & Inclusion
As part of the Company, the Board and with the Investment Manager’s commitment to promote ESG reporting; the following pie chart analyses the Diversity & Inclusion Summary of the Company’s
Portfolio, the Board, and the Investment Manager.
48
Pembroke Investment
Manager
15 persons
Investment Committee
4 persons
Portfolio Companies
(% are based on the value of investment)
Founders
C-Suite
Pembroke VCT Board
5 persons
20%
40%
60%
80%
75%
25%
32%
47%
53%
68%
100%
20%
100%
5%
17%
80%
95%
83%
Male
Female
Ethnically diverse
White
Note:
Female founder composition is based on having at least one female founder.
C-Suite composition is based on having at least one female member.
Ethnic diversity definition is based on gov.uk definition.
Founder diversity is based on having at least one ethnically diverse founder.
C-Suite diversity, including founders, is based on having at least one ethnically diverse member.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
N
O
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T
I
S
O
P
M
O
C
Y
T
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S
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E
V
D
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Strategic Report
49
Statement on long‑term viability
In accordance with the UK Corporate Governance Code in
2018 (the “2018 Code”), the Directors have considered their
obligation to assess the viability of the Company over a
period longer than the 12 months from the date of approval
of the Financial Statements required by the going concern
basis of accounting. The Directors have carried out a robust
assessment of the prospects of the Company for the period
to 31 March 2028, taking into account the Company’s current
position and principal risks, and are of the opinion that, at
the time of approving the Financial Statements there is a
reasonable expectation that the Company will be able to
continue in operation and meet liabilities as they fall due.
The Board carried out robust stress testing of cash flows,
which included paying out dividends, performing share
buybacks, making new investments, supporting our current
portfolio with funding and fundraising.
The Directors consider that for the purpose of this exercise
a five-year period is an appropriate time frame, as it allows
for reasonable forecasts to be made to allow the Board to
provide shareholders with reasonable assurance over the
viability of the Company. In making their assessment the
Directors have taken into account the nature of the
Company’s business and investment policy, its risk
management policies, the diversification of its portfolio
and the Company’s cash position.
The Board has additionally considered the ability of the
VCT to comply with the ongoing conditions to ensure it
maintains its VCT qualifying status under the current
investment policy.
Alternative Investment Fund Managers
Directive (“AIFMD”)
In July 2013 the AIFMD was implemented, a European
directive affecting the regulation of VCTs. The Company
has appointed its Investment Manager as its AIFM.
The Company’s Investment Manager was entered on the
register of small registered UK AIFMs in February 2014.
As an AIFM, the Investment Manager is required to submit
an annual report to the FCA setting out various information
relating mainly to the Company’s investments, principal
exposures and liquidity.
By Order of the Board
The City Partnership (UK) Limited
Company Secretary
29 June 2023
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Directors’ Report
This Directors’ report incorporates the Corporate governance
statement on pages 56 to 58 and the Statement of Directors
Responsibilities on page 59.
Principal activity and status
The Company is registered as a public limited company in
England and Wales under registration number 08307631.
The Directors have managed and intend to continue to
manage the Company’s affairs in such a manner as to comply
with s274 of the Income Tax Act 2007.
Directors
The Directors of the Company during the period under
review were Jonathan Djanogly, Laurence Blackall, Mark
Stokes, Louise Wolfson and David Till. Brief biographical
details of the Directors are given on pages 9 and 10.
Shareholder
UBS Private
Banking
Nominees Ltd
to attend and speak at general meetings, to appoint proxies
and to exercise voting rights. There are no restrictions on
the voting rights attaching to the Company’s shares or the
transfer of securities in the Company.
Substantial shareholdings
The directors are aware of one substantial shareholding
representing 3 per cent or more of the Company's issued
share capital as at 31 March 2023 and the date of this report.
As of 31 March 2023
No. B Ord
shares held
% of shares
in issue
As of 22 June 2023
No. B Ord
shares held
% of shares
in issue
17,891,873
9.5335
16,977,144
8.9540
Share capital
There were 187,673,741 shares in issue at the year end.
During the year 27,351,962 shares were allotted under Offers
for subscription at an average price of 123.28 pence per
share raising £33.7 million before deducting issue costs.
1,087,132 shares were allotted under the FlexiDRIS at an
average price of 121.00 pence per share raising £1.3 million.
Since the year end, 6,484,330 shares have been issued
under Offer for subscription and 681,627 shares have been
allotted under the FlexiDRIS, refer to Note 25 on page 84
for further details.
The Company will consider requests to buy back shares but
is mindful that investment in the Company was promoted
as comparatively long term with venture capital portfolios
typically taking from five to seven years to mature.
The Directors review these requests around the financial
year end and half year. During the year to 31 March 2023
5,234,964 shares were bought back by the Company.
The rights and obligations attaching to the Company’s
shares are set out in the Company’s Articles of Association,
copies of which can be obtained from Companies House.
The holders of shares are entitled to receive dividends when
declared, to receive the Company’s report and accounts,
Independent auditor
A resolution to reappoint BDO LLP as Independent Auditor
will be proposed at the forthcoming AGM.
Accountability and audit
The Statement of Directors' Responsibilities in respect of the
Financial Statements is set out on page 59 of this report.
The report of the Independent Auditor is set out on pages 61
to 66 of this report. The Directors who were in office on the
date of approval of these Financial Statements have
confirmed that, as far as they were aware, there is no
relevant audit information of which the auditor is unaware.
Each of the Directors has taken all the steps they ought to
have taken as Directors in order to make themselves aware
of any relevant audit information that has been
communicated to the auditor.
Future developments
The primary focus will continue to be on the development of
an investment portfolio which will deliver attractive returns
over the medium to longer term. The Company will continue
to provide support for the ongoing development of investee
companies and the Company’s Investment Manager will
continue to work closely with all investee companies
towards accelerating their growth and identifying possible
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
50
exits in the short to mid-term. Further details on the
Company’s future prospects may be found in the Outlook
paragraph in the Chair’s Statement on page 8. Details of post
balance sheet events may be found at Note 25 to the
Financial Statements.
Going concern
In accordance with FRC Guidance for Directors on going
concern and liquidity risk, the Directors have assessed the
prospects of the Company and are of the opinion that, at the
time of approving the Financial Statements, the Company
has adequate resources to continue in business for at least
12 months from the date of approval of the Financial
Statements. In reaching this conclusion the Directors took
into account the nature of the Company’s business and
Investment Policy, its risk management policies, the
diversification of its portfolio and the cash holdings.
They have also reviewed the budgets and forecasts, which
have been subject to liquidity stress tests performed by
the Investment Manager, and consider that the Company
has adequate financial resources to enable it to continue
in operational existence for the foreseeable future.
The Company’s business activities, together with the factors
likely to affect its future development, performance and
position including the financial, and operational related risks
the Company is exposed to are set out in the Strategic
Report on pages 42 to 47. As a consequence, the Directors
have a reasonable expectation that the Company has
sufficient cash to continue to operate and the Company
is well placed to manage its business risks successfully
and meet its liabilities as they fall due despite the current
economic climate. Thus, the Directors believe it is
appropriate to continue to apply the going concern basis
in preparing the Financial Statements.
Financial instruments
Information on the principal financial instruments held by
the Company, including details about risk management, may
be found in the Investment Review forming part of the
Strategic report and at Note 21 to the Financial statements.
51
Directors’ Report
Section 172 Statement: Directors’ duty to
promote the success of the Company
This section sets out the Company’s Section 172 Statement
and should be read in conjunction with the other contents
of the Strategic Report. The Directors have a duty to
promote the success of the Company for the benefit of its
members as a whole. In fulfilling this duty, the Directors
have regard to a number of matters including:
• the likely consequences of any decision in the long term;
• the interests of the Company’s employees;
• the need to foster business relationships with suppliers,
customers and others;
• the impact of the Company’s operations on the community
and the environment;
• the desirability of the Company maintaining a reputation
for high standards of business conduct; and
• the need to act fairly between members of the Company.
As an externally managed investment company, the Company
does not have employees. Its main stakeholders therefore
comprise the shareholders, the Investment Manager, investee
companies and a small number of service providers.
Shareholders
The Board places great importance on communication with
its shareholders and encourages shareholders to attend the
AGM and welcomes communication from shareholders as
described more fully on page 58 in the Corporate
Governance Statement.
Investment Manager
The investment management services are fundamental to
the long-term success of the Company through the pursuit
of the investment objectives. The Board’s decisions are
intended to achieve the Company’s objective to invest
in a diversified portfolio of smaller, principally unquoted
companies which the Investment Manager believes provide
the opportunity for value creation. The Board regularly
monitors the Company’s performance in relation to its
investment objectives and seeks to maintain a constructive
working relationship with the Investment Manager.
Representatives of the Investment Manager attend each
quarterly board meeting and provide an update on the
performance of companies in the portfolio.
Investee companies
The Company’s performance is directly linked to the
performance of its underlying investee companies and
accordingly communication with those companies is
regarded as very important. The Investment Manager has
a director on the board of many, but not all, of the portfolio
companies and communicates with all of them irrespective
of this on a regular basis. Investments also carry information
rights so that the Company is provided with reporting
updates at least quarterly.
Regulators
As a UK listed company the Board and Investment Manager
comply with the Companies Act, HMRC, UK Accounting
Standards and FCA regulatory requirements in addition to
the Alternative Investment Fund Managers Directive, to
ensure the Company can continue to trade. The Company
continued to comply with these regulations throughout the
year and to the date of this Report.
Key decision making
The Board has policies for dividends, share buybacks and the
dividend reinvestment scheme which are discussed regularly
and also discusses fundraising each year to ensure funds are
available for investment where opportunities exist with new
or existing investee companies. The Board also discusses the
cash balances, distributable reserves and the VCT rules to
ensure the Company can pay stable dividends for investors,
with additional special dividends linked to investment
realisations and conduct share buybacks.
Other service providers
Certain providers such as registrar, receiving agent, tax
adviser, auditor, lawyers and others contract directly with
the Company and do work on its behalf. Some providers such
as the distributor provide their services to the Company via
a contract with the Investment Manager. The quality of the
provision of these services is considered by the Directors at
Board meetings. The Board’s primary focus in promoting the
long-term success of the Company for the benefit of the
shareholders as a whole is to direct the Company with a
view to achieving the investment objective in a manner
consistent with its stated investment policy and strategy.
Global greenhouse gas emissions
The Company has no direct greenhouse gas emissions or
energy consumption to report from its operations, being an
externally managed investment company. The Company
does not fall within the scope of The Companies (Directors’
Report) and Limited Liability Partnerships (Energy and
Carbon Report) Regulations 2018 effective as of 1 April 2019
which implements the Government’s policy on Streamlined
Energy and Carbon Reporting, replacing the Carbon
Reduction Commitment Scheme. The 2018 Regulations
require companies that have consumed over 40,000
kilowatt-hours of energy to include energy and carbon
information in their Directors’ Report. This does not apply to
the Company as it qualifies as a low energy user.
Listing Rule 9.8.4 requires the Company to include certain
information in a single identifiable section of the Annual
Report or a cross reference table indicating where this
information is set out. The Directors confirm that there are
no disclosures required to be made in this regard.
By Order of the Board
The City Partnership (UK) Limited
Company Secretary
29 June 2023
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
52
Terms of appointment
None of the Directors has a service contract with the
Company. On being appointed, all Directors received
a letter from the Company setting out the terms of their
appointment, details of the fees payable and their specific
duties and responsibilities. A Director’s appointment may be
terminated by the Director or by the Company on the expiry
of three months’ notice in writing given by the Director or
the Company as the case may be. No arrangements have
been entered into between the Company and the Directors
to entitle any of the Directors to compensation for loss
of office. The letters of appointment are available for
inspection on request from the Company Secretary.
The Company’s Articles of Association provide that the
Directors will be subject to election at the first annual
general meeting after their appointment and at least every
three years thereafter. Brief biographical details of the
Directors are given on pages 9 and 10.
Directors’ Remuneration Report
This report has been prepared by the Directors in accordance
with The Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 (as amended)
(the “Regulations”). An ordinary resolution for the approval
of the Directors’ Annual Report on Remuneration will be put
to members at the forthcoming AGM.
The Company’s auditor, BDO LLP, is required to give its
opinion on certain information included in this report.
The disclosures which have been audited are indicated
as such. The auditor’s opinion on these and other matters
is set out in their report on pages 61 to 66.
Annual statement from the Chair
of the Company
Jonathan Djanogly and Laurence Blackall began their term
on 27 November 2012, David Till was appointed as a
Director of the Company on 28 August 2018. Mark Stokes
and Louise Wolfson were appointed as Directors on
1 January 2021. The Board resolved that, with effect from
1 April 2020, the Chair’s annual fee would be increased to
£30,000 (from £20,000) and the annual fee for other
Directors would be increased to £25,000 (from £15,000).
David Till has waived his annual fee with effect from
1 April 2020.
The Company has introduced a Remuneration and
Nomination Committee which shall meet as required,
and at least, annually. The committee will review the
appointments to the Board and its committees and the
levels of director remuneration.
Directors’ remuneration policy
This statement of the Directors’ Remuneration Policy took
effect following approval by shareholders at the annual
general meeting held on 30 September 2020 when 98.9% of
those who voted, voted to approve the Policy. A resolution
to approve the Directors’ Remuneration Policy will be put to
shareholders every three years. At this year’s annual general
meeting, shareholders are being invited to approve the
continuation of the Policy described below.
The Board has not retained external advisors in relation to
remuneration matters but has access to information about
directors’ fees paid by other companies of a similar size and
nature and this is used as a reference when setting the
Directors’ remuneration. Shareholders’ views in respect of
the directors’ remuneration are communicated at the
Company’s AGM and are taken into consideration in
formulating the Directors’ Remuneration Policy. The Board
has not received any views from the Company’s shareholders
in respect of the levels of Directors’ remuneration.
The Board considers that Directors’ fees should reflect the
time commitment required and the high level of
responsibility borne by Directors, and should be broadly
comparable to the fees paid by similar companies while
ensuring that the fees payable are appropriate to retain
individuals of sufficient calibre to lead the Company in
achieving its short and long-term strategy. The Company’s
Articles of Association, further to a resolution passed at a
General Meeting held on 14 August 2020, place an overall
annual limit of £150,000 (£100,000 pre-14 August 2020)
on Directors’ remuneration. None of the Directors is eligible
for pension benefits, share options, bonuses or other
benefits in respect of their services as non-executive
Directors of the Company.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Directors’ Remuneration Report
Directors’ annual report on remuneration
Directors’ fees for the year (audited)
The fees payable to individual Directors in respect of the year ended 31 March 2023 are
shown in the table below.
Director
Jonathan Djanogly
Laurence Blackall
Mark Stokes*
Louise Wolfson*
David Till**
Total annual
fee
£
Total fee paid for the
year ended 31.03.23
£
Total fee paid for the
year ended 31.03.22
£
30,000
25,000
25,000
25,000
Nil
30,000
25,000
25,000
25,000
Nil
30,000
25,000
25,000
25,000
Nil
*Mark Stokes and Louise Wolfson were appointed to the Board on 1 January 2021.
**David Till waived his annual fee with effect from 1 April 2020.
No taxable benefits were paid to the Directors, no pension related benefits were paid to
the Directors and no monies or other assets were received or receivable by the Directors for
the relevant financial year. There were no fees payable to past Directors or payments made
for loss of office. There is no comparative information in respect of employee remuneration
as the Company has no employees.
Fees are not specifically related to the Directors’ performance, either individually
or collectively.
53
Relative importance of spend on pay
The table below shows the total remuneration paid to the Directors and shareholder
distributions in the year to 31 March 2023 and the prior year. There were no outstanding
balances due at the year end.
Total Directors’ fees
Dividend
Share Buy Back
Total Directors’ fees as a percentage of dividend & buyback
Year ended
31.03.23
£
Year ended
31.03.22
£
Percentage
change
105,000
8,310,106
–
1.3%
105,000
9,290,670
9,802,771
0.6%
–
(11%)
–
0.7%
Directors’ shareholdings (audited)
The beneficial interests of the Directors in the shares of the Company at the year-end
were as follows:
As at 31.03.23
As at 31.03.22
Director
Jonathan Djanogly
Laurence Blackall
Mark Stokes
Louise Wolfson
David Till
shares
held
75,992
307,942
17,888
16,753
494,612
% of
shares
in issue
0.041
0.164
0.010
0.009
0.264
shares
held
75,992
307,942
17,178
8,250
410,437
% of
shares
in issue
0.048
0.193
0.011
0.005
0.258
The Company confirms that it has not set out any formal requirements or guidelines for
a Director to own shares in the Company.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Directors’ Remuneration Report
54
Company performance
The Board is responsible for the Company’s investment
strategy and performance, although the management
of the Company’s investment portfolio is delegated to the
Investment Manager through a management agreement.
The Directors consider that a comparison of investment
performance against the FTSE UK Small Cap Total Return
Index is the best available metric, although readers should
note that the differences between the scale, capital
structure and liquidity of investments in the two
differ markedly.
The graph opposite illustrates the Company’s net asset
value per share and total return per share both before and
after the VCT tax benefits* with the total return from a
notional investment of 100p in the FTSE UK Small Cap Total
Return Index over the same period.
At the AGM held on 29 September 2022, 99.09% of the votes
cast were for, 0.91% of the votes cast were against, and
37,336 shares were withheld in respect of, the resolution
approving the Directors’ remuneration report.
On behalf of the Board
Jonathan Djanogly
Director
29 June 2023
* Tax benefits include a 30% initial tax credit on invested
cost and an assumed 45% marginal income tax exemption
on dividends.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Pembroke VCT plc B Ordinary shares
210p
205p
200p
195p
190p
185p
180p
175p
170p
165p
160p
155p
150p
145p
140p
135p
130p
125p
120p
115p
110p
105p
100p
95p
90p
31 Mar
2015
30 Sep
2015
31 Mar
2016
30 Sep
2016
31 Mar
2017
30 Sep
2017
31 Mar
2018
30 Sep
2018
31 Mar
2019
30 Sep
2019
31 Mar
2020
30 Sep
2020
31 Mar
2021
30 Sep
2021
31 Mar
2022
31 Mar
2023
Pembroke VCT B Total Return per Ord Share (inc. tax benefits)
Pembroke VCT B Total Return per Ord Share
Pembroke VCT B NAV per Share
FTSE UK Small Cap TR Index
Governance
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Corporate Governance Statement
56
The Directors of Pembroke VCT plc confirm that the
Company has taken appropriate action to enable it to comply
with the Principles of the UK Corporate Governance Code
(the “2018 Code”) issued by the Financial Reporting Council
in 2018 which is publicly available at https://www.frc.org.
uk/directors/corporate-governance-and-stewardship/
ukcorporate-governance-code. Apart from the matters
referred to in the following paragraph, the requirements of
the Code were complied with throughout the year ended
31 March 2023.
The Directors consider that the annual report and accounts,
taken as a whole is fair, balanced and understandable and
provides the information necessary for shareholders to
assess the Company’s position, performance, business model
and strategy.
The Company complies with all the provisions of the 2018
Code save that:
(i) the Company does not conduct on an annual basis a
formal review as to whether there is a need for an
internal audit function, as the Directors do not consider
that an internal audit would be an appropriate control
for a venture capital trust;
(ii) as all the Directors are non-executive and in light of the
responsibilities delegated to the Investment Manager,
its VCT status adviser and Company Secretary, the
Company has not appointed a chief executive, deputy
Chair or a senior independent non-executive Director;
and
(iii) in view of its non-executive nature, to ensure continuity
of experience amongst members of the Board and the
requirement under the Articles that all Directors are
subject to election by shareholders at the first annual
general meeting after their appointment and thereafter
at every third annual general meeting, the Board
considers that it is not appropriate for the Directors
to be subject to annual re-election or appointed for a
fixed term.
David Till, who is not an independent Director, is subject
to annual re-election under the Listing Rules.
Full details of duties and obligations of the Directors are
provided at the time of appointment and are supplemented
by further details as necessary. There is no formal induction
programme for Directors but any newly appointed Director
will be given a comprehensive introduction to the
Company’s business, including meeting the Company’s
advisers.
Board of Directors
The Company has a Board of five non-executive Directors,
four of whom are considered to be independent. The fifth
Director, David Till, is also a member of the Investment
Manager. In accordance with the Listing Rules, David Till is
subject to annual re-election by shareholders. The Company
has no employees.
All non-executive Directors have signed letters confirming
the terms of their appointment as non-executive Directors.
These are all dated with effect from 1 January 2021.
Directors are provided with key information on the
Company’s activities including regulatory and statutory
requirements and internal controls by the Company’s VCT
status adviser, Philip Hare & Associates LLP, and by the
Company Secretary, The City Partnership (UK) Limited.
The Board has direct access to corporate governance advice
and compliance services through the Company Secretary,
which is responsible for ensuring that Board procedures
are followed and compliance requirements are met.
All Directors may take independent professional advice
in furtherance of their duties as necessary.
The Board is responsible to shareholders for the proper
management of the Company and looks to meet on at least
four occasions each year. It has formally adopted a schedule
of matters which must be brought to it for decision, thus
ensuring that it maintains full and effective control over
appropriate strategic, financial, operational and compliance
issues. Those matters include the appointment or removal of
the Investment Manager and monitoring the performance of
the Investment Manager and investee companies. The Chair
and the Company Secretary establish the agenda for each
Board meeting and all necessary papers are distributed in
advance of the meetings.
The Board has considered the recommendations of the Code
concerning diversity and welcomes initiatives aimed at
increasing diversity generally. The Board believes, however,
that all appointments should be made on merit rather than
positive discrimination. The policy of the Board is that
maintaining an appropriate balance around the Board table
through a diverse mix of skills, experience, knowledge and
background is of paramount importance and all forms of
diversity are a significant element of this.
Board performance
The Board aims to carry out performance evaluations of
the Board and its committees and, consequently, individual
Directors each year. Owing to the size of the Company,
the fact that all Directors are non-executive and the costs
involved, external facilitators will not be used in the
evaluation. A performance evaluation of the Board, the Audit
& Valuations Committee and individual Directors was led by
Jonathan Djanogly. The Directors concluded that the balance
of skills is appropriate and all Directors contribute fully to
discussion in an open, constructive and objective way. With
the additional two new Directors in January 2021 the size
and composition of the Board is considered adequate for the
effective governance of the Company. As all Directors have
acted in the interests of the Company throughout the period
of their appointment and demonstrated commitment to their
roles the Board recommends those presenting themselves
be re-elected at the AGM.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
57
Committee is satisfied that the key areas of risk and
judgment have been appropriately addressed in the
Financial Statements and that the significant assumptions
used in determining the value of assets and liabilities have
been properly appraised and are sufficiently robust.
The Audit & Valuations Committee has managed the
relationship with the auditor and assessed the effectiveness
of the audit process. When assessing the effectiveness of
the process for the period under review the Committee
considered the auditor’s technical knowledge and that they
have a clear understanding of the business of the Company;
that the audit team is appropriately resourced; that the
auditor provided a clear explanation of the scope and
strategy of the audit and maintained independence and
objectivity. As part of the review of auditor effectiveness and
independence, BDO LLP has confirmed that it is independent
of the Company and has complied with applicable auditing
standards. BDO LLP does not provide any non-audit services
to the Company and the Audit & Valuations Committee must
approve the appointment of the external auditor for any
non-audit services. BDO LLP was appointed by the Board
as auditor in February 2020 following a tender process,
therefore the current partner has served for four year ends.
The Board notes that statutory audit retendering is required
after an auditor has been in place for ten years.
Corporate Governance Statement
Audit & Valuations Committee
The Audit & Valuations Committee operates within clearly
defined written terms of reference which are available on
request from the Company Secretary.
The Audit & Valuations Committee comprises three
independent Directors. The members of the committee are
Laurence Blackall (Chair), Mark Stokes and Louise Wolfson.
A quorum shall be two members.
During the year ended 31 March 2023 and up to the date
of signing the Annual Report and Financial Statements,
the Audit & Valuations Committee discharged its
responsibilities by:
• Reviewing the content and monitoring the integrity of
the Financial Statements of the Company, including the
fair value of investments as determined by the
Investment Manager, calculation of the management fee
and allocation of expenses between revenue and capital,
and making recommendations to the Board;
• Reviewing the Company’s accounting policies;
• Reviewing internal controls and assessing the
effectiveness of those controls in minimising the impact
of key risks;
• Reviewing and approving the statements to be included
in the Annual Report concerning the internal control and
risk management;
• Reviewing the need to appoint an internal audit function;
• Reviewing and approving the Independent Auditor’s
terms of engagement, including remuneration;
• Reviewing and monitoring the independence and
objectivity of the auditor and the effectiveness of the
audit process;
• Reviewing and approving the Independent Auditor’s
audit plan;
• Recommending to the Board and shareholders the annual
reappointment of and fee payable to BDO LLP; and
• Reviewing the arrangements for staff of the Investment
Manager to raise concerns in confidence about possible
improprieties in financial reporting or other matters and
ensuring that those arrangements allow proportionate
and independent investigation of such matters and
appropriate follow-up actions.
The key areas of risk identified by the Audit & Valuations
Committee in relation to the business activities and
Financial Statements of the Company are:
•
Compliance with HM Revenue & Customs rules – in
particular s274 of the Income Tax Act 2007 – to maintain
the Company’s VCT status; and
• Valuation of unquoted investments.
These risks were discussed with the Investment Manager at
the Audit & Valuations Committee meeting before sign-off
of the Financial Statements. The Committee concluded:
Venture Capital status – the Investment Manager confirmed
to the Audit & Valuations Committee that the conditions for
maintaining the Company’s status had been complied with
throughout the year.
Valuation of unquoted investments – the Investment
Manager confirmed to the Audit & Valuations Committee
that the basis of valuation for unquoted companies was
in accordance with published industry guidelines, taking
account of the latest available information about investee
companies and current market data. The valuation of
unquoted investments is discussed regularly at Board
meetings, Directors are also consulted about material
changes to these valuations between Board meetings.
The Audit & Valuations Committee examined the Investment
Manager’s confirmation and considered it appropriate.
The Investment Manager and auditor confirmed to the Audit
& Valuations Committee that they were not aware of any
material misstatements. Having reviewed the Company’s
Financial Statements and reports received from the
Investment Manager and auditor, the Audit & Valuations
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Corporate Governance Statement
58
Remuneration & Nomination Committee
The Remuneration & Nomination Committee operates
within clearly defined written terms of reference which are
available on request from the Company Secretary.
The Remuneration & Nomination Committee comprises
three independent Directors. The members of the committee
are Louise Wolfson (Chair), Laurence Blackall, Jonathan
Djanogly and Mark Stokes.
A quorum shall be two members.
The Committee shall meet at least once a year and
otherwise as required.
Attendance at Board and committee meetings
During the year ended 31 March 2023 there were:
• Four full Board meetings – additional Board meetings
were held as required to address specific issues including
an offer for subscription and quarterly net asset values
• Two Audit & Valuations Committee meetings; and
• Two Remuneration & Nomination Committee meeting; and
• Two Management Engagement Committee meetings.
The Directors’ attendance at these meetings is noted below.
Director
Board
Jonathan Djanogly
Laurence Blackall
Mark Stokes
Louise Wolfson
David Till
4
4
4
4
3
Audit &
Valuations
Committee
Remuneration
& Nomination
Committee
Management
Engagement
Committee
2
2
2
2
n/a
2
2
2
2
n/a
2
2
2
2
n/a
Management Engagement Committee
The Management Engagement Committee operates within
clearly defined written terms of reference which are
available on request from the Company Secretary.
The Management Engagement Committee comprises four
independent Directors. The members of the committee are
Jonathan Djanogly (Chair), Laurence Blackall, Mark Stokes
and Louise Wolfson.
A quorum shall be two members.
The Committee met for the first time on 29 September 2022
and shall meet at least once a year and otherwise as required.
Internal control
The Board has established a process for the identification,
evaluation and management of the significant risks faced by
the Company. The Board acknowledges that it is responsible
for the Company’s internal control systems and for reviewing
their effectiveness. Internal controls are designed to manage
the particular needs of the Company and the risks to which
it is exposed. The internal control systems aim to ensure the
maintenance of proper accounting records, the reliability of
the financial information on which business decisions are
made and which is used for publication, and that the assets
of the Company are safeguarded. They can by their nature
provide only reasonable and not absolute assurance against
material misstatement or loss. The financial controls
operated by the Board include the authorisation of
investments and regular reviews of both the financial
results and investment performance.
The Board has delegated to third parties the provision
of investment management services, VCT status advisory
services, broking services, day-to-day accounting, company
secretarial and administration services, receiving agent and
share registration services.
Each of these contracts was entered into after full and
proper consideration by the Board of the quality and cost
of services offered. The Board receives and considers regular
reports from the Investment Manager. Ad hoc reports and
information are supplied to the Board as required. The Board
keeps under review the terms of the agreement with the
Investment Manager.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Review of internal control
The process adopted by the Board for identifying, evaluating
and managing the risks faced by the Company includes an
annual review of the control systems. The review covers a
consideration of the significant risks in each of three areas:
statutory and regulatory compliance; financial reporting; and
investment strategy and performance. Each risk is considered
with regard to: the likelihood of occurrence, the probable
impact on the Company, and the controls exercised at source,
through reporting and at Board level. The Board has identified
no problems with the Company’s internal controls.
Relations with shareholders
The Board welcomes the views of shareholders and puts
a premium on effective communication with the Company’s
members. Shareholders are encouraged to attend the
Company’s Annual General Meeting where the Directors and
representatives of the Company’s advisers will be available
to answer any questions members may have.
The Board also communicates with shareholders through
the half-yearly and annual reports and financial statements
which will include a Chair’s Statement and an Investment
Manager’s report both of which are reviewed and approved
by the Board to ensure that they present a fair assessment
of the Company’s position and future prospects.
The Company distributes individual investor statements
to shareholders annually in February. The Company also
provides an Investor Hub, https://pembroke-vct.cityhub.
uk.com, where shareholders and their financial
intermediaries can view the indicative shareholding
valuations, transaction history, dividend history and deal
with a range of administration matters. The Investment
Manager also produces regular newsletters which are
circulated to shareholders and their financial intermediaries.
On behalf of the Board
Jonathan Djanogly
Director
29 June 2023
59
Statement of Directors’ Responsibilities
The directors are responsible for preparing the annual
report and the financial statements in accordance with UK
adopted international accounting standards and applicable
law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the
directors are required to prepare the financial statements
in accordance with UK adopted international accounting
standards . Under company law the directors must not
approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs
and company and of the profit or loss for the and company
for that period.
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 they have been prepared in accordance
with UK adopted international accounting standards,
subject to any material departures disclosed and
explained in the financial statements
prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
group and the company will continue in business;
prepare a directors’ report, a strategic report and
directors’ remuneration report which comply with the
requirements of the Companies Act 2006.
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
comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the
company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for ensuring that the annual
report and accounts, taken as a whole, are fair, balanced,
and understandable and provides the information necessary
for shareholders to assess the Company’s performance,
business model and strategy.
Website publication
The directors are responsible for ensuring the annual report
and the financial statements are made available on a website.
Financial statements are published on the company’s website
in accordance with legislation in the United Kingdom
governing the preparation and dissemination of financial
statements, which may vary from legislation in other
jurisdictions. The maintenance and integrity of the
company's website is the responsibility of the directors.
The directors' responsibility also extends to the ongoing
integrity of the financial statements contained therein.
Directors’ responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:
•
•
The financial statements have been prepared in
accordance with the applicable set of accounting
standards, give a true and fair view of the assets,
liabilities, financial position and profit and loss
of the company.
The annual report includes a fair review of the
development and performance of the business and the
financial position of the Company, together with a
description of the principal risks and uncertainties that
they face.
On behalf of the Board
Jonathan Djanogly
Director
29 June 2023
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Auditor’s Report
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Independent Auditor’s Report
to the members of Pembroke VCT plc
61
Opinion on the financial statements
In our opinion the financial statements:
• give a true and fair view of the state of the Company’s
affairs as at 31 March 2023 and of its loss for the year
then ended;
• have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements
of the Companies Act 2006.
We have audited the financial statements of Pembroke VCT
Plc (the ‘Company’) for the year ended 31 March 2023 which
comprise the Income Statement, the Balance Sheet, the
Statement of Changes in Equity, the Statement of Cash Flow
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 United Kingdom Accounting Standards,
including Financial Reporting Standard 102 The Financial
Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
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 believe that the
audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion. Our audit opinion is
consistent with the additional report to the audit committee.
Independence
Following the recommendation of the audit committee,
we were appointed by the Board of Directors to audit the
financial statements for the year ended 31 March 2020
and subsequent financial periods. The period of total
uninterrupted engagement including retenders and
reappointments is four years, covering the years ended
31 March 2020 to 31 March 2023. We remain 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. The non-audit services prohibited by that
standard were not provided to the Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded
that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statements
is appropriate. Our evaluation of the Directors’ assessment
of the Company’s ability to continue to adopt the going
concern basis of accounting included:
• Obtaining the VCT compliance reports prepared by
management’s expert during the year and as at year end
Overview
and reviewing the calculations therein to check
that the Company was meeting its requirements to
retain VCT status;
• Reviewing and challenging the forecasted cash flows
that support the Directors’ assessment of going concern
taking into account the current levels of cash and
considering the discretionary nature of the Company’s
significant cash outflows; and
• Calculating the financial ratios to consider the financial
health of the Company.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the Company’s ability to continue
as a going concern for a period of at least twelve months
from when the financial statements are authorised for issue.
In relation to the Company’s reporting on how it has applied
the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the
Directors’ statement in the financial statements about
whether the Directors considered it appropriate to adopt
the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors
with respect to going concern are described in the relevant
sections of this report.
Key audit matters
Valuation of unquoted investments
Materiality
Company financial statements as a whole
£3,540,000 (2022: £3,220,000) based on 2% (2022: 2%) of gross investments.
2023
2022
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Independent Auditor’s Report
62
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding
of the Company and its environment, including the
Company’s system of internal control, and assessing the
risks of material misstatement in the financial statements.
We also addressed the risk of management override of
internal controls, including assessing whether there was
evidence of bias by the Directors that may have represented
a risk of material misstatement.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, 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) that 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. This matter
was 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 this matter.
Key Audit Matter: Valuation of unquoted investments
(Notes 4 and 12 to the financial statements)
We consider the valuation of investments to be the most
significant audit area as there is a high level of estimation
uncertainty involved in determining the unquoted
investment valuations; consisting of both equity and loan
stock instruments.
There is also an inherent risk of management override
arising from the unquoted investment valuations being
prepared by the Investment Manager, who is remunerated
based on the value of the net assets of the fund, as shown
in note 7.
For these reasons we considered the valuation of unquoted
investments to be a key audit matter.
How the scope of our audit addressed the key audit matter
Our sample for the testing of unquoted investments was
stratified according to risk considering, inter alia, the value
of individual investments, the nature of the investment, the
extent of the fair value movement and the subjectivity of
the valuation technique.
For all investments in our sample we:
• Considered whether the valuation methodology was
the most appropriate in the circumstances under the
International Private Equity and Venture Capital Valuation
(“IPEV”) Guidelines and the applicable accounting
standards. Where there has been a change in valuation
methodology from prior year, we assessed whether the
change was appropriate.
• Considered the change in market multiples and discount
rate applied from prior year and if these were supported
by the performance of the underlying investment.
• Verified that the valuation was based on recent financial
information and reviewed the arithmetic accuracy of
the valuation.
Further for a sample of 86% of the investments by value of
investment holdings, our procedures included the following:
• Re-performing the calculation of the multiples-based
investment valuations.
• Verifying and benchmarking key inputs and estimates
to independent information and our own research and
against metrics from the most recent investments.
• Challenging and corroborating the inputs to the valuation
with reference to management information of investee
companies, market data and our understanding and
assessing the impact of estimation uncertainty concerning
these assumptions.
• Considering the economic environment in which the
investment operates to identify factors that could impact
the investment valuation.
• For investments valued using cost (where the investment
was recently acquired), the price of a recent investment,
or an offer to acquire the investee company, we checked
the cost or third party offer to supporting evidence,
reviewed the calibration of fair value and considered the
Investment Manager’s determination of whether there
were any reasons why the valuation and the valuation
methodology was not appropriate at 31 March 2023.
For a sample of loans held at fair value included above, we:
• Checked security held to supporting documentation.
• Considered the carrying value of the loan with regard to
the “unit of account” concept.
• Reviewed the treatment of accrued redemption premium/
other fixed returns in line with the Statement of
Recommended Practice.
Key observations
Based on the procedures performed we noted the
methodology and assumptions used to value unquoted
investments to be appropriate.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Independent Auditor’s 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. We consider materiality to be the magnitude by
which misstatements, including omissions, could influence the economic decisions of
reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements
exceed materiality, we use a lower materiality level, performance materiality, to determine
the extent of testing needed. Importantly, misstatements below these levels will not
necessarily be evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements
as a whole and performance materiality as follows:
Company Financial Statements
2022
2023
Materiality
£3,540,000
£3,220,000
Basis for determining materiality
2% of gross investments
Rationale for the benchmark applied
In setting materiality, we have had regard to the
nature and disposition of the investment portfolio.
Given that the VCT’s portfolio is comprised of
unquoted investments which would typically have
a wider spread of reasonable alternative possible
valuations, we have applied a percentage of 2%
of gross investments.
Performance materiality
£2,300,000
£2,090,000
Basis for determining
performance materiality
65% of materiality
Rationale for the percentage applied
for performance materiality
The level of performance materiality applied was
set after having considered a number of factors
including the expected total value of known and
likely misstatements and the level of transactions
in the year.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
63
Lower testing threshold
While the majority of long-term returns are expected to arise from capital, we note that
ongoing costs and revenue returns are still important to users of the financial statements,
despite being considerably smaller in magnitude. As a result, we determined a lower testing
threshold for those items impacting revenue return of £250,000 (2022: £250,000) based on
5% of expenditure (2022: 5% of expenditure).
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit
differences in excess of £70,000 (2022: £60,000). We also agreed to report differences
below this threshold that, in our view, warranted reporting on qualitative grounds.
Other information
The Directors are responsible for the other information. The other information comprises
the information included in the annual report and financial statements other than the
financial statements and our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material misstatements, we are required
to determine whether this gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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 Code 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.
Independent Auditor’s Report
Going concern and
longer‑term viability
• The Directors' statement with regards to the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identified; and
• The Directors’ explanation as to their assessment of the
Company’s prospects, the period this assessment covers
and why the period is appropriate.
Other Code provisions
• Directors' statement on fair, balanced and understandable;
• Board’s confirmation that it has carried out a robust assessment
of the emerging and principal risks;
• The section of the annual report that describes the review
of effectiveness of risk management and internal control
systems; and
• The section describing the work of the Audit Committee.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
64
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course
of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain
opinions and matters as described below.
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course
of the audit:
• the information given in the Strategic report and the Directors’
report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
• the Strategic report and the Directors’ report have been
prepared in accordance with applicable legal requirements.
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.
Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Matters on which
we are required to
report by exception
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
• adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches
not visited by us; or
• the financial statements and the part of the Directors’
remuneration report to be audited are not in agreement with
the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law
are not made; or
• we have not received all the information and explanations we
require for our audit.
Independent Auditor’s Report
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.
Extent to which the audit was capable of detecting irregularities,
including fraud
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:
Non‑compliance with laws and regulations
We gained an understanding of the Company and the industry in which it operates and held
discussions with the investment manager and those charged with governance in order to obtain
and understand of the Company’s policies and procedures regarding compliance with laws
and regulations. We have therefore considered the significant laws and regulations to be the
Companies Act 2006, the FCA listing and DTR rules, the principles of the UK Corporate
Governance Code, industry practice represented by the Statement of Recommended Practice:
Financial Statements of Investment Trust Companies and Venture Capital Trusts (“the SORP”)
and updated in 2022 with consequential amendments and the applicable financial reporting
framework. We also considered the Company’s qualification as a VCT under UK tax legislation.
65
Our procedures in respect of the above included:
• Obtaining an understanding of the control environment in monitoring compliance with
laws and regulations;
• Agreement of the financial statement disclosures to underlying supporting documentation;
• Enquiries of the investment manager and those charged with governance relating to the
existence of any non-compliance with laws and regulations;
• Obtaining the VCT compliance reports prepared by management’s expert during the year
and as at year end and reviewing their calculations to check that the Company was
meeting its requirements to retain VCT status; and
• Reviewing minutes of meeting of those charged with governance for the year for instances
of non-compliance with laws and regulations.
Fraud
We assessed the susceptibility of the financial statement to material misstatement
including fraud.
Our risk assessment procedures included:
• Enquiry with the investment manager and those charged with governance regarding any
known or suspected instances of fraud;
• Obtaining an understanding of the Company’s policies and procedures relating to:
– Detecting and responding to the risks of fraud; and
– Internal controls established to mitigate risks related to fraud.
• Review of minutes of meeting of those charged with governance for any known or
suspected instances of fraud;
• Discussion amongst the engagement team as to how and where fraud might occur in the
financial statements; and
• Considering performance incentive schemes and performance targets and the related
financial statement areas impacted by these.
Based on our risk assessment, we considered the areas most susceptible to fraud to be the
valuation of unquoted investments and management override of controls.
Our procedures in respect of the above included:
• The procedures set out in the Key Audit Matters section above;
• Obtaining independent evidence to support the ownership of a sample of investments;
• Recalculating investment management fees in total;
• Obtaining independent confirmation of bank balances; and
• Reviewing the appropriateness of journals posted in the preparation of the financial
statements by agreeing to supporting documentation and evaluating whether there was
evidence of bias by the Investment Manager and Directors that represented a risk of
material misstatement due to fraud.
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Independent Auditor’s Report
66
We also communicated relevant identified laws and
regulations and potential fraud risks to all engagement
team members who were all deemed to have appropriate
competence and capabilities and remained alert to any
indications of fraud or non-compliance with laws and
regulations throughout the audit.
Our audit procedures were designed to respond to risks
of material misstatement in the financial statements,
recognising that the risk of not detecting a material
misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are inherent
limitations in the audit procedures performed and the
further removed non-compliance with laws and regulations
is from the events and transactions reflected in the financial
statements, the less likely we are to become aware of it.
A further description of our responsibilities is available
on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
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.
Vanessa-Jayne Bradley (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, United Kingdom
29 June 2023
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Financial Statements
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Income Statement
for the year ended 31 March 2023
For the year ended 31 March 2023 (audited)
Realised/unrealised gains on investments
Income
Interest write-offs
Investment Manager’s fees
Other expenses
(Loss)/profit before tax
Tax
(Loss)/profit attributable to equity shareholders
Return per share (pence)
The total column of this Income Statement represents
the profit and loss account of the Company, prepared
in accordance with Financial Reporting Standard 102
(“FRS 102”). The supplementary revenue and capital return
columns are prepared in accordance with the Statement
of Recommended Practice, “Financial Statements of
Investment Trust Companies and Venture Capital Trusts"
(‘the SORP’) and updated in 2022 with consequential
amendments. A separate Statement of Comprehensive
Income has not been prepared as all comprehensive
income is included in the Income Statement.
All the items above derive from continuing operations
of the Company.
For the year ended 31 March 2022 (audited)
Realised/unrealised gains on investments
Income
Interest write-offs
Investment Manager’s fees
Performance Incentive fee
Other expenses
(Loss)/profit before tax
Tax
The notes on pages 72 to 84 are an integral part of the
Financial Statements.
(Loss)/profit attributable to equity shareholders
Return per share (pence)
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
68
Note
12
6
7
8
9
11
Note
12
6
7
7
8
9
11
Revenue
£’000
1,826
(339)
(1,037)
(735)
(285)
–
(285)
(0.1)
Revenue
£’000
–
2,204
(569)
(835)
–
(1,186)
(386)
–
(386)
(0.3)
Capital
£’000
(5,861)
–
–
(3,112)
–
(8,973)
–
(8,973)
(5.3)
Capital
£’000
27,755
–
–
(2,506)
(377)
(378)
24,494
–
24,494
19.6
Total
£’000
(5,861)
1,826
(339)
(4,149)
(735)
(9,258)
–
(9,258)
(5.4)
Total
£’000
27,755
2,204
(569)
(3,341)
(377)
(1,564)
24,108
–
24,108
19.3
Balance Sheet
as at 31 March 2023
The Financial Statements were approved by the Directors
and authorised for issue on 29 June 2023 and signed on their
behalf by:
Jonathan Djanogly
Director
Fixed assets
Investments
Current assets
Debtors
Funds held by Administrator
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current assets
Creditors: amounts falling due after more than one year
Net assets
Capital and reserves
Called up share capital
Share premium account
Capital redemption reserve
Special reserves
Capital reserves
Revenue reserves
Total shareholders’ funds
Company registered number: 08307631
Net asset value per B Ordinary share (pence)
The notes on pages 72 to 84 are an integral part of the
Financial Statements.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
69
Note
31.03.23
£’000
31.03.22
£’000
12
14
15
16
17, 18
18
18
18
18
18
19
177,029
161,445
329
7,903
32,489
40,721
(692)
40,029
(978)
1,580
–
39,612
41,192
(1,427)
39,765
(625)
216,080
200,585
1,877
106,909
97
67,796
40,261
(860)
1,592
74,131
97
76,106
49,234
(575)
216,080
200,585
115.1
126.0
Statement of
Changes in Equity
for the year ended 31 March 2023
For the year ended 31 March 2023
Opening balance as at 1 April 2022
Investment disposal
Total comprehensive income for the period
Shares issued (Note 17)
Share issue expenses
Share reorganization
Share premium cancellation
Transfer of distributable reserves (Note 18)
Dividends paid
Non-distributable reserves
Distributable reserves
Restricted
Unrestricted
Called
up share
capital
£’000
Share
premium
£’000
Capital
redemption
reserve
£’000
Capital
reserve
£’000
Special
reserve
*
£’000
Special
reserve
£’000
Capital
* reserve
£’000
Revenue
reserve
£’000
1,592
–
–
285
–
–
–
–
–
74,131
–
–
34,749
(1,971)
–
–
–
–
63,248
97
–
5,291
– (5,575)
–
–
–
–
–
–
–
–
–
–
–
–
64,098
–
–
–
–
–
–
(12,185)
–
–
–
–
12,185
–
(8,310)
12,008 (14,014)
– (5,291)
– (3,398)
(575)
–
(285)
–
–
–
–
–
–
–
–
–
–
–
–
70
Total
reserves
£’000
200,585
–
(9,258)
35,034
(1,971)
–
–
–
(8,310)
Closing balance as at 31 March 2023
1,877 106,909
97
62,964
51,913
15,883 (22,703)
(860)
216,080
For the year ended 31 March 2022
Opening balance as at 1 April 2021
Investment disposal
Total comprehensive income for the period
1,142
–
–
11,722
–
–
2
36,367
– (18,296)
– 40,628
76,145
–
–
19,103 (11,627)
– 18,296
– (16,134)
(188)
–
(386)
132,666
–
24,108
Transfer of unrealised losses to realised losses for
period to 31 March 2021
Shares issued (Note 17)
Share issue expenses
Share bought back
Transfer of distributable reserves (Note 18)
Dividends paid
–
–
–
4,549
–
– (4,549)
544
64,726
– (2,317)
–
–
–
(95)
–
–
–
–
95
–
–
97
–
–
–
–
–
–
–
–
(12,047)
–
–
–
(9,852)
12,047
(9,290)
–
–
–
–
–
–
–
–
–
–
–
–
65,270
(2,317)
(9,852)
–
(9,290)
63,248
64,098
12,008 (14,014)
(575)
200,585
The notes on pages 72 to 84 are an integral part of the
Financial Statements.
Closing balance as at 31 March 2022
1,592
74,131
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
*Special reserve is available for distribution, subject to the restrictions tabled in Note 18 of the financial statements.
Statement
of Cash Flow
for the year ended 31 March 2023
Operating activities
Investment income received
Deposit and similar interest received
Prior year disposal receipt (Me+Em)
Investment Manager’s fees paid
Performance incentive fee
Directors’ fees
Other cash payments
Net cash outflow from operating activities
Cash flows from investing activities
Purchase of investments
Disposal of investments
Long term loan made
Long term loans repaid
Net cash outflow from investing activities
Net cash outflow before financing
Cash flows from financing activities
Share issue proceeds
Share issue expenses
Share buybacks paid
Equity dividend paid
Net cash inflow from financing
(Decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
71
Year ended
31.03.23
£’000
Year ended
31.03.22
£’000
Note
20
12
12
12
349
205
1,000
(4,965)
–
(144)
(679)
(4,234)
(20,573)
7
(2,145)
2,200
(20,511)
(24,745)
25,534
(917)
–
(6,995)
17,622
(7,123)
39,612
32,489
402
3
–
(2,327)
(377)
(115)
(1,293)
(3,707)
(27,170)
22,574
(9,150)
834
(12,912)
(16,619)
65,271
(2,317)
(9,852)
(9,291)
43,811
27,192
12,420
39,612
The notes on pages 72 to 84 are an integral part of the
Financial Statements.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
72
Notes to the Financial Statements
1. Company information
The Company is a Public Limited Company incorporated in England and Wales.
The registered address is 3 Cadogan Gate, London SW1X 0AS. The principal activity
is investing in unlisted growth companies.
2. Basis of preparation
These Financial Statements have been prepared in accordance with applicable
United Kingdom accounting standards, including Financial Reporting Standard 102 –
'The Financial Reporting Standard applicable in the United Kingdom and Republic of
Ireland' ('FRS 102'), and in accordance with the Statement of Recommended Practice
"Financial Statements of Investment Trust Companies and Venture Capital Trusts"
(‘the SORP’) and updated in 2022 with consequential amendments, to the extent that
they do not conflict with International Accounting Standards in conformity with the
Companies Act 2006. The Financial Statements have been prepared on the historical
cost basis except for the modification to a fair value basis for certain financial
instruments as specified in the accounting policies below.
The Financial Statements are prepared in pounds sterling, which is the functional
currency of the company.
3. Going concern
In accordance with FRC Guidance for Directors on going concern and liquidity risk, the
Directors have assessed the prospects of the Company and are of the opinion that, at
the time of approving the Financial Statements, the Company has adequate resources
to continue in business for at least 12 months from the date of approval of the
Financial Statements. In reaching this conclusion the Directors took into account the
nature of the Company’s business and Investment Policy, its risk management policies,
the diversification of its portfolio and the cash holdings. They have also reviewed the
budgets and forecasts, which have been subject to liquidity stress tests performed by
the Investment Manager, and consider that the Company has adequate financial
resources to enable it to continue in operational existence for the foreseeable future.
Therefore, the Company continues to adopt the going concern basis in preparing these
Financial Statements.
4. Significant judgements and estimates
The preparation of the Financial Statements may require the Board to make
judgements and estimates that affect the application of policies and reported amounts
of assets.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
The carrying value of the unquoted fixed asset investments requires estimates to
determine fair values. Estimates are based on historical experience and other
assumptions that are considered reasonable under the circumstances. However,
because of the inherent uncertainty of valuation, those estimated values may be
materially higher or lower than the values that would have been used had a ready
market for the investments existed. The availability of valuation techniques and
observable inputs can vary from investment to investment and are affected by
a wide variety of factors, including the type of investment, whether the investment
is new and not yet established in the marketplace, the liquidity of markets, and other
characteristics particular to the transaction. All unquoted investments are valued in
accordance with the International Private Equity and Venture Capital Valuation (“IPEV”)
Guidelines December 2018, this relies on subjective estimates such as appropriate
sector earnings multiples, forecast results of investee companies and liquidity or
marketability of the investments held. Although the estimates and the assumptions
applied are under continuous review to ensure that the fair values are appropriately
stated there is a risk that the carrying value of an unquoted investment may require
material adjustment either within the next year or in the longer term. More information
related to the unquoted investment and their valuations is included in Note 12 and the
Investment Manager’s Review.
No judgements have been applied in selection and application of this accounting
policy.
5. Accounting policies
A summary of the principal accounting policies, all of which have been applied
consistently throughout the year, is set out below.
a) Investments
The Company did not hold any listed investments at any time during the reporting
period. Investments in unlisted companies are held at fair value through profit or
loss by the Directors. Information about the portfolio is provided internally to the
Directors on that basis and the Directors consider the basis to be consistent with
the Company’s investment strategy.
Investments held by the Company have been valued in accordance with the
International Private Equity and Venture Capital Valuation (“IPEV”) Guidelines
December 2018. The portfolio valuations are prepared by the Investment Manager
and subsequently reviewed and approved by the Board.
In determining fair value, the Investment Manager uses various valuation methods,
including a combination of the price of recent investment and market-based
approach. The market-based approach ascribes a value to a business interest or
73
Notes to the Financial Statements
5. Accounting policies (continued)
shareholding by comparing it to similar businesses, using the principle of
substitution: that is, that a prudent purchaser would pay no more for an asset than
it would cost to acquire a substitute asset with the same utility and income earning
potential. The price of recent investment will only be used as fair value after careful
consideration of all the facts and circumstances concerning the underlying
investment. substitute asset with the same utility and income earning potential. The
price of recent investment will only be used as fair value after careful consideration
of all the facts and circumstances concerning the underlying investment.
When using the cost or price of recent investment in the valuations, the Company
looks to ‘re-calibrate’ this price at each valuation point by reviewing progress within
the investment, comparing against the initial investment thesis, assessing if there
are any significant events or milestones that would indicate the value of the
investment has changed and considering whether a market-based methodology
(i.e. using multiples from comparable public companies) or a discounted cashflow
forecast would be more appropriate.
The main inputs into the calibration exercise, and for the valuation models using
multiples, are revenue, EBITDA and P/E multiples (based on the most recent
revenue, EBITDA or earnings achieved and equivalent corresponding revenue,
EBITDA or earnings multiples of comparable companies), quality of earnings
assessments and comparability difference adjustments. Revenue multiples are often
used, rather than EBITDA or earnings, due to the nature of the Company’s
investments, being in growth and early-stage companies which are not normally
expected to achieve profitability or scale for a number of years. Where an
investment has achieved scale and profitability, the Company would normally then
expect to switch to using an EBITDA or earnings multiple methodology.
In the calibration exercise and in determining the valuation for the Company’s
equity instruments, comparable trading multiples are used. In accordance with the
Company’s policy, appropriate comparable companies based on industry, size,
developmental stage, revenue generation and strategy are determined and a trading
multiple for each comparable company identified is then calculated. The multiple is
calculated by dividing the enterprise value of the comparable group by its revenue,
EBITDA or earnings. The trading multiple is then adjusted for considerations such as
illiquidity, marketability and other differences, advantages and disadvantages
between the portfolio company and the comparable public companies based on
company specific facts and circumstances.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Realised surpluses or deficits on the disposal of investments are taken to realised
capital reserves, and unrealised surpluses and deficits on the revaluation of
investments are taken to unrealised capital reserves.
Those venture capital investments that may be categorised as associated
undertakings are carried at fair value as determined by the Directors in accordance
with the Company’s normal policy. Carrying investments at fair value is specifically
permitted under FRS102 Section 14.4.
b) Income
Dividends receivable on unlisted equity shares are brought into account when the
Company’s right to receive payment is established and it is probable that payment
will be received. Special dividends receivable are treated as a revenue receipt or a
capital receipt depending on the facts and circumstances of each particular case.
Fixed returns on non-equity shares and debt securities are recognised on an
accruals basis using the effective interest method. Such amounts are recognised
in the revenue column provided that it is probable that payment will be received
in due course.
c) Expenses
All expenses, including “Annual Running Costs”, are accounted for on an accruals
basis. In respect of the analysis between revenue and capital items presented within
the income statement, all expenses have been accounted for as revenue items
except as follows:
Expenses are split and presented partly as capital items where a connection with
the maintenance or enhancement of the value of the investments held can be
demonstrated, and accordingly the investment management fee is currently
allocated 25% to revenue and 75% to capital, which reflects the Directors’ expected
long-term view of the nature of the investment returns of the Company.
“Annual Running Costs” are the annual costs and expenses incurred by or on behalf
of the Company in the ordinary course of its business, excluding the management
fees payable to the Manager and including, but not limited to, the following items:
(i)
(ii)
auditor’s fees;
administration, accounting and company secretarial fees;
(iii)
share registrars’ fees;
(iv)
London Stock Exchange fees;
(v)
printing and mailing costs in respect of the year-end audited accounts, interim
accounts and circulars to shareholders;
74
Notes to the Financial Statements
5. Accounting policies (continued)
(vi)
fees in respect of regulatory announcements made through a Regulatory
Information Service;
(vii)
insurance premiums; and
(viii) remuneration of the Board (including employers’ national insurance
contributions);
(ix)
compliance and advisory fees; and
(x) market/organisational subscriptions
together with any irrecoverable value-added tax on those annual costs and expenses.
d) Performance fees
Performance fees predominantly relate to the capital performance of the portfolio
and are therefore charged 100% to capital. Performance fees are accrued and a
liability is recognised when they are likely to be payable and can be reliably measured.
e) Debtors
Short-term debtors (including short-term loans) are measured at amortised cost,
less any impairment.
f) Creditors
Short and long-term creditors are measured at amortised cost.
g) Taxation
Current tax is recognised for the amount of corporation tax payable in respect of the
taxable profit for the current or past reporting periods using the tax rates and laws
that have been enacted or substantively enacted by the reporting date. The tax
effect of different items of income/gain and expenditure/loss is allocated between
capital and revenue return on the “marginal” basis as recommended in the SORP.
Any tax relief obtained in respect of management fees allocated to capital is
reflected in the capital column of the Statement of Comprehensive Income and
a corresponding amount is charged against the revenue column. The tax relief
is the amount by which corporation tax payable is reduced as a result of these
capital expenses.
Deferred tax is recognised in respect of all timing differences at the reporting date,
except as otherwise indicated. Deferred tax assets are only recognised to the extent
that it is probable that they will be recovered against the reversal of deferred tax
liabilities or other future taxable profits.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Deferred tax is calculated using the tax rates and laws that have been enacted
or substantively enacted by the reporting date that are expected to apply to the
reversal of the timing difference.
No asset or liability has been recognised for deferred tax in relation to capital gains or
losses on revaluing investments as the Company is exempt from corporation tax in
relation to capital gains or losses as a result of qualifying as a Venture Capital Trust.
The tax expense/(income) is presented either in the Income Statement or Statement
of Changes in Equity depending on the transaction that resulted in the tax expense/
(income). Deferred tax liabilities are presented within provisions for liabilities and
deferred tax assets within debtors.
h) Financial instruments
The Company has elected to apply the provisions of Section 11 ‘Basic Financial
Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all
of its financial instruments.
The Company’s financial instruments comprise its investment portfolio, cash
balances and most debtors and creditors. These financial assets and financial
liabilities are carried either at fair value or, in the case of debtors, creditors and
cash, using amortised cost.
i) Cash and cash equivalents
Cash comprises cash and demand deposits. Cash equivalents, which include bank
overdrafts, are short term, highly liquid investments that are readily convertible to
known amounts of cash, are subject to insignificant risks of changes in value, and
are held for the purpose of meeting short term cash commitments.
6. Income
Interest receivable – revenue
– from bank deposits
– from loan stock
Dividends receivable
Other income
2023
£’000
205
1,438
175
8
1,826
2022
£’000
3
2,030
149
22
2,204
Notes to the Financial Statements
7. Investment Manager’s fees
Annual management fee
Performance fee
Total
2023
£’000
4,149
–
4,149
2022
£’000
3,341
377
3,718
Pembroke Investment Managers LLP has been appointed as the Company’s Investment
Manager. This appointment shall continue until terminated by the expiry of not less
than 12 months’ notice in writing given by either party. The appointment may also be
terminated in circumstances of material breach by either party. The annual management
fee is 2% of net assets calculated quarterly. The performance fee is based on
investment exits and only payable on a profitable exit and subject to further conditions.
Details of the appointment can be found in the Strategic Report on page 43.
75
8. Other expenses
Other expenses include:
Annual Running Costs
Company secretarial fees and administration fees
Directors’ remuneration
Legal and professional fees
Printing and stationery
Auditor’s remuneration – audit of Statutory Financial Statements
Insurance
Employer’s NI on Directors’ remuneration
London Stock Exchange fees
Registrar fees
Other costs
Irrecoverable VAT
Total Annual Running Costs
Trail commission payable on funds raised
Other costs
Total costs and expenses
2023
£’000
2022
£’000
170
105
111
62
68
45
9
9
18
56
82
735
–
–
146
105
115
61
46
45
10
7
7
51
67
660
525
379
735
1,564
The Company has no employees other than the Directors.
Information relating to Directors’ remuneration can be found in the audited section
of the Directors’ Remuneration Report on page 53.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Notes to the Financial Statements
9. Tax
a) Analysis of tax charge
Current year charge:
Revenue charge
Credited to capital return
Current tax charge (Note 9b)
Prior year charge:
Revenue charge
Credited to capital return
Total current and prior year tax charge
b) Factors affecting tax charge for the year
Profit/(loss) on ordinary activities before taxation
Effect of:
Corporation tax at 19% (2022: 19%)
Non-taxable gains/(losses) on investments
Non-taxable dividends
Current year losses carried forward
Other movements
Tax charge for year (Note 9a)
2023
£’000
2022
£’000
10. Dividends paid
Dividends recognised as distributions paid to equity holders during the year:
–
–
–
–
–
–
2023
£’000
(9,258)
(1,759)
1,113
(33)
676
3
–
–
–
–
–
–
–
2022
£’000
24,108
–
4,580
(5,274)
(28)
722
–
–
Special dividend on B Ordinary shares for the year ended 31 March 2021
of 4.0 pence per share
Final dividend on B Ordinary shares for the year ended 31 March 2021
of 3.0 pence per share
Interim dividend on B Ordinary shares for the year ended 31 March 2022
of 5.0 pence per share (made of cash paid and DRIS)
Dividends paid or payable in respect of the financial year:
Interim dividend on B Ordinary shares for the year ended 31 March 2022
of 5.0 pence per share
Interim dividend on B Ordinary shares for the year ended 31 March 2023
of 2.5 pence per share (made of cash paid and DRIS) – payable on 30 May 2023
All dividends are paid from the distributable special reserve.
76
2023
£’000
–
–
8,310
8,310
2022
£’000
5,118
4,172
–
9,290
2023
£’000
2022
£’000
–
8,310
4,723
4,723
–
8,310
There is no potential liability to deferred tax. No deferred tax asset has been
recognised on surplus expenses carried forward as it is not envisaged that any such
tax will be recovered in the foreseeable future. The total losses carried forward are
£13,378,211 (2022: £9,822,741) and the value of the unrecognised deferred tax in
relation to these is £3,344,553 (2022: £2,455,685). This is calculated using a
corporation tax rate of 25% (2022:25%) which is the rate at which it is deemed that
any losses would be utilised.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Notes to the Financial Statements
11. Return per share
12. Investments
77
Revenue
2023
Capital
Earnings per share (pence)
(0.1)
(5.3)
Total
(5.4)
Revenue
2022
Capital
(0.3)
19.6
Total
19.3
Basic revenue return per share is based on the net loss after taxation of £284,791
(2022: £386,288 loss) and on 170,716,018 (2022: 125,054,507) shares, being the
weighted average number of shares in issue during the year.
Basic capital return per share is based on the net capital loss after taxation of
£8,973,206 (2022: £24,493,606 gain) and on 170,716,018 (2022: 125,054,507) shares,
being the weighted average number of shares in issue during for the year.
Movements in investments during the year are summarised as follows:
Opening valuation:
Cost at 31 March 2022 (after realised losses)
Unrealised gains at 31 March 2022
Unrealised losses on loan notes at 31 March 2022
Interest rolled up in fixed income investments
Valuation at 31 March 2022
Movements in the year:
Purchases at cost
Loans repaid
Loans converted to equity
Unrealised losses
Realised losses on disposals
Interest rolled up in fixed income investments
Interest received
Shares
£’000
Loan stock
£’000
Total
£’000
77,971
63,534
–
–
15,081
–
–
4,859
93,052
63,534
–
4,859
141,505
19,940
161,445
20,573
–
2,750
(283)
(5,485)
–
–
2,145
(2,200)
(2,750)
–
(100)
1,053
(119)
22,718
(2,200)
–
(283)
(5,585)
1,053
(119)
Total movements in year
17,555
(1,971)
15,584
Closing valuation:
Cost at 31 March 2023 (after realised losses)
Unrealised gains at 31 March 2023
Unrealised losses on loan notes at 31 March 2023
Interest rolled up in fixed income investments
95,809
63,251
–
–
12,177
–
–
5,792
107,986
63,251
–
5,792
Valuation at 31 March 2023
159,060
17,969
177,029
As at 31 March 2023, the Company had no arrangements in place to dispose of any
investments.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
78
Notes to the Financial Statements
12. Investments (continued)
During the year, the following changes in valuation of unquoted shares were
considered material:
Carrying
value at
31.03.22
£’000
2,891
19,613
10,376
9,273
1,592
2,658
5,720
13,684
7,426
5,260
4,486
–
–
–
–
–
–
Additions
in the year
£’000
Increase/
(decrease) in
valuation
£’000
Carrying
value at
31.03.23
£’000
–
–
–
–
–
1,000
–
–
–
–
3,000
1,150
1,500
1,800
2,500
1,500
3,000
(2,573)
10,071
(3,833)
(1,976)
(1,592)
(229)
355
841
308
(1,698)
–
534
–
–
–
–
–
318
29,684
6,543
7,297
–
3,429
6,075
14,525
7,734
3,562
7,486
1,684
1,500
1,800
2,500
1,500
3,000
United Fitness Brands
Lyma
Thriva
N is for Nursery
Stitch & Story
Heist
Stillking
Popsa
OnePlan
Coat
Peckwater Brands
Eave
My Expert Midwife
Auddy
BlooBloom
Ro&Zo
Seatfrog
The Company is required to report the category of fair value measurements used in
determining the value of its investments, to be disclosed by the source of inputs, using
a three-level hierarchy:
Quoted market prices in active markets – “Level 1”
Inputs to Level 1 fair values are quoted prices in active markets for identical assets.
An active market is one in which quoted prices are readily and regularly available and
those prices represent actual and regular occurring market transactions on an arm’s
length basis. The Company has no investments classified in this category.
Valued using models with significant observable market parameters – “Level 2”
Inputs to Level 2 fair values are inputs other than quoted prices included within
Level 1 that are observable for the asset, either directly or indirectly. The Company
has no investments classified in this category.
Valued using models with significant unobservable market parameters – “Level 3”
Inputs to Level 3 fair values are unobservable inputs for the asset. Unobservable inputs
may have been used to measure fair value to the extent that observable inputs are not
available, thereby allowing for situations in which there is little, if any, market activity
for the asset at the measurement date (or market information for the inputs to any
valuation models). As such, unobservable inputs reflect the assumptions the Company
considers that market participants would use in pricing the asset. The Company’s
unquoted equities and loan stock are classified within this category. As explained in
Note 5, unquoted investments are valued in accordance with the IPEV guidelines.
The fair value of all investments is assessed by the Company and, where appropriate,
a revaluation against cost is made. The basis of revaluation may be based on a sales
or profit multiple, or on market information that supersedes that held at the time of
acquiring the investment. Details of the basis of revaluation are included in the
Investment Manager’s Review on pages 23 to 40
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
79
Notes to the Financial Statements
13. Significant interests
As at the balance sheet date the company held significant investments amounting to 20% or more of the equity capital of an undertaking and voting rights, in the following companies:
Company
Legal name
Holdings*
Kinteract
Bella Freud
Sourced Market
Heist
Troubadour
Hackney Gelato
Stitch & Story
PlayerLayer
Eave
Kat Maconie
Coat
Alexa Chung
Chucs Restaurants
Dropless
Roto VR
Floom
Ro&Zo
Secret Food Tours
Annie Mals
Smartify
Lyma
Popsa
Boat
Make It Plain Ltd
Bella Freud Ltd
SP Market Limited
Carousel Ventures Limited
Troubadour Goods Limited
Hackney Gelato Limited
Stitch & Story Ltd
Dreamsport Limited
Eartex Ltd
Kat Maconie Limited
Coat Trading Ltd
Alpha Charlie Ltd
Chucs Restaurants Limited
Dropless Ltd
Roto VR Ltd
Floom Ltd
Ro&Z0 Limited
Essor Ltd
Annie Mals Limited
Smartify Holdings Ltd
Lyma Life Limited
Popsa Holdings Limited
Boat International Business Limited
48.8%
46.4%
40.5%
40.2%
37.3%
36.1%
34.5%
34.5%
34.4%
31.6%
27.7%
24.5%
25.0%
22.6%
22.1%
24.4%
21.4%
20.5%
20.0%
20.0%
19.7%
18.0%
17.9%
Equity investment
Ordinary
£'000
Preference
£'000
Investment in
loan stock
£'000
500
3,379
1,630
748
1,740
3,200
4,000
5,852
2,650
1,820
3,000
4,122
2,220
2,375
1,750
–
1,500
2,000
500
1,000
2,000
5,200
2
2,635
–
2,250
6,500
–
–
–
–
1,250
–
–
–
–
–
–
4,415
–
–
–
–
–
–
1,698
500
950
3,550
1,100
800
–
100
–
–
1,030
–
–
–
2,000
–
145
–
–
–
500
–
–
1,550
Total
£'000
3,635
4,329
7,430
8,349
2,540
3,200
4,100
5,852
3,900
2,850
3,000
4,122
2,220
4,375
1,750
4,560
1,500
2,000
500
1,500
2,000
5,200
3,250
* The percentage of equity held for these companies is the fully diluted figure.
** The financial information is derived from publicly available Report and accounts, where available. In addition
to the reported net assets (above), the following information on turnover and operating profit is publicly available
for Popsa and Boat.
Details of holdings may be found in the Investment Manager’s Review and Investment Portfolio on pages 15 to 40.
Financial Information**
Year
ended
Net Assets
£'000
Location
31 December 2021
31 March 2022
In liquidation
31 March 2021
31 December 2021
31 August 2022
In liquidation
In administration
31 March 2022
31 March 2022
31 March 2022
31 March 2022
30 June 2021
31 December 2021
31 August 2022
31 December 2022
30 November 2021
31 January 2022
No available report & accs
31 December 2022
31 December 2021
31 December 2021
31 December 2021
766
913
–
8,994
(605)
749
–
–
(207)
(1,171)
(379)
(301)
1,047
555
799
1,746
(548)
1,126
–
1,117
2,892
12,029
(4,409)
Melton Mowbray, UK
London, UK
London, UK
London, UK
London, UK
London, UK
Manchester, UK
Manchester, UK
London, UK
Kent, UK
London, UK
London, UK
London, UK
London, UK
Borehamwood, UK
London, UK
Waltham Cross, Herts, UK
Dorset, UK
Manchester, UK
London, UK
London, UK
Surbiton, Surrey, UK
London, UK
Year ended
Financial Information (£'000)
Turnover
Operating profit
Popsa
Boat
31 December 2021
31 December 2021
25,354
8,351
(3,746)
(1,216)
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
80
Notes to the Financial Statements
14. Debtors
Amounts falling due within one year:
Prepayments and accrued income
Other debtors
15. Creditors: amounts falling due within one year
Sundry creditors and accruals
2023
£’000
66
263
329
2023
£’000
692
16. Creditors: amounts falling due after more than one year
2023
£’000
978
Non-current creditors
17. Called up share capital
Allotted, called-up and fully paid at 1 April 2022:
Issued during the year
Shares purchased for cancellation
At 31 March 2023
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
2022
£’000
141
1,439
1,580
2022
£’000
1,427
2022
£’000
625
Total shares
’000
159,234
28,440
–
187,674
As at 31 March 2023, there were 187,673,741 (2022: 159,234,647) shares allotted,
called up and fully paid. During the year, the Company issued 28,439,094 shares under
an offer for subscription and the Dividend Re-Investment Scheme as detailed below:
Allotted, called up and fully paid:
5 April 2022
12 April 2022
13 May 2022
29 July 2022 (DRIS)
5 October 2022
26 October 2022
14 December 2022
31 January 2023
28 February 2023
31 March 2023
No of
shares
(’000)
3,568
1,963
1,437
1,087
2,104
2,701
4,093
2,655
2,180
6,652
Nominal
value
£’000
Consideration
received
£’000
36
20
14
11
21
27
41
27
22
66
4,558
2,487
1,820
1,315
2,543
3,270
4,959
3,236
2,680
8,166
28,440
285
35,034
After the year end, the Company bought back for cancellation, 5,234,964 shares, in
April 2023.
18. Reserves
Called-up share capital represents the nominal value of shares that have been issued.
Share premium account includes any premiums received on issue of share capital less
any transaction costs associated with the issuing of shares and any amounts
transferred to the special reserve.
The capital redemption reserve accounts for amounts by which the issued share capital
is diminished through the repurchase and cancellation of the Company’s own shares.
Capital reserves includes all current and prior period realised and unrealised
movements in the fair value of investments and all costs which are considered
capital in nature. As at 31 March 2023 there were realised losses of £22,703,902
(2022 Losses: £14,014,128) and £62,963,602 of unrealised, non-distributable gains
(2022: £63,247,034).
81
Notes to the Financial Statements
18. Reserves (continued)
20. Reconciliation of profit before taxation to net cash outflow from
Revenue reserve includes all current and prior period retained profits and losses.
The balance on the account is distributable.
Special reserve includes amounts transferred from the share premium account on
26 March 2014 and 22 December 2020. Special reserve is a distributable reserve that
is subject to certain restrictions under the VCT rules.
The restricted distributable reserves will become unrestricted on the following dates:
Date
1 April 2021
1 April 2022
1 April 2023
1 April 2024
Amount
£’000
12,047
12,185
44,343
7,570
19. Net asset value per share
The net asset values per share at the year-end were as follows:
2023
Net asset values attributable
2022
Net asset values attributable
Net assets
(£’000)
Net assets
per share (p)
Net assets
(£’000)
Net assets
per share (p)
B Ordinary Shares
216,080
115.1
200,585
126.0
Net asset value per B Ordinary share is based on net assets at the year end and on
187,673,741 (2022: 159,234,647) B Ordinary shares, being the number of B Ordinary
shares in issue at the year end.
operating activities
Profit/(loss) before taxation for the year
Net (gain)/loss on investments
Decrease/(increase) in debtors (excluding share issue proceeds and short-term loans)
Increase in interest rolled up in fixed income investments
Increase in creditors and accruals (excluding share issue expenses,
short-term loans and fixed asset investment balances)
Net cash outflow from operating activities
2023
£’000
(9,258)
5,861
67
(933)
2022
£’000
24,108
(27,755)
(86)
(1,240)
29
1,265
(4,234)
(3,707)
21. Financial instruments
The Company’s financial instruments comprise:
(i) Equity and fixed-interest investments that are held in accordance with the
Company’s investment objectives as set out in the Directors’ Report; and
(ii) Cash, liquid resources, short term debtors and creditors that arise directly from
the Company’s operations.
Investments are made in a combination of equity and loans. Surplus funds are held
on bank deposit. It is not the Company’s policy to trade in financial instruments
or derivatives.
Fixed asset investments are valued at fair value through profit or loss. Unquoted
investments are valued by the Directors using rules consistent with International
Private Equity and Venture Capital Association (“IPEV”) guidelines. The fair value of all
other financial assets and liabilities is represented by their carrying value in the
balance sheet. Further details of the bases on which financial instruments, including
investments, are held may be found at Notes 5 and 12 and in the Investment Manager’s
Review on pages 16 to 40.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Notes to the Financial Statements
21. Financial instruments (continued)
Credit risk
82
The Company has exposure to credit risk in respect of its loan stock investments.
This risk is managed through the due diligence process adopted when making loan
investments to unquoted companies and through regular monitoring of the investee
companies by the Investment Manager. The selection of credit institution at which to
hold cash balances is made by the Investment Manager and monitored by the Board.
The credit risk is managed by ensuring cash is held with an institution or institutions
with a Standard & Poors’ long-term credit rating of BBB or better. The maximum
exposure to credit risk at the balance sheet date was £58,690,000 (2022: £61,919,000).
The Company has banking relationships with Barclays Bank plc and Metro Bank plc.
Investment valuation risk
The Board manages the investment valuation risk inherent in the Company’s portfolio
by maintaining an appropriate spread of risk and by ensuring full and timely access to
relevant information from the Investment Manager. The Board reviews the investment
performance and financial results, as well as compliance with the Company’s
investment objectives. The Board seeks to ensure that an appropriate proportion of the
Company’s portfolio is invested in cash and readily realisable securities which are
sufficient to meet any funding commitments which may arise. The Company does not
use derivative instruments to hedge against market risk.
The equity and fixed interest stocks of the Company’s unquoted investee companies
are not traded and, as such, their prices are more uncertain than those of more
frequently traded stocks. It is estimated that a 30% fall in the carrying value of the
Company’s unquoted investments would reduce profit before tax for the year and the
Company’s net asset value per share by £53,109,000 and 28.3p (2022: £48,434,000
and 30.4p) respectively.
A 30% estimate is considered to be an appropriate illustration given historical volatility
and market expectations of future performance.
The Company held the following categories of financial instruments at 31 March 2023:
Assets at fair value through profit or loss:
Equity investments
Loan stock
Assets measured at amortised cost:
Cash at bank
Funds held by Administrator *
Other debtors
Short term loans
Liabilities measured at amortised cost:
Creditors
2023
Cost
£’000
Fair value
£’000
2022
Cost
£’000
Fair value
£’000
113,090
15,836
159,060
17,969
92,477
18,631
141,505
19,940
32,489
7,903
329
–
32,489
7,903
329
–
39,612
–
1,580
–
39,612
–
1,580
–
(1,670)
(1,670)
(2,052)
(2,052)
167,977
216,080
150,248
200,585
* Funds held by Administrator related to the allotment on 31 March 2023.
Payment has been received on 11 April 2023.
Loans to investee companies are treated as fair value through profit or loss and are
included in the investment portfolio.
Unquoted investments account for 100% of the investment portfolio by value. The
investment portfolio has a 100% concentration of risk towards small UK based, sterling
denominated companies and represents 82% (2022: 81%) of net assets at the year end.
All financial liabilities due within one year and expected to be settled within six
months of the period and in accordance with normal credit terms.
The main risks arising from the Company’s financial instruments are credit risk,
investment valuation risk, interest rate risk, foreign exchange risk on portfolio
companies own cash flows, and liquidity risk. All assets and liabilities are denominated
in sterling, hence there is no currency risk.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Notes to the Financial Statements
21. Financial instruments (continued)
Interest rate risk
The Company’s financial assets include loan stock and bank deposits which are interest
bearing, at a mix of fixed and variable rates. As a result, the Company is exposed to
interest rate risk due to fluctuations in prevailing levels of market interest rates.
The Board seeks to mitigate this risk through regular monitoring of the Company’s
interest-bearing investments. The Company does not use derivative instruments to
hedge against interest rate risk.
As at 31 March 2023, the Company’s financial assets by value, excluding short-term
debtors and creditors which are not exposed to interest rate risk, comprised:
Financial assets
£’000
%
Weighted
average
interest rate
%
Interest
rate
Fixed
term
years
Venture capital investments
Ordinary shares
Loan stock interest
Loan stock interest
Loan stock interest
Loan stock interest
Loan stock interest
Loan stock interest
Loan stock
Loan stock
Loan stock
Loan stock
Loan stock
Loan stock
Loan stock
Loan stock
Loan stock
Loan stock
155,860
65
50
19
1
2
3
290
500
4,237
2,356
250
500
500
500
150
200
74.5
–
–
–
–
–
–
0.1
0.2
2
1.1
0.1
0.2
0.2
0.2
0.1
0.1
n/a
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
n/a
9
10
8
8
8
8
9
8
12
9
8
10
8
8
8
8
n/a
n/a
n/a
n/a
n/a
n/a
n/a
5
5
5
5
5
5
5
5
5
5
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Financial assets
Loan stock
Loan stock interest
Loan stock
Loan stock
Loan stock
Loan stock
Loan stock
Loan stock
Loan stock
Loan stock
Loan stock
Loan stock
Loan stock interest
Loan stock interest
Loan stock interest
Loan stock
Loan stock
Loan stock interest
Loan stock interest
Loan stock
Loan stock
Loan stock
Loan stock
Loan stock interest
Loan stock
Loan stock
Loan stock
Bank deposits
83
Weighted
average
interest rate
%
Interest
rate
Fixed
term
years
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Floating
Floating
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Floating
8
8
12
12
10
10
10
8
8
10
10
8
12
11.5
11.5
8
8
7
10
8
12
8
8
8
12
10
8
0.15
5
5
5
5
5
5
5
5
5
5
5
5
5
n/a
n/a
5
5
n/a
n/a
5
5
5
5
5
5
5
5
n/a
£’000
250
2
155
165
187
429
137
186
183
345
305
342
99
3
1
134
879
101
106
1104
2,643
2,197
785
36
152
100
520
32,489
%
0.1
–
0.1
0.1
0.1
0.2
0.1
0.1
0.1
0.2
0.1
0.2
–
–
–
0.1
0.4
0.1
0.1
0.5
1.3
1
0.4
–
0.1
0.1
0.2
15.5
209,518
100.00
Notes to the Financial Statements
21. Financial instruments (continued)
24. Related parties
84
The Company retains Pembroke Investment Managers LLP (“PIM”) as its Investment
Manager.
David Till, a non-executive Director of the Company, is a member of PIM. During the
year ended 31 March 2023, £4,148,992 was payable to PIM for Investment Manager
services of which £242,239 was owed to PIM at the year end (2022: £3,341,514, of
which £1,058,506 was owed at the year end).
The remuneration and shareholdings of the Directors, who are key management
personnel of the Company, is disclosed in the Directors’ Remuneration Report on
page 53.
25. Events after the reporting period
Non‑adjusting events
Since the Company’s year end, the following transactions have taken place:
• The Company bought back 5,234,964 B Ordinary Shares at 112.86p.
• The Company has made investments of £1,800,000 in HotelMap.com Ltd, £2,000,000
in Appraise Me Ltd, £375,000 in Dropless Ltd, £1,999,993 in COAT Trading Ltd and
£99,996 in Rubies in the Rubble Ltd.
• 4,228,714 shares were allotted under the share offer on 5 April 2023
• 655,547 shares were allotted under the share offer on 6 April 2023
• 1,600,069 shares were allotted under the share offer on 28 April 2023
• 681,627 shares were allotted under the Company’s Flexible Dividend
Reinvestment Scheme.
It is estimated that, if the floating interest rate fell to 0%, pre-tax profit for the year
would fall by 0.53% (2022: 0.25%) on an annualised basis.
The risk from future fluctuations in interest rate movements should be mitigated by
the Company’s intention to complete its investment strategy and to hold a majority
of its investments in instruments which are not directly exposed to market interest
rate changes.
Liquidity risk
The investments in equity and fixed interest stocks of unquoted companies that the
Company holds are not traded and thus are not readily realisable. At times, the
Company may be unable to realise its investments at their carrying values because
of an absence of willing buyers. The Company’s ability to sell investments may
also be constrained by the requirements set down for VCTs. To counter such liquidity
risk, sufficient cash and money market funds are held to meet running costs and
other commitments.
22. Management of capital
The Board of Directors considers the Company’s net assets to be its capital and the
Company does not have any externally imposed capital requirements.
The Company’s objectives when managing capital are to safeguard the Company’s
ability to continue as a going concern, satisfy the relevant HMRC requirements and
provide at least adequate returns for shareholders.
As a VCT, the Company must have, and must continue to have, within three years of
raising its capital at least 80% by value of its investments in VCT qualifying holdings
which are a relatively high risk asset class of small UK companies. In satisfying this
requirement, the Company’s capital management scope is restricted. Subject to this
restriction, the Company directs investment policy and may adjust dividends, return
capital to shareholders, issue new shares or sell assets to maintain the level of liquidity
to remain a going concern.
23. Geographical analysis
The operations of the Company are wholly in the United Kingdom.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
85
Notice of Annual General Meeting
Notice is hereby given that the tenth annual general meeting of Pembroke VCT plc will be
held at 10.00 a.m. on Thursday, 28 September 2023 at 3 Cadogan Gate, London SW1X 0AS
for the purpose of considering and, if thought fit, passing the following resolutions (of which,
resolutions 1 to 8 will be proposed as ordinary resolutions and resolutions 9 to 12 will be
proposed as special resolutions).
It is the Board’s opinion that all resolutions are in the best interests of shareholders as a
whole and the Board recommends that shareholders should vote in favour of all resolutions.
Any shareholder who is in doubt as to what action to take should consult an appropriate
independent financial adviser authorised under the Financial Services and Markets Act 2000.
If you have sold or transferred all your shares in the Company, please forward this document
to the purchaser, transferee, stockbroker or other agent through whom the sale or transfer
was effected, for transmission to the purchaser or transferee.
If you are unable to attend in person, please consider viewing the live stream of the AGM
which the Board has arranged. To do so, please send an email to agm@pembrokevct.com
stating your wish to view the live stream. You will then be sent access details. The deadline
for requesting access to the stream is 21 September 2023.
The Board also encourages the submission by those who are unable to attend in person
of questions on either the Company or the portfolio to the Board via email to
agm@pembrokevct.com by 21 September 2023, being one week prior to the date of the AGM.
Answers will be published on the Company’s website at the time of the AGM.
Ordinary Resolutions
1. To receive the Directors’ and the Independent Auditor’s Reports and the Company’s
Financial Statements for the year ended 31 March 2023.
2. To receive and approve the Directors’ Remuneration Report for the year ended
31 March 2023.
3. To approve the Directors’ Remuneration Policy
4. To re appoint BDO LLP as auditor of the Company to hold office until the conclusion
of the next annual general meeting at which accounts are laid before the Company.
5. To authorise the Directors to fix the remuneration of the auditor.
6. To re-elect David Till as a Director of the Company.
7. That, in accordance with article 147 of the Company‘s articles of association (the
“Articles”) and in addition to existing authorities, the Directors of the Company be and are
hereby generally and unconditionally authorised in accordance with section 551 of the
Companies Act 2006 (the “Act”) to exercise all the powers of the Company to allot and
issue the following B Ordinary shares of 1 pence each in the capital of the Company
(“B Ordinary Shares”) pursuant to the terms and conditions of the dividend investment
scheme adopted by the Company on 3 December 2015 and in connection with any
dividend declared or paid in the period commencing on the date of this resolution 7 and
ending on the later of the date of the Company’s next annual general meeting or the
date falling 15 months after the date of the passing of this resolution:
B Ordinary Shares up to an aggregate nominal amount representing 10% of the issued
B Ordinary Share capital from time to time (approximately 18,960,473 B Ordinary Shares
at the date of this notice).
8. That, in addition to any existing authorities, in accordance with section 551 of the Act,
the Directors be and are hereby generally and unconditionally authorised to exercise all
the powers of the Company to allot:
a. B Ordinary Shares up to an aggregate nominal amount of £600,000 in connection
with offer(s) for subscription; and
b. B Ordinary Shares up to an aggregate nominal amount representing 20% of the issued
B Ordinary Shares from time to time; and
that, in connection with the use of the authority, the Directors may pay commission(s)
including in the form of fully or partly paid shares in accordance with article 9 of the
Articles and provided that this authority shall, unless renewed, extended, varied or
revoked by the Company, expire on the later of the date of the Company’s next annual
general meeting or the date falling 15 months after the date of the passing of this
resolution save that the Company may, before such expiry, make offers or agreements
which would or might require B Ordinary Shares to be allotted and the Directors may
allot B Ordinary Shares in pursuance of such offers or agreements notwithstanding that
the authority conferred by this resolution has expired.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
86
Notice of Annual General Meeting
Special Resolutions
9. That, in accordance with section 570(1) of the Act, the Directors be and are hereby given
power to allot or make offers or agreements to allot equity securities (as defined in
section 560 of the Act) for cash pursuant to the authorities conferred by resolution 7
above as if section 561 of the Act did not apply to any such allotment, and so that:
a. Reference to the allotment in this resolution shall be construed with section 560 of
the Act; and
b. The power conferred by this resolution shall enable the Company to make offers or
agreements before the expiry of said power which would or might require equity
securities to be allotted after the expiry of the said power and the Directors may allot
equity securities of such offers or agreements notwithstanding the expiry of such
power.
10. That, in accordance with section 570(1) of the Act, the Directors be and are hereby given
power to allot or make offers or agreements to allot equity securities (as defined in
section 560 of the Act) for cash pursuant to the authorities conferred by resolution 8
above as if section 561 of the Act did not apply to any such allotment, and so that:
a. Reference to the allotment in this resolution shall be construed with section 560 of
the Act, and
b. The power conferred by this resolution shall enable the Company to make offers or
agreements before the expiry of the said power which would or might require equity
securities to be allotted after the expiry of the said power and the Directors may allot
equity securities in pursuance of such offers or agreements notwithstanding the
expiry of such power.
11. That, subject to the approval of the High Court of Justice, the amount standing to the
credit of the share premium account of the Company as at 31 March 2023, be and is
hereby cancelled at the date the court order is made confirming such cancellation.
12. That the Company be and is hereby generally and unconditionally authorised within
the meaning of section 701 of the Act to make market purchases of B Ordinary Shares
provided that:
(i) the maximum number of B Ordinary Shares hereby authorised to be purchased is an
amount equal to 14.99% of the issued B Ordinary Share capital of the Company from
time to time;
(ii) the minimum price which may be paid for a B Ordinary Share is 1 pence per share,
the nominal amount thereof;
(iii) the maximum price which may be paid for a B Ordinary Share is an amount equal to
the higher of (a) 105% of the average of the middle market quotation per B Ordinary
Share taken from the London Stock Exchange Daily Official List for the five business
days immediately preceding the day on which such B Ordinary Share is to be
purchased and (b) the amount stipulated by Article 5(6) of the Market Abuse
Regulation.
(iv) the authority hereby conferred shall (unless previously renewed or revoked) expire
on the earlier of the AGM of the Company to be held in 2024 and the date which is
15 months after the date on which this resolution is passed; and
(v) the Company may make a contract or contracts to purchase its own B Ordinary Shares
under this authority before the expiry of the authority which will or may be executed
wholly or partly after the expiry of the authority, and may make a purchase of its own
B Ordinary Shares in pursuance of any such contract or contracts as if the authority
conferred hereby had not expired.
By Order of the Board
The City Partnership (UK) Limited
Company Secretary
29 June 2023
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
87
Appointment of proxy using hard copy Form of Proxy
5. These notes explain how to direct your proxy to vote on the resolutions or withhold
their vote.
To appoint a proxy using the Form of Proxy, the form must be:
• completed and signed;
• sent or delivered to The City Partnership (UK) Limited, The Mending Rooms,
Park Valley House, Park Valley Mills, Meltham Road, Huddersfield HD4 7BH; and
• received by The City Partnership (UK) Limited no later than 10.00 a.m. on 26 September
2023 in respect of the Annual General Meeting or, if the meeting is adjourned, by no later
than 48 hours prior to the adjourned Annual General Meeting.
In the case of a member which is a company, the Form of Proxy must be executed under
its common seal or signed on its behalf by an officer of the company or an attorney for
the company.
Any power of attorney or any other authority under which the Form of Proxy is signed
(or a duly certified copy of such power or authority) must be included with the Form of Proxy.
Electronic appointment of proxies
6. As an alternative to completing the hard copy Form of Proxy, you can appoint a proxy
electronically via the registrar’s on-line Proxy Voting App which may be found by copying
https://proxy-pembroke.cpip.io into your browser. You will need your City Investor Number
(CIN) and your Access Code which may be found either on the Form of Proxy or in the email
sent to you.
For an electronic proxy appointment to be valid, your appointment must be received by
The City Partnership (UK) Limited no later than 48 hours prior to the time of the meeting,
i.e. by 10.00 a.m. on 26 September 2023.
Notice of Annual General Meeting continued
Notes
Entitlement to vote
The right to vote at the Annual General Meeting is determined by reference to the register of
members 48 hours before the time of the Annual General Meeting. Accordingly, to be entitled
to vote, Shareholders must be entered in the register of members by close of business on
26 September 2023.
Appointment of proxies
1. As a member of the Company, you are entitled to appoint a proxy to exercise all or any
of your rights to attend, speak and vote at the Annual General Meeting.
For this purpose, you may use the Form of Proxy which will have been sent to you unless
you opted for electronic communications. As an alternative to completing the hard copy
Form of Proxy, Shareholders can appoint a proxy electronically on-line, as explained
below.
If you opted for electronic communications, then you will have been sent an email which
includes information on how to appoint a proxy electronically on-line.
You can only appoint a proxy using the procedures set out in these notes.
2. A proxy does not need to be a member of the Company. Details of how to appoint the chair
of the meeting or another person as your proxy using the Form of Proxy are set out in
these notes.
3. You may appoint more than one proxy provided each proxy is appointed to exercise rights
attached to different shares. You may not appoint more than one proxy to exercise rights
attached to any one share. To appoint more than one proxy, please complete a Form of
Proxy for each proxy specifying which of your shares the proxy will be acting in respect of.
4.
If you do not give your proxy an indication of how to vote on the resolutions, your proxy
will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain
from voting) as he or she thinks fit in relation to any other matter which is put before
the meeting.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
88
• By sending an e-mail to proxies@city.uk.com with a signed revocation attached to the
email such that the revocation would have been valid had it been sent by ordinary mail.
This email address should not be used for any other purpose unless expressly stated.
• By amending your proxy vote via the Proxy Voting App which may be found by copying
https://proxy-pembroke.cpip.io into your browser.
Whichever method is used, the revocation notice must be received by the Company no
later than 10.00 a.m. on 26 September 2023 in respect of the Annual General Meeting or,
if the meeting is adjourned, by no later than 48 hours prior to the adjourned Annual
General Meeting.
If you attempt to revoke your proxy appointment but the revocation is received after the
time specified then, subject to the paragraph directly below, your proxy appointment will
remain valid.
Communication
10. Except as provided above, members who have general queries about the meeting should
contact the Company Secretary by post at The City Partnership (UK) Limited, The Mending
Rooms, Park Valley House, Park Valley Mills, Meltham Road, Huddersfield HD4 7BH, or by
email at enquiries@city.uk.com (no other methods of communication will be accepted).
You may not use any electronic address provided either:
• in the notice of the Annual General Meeting; or
• any related documents (including the Form of Proxy),
to communicate with the Company for any purposes other than those expressly stated.
Notice of Annual General Meeting continued
Notes
Appointment of proxy by joint members
7.
In the case of joint shareholders, where more than one of the joint holders purports
to appoint a proxy, only the appointment submitted by the most senior holder will be
accepted. Seniority is determined by the order in which the names of the joint holders
appear in the Company’s register of members in respect of the joint holding (the first-
named being the most senior).
Changing proxy instructions
8. To change your proxy instructions simply submit a new proxy appointment using the
methods set out above. Note that the cut-off time for receipt of proxy appointments
(see above) also applies in relation to amended instructions; any amended proxy
appointment received after the relevant cut-off time will be disregarded.
Where you have appointed a proxy using the hard copy Form of Proxy and would like to
change the instructions using another hard copy Form of Proxy, please contact The City
Partnership (UK) Limited, The Mending Rooms, Park Valley House, Park Valley Mills,
Meltham Road, Huddersfield HD4 7BH.
If you submit more than one valid proxy appointment, the appointment received last
before the latest time for the receipt of proxies will take precedence.
Termination of proxy appointments
9. In order to revoke a proxy instruction you will need to inform the Company using one of
the following methods:
• By sending a signed hard copy notice clearly stating your intention to revoke your proxy
appointment to The City Partnership (UK) Limited, The Mending Rooms, Park Valley
House, Park Valley Mills, Meltham Road, Huddersfield HD4 7BH. In the case of a member
which is a company, the revocation notice must be executed under its common seal or
signed on its behalf by an officer of the company or an attorney for the company.
Any power of attorney or any other authority under which the revocation notice is
signed (or a duly certified copy of such power or authority) must be included with the
revocation notice.
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
89
Independent Auditor
BDO LLP
55 Baker Street
London W1U 7EU
VCT Status Adviser
Philip Hare & Associates LLP
Suite C, First Floor
4-6 Staple Inn
London WC1V 7QH
Corporate Information
Directors
(all non‑executive)
Independent
Jonathan Simon Djanogly (Chair)
Laurence Charles Neil Blackall
Mark Stokes
Louise Wolfson
Non‑independent
David John Till
All of the registered office and
principal place of business
3 Cadogan Gate
London SW1X 0AS
www.pembrokevct.com
Investment Manager
Pembroke Investment Managers LLP
3 Cadogan Gate
London SW1X 0AS
Bankers
Barclays Bank plc
1st Floor, 99 Hatton Garden
London EC1N 8DN
Metro Bank PLC
One Southampton Row
London WC1B 5HA
Lawyers
Howard Kennedy LLP
1 London Bridge
London SE1 9BG
Registrar
The City Partnership (UK) Limited
The Mending Rooms
Park Valley Mills
Meltham Road
Huddersfield
HD4 7BH
Company Secretary
The City Partnership (UK) Limited
110 George Street
Edinburgh
EH2 4LH
Reporting calendar
for the year ending 31 March 2024
Results announced:
Interim – November 2023
Annual – June 2024
Pembroke VCT plc Annual Report and Financial Statements for the year ended 31 March 2023
Designed by & inc.
3 Cadogan Gate, London SW1X 0AS
Incorporated in England and Wales
with registered number 08307631