Seneca Growth Capital VCT Plc
Annual Report
and Financial Statements
For the year ended 31 December 2020
Company No: 04221489
Contents
Financial Headlines ………………………………………………………………………………………….....
Financial Summary ……………………………………………………………………………………………..
Strategic Report ...……………………………………………………………………………………………....
Our Strategy ……….…………………………………………………………………………………..
Chairman’s Statement ..……...……………………………………………………………………....
Investment Manager’s Report ……..………………………………………………………………...
Business Review ………………………………………………………….…………………………..
Details of Directors ……………………………………………………………………………………………..
Directors’ Report ………………………………………………………………………………………………..
Corporate Governance …………………………………………………………………………………………
Audit Committee Report ……………………………………………………………………………………….
Directors’ Remuneration Report and Policy …………………………………………………………..…….
Directors’ Responsibilities Statement ………………………………………………………………………...
Report of the Independent Auditor to the Members of Seneca Growth Capital VCT Plc ……………....
Combined Income Statement ………….………………………………………………………………….......
Ordinary Share Income Statement (non-statutory analysis) ……………………………………………….
B Share Income Statement (non-statutory analysis) ……………………………………………………….
Combined Statement of Changes in Equity ……………………………………….………………………...
Ordinary Shares – Statement of Changes in Equity ………………………………………………………..
B Shares – Statement of Changes in Equity ………………………………………………………………...
Combined Balance Sheet ……………………………….……………………………………………………..
Ordinary Share Balance Sheet (non-statutory analysis) …………………………………………………...
B Share Balance Sheet (non-statutory analysis) …………………………………………………………....
Combined Statement of Cash Flows …………………………………..……………………………………..
Ordinary Shares Statement of Cash Flows ……………..……………………………………………………
B Shares Statement of Cash Flows …………………………………………………………………………..
Notes to the Financial Statements …………………………………………………………………………....
Shareholder Information and Contact Details …………………………………………………………….....
Directors and Advisers ………………………………………………………………………………………....
Notice of Annual General Meeting …………………………………………………………………………....
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Financial Headlines
Ordinary Shares
Ordinary share NAV plus cumulative dividends paid at 31 December 2020 (“Total Return”)
Ordinary share NAV at 31 December 2020
Interim capital dividends paid per Ordinary share during year
95.5p
30.2p
13.0p
B Shares
£2.4m
Amount raised during the year from the issue of B shares
£1.36m
Amount invested during the year into six new investee companies by B share pool
97.8p
91.8p
3.0p
B share NAV plus cumulative dividends paid at 31 December 2020 (“Total Return”)
B share NAV at 31 December 2020
Interim dividends paid per B share during year
Financial Summary
Net assets (£’000s)
Return on ordinary activities after tax (£’000s)
Earnings per share (p)
Net asset value per share (p)
Dividends paid since inception (p)
Total return (NAV plus cumulative dividends paid) (p)
Financial Calendar
The Company’s financial calendar is as follows:
Year to
31 December
2020
Ordinary share
pool
2,453
1,045
12.8
30.2
65.25
95.45
Year to
31 December
2020
B share
pool
8,317
252
3.5
91.8
6.00
97.8
Year to
31 December
2019
Ordinary share
pool
2,463
(547)
(6.7)
30.4
52.25
82.65
Year to
31 December
2019
B share
pool
5,921
(168)
(3.2)
93.1
3.0
96.1
29 March 2021
Annual General Meeting (“AGM”) will be a closed meeting as a result of the Covid-19
(“C-19”) pandemic and will be held at 14:00 at 9 The Parks, Haydock, WA12 0JQ
July 2021
Half-yearly results to 30 June 2021 published
February 2022
Annual results for the year to 31 December 2021 announced and Annual Report and
Financial Statements published
1
About Seneca Growth Capital VCT Plc
Seneca Growth Capital VCT Plc (“the Company” or “Seneca Growth Capital”) is a Venture Capital Trust,
launched in 2001, which now aims to generate returns from a diverse portfolio of both unquoted and
AIM/AQSE quoted growth capital investments. Until 23 August 2018 the Company was called Hygea
vct plc. On 9 May 2018, the Company launched an offer for subscription for a new B share class which
closed in April 2019. The Company made an initial allotment of B shares on 23 August 2018, at which
point Seneca Partners Limited (“Seneca”) was appointed as the Company's Investment Manager.
Further to the success of the Company’s B Share offers in the last two years under which the Company
has raised £7.2 million a new offer of B shares was launched on 13 October 2020 to raise, in aggregate,
up to £10 million with an over-allotment facility of up to a further £10 million (before issue costs) (the
“Offer”). The Company had raised a further £1.5 million under the Offer as at 31 December 2020.
The Company is registered as a small UK Alternative Investment Fund Manager (AIFM) with a Board
comprising of four non-executive directors, three of whom are independent.
As the Company’s Investment Manager, Seneca are responsible for the management of the Company’s B
share pool investments, whilst responsibility for the management of the Ordinary share pool investments has
been delegated to those members of the Board of Directors who served immediately prior to 23 August 2018,
namely John Hustler and Richard Roth.
The Company continues to manage both share classes in accordance with its investment policy, having
expanded the range of qualifying investments in 2018.
No new investments have been made in the Ordinary share pool during 2020. The Directors continue to seek
to return to Ordinary shareholders over time the proceeds from any realisations in the form of dividends or by
means of a return of capital. During the year, the Company realised its remaining investment in Omega
Diagnostics Group Plc (“Omega”) and sold 8% of its holding in Scancell Plc which enabled the payment of a
further 13p of dividends per Ordinary share during the year.
The funds raised from the issue of B shares under the Offer and any subsequent fund raisings are not limited
to being invested in any specific sector. Instead, the Company’s B share pool is targeting well managed
businesses with strong leadership that can demonstrate established and proven concepts and are seeking an
injection of growth capital to support their continued development. Six new investments were made by the B
share pool during the year, details of which are included on pages 14 to 27. The Company intends to distribute
a proportion of the net profits it receives from realisations by way of special tax-free dividends. This is intended
to provide investors with an attractive income stream whilst also maintaining a relatively stable Net Asset Value
(“NAV”) per B share, subject to the requirements and best interests of the Company.
Venture Capital Trusts (VCTs)
VCTs were introduced by the UK Government in 1995 to encourage individuals to invest in UK smaller
companies. The Government achieved this by offering VCT investors a series of tax benefits.
The Company has been approved as a VCT by HM Revenue & Customs (HMRC). In order to maintain its
approval, the Company must comply with certain requirements on a continuing basis which are discussed
further in the Business Review on pages 39 to 40. The Company has continued its compliance with these
requirements during the year, and both share classes in the Company are eligible shares as defined by section
273 ITA 2007.
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Strategic Report
The Directors are required by the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations
2014 to include a Strategic Report to shareholders.
The following sections form part of the Strategic Report:
● Our Strategy
● Chairman’s Statement
●
● Business Review
Investment Manager’s Report
Our Strategy
Seneca was appointed as the Company’s Investment Manager in August 2018 and is specifically responsible
for the management of the Company’s B share pool investments. Responsibility for the management of the
Ordinary share pool investments has been delegated to those remaining members of the Board of Directors
who served immediately prior to 23 August 2018, namely John Hustler and Richard Roth.
There has been no change during the year in the way the Ordinary share pool’s assets are managed. The
Ordinary share pool made two realisations from its AIM quoted investments in the period, one of which was
the full realisation of its shares in Omega. The Ordinary share pool’s unquoted investment Exosect Limited
was dissolved on 24 January 2020. The Directors do not envisage making any new investments from the funds
in this share pool (apart from any follow-on investments in existing portfolio companies), and continue to seek
to return to Ordinary shareholders over time the proceeds from any realisations in the form of dividends or by
means of a return of capital.
The Company’s latest Offer for new B shares opened on 13 October 2020 seeking to raise up to £10 million
with an over-allotment facility of up to a further £10 million (before issue costs). The funds raised from the issue
of B shares will not be limited to being invested in any specific sector. Instead, in line with the Company’s
investment policy, the Company is targeting well managed businesses with strong leadership that can
demonstrate established and proven concepts and are seeking an injection of growth capital to support their
continued development.
The Company fosters a culture of innovation, risk mitigation and collaboration supported by policies, practices
and behaviours to further our purpose as an investment company seeking to provide growth capital to well
managed leading UK SMEs which share our values, in order to deliver on our investment strategy and objective
as described below. The Directors will continually monitor and assess the investment process and ensure
compliance with both the relevant VCT regulations for qualifying investments, summarised below, and the
Company’s investment policy, included further below through a set of robust internal controls as discussed in
the Business Review on page 40, the Corporate Governance policy on pages 50 to 54 and within the Audit
Committee Report on pages 55 to 57.
3
Qualifying Investments
Compliance with required rules and regulations is considered with all investment decisions made. The
Company is further monitored on a continual basis by Philip Hare & Associates LLP to ensure compliance on
an ongoing basis. The main criteria to which the company must adhere include:
● At least 80% of investments must be made in qualifying shares or securities;
● At least 70% of qualifying investments must be invested into ordinary shares with no prohibited
preferential rights (investments made before 6 April 2018 from funds raised before 6 April 2011 are
excluded);
● At least 30% of funds raised after 31 December 2018 must be invested in qualifying investments by
the anniversary of the end of the accounting period in which those funds were raised;
● No single investment made can exceed 15% of the total HMRC company value at the time the
investment is made.
In respect of VCT shares issued on or after 6 April 2014, VCT status will be withdrawn if a dividend is paid (or
other forms of distribution or payments are made to investors) from the capital received by the VCT from that
issue within three years of the end of the accounting period in which shares were issued to investors.
Qualifying investments can only be made in small and medium sized trading companies which fall within the
following limits:
● have fewer than 250 full time equivalent employees (500 if a knowledge intensive company); and
● have less than £15 million of gross assets at the time of investment and no more than £16 million
●
immediately post investment; and
its first commercial sale must be less than seven years old (or ten years if a knowledge intensive
company) if raising State Aided funds for the first time; and
● have raised no more than £5 million of State Aided funds in the previous 12 months and less than the
lifetime limit of £12 million (or £20 million if a knowledge intensive company); and
● produce a business plan to show that its funds are being raised for growth.
The Finance Act 2018 introduced a “risk-to-capital” condition for qualifying investments, designed to focus
investments towards earlier stage, growing businesses, and away from investments which could be regarded
as lower risk. The Board is satisfied that the Company’s investment policy is in line with this “risk-to-capital”
condition.
The investment policy, as approved by shareholders on 19 January 2018, is set out below and includes the
sections titled Investment Policy, Qualifying Investments, Non-Qualifying Investments, Risk Management,
Borrowing and Changes to the Investment Policy:
Investment Policy
The Company's investment objective is to provide shareholders with an attractive income and capital return
by investing its funds in a portfolio of both unquoted and AIM/AQSE quoted UK companies which meet the
relevant criteria under the VCT rules.
The Company will target well managed businesses with strong leadership that can demonstrate established
and proven concepts and are seeking an injection of growth capital to support their continued development.
At least the minimum required percentage of the Company's assets will be invested in qualifying investments
as required by the VCT rules, with the remainder held in cash and money market securities.
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Qualifying Investments
Compliance with required rules and regulations is to be considered with all investment decisions made. The
Company is further monitored on a continual basis to ensure compliance.
Non-Qualifying Investments
An active approach will be taken to manage any cash held, both prior to its investment in qualifying companies
and any remaining cash after all investment qualification targets in the VCT rules have been satisfied. All
cash will be invested in accordance with VCT rules for non-qualifying investments. Such non-qualifying
investments may include liquid AIFs, UCITS or other money market funds.
Risk Management
The Directors control the overall risk of the portfolio by ensuring that the Company has exposure to a
diversified range of unquoted and AIM/AQSE quoted companies. In order to limit concentration risk in the
portfolio that is derived from any particular investment, at the point of investment or addition to an existing
investment no more than 15% of the Company by VCT value will be in any one investment. In addition,
investments may also be made by way of loan stock and/or redeemable preference shares as well as ordinary
shares to generate income, whilst ensuring compliance with whatever VCT rules apply at the time.
Key Information Document
New EU PRIIPs regulations came into effect in January 2018. The intent of the regulations is to increase
customer protection by improving the functioning of financial markets and in this instance through the Key
Information Document (KID) to provide shareholders with more information about the risks, potential returns
and charges within VCTs. The regulation requires the Company to publish a KID. Retail investors must now
be directed to this before buying shares in the Company. The KID is published on the Company website
https://senecavct.co.uk/key-documents/. The KID has been prepared using the methodology prescribed in
the PRIIPS regulation. Although well intended, there are widespread concerns about the application of some
aspects of the prescribed methodologies to VCTs. Specifically, there are concerns that:
1. the risk score may be understating the level of risk; and
2. investment performance scenarios may indicate future returns for shareholders that are too
optimistic.
The Association of Investment Companies (AIC) has engaged on this matter and it is hoped that these issues
will be resolved in the future. In the meantime, the Board recommends shareholders continue to classify VCTs
as a high-risk investment.
Borrowing
Whilst the Board does not intend that the Company will borrow funds (other than to manage short term cash
requirements), the Company is entitled to do so subject to the aggregate principal amount at the time of
borrowing not exceeding 25% of the value of the adjusted capital and reserves of the Company (being, in
summary, the aggregate of the issued share capital, plus any amount standing to the credit of the Company's
reserves, deducting any distributions declared and intangible assets and adjusting for any variations to the
above since the date of the relevant balance sheet). The Company did not borrow any funds in 2020.
5
Changes to the Investment Policy
The Company will not make any material changes to its investment policy without shareholder approval.
Section 172(1) Statement
The Directors discharge their duties under section 172 of the Companies Act 2006 to act in good faith and to
promote the success of the Company for the benefit of shareholders as a whole as set out in the Business
Review from page 36. As an investment company, Seneca Growth Capital has no employees. The Directors
assessed the impact of the Company’s activities on other stakeholders, in particular shareholders and our
third-party advisers, as well as the portfolio of companies.
The Board’s decision-making process incorporates, as part of the Company’s investment policy and
investment objectives as set out on page 4, considerations for supporting the Company’s business
relationships with the Investment Manager, shareholders, advisers and registrar, independent financial
advisers and the impact of the Company’s operations on the community and the environment, which by nature
of the business, only extends to the holdings in portfolio companies.
Key stakeholders
Investors
Outside of general meetings, the Company engages with shareholders through regulatory news service
announcements, interim and annual reports as well as regular correspondence with shareholders and their
advisers to address any queries that arise.
the answers
forward by shareholders,
The Company has also introduced regular shareholder presentations in addition to the AGM in order to engage
directly with shareholders and to date have successfully completed our first Shareholder Update Presentation
in September 2020 following the June 2020 interim results. At the September 2020 Shareholder Update
Presentation, we had exceptional attendance from shareholders and had the opportunity to address ten queries
to which are available on our website at
put
https://senecavct.co.uk/shareholder-qa/. It was a great opportunity to engage directly with shareholders and
have subsequently made some changes to address the minor concerns raised, particularly around shareholder
communications. Steps have been taken and changes implemented to improve shareholder communications
as a result of the presentation and feedback provided throughout the year from shareholders. These and any
other views which may arise are discussed by the Board and factored into any decision-making and disclosed
in annual and interim reports as appropriate. The Board uses a number of measures to assess the Company’s
success in meeting its strategic objectives with regard to shareholder interests as detailed in the Key
Performance Indicators on pages 37 to 38.
Investment Manager
The Company’s most important business relationship is with the Investment Manager. There is regular contact
with the Investment Manager, and all members of the Investment Manager’s Growth Capital investment team
attend all of the Company’s Board meetings. There is also an annual timetable agreed with the Investment
Manager and the Company for matters related to the annual timetable which are discussed at each Board
Meeting. The Company and Investment Manager also work together to maintain efficient operation of the VCT
as detailed in the Key Performance Indicators on pages 37 to 38.
Portfolio Companies
The Company holds minority investments in its portfolio companies and it has appointed the Investment
Manager to manage the B share portfolio. While the Board has little direct contact with the B share portfolio,
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the Investment Manager provides updates on the B share portfolio at least quarterly. There were six additions
to the portfolio in the period and the Company completed four exits as detailed in the Chairman’s Statement
on pages 8 to 13 and the Investment Manager’s Report on pages 14 to 27. The Board and Investment Manager
believe that the full realisations and partial realisations from each share pool was in the best interests for all
key stakeholders. Responsibility for the management of the Ordinary share pool investments has been
delegated to those remaining members of the Board of Directors who served immediately prior to 23 August
2018, namely John Hustler and Richard Roth who also provide updates on the Ordinary Share portfolio at least
quarterly.
Environment and Community
The Company seeks to ensure that its business is conducted in a manner that is responsible to the environment
as far as is practicable given the nature of the business as an investment company. The management and
administration of the Company is undertaken by the Investment Manager, who recognises the importance of
its environmental responsibilities, monitors its impact on the environment and implements policies to reduce
any damage that might be caused by its activities. Initiatives of the Investment Manager designed to minimise
its and the Company’s impact on the environment include recycling and reducing energy consumption. More
details of the work that the Investment Manager has done in this area are set out on pages 45 to 46.
7
Strategic Report
Chairman’s Statement
I am pleased to present the 2020 Annual Report on behalf of the Board to shareholders.
Overview
As shareholders will recall, Seneca have assumed the investment and accounting responsibilities of the
Company with effect from August 2018, following which £8.7 million has been raised for the B share pool to 31
December 2020. Since this represents the active investment portfolio, I am reporting on the B share portfolio
first and then will give the results of the legacy Ordinary share portfolio.
I am pleased to say that, despite the unprecedented circumstances which we are all facing due to the C-19
global pandemic, I am able to report that both the B share and Ordinary share investment portfolios have stood
up well to the challenges that they have faced. The Total Return (NAV per share plus cumulative dividends per
share) for each share class increased during the year with the B share increasing by 1.8% to 97.8p and the
Ordinary share increasing by 15.5% to 95.5p.
I am also pleased to be able to report that Seneca continued the development of the B share pool during the
year both in terms of fundraising and investment activity. In October 2020, the Company launched its third offer
for B shares and allotted an additional £1.5 million of shares in December 2020 taking to £8.7 million the total
raised by the B share pool from launch in May 2018 to 31 December 2020. I would like to welcome all new
shareholders and thank both existing and new shareholders for their support. The share offer will remain open
until 28 May 2021 unless it reaches the target of £10 million with an over-allotment facility of £10 million before
then.
The Company made six new B share pool investments in the year in addition to achieving one full exit and one
partial exit and as a result the Company’s B share pool closed the year with ten investments, an increase of
five on the prior year.
There were two full, and one partial disposal from the Ordinary share pool. The Ordinary share pool now has
just seven investments remaining with AIM quoted Scancell Holdings Plc (“Scancell”) (which encouragingly
secured £48 million of new investment in the year) accounting for 66% of the Ordinary share pool’s NAV at the
year end. Recent press coverage regarding Scancell’s involvement in a potential C-19 vaccine has led to a
significant rise in its share price, which stood at 24.5p at 19 February 2021 compared to our year end value of
13.5p. Further details and an updated unaudited NAV per Ordinary share and B share are included below.
With 54% of the B share pool’s NAV as at 31 December 2020 represented by cash and more than 20% of the
Ordinary share pool’s NAV, the Company has ended the year well placed to face the challenges and
opportunities presented by the ongoing C-19 pandemic and to deliver on the key objectives of continuing to
build an attractive portfolio of growth capital investments in the Company’s B share pool whilst also continuing
to realise investments in the Ordinary share pool when the opportunity arises.
I have set out below the progress made by each of the Company’s share classes during the year.
B Share Pool
B Shares - Results
The key items to impact the NAV of the B share pool during the year were as follows:
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• Two dividends paid during the year totalling 3.0p per B share.
• The full realisation of one B share pool AIM quoted investment generating a 2.1x return.
• The partial exit of one B share pool AIM quoted investment generating a 1.6x return.
• An increase in the valuation of two of the B share pool’s remaining three AIM quoted holdings.
• A reduction in fair value of one of the B share pool’s seven unquoted company investments as a
result of the impact of C-19.
• The Company’s running costs.
The net result of the above was an overall increase in the Total Return per B share to 97.8p as at 31 December
2020 (2019: 96.1p), consisting of a modest reduction in the NAV per B share to 91.8p as at 31 December 2020
(2019: 93.1p), a positive capital return of 5.7p per B share (2019: negative 0.7p) and a negative revenue return
of 2.2p per B share (2019: negative 2.5p).
Whilst the negative revenue return of 2.2p per B share is principally a result of the impact of the Company’s
running costs on the B share pool, shareholders will recall that the Company’s running expenses are capped
at 3% of the B share NAV until July 2021 (thereafter the total running costs will continue to be capped at 3%
with general expenses being allocated to the Ordinary share pool and the B share pool pro-rata to their
respective NAVs). As a result, Seneca reduced their annual management fee for 2020 from £127k to £41k to
ensure the Company’s annual running expenses stayed within this 3% limit.
The positive capital return of 5.7p per B share noted above was principally due to increases in the share prices
of the B share pool’s AIM quoted investments during the year and some harvesting of profit via partial sales of
these AIM quoted investments offset by a reduction in the carrying value of one of the B share pool’s unquoted
company investments. Full details are disclosed in the Investment Manager’s Report on pages 14 to 27.
B Shares - Investment Portfolio Review
As at 31 December 2020, the B share portfolio comprised ten companies, three of which are quoted on AIM,
at a total net investment cost of £3,794k. As at 31 December 2020 this portfolio was valued at £3,982k.
In January 2021, the Company sold 1,750,000 shares in SkinBioTherapeutics Plc (“SkinBio”) which
represented 37% of the original holding of 4,677,107 shares, reducing the remaining holding to 2,752,107
shares. These were sold at a net average price of 35.5p per share providing a return in the region of 2.2x on
original cost.
B Shares – Update and Outlook
Taking into account further proceeds realised since 31 December 2020 as detailed above and in note 17 on
page 97 and an overall increase in AIM quoted investment bid prices, the Company is pleased to announce an
updated unaudited NAV per B share of 99.4p per B share at 19 February 2021, an increase of 7.6p per B share
from the audited NAV of 91.8p per B share as at 31 December 2020 and an overall increase in the Total Return
per B share to 105.4p as at 19 February 2021.
Shareholders will be pleased to know the Board declared an interim B share dividend of 1.5p per B share on
18 February 2021 to be paid on 14 May 2021 to shareholders on the B share register on 30 April 2021, with
an ex-dividend date of 29 April 2021.
Seneca continue to work closely with the investee companies in the B share portfolio with the aim of ensuring
that the potential impact of C-19 is mitigated and that each investee company has sufficient funds to support
their working capital requirements until normal trading and economic conditions return. Seneca remain
confident that the portfolio retains its potential to provide attractive returns for B shareholders over the medium
term.
9
The Board is pleased with the progress that Seneca have made since their appointment as Investment
Manager in 2018, in terms of funds raised, new investments made and relationships with brokers offering new
quoted securities and now, exits achieved.
Seneca expect to increase the funds raised under the current B share Offer and add new growth capital
investments to the B share portfolio during the course of 2021 from, inter alia, the investments they currently
have in the later stages of due diligence.
Ordinary Share Pool
Ordinary Shares - Results
Whilst the NAV per Ordinary share decreased by 0.2p from 30.4p to 30.2p during the year, this was after the
payment of dividends per Ordinary share totalling 13.0p. A better understanding of the underlying performance
of the Company’s Ordinary share portfolio during the year is therefore provided by considering the NAV
movement per Ordinary share during the year before dividends which shows an increase of some 12.8p (a
42% increase compared to 31 December 2019).
This increase was principally driven by the increase in value of the Ordinary share portfolio’s two AIM quoted
investments during the year. The quoted bid price of Scancell shares increased from 7.0p to 13.5p from the
start of the financial year to the financial year end. During this period, it was decided to harvest a modest portion
of our shareholding and we now hold 12 million shares. Omega benefited from its involvement in a partnership
to develop a C-19 antibody test and the share price rose significantly; the Board, therefore, decided it was
appropriate to take advantage of this and we sold our entire holding for £987k, generating a profit over original
cost of £659k and over our holding value at 31 December 2019 of £666k.
As a result of the realisations noted above, your Board were very pleased to be able to pay dividends totalling
13p per Ordinary share during the year with no material adverse impact on the Ordinary pool’s NAV. The Total
Return in relation to the Ordinary shares is now 95.5p comprising cumulative distributions of 65.25p per
Ordinary share and a residual NAV per Ordinary share of 30.2p as at 31 December 2020.
As previously reported, the Board remains focused on identifying exit opportunities for the remainder of the
Ordinary share pool investment portfolio, and it was particularly pleasing to have been able to distribute 13p
per Ordinary share to shareholders this year with no material adverse impact on the Ordinary share pool’s
NAV. Realisations in the last three years have enabled the payment of a total of 41p per Ordinary share in
dividends to Ordinary shareholders, representing 64.3% of the NAV per Ordinary share as at 31 December
2017 and we still retain net assets of 30.2p per Ordinary share as at 31 December 2020. Notwithstanding this
success, we remain confident that, overall, there remains the opportunity to realise further value for Ordinary
shareholders in due course (particularly in relation to our Scancell holding): indeed as noted below, earlier this
month we realised a further portion of our Scancell holding. For the time being, we do not currently consider it
appropriate to liquidate any further Scancell shares and do not see any other immediate opportunities for
realisations, but we continue to monitor the situation closely.
Ordinary Shares - Investment Portfolio
The remaining Ordinary share portfolio now comprises one AIM quoted holding, Scancell, as referred to above,
which has a carrying value of £1,620k as at 31 December 2020, and six unquoted holdings – the carrying value
of three of which have been reduced to zero with the combined carrying value of the other three being £521k
as at 31 December 2020.
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Shareholders will note therefore that Scancell represented more than 75% of the value of the Ordinary share
portfolio as at 31 December 2020 and as a result the NAV per Ordinary share now fluctuates largely in line
with the movement in the Scancell share price. Whilst the Scancell share price showed volatility during 2020,
it is not our policy to update the market following each of these fluctuations unless there are considered to be
abnormal events (e.g. sale of a significant holding – see below). Your Board therefore recommends that
shareholders or prospective shareholders keep the Scancell share price under review and consider its impact
on the Ordinary share NAV per share before taking any action in relation to an existing or prospective holding
in the Company’s Ordinary shares.
Further details in relation to the Ordinary share pool’s investment portfolio are included in the Investment
Manager’s Report on pages 28 to 35.
Ordinary Shares – Update and Outlook
As referred to above, and following recent press coverage, the share price of Scancell has risen significantly
from 13.5p at 31 December 2020 and was 24.5p at 19 February 2021. We are pleased that the market is
recognising the continuing developments at Scancell and have taken the opportunity to realise a further modest
part of our holding by selling 1 million shares at 21.7p per Scancell share. Our current holding is 11 million
shares and we continue to believe that there is further upside in this holding.
This increase in the share price has given rise to a significant rise in the NAV per Ordinary share. Based on
the NAV at 31 December 2020, adjusted solely for the uplift in valuation of our Scancell shares , the Ordinary
share unaudited NAV per share was 44.0p at 19 February 2021.
The Ordinary share pool retained a cash balance of £527k as at 31 December 2020 in order to make follow-
on investments into existing Ordinary share portfolio companies where the Board believes this will protect the
Ordinary share pool’s existing investment and/or improve the overall prospects of a timely exit from the investee
company. This has been increased to £744k following the recent sale of Scancell shares. Despite several of
the Ordinary share pool portfolio companies seeking further funds during the year, we did not consider the
terms attractive nor likely to improve the overall prospects for a timely realisation from the investee company
and therefore no further Ordinary share pool investments were made.
Ordinary shareholders will recall that, following the appointment of Seneca as Investment Manager in August
2018, the Ordinary share pool incurs no running costs until July 2021.
Fund Raising
During the year the Company has allotted 2,701,500 B shares raising gross proceeds of £2,403k in the process.
The current B share Offer will remain open until May 2021.
Annual General Meeting
The Company’s AGM will be held as a closed meeting at 14.00 on Monday, 29 March 2021 at the Company’s
registered address 9 The Parks, Haydock, WA12 0JQ in accordance with the provisions of the Corporate
Insolvency and Governance Act 2020. In light of the unprecedented restrictions on movement and gatherings
due to the C-19 pandemic, shareholders will not be permitted to attend this year’s AGM and the meeting will
take place with either two Directors who hold shares in the Company or one Director and an investment
manager from Seneca Partners, who is also a shareholder, present only, to constitute the minimum quorum
for the AGM to take place under the Company's articles of association and company law requirements.
Shareholders should note that only the formal business set out in the Notice of AGM will be considered at the
AGM.
Although shareholders will not be permitted to attend the AGM this year there will be a shareholder update
presentation by the Investment Manager and a question and answer (“Q&A”) session at 10:00 on 8 March
11
2021, further details of which are included below and on https://senecavct.co.uk/march-2021-shareholder-
presentation/.
Shareholders wishing to vote on any of the matters of business are urged to do so through completion of a
proxy form appointing the Chairman of the AGM, which can be submitted to the Company’s Registrar. Proxy
forms should be completed and returned in accordance with the instructions thereon and the latest time for the
receipt of proxy forms is 14.00 on Saturday, 27 March 2021. Proxy votes can be also be submitted by CREST.
All resolutions will be decided by a poll and therefore it is essential that shareholders wishing to vote submit
their proxy forms by 14.00 on Saturday, 27 March 2021.
Shareholders will have the opportunity to ask questions prior to submitting their proxy votes at the shareholder
update presentation on 8 March 2021 as detailed below.
The Board has reviewed my performance and has asked me to continue as Chairman. A resolution for my re-
election is included in the AGM Notice. Resolutions for the re-election of Alex Clarkson, Richard Manley and
Richard Roth are also included in the AGM Notice.
The Notice of the AGM includes resolutions empowering the Directors to issue further B shares following the
date of the AGM, which will primarily be used for the issue of B shares under a further Offer which we intend
to launch for the 2021/2022 tax year. This requires authorisation for the Directors to be able to allot up to a
further 35,000,000 B shares. Including these resolutions in the AGM business will avoid the Company having
to produce and send out a separate circular to convene a separate general meeting.
The Notice of the AGM also includes a resolution to adopt amended Articles of Association which are
substantially in the same form as the Company’s current Articles of Association but will allow, inter alia, the
holding of partially virtual AGMs and to increase the total remuneration of the Directors to allow for the
recruitment of a new non-executive Director. Further details of the differences between the two sets of Articles
are set out in the Directors’ Report on pages 48 to 49.
A summary of the resolutions to be proposed by the Company at the AGM is included on pages 48 to 49.
Shareholder Update Presentation
Due to government restrictions impacting shareholders’ ability to attend the 2021 AGM as a result of the C-19
pandemic, a virtual shareholder update presentation will take place at 10:00 on Monday, 8 March 2021.
Shareholders can register to attend the presentation by visiting:
• https://zoom.us/webinar/register/WN_UyGALLGCQCusM0gYuvud0A.
Further details about the shareholder event can be found on https://senecavct.co.uk/march-2021-shareholder-
presentation/.
A Q&A session will take place where shareholders will have the opportunity to submit questions directly which
we will seek to answer during the presentation. Questions can be submitted by emailing them to
enquiries@senecavct.co.uk. Both the questions and answers will be published on the Company’s website
following the presentation.
VCT Qualifying Status
Philip Hare & Associates LLP provides the Board with advice on the ongoing compliance with HMRC rules and
regulations concerning VCTs; they have confirmed that the Company remains within all the appropriate VCT
qualifying regulations as at 31 December 2020. In respect of the 80% Qualifying Holdings test, as at the end
12
of December 2020 the percentage is 100% by virtue of a disregard of disposal proceeds, of which there have
been £1.1m of relevant share sales (exit proceeds that occurred in the prevailing 12-month period are deducted
from the total investments balance). Note, these exit proceeds are only deducted to the point that the test
reaches 100% but without these the Company was still well above the 80% qualifying requirement. As at 31
December 2020 39% of funds raised in the year to 31 December 2019 had been invested in qualifying
investments for the 30% minimum requirement.
Fund Administration
Our administration is conducted by Seneca at the Company’s registered address. Neville Registrars Limited
(“Neville”) continue to maintain the shareholder register. All information in respect of both share classes
including Annual Reports and notices of meetings can be found on our website www.senecavct.co.uk. We
would remind shareholders who have not opted for electronic communications that this is more efficient and
ecologically friendly than receiving paper copies by post and therefore encourage you to contact Neville, whose
details are on page 101, to advise them of your wish to switch to electronic communication.
Auditor
UHY Hacker Young LLP have audited the Company’s annual results for the year ending 31 December 2020,
and shareholders will be asked to reappoint them at the AGM for the audit of the accounts for the year ending
31 December 2021.
Future Prospects
We are pleased that Seneca have continued to develop the portfolio of B share pool investee companies during
the year. The B share portfolio includes a mix of both unquoted and AIM quoted investments and whilst
progress of these investments to date has been generally positive, the Board and Seneca remain acutely aware
of the need to continue to work at close quarters with all B share portfolio companies as they navigate the
challenges ahead resulting from the C-19 pandemic.
We also note that Seneca expect to see an increase in the number of businesses seeking investment to support
their growth plans over the next 12 months as a result of the C-19 pandemic. With over £4.5 million of cash on
the B share pool balance sheet at 31 December 2020. Seneca believe they are very well placed to continue to
support the existing B share investment portfolio as well as adding attractive new growth capital investments
to the B share portfolio from the strong pipeline of opportunities presented to them. We therefore look forward
to the continued development of the B share portfolio in due course.
Your Board continues to view the future of our Company with confidence.
John Hustler
Chairman
22 February 2021
13
Investment Manager’s Report
We are pleased to set out in this section further details in relation to the development of both the B and Ordinary
share pools and their respective investee companies during 2020.
The B Share Pool
Fundraising
Our second B share offer was concluded in July 2020, bringing total funds raised to £7.2 million and our fund-
raising efforts have since continued under our third B share Offer that was launched in October 2020, with £1.5
million being raised under this third Offer as at 31 December 2020. We were encouraged by the funds raised
in the two months immediately following launch and remain focused on increasing the size of the B share pool,
which will in turn allow us to increase the number and diversity of new investments that we make.
Performance and Dividends
Despite the unprecedented economic climate and general turmoil of financial markets occasioned by the C-19
pandemic, we are pleased with the development of the B share portfolio, with six additional investments being
made in the year. We are also pleased to report an increase in the NAV Total Return per B share, from 96.1p
at 31 December 2019 to 97.8p as at 31 December 2020.
This increase in NAV Total Return per B share was the result of a slight reduction in the B share NAV as at 31
December 2020 (which fell to 91.8p per B share (2019: 93.1p)) which was more than explained by the payment
of two B share dividends totalling 3.0p during the year.
These two B share dividends paid during the year were in line with the Company’s ambition to continue to pay
dividends on the B shares and it should be noted that the Company has sufficient distributable reserves to
enable the continued declaration of B share dividends over the medium term subject to Board approval, the B
share pool investment pipeline and liquidity levels.
AIM Quoted Investments
With the AIM market demonstrating a heightened level of volatility during the year as a result of the impact of
C-19, we took the opportunity to realise just over half of the B share pool’s shareholding in OptiBiotix plc
(“OptiBiotix”) (an investment made during the year), selling 400,000 shares and realising a gain of £92k on the
disposal (1.6x cash return in just 2 months following the original investment). We also sold our full holding in
Genedrive (another investment made in the year) which is the B share pool’s first full exit and generated a
profit of £136k versus original cost (2.1x cash return).
We were also encouraged that the during the year we saw an increase in the bid price of the two largest B
share pool AIM quoted investments: the SkinBio share price increased to 22.0p as at 31 December 2020 (a
57% increase from 14p as at 31 December 2019) and the OptiBiotix share price increased to 57.0p as at 31
December 2020 (a 42.5% increase from the cost price of 40p per share).
Co-investing With Seneca EIS Funds
More generally we continue to develop Seneca’s position in the market as an active growth capital investor
and as at 31 December 2020, we have raised and deployed c.£100 million of EIS and VCT investment funds
into over 50 SME companies, through over 100 funding rounds, since we undertook our first EIS investment in
2012. This includes £8.7 million raised to date by the B share pool.
14
The ten investments in the B share portfolio had a value of £3,982k as at 31 December 2020 and are co-
investments with EIS funds also managed by Seneca. We believe that the opportunity for the Company’s B
share pool to co-invest with EIS funds that are also managed by Seneca provides the B share pool with a
number of advantages including being able to participate in a higher number of investments, of a larger scale,
into more established businesses than would be possible for the B share pool on a standalone basis.
Further, as a result of our position in the UK market as an active growth capital investor we maintain a strong
pipeline of investment opportunities, particularly in the North of England, with a focus on well managed
businesses with strong leadership teams that can demonstrate established and proven concepts in addition to
growth potential. We aim to invest in both unquoted and AIM quoted companies and are pleased to have
completed three additional AIM quoted investments in the year.
Investee Company Updates
We are very happy with the development of the B share investment portfolio. As noted above, we are delighted
to have been able to include some AIM quoted investments in these early investments and are also very happy
that by 31 December 2020 we had already been able to exit some of these at a profit so early in the
development of those businesses (1 full exit and 2 partial exits). These early profits have supported the
performance of the B share pool NAV at the same time as we continue to develop the unquoted company
investment portfolio.
We are excited about the potential that lies with the B share investment portfolio and have included updates in
relation to all of the B share pool investee companies later in this Investment Manager’s Report but wanted to
highlight in particular the progress being made by B share pool investee companies SilkFred Limited
(“SilkFred”) and SkinBio below and also comment on the reduction in fair value introduced against the carrying
value of Qudini.
SilkFred
SilkFred is an online marketplace which specialises in independent ladies’ fashion brands. The B share pool
invested £500k in SilkFred in December 2018 and the business made strong progress throughout the first year
of our investment building a strong reputation and brand in the “event driven” fashion space.
As you would expect however, this left the business exposed to the impact of the C-19 pandemic in 2020 which
brought about a fall in sales levels as a result of the reduction in the number of celebrations and events which
previously drove the company’s growth.
Notwithstanding this, SilkFred’s recovery from the UK’s first lockdown was swift and Gross Marketplace Value
(total sales value sold through the SilkFred platform) during the summer months of 2020 actually exceeded
that of 2019. The business traded well for the rest of the year, remaining profitable throughout, buoyed by the
loyalty shown by the customer base. The management team continue to view their market position positively
and are looking to the future with confidence, particularly in anticipation of the return of their core markets as
the UK emerges from lockdown. We too, are excited about SilkFred’s future.
SkinBio
SkinBio is an AIM quoted life science company focused on skin health and the B share pool invested £750k in
February 2019 at 16p per share. The business made excellent progress during 2020 including raising c£4.45m
of funds from new and existing investors, successfully accelerating the project timeline for its food supplement
programme and gaining commercial interest for its MediBiotix™ and CleanBiotix™ programmes. The SkinBio
share price closed on 31 December 2020 at 22p per share.
Having initially invested in SkinBio in February 2019, we sold 175,000 shares in early June 2019 at a profit of
c1.5x original cost reducing the remaining holding to 4,502,107 shares. We did not sell any shares in 2020;
15
however following the 31 December 2020 year end, the positive progress being made by SkinBio translated
into further increases in the share price and we are pleased to report that we have taken the opportunity to
take some profit from this investment. We sold 1,750,000 shares in January 2021 (37% of the B share pool’s
original holding of 4,677,107 shares) reducing the remaining holding to 2,752,107 shares. These were sold at
a net average price of 35.5p per share providing a return in the region of 2.2x on original cost.
The business is well funded, is targeting a valuable market with unmet cosmetic and clinical needs and we
remain confident of SkinBio’s long-term prospects of success.
Qudini
Qudini is a UK based market leading provider of queue management software for enterprise brands. It
generates the vast majority of its revenue from bricks and mortar retailers. Given the level of uncertainty caused
in this core market by C-19, we took the prudent decision to reduce the carrying value of the B share pool’s
investment in Qudini by 40% as at 30 June 2020. Whilst there has been some improvement in the trading
performance of Qudini in H2 2020, some uncertainty remains over the future of its core bricks and mortar retail
market. Therefore, we have maintained the 40% reduction in fair value and this investment was held at 60%
of cost as at 31 December 2020.
Investments made after the Year End and outlook
Following the year end we also completed an additional unquoted company investment into Solascure Ltd
(“Solascure”) for £500k. Solascure is an early stage wound care specialist which was originally spun out of
(and continues to work alongside) world leading German biotech company BRAIN engaged in the development
of a new-to-market wound care product. Solascure is also backed by strategic investor Eva Pharma and the
business will commence their first clinical trial in 2021. Solascure’s Aurase product is a gel-based product that
efficiently and gently cleans wounds, making the healing process much more straightforward.
We look forward to continuing to increase the funds raised for the B share pool under the current Offer and
with several new investment opportunities in the later stages of due diligence, we expect to add to the portfolio
of B share investee companies in the coming months.
16
Investment Portfolio – B shares
Unquoted Investments
Fabacus Holdings Limited
Silkfred Limited
Old St Labs Limited
Ten80 Ltd
Qudini Limited
Bright Network Ltd
ADC Biotechnology Ltd
Equity
held
%
Investment at
cost £'000
Unrealised
profit/(loss)
£'000
Carrying
value at
31 December
2020
£'000
Movement
in the year to
31 December
2020
£'000
2.0
<1.0
3.8
7.5
2.4
1.7
<1.0
500
500
500
400
500
234
150
63
-
-
-
(200)
-
-
563
500
500
400
300
234
150
-
-
-
-
(200)
-
-
Total unquoted investments
2,784
(137)
2,647
(200)
Quoted Investments
SkinBioTherapeutics Plc
OptiBiotix plc
Abingdon Health plc
Total quoted investments
Total investments
Shares held
4,502,107
350,000
156,250
Investment at
cost £'000
Unrealised
profit/(loss)
£'000
Carrying
value at
31 December
2020 £'000
Movement
in the year to
31 December
2020
£'000
720
140
150
1,010
3,794
270
60
(5)
325
188
990
200
145
1,335
3,982
360
60
(5)
415
215
Exits for the period
Investment Date
No. of
Shares sold
Investment at
cost £'000
Sale
Proceeds
£’000
Realised
profit/(loss)
£'000 Exit Multiple
OptiBiotix Health Plc*
April 2020
400,000
Genedrive Plc
May 2020
157,437
Total
*Partial exit
160
126
286
252
262
514
92
136
228
1.6
2.1
1.8
17
B Share Pool – Investment Portfolio – Top Six Unquoted Investments by value as at 31 December 2020
1. Fabacus Holdings Limited
Initial investment date:
February 2019
Cost:
Valuation:
Equity held:
£500,000
£563,000
2.0%
Last statutory accounts:
31 August 2019
Turnover:
Loss before tax:
Net assets:
Not disclosed
Not disclosed
£7.6 million
Valuation method:
Price of last fundraise
Fabacus is an independent software company that
has developed a complete product lifecycle solution:
Xelacore, aimed at bringing transparency to supply
chain networks, with an initial focus on resolving the
interaction and information flow between global
licensors and their licensees.
Currently, there is a fundamentally flawed data
capture process between licensors and licensees;
and a disconnection from the framework of retail standards that have underpinned and
continue to enable the retail value chain. This has resulted in an inability to correctly
address known shortcomings in respect to data management and hinder the needed
digital transformation of licensors in the digitally evolving retail landscape.
Fabacus’s solution, Xelacore, is a modular, Software as a Service solution with an
intuitive interface and proprietary data aggregation and management engine that
allows all stakeholders to operate on a single unified and collaborative platform. It
bridges the gaps in an inefficient process within the current retail ecosystem by creating
authenticated, enriched universal records that unlock opportunities, reduce risk and
drive performance for both licensors and licensees.
Progress made by the company in 2020 includes:
•
Continuing to make excellent progress with a number of customers, most
notably through its promising relationship with Amazon.
• Onboarding fee-paying licensees to their market leading data platform and
starting to generate revenue from their relationship with IMG (#1 global
licensing agency).
•
•
Successfully raising c.£1m to fund the working capital requirements of the
company and to onboard the growing customer pipeline.
Collaborating with Amazon to provide a version of the company’s
technology which has the ability to identify and remove any counterfeit
products from online marketplaces. In turn this has driven a significant
increase in interest in and demand for Fabacus’ platform and ancillary
services which has translated into increased commercial activity and
revenue in recent months.
18
2. SilkFred Limited
Initial investment date:
December 2018
Cost:
Valuation:
Equity held:
£500,000
£500,000
<1%
Last statutory accounts:
31 December 2019
SilkFred is an online marketplace for independent
ladies’ fashion brands. The business was founded in
2011 with
the aim of creating an efficient
marketplace for emerging fashion designers to bring
products to market and establish their brand in the
sector. The business now works with c.600
independent brands, selling to over 500k customers.
Turnover:
Loss before tax:
Net assets:
Valuation method:
£20 million
£3.1 million
£4.4 million
Cost and price of recent
investment (reviewed for
any fair value
adjustment)
SilkFred acts as a central marketing and sales
platform for these brands, charging commission in exchange for these services, and
as a result the business itself takes minimal inventory / working capital risk on new
brands, lines or products.
The business model revolves around a market leading and scalable customer service
platform, and as such SilkFred are continually investing in core infrastructure and
constantly seeking innovative methods to enhance the customer experience.
Progress made by the company in 2020 includes:
•
•
•
Bouncing back extremely well from the impact of the first C-19 lockdown
which saw the company’s primary market of event driven fashion being
adversely impacted by the C-19 pandemic. Product mix has changed
dramatically in the short term, meaning SilkFred is well positioned for future
growth with a more diverse customer base and impacted less by seasonal
trends.
Continued expansion of SilkFred’s international presence. It is clear that the
international potential of the brand is a key driver of value in the business
and it is therefore encouraging to see international sales growing by more
than 60% in 2020.
Despite the C-19 impact being felt to some extent throughout 2020, SilkFred
saw continued growth in its portfolio of brands, increasing to more than 900
and once again selling over 1m units for the year. The company also saw
continued improvement in its key performance metrics with average order
value, orders to repeat customers and return on marketing spend all
increasing during the year.
19
3. Old St Labs Limited
Initial investment date:
March 2019
Cost:
Valuation:
Equity held:
£500,000
£500,000
3.8%
Last statutory accounts:
31 March 2020
Turnover:
Loss before tax:
Net assets:
Valuation method:
Not disclosed
Not disclosed
£260,000
Cost and price of recent
investment (reviewed for
any fair value
adjustment)
Old St Labs is a provider of cloud based, supplier collaboration
tools for large, blue chip customers, enabling them to manage
key supplier relationships and strategic project work. The core
product, Vizibl, seeks to make supplier collaboration much
more straight forward, with key focus on compliance, savings /
efficiency and driving growth across the business.
Vizibl is the only SaaS workspace that supports collaborative
supplier relationships, bringing all points of contact together in one place, providing
visibility across the company and eliminating duplication of efforts. Vizibl’s real-time
reporting speeds up decision making, drawing on and sharing the expertise of the
community in the process. The offering taps into a growing trend in supplier
collaboration, having moved on from the initial focus on compliance, to an increased
emphasis on savings / efficiency, and recent developments highlighting the benefits in
terms of wider growth strategy for large customers.
Vizibl provides the infrastructure, governance and reporting capabilities to optimise
present supplier performance and acts as a springboard for those collaborative supplier
relationships. The product is CRM / ERP agnostic, working alongside all major software
providers to ensure the collaboration software is insightful and informative.
Progress made by the company in 2020 includes:
•
•
•
•
Engaging with global leaders across a wide range of sectors with keeping
annual recurring revenue consistent at just over £1m. In what was initially a
slow period for the business with large corporate customers slowing down
decision making and pausing project spend upon the onset of C-19, Old St
Labs have worked closely with existing customers and have returned to
growth in the second half of the year with multiple impressive customer
wins.
Continuing to expand the Vizibl platform and enhancing its capabilities and
usability. In the current year, in response to the global pandemic, the team
have pushed more of a sustainability angle into the platform, adding
features and enhancements to assist both new and existing customers with
ensuring that their projects and organisations remain resilient.
Building on an already impressive customer base by onboarding Unilever
and Sanofi. Not only do these types of customers improve the financial
profile of the business, but they also further validate the proposition and
serve to demonstrate the viability of the Vizibl platform across a wider range
of sectors.
Securing a £2.5m funding from the UK Government-backed Future Fund,
providing sufficient headroom to progress through to profitability.
20
4. Ten80 Group Limited
Initial investment date:
March 2020
Cost:
Valuation:
Equity held:
£400,000
£400,000
7.5%
Last statutory accounts:
31 December 2019
Based in Hammersmith, Ten80 Group Limited (“Ten80”)
was established in early 2019. The company is a SAP
focussed on-demand outcome-based delivery solution.
SAP is best known for producing enterprise resource
planning software which allows organisations to manage
business operations across procurement, manufacturing, service, sales, finance, and
HR.
Turnover:
Loss before tax:
Net assets:
Valuation method:
Not disclosed
Not disclosed
£30,000
At cost (reviewed for any
fair value adjustment)
Ten80’s aim is to connect every SAP customer with every SAP consultant globally,
delivering outcome-based projects rather than time-driven costs through the contractor
or freelancer marketplace.
The SAP global consultancy market is estimated to be worth in excess of £300bn.
Progress since our investment:
•
•
•
Securing its first paying customers, providing further validation that the
proposition is of value to large corporations with significant IT project spend.
Whilst the global pandemic has slowed down large enterprise decision
making, it has also fast-tracked the shift to remote working and flexible
resource, something which plays into the hands of the Ten80 proposition.
Successfully adding the required skills to the team scaling it from 5 people
at the time of investment to 19 at present. This has added valuable resource
across the business, with key focus on the development team, sales
personnel and customer success roles.
Further, in January 2021 the business secured a £1m funding round under
the UK Government-backed Future Fund. This will in turn provide the
business with additional cash headroom as they focus on converting an
exciting customer pipeline and expanding the customer base, as well as
ramping up usage of the Ten80 platform within existing customers.
21
5. Qudini Limited
Initial investment date:
April 2019
Cost:
Valuation:
Equity held:
£500,000
£300,000
2.4%
Last statutory accounts:
31 December 2019
Turnover:
Loss before tax:
Net assets:
Valuation method:
Not disclosed
Not disclosed
£3.1 million
At cost, less a 40%
reduction in fair value to
reflect potential impact
of C-19 on the
company’s core UK
markets
Founded in 2012, Qudini is a B2B software company that
provides
to
organisations in retail, hospitality, the public sector and
healthcare.
experience SaaS
customer
solutions
Qudini provides a software solution for appointment bookings,
queue management, event management and
task
management – enabling businesses to improve shop floor
operations by managing staff activity, breaks and performance, and by assigning tasks
at store or head office level.
Qudini is aiming to revolutionise digital queue and appointment management. It
achieves this through deployment of its data-centric, cloud-based (Amazon Web
Services), cross-platform service, which improves a business’ ability to manage the
flow of customers awaiting service, using algorithms to provide accurate, live data, such
as estimated wait times. Through integration with various software platforms and
compatible with wide variety of hardware, Qudini enables detailed analytics focused on
customer trends, and provides a unique insight into areas such as customer footfall,
peak demand times, and wait times.
2020 update:
• Given that the company's main source of income is through the provision of
queuing technology for bricks and mortar retailers, the effect of C-19 during
the first UK lockdown was expected to be significant. As such, the company
took the opportunity to restructure its cost base and reduce FTE’s by c.50%
to 19 and put a stop to any unnecessary spend in order to preserve cash.
Consequently, we applied a 40% reduction in fair value (in March 2020)
against the carrying value of the B share pool’s investment in Qudini to
reflect this uncertainty and have maintained this at 31 December 2020.
•
Although a level of uncertainty remains given the company’s retail market
exposure, the outlook has improved somewhat given the increasing
demand for queuing/customer management technologies as retailers look
to re-open and trade safely.
• Whilst the environment for new business during the first lockdown had not
been ideal, Qudini now has a short window of opportunity to continue to
gain market share in H1 2021.
•
The demand noted above has driven an increase in Annual Recurring
Revenue (“ARR”) as at December 2020 to c.£2.5m (December 2019:
£1.8m); however, it will be a key focus of the management team over the
next 12 months to upsell Qudini’s other services in order to help retain the
company’s new customers post-covid and transition those new customers
on to longer term contracts.
22
6. Bright Network (UK) Limited
Initial investment date:
March 2020
Cost:
Valuation:
Equity held:
£234,000
£234,000
1.7%
Last statutory accounts:
31 March 2020
Turnover:
Loss before tax:
Net assets:
Valuation method:
Not disclosed
Not disclosed
£4.9 million
At cost (reviewed for any
fair value adjustment)
Bright Network (UK) Limited (“Bright”) is a Human
Resources technology platform designed to enable
leading employers to reach, identify and recruit high
quality graduates and young professionals. At the
time of our investment, the platform supported a network of over 255,000 high calibre
candidates and has 300+ leading employers within its customer base, including
multiple high-quality blue-chip clients. These employers utilise Bright’s services to fill
annual intern and graduate recruitment scheme places, as well as any bespoke
recruitment requirements.
Data analytics and machine learning is utilised to support and continuously improve
identification of the best-suited talent to each employer. Bright provides a free service
to undergraduates, personalising careers advice and job matches to support their
career journey. The database is therefore a growing data-rich asset, processing 30
million pieces of data on a new generation of young professionals.
In March 2020, the VCT invested £234,000, as part of a larger £3.5m fundraise to allow
the company to increase the size of its digital and talent solutions’ sales and marketing
resources, together with improvements to the technical platform to drive additional
service revenues.
Progress since our investment:
•
•
•
•
Limiting the potential impact of C-19 by cutting its cost base and through
the launch of online internships which were extremely well received over
the summer. This has resulted in an increase in registered users to over
350,000.
Trading ahead of expectations. Due to the pandemic the sales season
(which typically ends at the end of August) has been extended, and the
company continues to be on track to surpass the £2.5M revenue target for
the financial year ending 31 March 2021 (FY21).
Delivering strong top line performance coupled with tight cost control has
resulted in the company outperforming FY21 planned gross profit and
EBITDA.
Delivering an improved cash position which is £900k ahead of budget. This
outperformance alongside business agility puts the company in a strong
position as the UK recovers from the C-19 pandemic. However, whilst more
macro-economic uncertainty remains, this investment will continue to be
held at cost.
23
B Share Pool - Investment Portfolio – AIM Quoted Investments as at 31 December 2020
1. SkinBioTherapeutics Plc
Initial investment date:
February 2019
Cost (of the portion of
the original investment
still held as at 31
December 2020):
Valuation:
Equity held:
£720,000
£990,000
2.9%
Last statutory accounts:
30 June 2020
Turnover:
Loss before tax:
Net assets:
Valuation method:
£nil
£1.6 million
£2.5 million
Bid price of 22p per
share
SkinBioTherapeutics is a life science company
focused on skin health. The company's proprietary
platform technology, SkinBiotixTM, is based upon
discoveries made by Dr. Cath O'Neill and Professor
Andrew McBain.
SkinBioTherapeutics' platform applies
research
discoveries made on the activities of lysates derived
from probiotic bacteria when applied to the skin. The
company has shown that the SkinBiotixTM platform can improve the barrier effect of
skin models, protect skin models from infection and repair skin models. Proof of
principle studies have shown that the SkinBiotixTM platform has beneficial attributes
applicable to each of these areas.
The aim of the company is to develop its SkinBiotixTM technology into commercially
successful products supported by a strong scientific evidence base.
SkinBioTherapeutics’ commercial strategy is to engage health and wellbeing and/or
pharmaceutical companies in early dialogue to build up relationships and maintain
communication on technical progress until one or more commercial deals can be
secured.
Progress made by the company in 2020 includes:
•
•
•
•
Announcing a 3 year agreement with Winclove to focus on the development
of a blend of probiotic bacteria which have been identified as having a
positive impact on the psoriasis disease pathway. Under the agreement,
SkinBio will identify the specific probiotic strains which Winclove will
formulate and manufacture into a consumable product to be branded
AxisBiotix. Later in the year the company announced that Winclove had
been able to successfully combine and formulate the blend as a probiotic
food supplement, to be known as AxisBiotix Ps, several months ahead of
schedule. A study is due to commence in February 2021.
Announcing in July 2020 that the SkinBiotix cosmetic programme had
achieved a number of key scientific milestones with its partner Croda. Croda
has successfully replicated the lysate manufacturing process and achieved
the same performance from the SkinBiotixTM technology as established by
the company. Croda is now working to validate scale up of the
manufacturing process at different volume levels. The project is progressing
in line with the original plan and has not been adversely impacted by C-19.
Continued progress with live opportunities across its MediBiotix, CleanBiotix
and PharmaBiotix divisions, including the development of eczema
treatments as well as additional opportunities designed to reduce hospital
acquired infections.
Completion of a £4.5m funding round in October 2020, providing the
business with sufficient cash headroom to progress with its exciting pipeline
of commercial opportunities, as well as continuing with the development of
a number of early stage, pre-clinical opportunities.
24
2. OptiBiotix Health Plc
Initial investment date:
April 2020
Cost (of the portion of
the original investment
still held as at 31
December 2020):
Valuation:
Equity held:
£140,000
£200,000
<1.0%
Last statutory accounts:
31 December 2019
Turnover:
Loss before tax:
Net assets:
Valuation method:
£745,000
£2.2 million
£5.2 million
Bid price of 57p per
share
OptiBiotix Health PLC is a Life Sciences business
operating in one of the most progressive areas of
research,
developing
biotechnological
technologies
human
that modulate
microbiome – the collective genome of the
microbes in the body. The business identifies and
develops microbial strains, compounds and formulations for use in food ingredients,
supplements and active compounds that can impact on human physiology, deriving
potential health benefits.
the
With an established pipeline of microbiome modulators, the OptiBiotix team works
today in the prevention and management of chronic lifestyle diseases including obesity,
hypercholesterolemia and lipid profiles, and diabetes.
To date, the company has signed in excess of 50 commercial deals globally to supply
or licence its suite of products/supplements to manufacturers and retailers and has
launched a number of its own brand products. The VCT invested £300,000 into a £1m
fundraise in April 2020, with funds being used to launch its award-winning products
across Asia and the US, through partners who have an international reputation and
significant retail network, as well as further expanding the portfolio of products.
Between investment and 31 December 2020 53% of the shares originally acquired
have been realised at a 60% profit.
Progress since our investment:
•
Announcing positive half year results for the 6 month period to 30 June 2020
including:
o H1 revenue growth of £745k.
o
o
a 5x increase in revenues from H1 2019.
a 15.5% reduction in other administration costs.
a 50% reduction in loss compared to the same period in the prior
year.
The company is now at a commercial turning point with the business model now proven
through growing sales from proven products, established partners in multiple
international territories, and reduced administration and R&D costs. We believe the
company is therefore well placed to attack the various attractive markets in which they
are gaining traction.
Optibiotix’s first generation products, SlimBiomeTM, and LPLDLTM, are now established
scientifically, clinically, and commercially with products being sold in over 120 countries
around the world and a growing brand presence.
As sales and profitability in first generation products continues to improve, there is an
expectation this should enhance the company’s reach into new application areas and
territories, and commercialise next generation products – all of which have the ability
to further enhance the scale and growth prospects of the company.
25
3. Abingdon Health plc
Initial investment date:
December 2020
Cost:
Valuation:
Equity held:
£150,000
£145,000
<1.0%
Last statutory accounts:
30 June 2019
Turnover:
Loss before tax:
Net assets:
Valuation method:
£2.3 million
£1.5 million
£6.2 million
Bid price of 93p per
share
Abingdon Health
is a specialist
outsourced Contract Development
and Manufacturing Organisation
(CDMO) providing a full suite of
services to the lateral flow diagnostic market. It is the lead member of the UK’s Rapid
Test Consortium (UK-RTC) for a point-of-need C-19 antibody test (AbC-19) and is
investing in automated manufacturing to significantly increase capacity and attract new
customers across a range of sectors.
As the lead member of UK-RTC, the company co-ordinated a consortium of four
companies (including former Ordinary share portfolio company Omega) and, in under
four months, successfully developed and validated a rapid lateral flow test (“AbC-19”)
for detecting SARS-CoV-2 IgG antibodies. The UK Government has ordered the first
1m devices and provided funding for the components for a further 9m to be delivered
in the coming months. There is a mechanism by which Abingdon Health can sell any
excess supply externally and it has already had significant interest from a number of
third parties. It is also working with a number of partners on rapid antigen tests,
leveraging its key lateral flow competencies and offering broad exposure in C-19
diagnostics. The pandemic has driven a material step change in demand for lateral
flow tests generally and has catalysed a number of other C-19 and non-C-19 contract
development and manufacturing opportunities.
Abingdon Health has established relationships with blue chip partners and a strong
pipeline of potential new business, including a number of signed and qualified
opportunities. It also has an innovative and proprietary mHealth solution, AppDx, a
customisable smartphone reader that is capable of quantitative analysis of lateral flow
tests and the transfer of real-time data.
The investment was completed just before the end of the financial year, so there is no
further progress to report from 2020.
26
B Share Pool – Investment Portfolio – Post-balance sheet Investments as at 22 February 2021
1. Solascure Ltd
Initial investment date:
January 2021
Cost:
Valuation:
Equity held:
£500,000
£500,000
2.8%
Last statutory accounts:
30 June 2019
Turnover:
Loss before tax:
Net assets:
Not disclosed
Not disclosed
£ 6.7 million
Valuation method:
At cost
Solascure is an early stage wound care
specialist, originally spun out of and working
alongside BRAIN (world leading German
biotech company), to develop a new-to-
market wound care product. In 2019, the
company deconsolidated from BRAIN and
brought in additional strategic investment from Eva Pharma (c.£2m) and is now set to
commence clinical trials of its wound care product Aurase. Solscure’s Aurase is a gel-
based product that efficiently and gently cleans wounds, making the healing process
much more straightforward. Pre-clinical work has been extremely positive and the
clinical trial planning process is now well progressed.
Chronic wounds are a growing global problem, and alternative methods of treatment
for hard to heal wounds are extremely expensive, impractical and slow. Solascure’s
proprietary technology utilises the key mechanism of maggot debridement without the
cost or labour input of live maggots. In simple terms, it uses maggot elements to
facilitate and promote the body’s own wound cleansing processes. Core benefits of the
product are the clear practical elements, as well as the reduced time scale to full
debridement without delaying wound healing.
SolasCure have an approved protocol for a clinical study in order to reach market
authorisation, which is anticipated to commence in early 2021 (with phase 1 anticipated
to conclude by the end of the year). Crucially, the product permits the use of the main
maggot-derived wound debriding enzyme without the cost or labour input involved with
the use of live maggots, but also augments and synergises the body’s own wound
cleansing processes. The product is expected to demonstrate 3 key benefits: 1)
Specific swift destabilisation of fibrin debris; 2) No irritation or damage to healthy tissue;
3) Reducing the time to full debridement without delaying wound healing.
In January 2021, the VCT invested £500,000, alongside £733,000 of Seneca EIS funds
as part of a £2.9m fundraise to allow the company to progress and complete the full
trial (Phase 1 and 2) by the end of 2022.
27
The Ordinary Share Pool
Shareholders will recall that whilst Seneca is the Company’s Investment Manager, responsibility for the
management of the Ordinary share pool investments continues to rest with those remaining members of the
Board of Directors who were serving at the point of Seneca’s appointment on 23 August 2018, which now
includes John Hustler and Richard Roth.
AIM Quoted Investments
The Ordinary share pool’s largest investment is AIM quoted Scancell and this represented 37% of the Ordinary
share pool’s NAV as at 31 December 2019 when the Scancell share price was 7.0p. During the year, the
Scancell share price almost doubled and ended the year at 13.5p. In view of this increasing share price, the
Company took the opportunity to realise some profit and sold a small portion of our Scancell shares during the
year (1,049,730 shares (8%) were sold from a holding at the start of the year of 13,049,730 shares) realising
£127k and generating a profit versus original cost of £64k (a 2x return on the original investment) and a profit
versus the 31 December 2019 carrying value of £54k. The Ordinary share pool’s remaining stake in Scancell
of 12,000,000 shares increased by £780k during the year to stand at a value of £1,620k as at 31 December
2020.
The Ordinary share pool’s investment in AIM quoted Omega gained significant traction in the year following its
involvement in a partnership to develop a C-19 antibody test. The share price rose substantially from its 31
December 2019 price when it was 14p and this allowed the Company to sell the Ordinary share pool’s entire
holding of 2,293,868 Omega shares in the year for a total of £987k. This generated a profit versus original cost
of £659k (a 3x return on the original investment) and similarly a profit of £666k versus its 31 December 2019
value.
Unquoted Investments
With regard to the Ordinary share pool’s unquoted investments, the carrying value of OR Productivity Limited
(“ORP”) and Fuel 3D Technologies Limited (“Fuel 3D”) were both reduced as a result of fundraises by these
companies in 2020. In the case of ORP, the dilutive impact of the funds raised are such that the Company
reduced the carrying value to £nil for the Ordinary share pool’s investment in ORP as at 31 December 2020
(31 December 2019 carrying value: £233k) and in the case of Fuel 3D the carrying value has been reduced to
bring it in line with the price of their 2020 fundraise. Although the Ordinary share pool has maintained the value
of Arecor Ltd at the price of the last fundraising in 2018, it continues to make excellent technical and commercial
progress.
Performance and Dividends
As a result of the above AIM quoted investee company realisations, the Ordinary share pool was able to pay
dividends totalling 13p per Ordinary share during the period.
The Total Return in relation to the Ordinary shares is now 95.5p comprising cumulative distributions of 65.25p
per Ordinary share and a residual NAV per Ordinary share of 30.2p as at 31 December 2020.
As noted in the Chairman’s statement, the Company is focussed on realising assets in the Ordinary share pool
at the appropriate time with the proceeds then being distributed to Ordinary shareholders as dividends – it is
therefore noteworthy that in the 3 years to 31 December 2020 the Company has paid out dividends totalling
41p per Ordinary share (equivalent to 64.3% of the NAV per Ordinary share of 63.8p as at 31 December 2017)
and the Ordinary share pool also retains NAV per Ordinary share of 30.2p as at 31 December 2020.
28
Investment Portfolio – Ordinary shares
Unquoted Investments
Arecor Limited
Fuel 3D Technologies Limited
Insense Limited
OR Productivity Limited
Microarray Limited
ImmunoBiology Limited
Equity
held
%
Investment
at cost
£'000
Unrealised
profit/(loss)
£'000
Carrying
value at
31 December
2020
£'000
1.1
<1.0
4.6
3.7
3.0
1.2
142
299
509
765
132
868
63
(104)
(388)
(765)
(132)
(868)
205
195
121
-
-
-
Movement
in the year to
31 December 2020
£'000
-
(81)
-
(232)
-
-
Total unquoted investments
2,715
(2,194)
521
(313)
Quoted Investments
Scancell plc
Total quoted investments
Total investments
Shares held
12,000,000
Investment
at cost
£'000
Unrealised
profit/(loss)
£'000
Carrying
value at
31 December
2020 £'000
Movement
in the year to
31 December 2020
£'000
726
726
894
894
3,441
(1,300)
1,620
1,620
2,141
780
780
467
Exits for the period
Investment Date
No. of
Shares sold
Investment at
cost £'000
Sale
Proceeds
£’000
Realised
profit/(loss)
£'000 Exit Multiple
Scancell plc *
December 2003
1,049,730
Omega Diagnostics plc
August 2007
2,293,868
Exosect Limited **
January 2010
8,575
Total
*Partial exit
**Dissolved 24 January 2020
63
328
270
661
127
987
-
1,114
64
659
(270)
453
2.0
3.0
-
1.7
29
Ordinary Share Pool – Investment Portfolio – All Six Unquoted Investments by value as at 31 December
2020
1. Arecor Limited
Initial investment date:
January 2008
Cost:
Valuation:
Equity held:
£142,000
£205,000
1.1%
Arecor was a spin-out from Insense (a Seneca
Growth Capital Ordinary share investee company –
see below) to commercialise technology developed
by Insense for enabling biologics to maintain their
integrity without the need for refrigeration - this both
reduces cost and also helps supply chain logistics in
developing countries where temperature monitored
cold storage facilities are in short supply.
Last statutory accounts:
31 December 2019
Progress made by the company in 2020 includes:
Turnover:
£748,000
Loss before tax:
£2.7 million
Net assets:
£4.2 million
Valuation method:
Price of last fundraise
•
•
•
•
•
Announcing in March 2020 that Arecor had extended its multi-product
collaboration with a US-based clinical stage biotechnology company.
Announcing in June 2020 positive results of their phase 1 trial on AT247.
Expanding their partnership with Hikma announced 20 October 2020.
Commencing in December 2020 dosing patients in the AT278 clinical study
(ultra-concentrated insulin, first in man study) following a £1.9m fund raise:
this is a very significant milestone as they continue to build momentum with
their differentiated portfolio of superior products.
Announcing in late December 2020 that Arecor’s partner, Inhibrx, exercised
their option to license a novel formulation of the investigational clinical stage
product, INH-101, developed by Arecor. This is the first license under a multi-
product collaboration with Inhibrx and further validates the value of the
ArestatTM technology platform in developing superior versions of existing
therapeutic products.
30
2. Fuel 3D Technologies Limited
Initial investment date:
March 2010
Cost:
Valuation:
Equity held:
£299,000
£195,000
< 1%
Last statutory accounts:
31 December 2019
Turnover:
£521,000
Loss before tax:
£4.3 million
In 2014 Fuel 3D was formed to acquire the computer
3D imaging IP of Seneca Growth Capital Ordinary
share
initial
investee company, Eykona. The
application for this IP targeted by Eykona was
measuring the volume of chronic wounds; however
this has since developed and the current application
focus is on a) measuring tumours in animals used in
drug development via a product called BioVolume
and b) enabling the manufacture of products to fit a
particular individual e.g. masks used to treat certain medical conditions.
BioVolume is Fuel 3D’s lead product and improves measurement accuracy, inter-
operator consistency, animal welfare, cost efficiencies, compliance and the success of
pre-clinical oncology research.
Net assets:
£5.4 million
Progress made by the company in 2020 includes:
Valuation method:
Price of last fundraise
•
•
•
•
The development of BioVolume in conjunction with major pharmaceutical
companies but have suffered C-19 related delays: trials with three of the
majors are only now coming to an end and the fourth commenced in January
2021. The data to date looks promising and has recently enabled the signing
of a contract to sell two units to a specialist research lab.
The continued development of the technology for FitsYou applications (e.g.
sleep apnoea masks and eyewear) has taken longer than expected, partly
due to working at the edge of capability of partners’ platforms. The app that
has been designed for the world’s largest manufacturer of sleep apnoea
masks (to allow them to scan customers’ faces in order to assess best fit)
has recently been completed and a three month pilot will start early in the
New Year, hopefully resulting in a commercial licensing agreement later in
2021. The same technology is also being used to develop tools targeted at
the eyewear industry, developing apps to bring virtual try on and best fit to
eyewear retailers and brands. Fuel 3d is exploring the launch of a B2C
marketplace and the company has filed a patent application to cover the
creation of a 3D model using depth data generated by mobile devices which
it expects to form a fundamental part of its technology offering within FitsYou.
The reduction in cash burn, which is now c.40% lower than this time last year
and the raising of £3.8m (at a slightly reduced valuation) means that even in
the absence of revenues, the company has sufficient runway to take it
through to the end of 2021, although it may seek further investment to
accelerate development and commercialisation of FitsYou.
The board of Fuel3D is also considering separating each business into
separate units as the BioVolume and FitsYou businesses are likely to appeal
to different buyer audiences.
31
3.
Insense Limited
Initial investment date:
July 2003
Cost:
Valuation:
Equity held:
£509,000
£121,000
4.6%
Last statutory accounts: 31 December 2019
Insense is an innovative, biotechnology company and
was spun-out from Unilever’s R&D laboratory in
2001.
It has since had two successful spinouts, namely
Arecor (see above) and Archimed, from which
Microarray (see below) was also spun-out. Current
Insense development activity is concentrated on
dermatology products for both professional and
consumer applications.
Turnover:
Not Disclosed
Progress made by the company in 2020 includes:
Loss before tax:
Not Disclosed
Net liabilities:
£51,000
Valuation method:
Price of last fundraise
•
Completing testing of the UV lamp that will be used in a first-in-man trial and
continuing preparations for further formulation and stability testing. C-19 has
affected progress in 2020, slowing the speed of product and service delivery
from Chinese and UK-based partners.
4. OR Productivity Limited
Initial investment date:
March 2011
Cost:
Valuation:
Equity held:
£765,000
£nil
3.7%
Last statutory accounts:
31 March 2020
Turnover:
Not Disclosed
At the end of 2011, Freehand 2010 (a Seneca Growth
Capital Ordinary share investee) was acquired by OR
Productivity plc (ORP) in exchange for ORP shares.
intellectual property
Freehand 2010 owns
to
the
technology incorporated in a product, FreeHand, for
robotically controlling the laparoscope (part of the camera
system) used in the growing sector that is keyhole surgery. The company sells the
system outright and provides consumables although, increasingly, the business model
is built upon free placement of the system with recurring revenue then being generated
from the subsequent sale of a consumable per operation.
Loss before tax:
Not Disclosed
Progress made by the company in 2020 includes:
Net liabilities:
£4.6 million
Valuation method:
Carrying value reduced
to £nil
•
•
•
•
An initial fundraising in 2020 which raised £750,000 following which a
Crowdcube funding campaign was launched. To date the fundraising has
achieved £1.225 million.
Year over year sales being up in spite of C-19 but pressures on elective
surgery have resulted in significant revenue shortfall to budget.
Spanish distributor MBA continuing to lead the way and has ordered 3 new
Panorama robots from the company.
Announcing a new distribution partnership with Imperial Medical Solutions to
support sales in India, Sri Lanka, Malaysia and the Caribbean.
The current fundraising has been through the issue of A Ordinary shares which carry a
one times repayment preference. In addition further A Ordinary shares with the same
preference have been issued to redeem certain outstanding liabilities. At the present
time the Board considers it unlikely that the Ordinary share pool investment in ORP can
be valued in excess of the value of the A Ordinary shares issued. The Ordinary share
pool does not hold any A Ordinary shares.
32
5.
ImmunoBiology Limited
Initial investment date:
November 2005
Cost:
Valuation:
Equity held:
£868,000
£nil
1.2%
Last statutory accounts:
31 May 2020
Turnover:
£nil
Loss before tax:
£594,000
Net assets:
£262,000
Valuation method:
Carrying value reduced
to £nil
(“ImmBio”)
illnesses such as meningitis,
ImmunoBiology
is a biotechnology
company that is focused on developing treatments
for
tuberculosis,
influenza and hepatitis C. The company’s technology
is based on the discovery that a group of proteins
known as ‘heat shock proteins’ has a pivotal role in
controlling
to
infections. The focus is currently on a vaccine for
Pneumococcal Disease, for which the challenge is
that there are >90 strains in circulation but present treatments address only a small
proportion. In 2016 a first in human study demonstrated safety in adults.
the normal
response
immune
ImmBio - formally known as ImmunoBiology Ltd has licensed its pneumococcal vaccine
to China National Biotech Group. It has completed certain parts of its technology transfer
and is now seeking to start a phase 2 study of the same vaccine. Coronavirus has again
highlighted the importance of vaccines to the world and in recent years pneumococcal
disease has claimed a similar number of deaths as C-19 in 2020. An existing vaccine
has reduced the death rate, but the existing vaccines only protect against fewer than 20
of the 90 or so existing strains. As ImmBio’s ImmBioVax technology utilises heat shock
proteins to activate T-cell responses, it is hoped that it can be used to create vaccines
for a wide range of currently poorly served infectious diseases.
ImmBio has a complex equity structure which has impacted the investment valuation.
As such, the Board does not believe that the Company’s Ordinary share pool’s
investment currently has any value.
Progress made by the company in 2020 includes:
•
•
•
Continuing with the technology transfer to a subsidiary company of China
National Biotec Group to co-develop ImmBio’s proprietary PnuBioVax
vaccine against pneumococcal disease and launch the pneumococcal
vaccine in the Greater China area upon completion of successful clinical
studies but there is also a requirement to start a clinical trial outside China
which needs funding.
Improving the required storage conditions. (hoping to achieve refrigerator
storage) via their partnership with CPI (an independent technology
innovation centre) to produce a Pneumococcal vaccine which is heat stable,
thus avoiding the need (and inherent expense) of the cold chain – ImmBio
estimate there to be c.50 million patients annually who could benefit from
such a vaccine.
Commencing discussion with a number of strategic partners and vaccine
producers, some of whom have technology to use Immbio’s approach; there
are regulatory challenges but C-19 may help in this scenario. It has certainly
made everyone more receptive to vaccines and with different mutations,
universal vaccines become more popular. Existing C-19 vaccine suppliers
are also keen to have a second or third approach on their books especially
which doesn’t need to keep up with changing strains; this may be beneficial
to Immbio.
Almost all staff are currently furloughed, whilst further funds can be obtained.
33
6. Microarray Limited
Initial investment date:
January 2011
Cost:
Valuation:
Equity held:
£132,000
£nil
3.0%
Last statutory accounts: 31 December 2019
Turnover:
Not Disclosed
Loss before tax:
Not Disclosed
Net liabilities:
£(4 million)
Valuation method:
Carrying value reduced
to £nil
Microarray Ltd is a UK-based specialist wound
healing company. Founded in 2000, Microarray was
de-merged from Archimed, a spin-out from Insense
(see above): the company is now privately owned.
The company has access to wide ranging expertise
in the fields of wound dressing product development,
sales; electrochemistry and
marketing and
diagnostic sensor
technologies; biochemistry,
oxygen and iodine chemistry; enzymology, immunology and inflammation. Current
research and development activities are concentrated on innovative wound care
diagnostics.
Microarray owns and continues to develop new intellectual property in its specialist
fields. It works independently and with expert academic and industrial partners.
Progress made by the company in 2020 includes:
•
•
Designing and gaining the necessary approvals for our next clinical trial
looking at chronic wound state biomarkers. C-19 has affected the recruitment
of patients for the trial, which is now hoped to start in Q3/2021.
In parallel, the company continues to use machine-learning methods to
analyse the clinical data collected to date, and is investigating the
commercial potential of these non-biomarker assets.
Previously product testing results have not provided the indicators that the company
hoped for in terms of assessing whether a wound is infected or not. As a result of this
adverse outcome in relation to an area of focus for the company, the carrying value of
the investment of the Ordinary share portfolio’s investment in Microarray Limited has
been reduced to £nil. Notwithstanding the above, the company is continuing to develop
its wound diagnostic products as the progress in 2020 indicates.
34
Ordinary Share Pool – Investment Portfolio – AIM Quoted Investment as at 31 December 2020
December 2003 Scancell is an AIM listed biotechnology company that is developing
a pipeline of therapeutic vaccines to target various types of cancer,
with the first target being melanoma.
£726,000
1. Scancell plc
Initial investment
date:
Cost (of the portion
of the original
investment still
held as at 31
December 2020):
Valuation:
£1,620,000
Equity held:
1.5%
Last statutory
accounts:
30 April 2019
Turnover:
£nil
Loss before tax:
£6.7 million
Net assets:
£9.3 million
Valuation method: Bid price of
13.5p per share
The Immunobody platform technology, in effect, educates the
immune system how to respond – this means that the technology
can also be licensed to pharmaceutical companies to assist the
development of their own therapeutic vaccines, which is an area of
emerging importance for which a number of big pharmas do not
have in-house technology. In addition, in 2012 a second platform technology, Moditope, was
announced and is based on exploiting the normal immune response to stressed cells and is
complementary to the Immunobody platform. The AvidMab platform was established in 2018 which
allows direct tumour killing.
Scancell continues to develop its multiple technologies. Progress made by the company in 2020
includes:
•
•
•
The company received FDA approval in February 2020 to initiate the US arm of the Phase
2 SCIB1 clinical trial although C-19 has delayed patient recruitment. The Modi-1 Phase1/2
trial is progressing for regulatory submission with a planned study start in the UK in the first
half of 2021. GMP drug manufacture is advancing and formal regulatory-compliant toxicity
studies are complete The new AvidiMab platform has also generated significant interest and
further agreements have been signed with different partners to evaluate its potential, which
if successful, could translate into important commercial deals.
In April Scancell announced it had initiated a research project to use its clinical expertise in
cancer to produce a simple, safe, cost effective and scalable vaccine which could induce a
durable response against the virus that causes C-19. The project is funded by a £2 million
Innovate UK grant awarded in August to a consortium between Scancell, University of
Nottingham and Nottingham Trent University. Scancell has now selected their C-19 vaccine
candidate, SN14, for further development and clinical trials. SN14 is a second generation
vaccine which offers several potential advantages over currently approved and late-stage
C-19 vaccines. In October, it entered into a collaboration with Cobra Biologics, part of the
Cognate BioServices family, to conduct preliminary work leading to the manufacture of SN14
with the goal of starting a Phase 1 COVIDITY clinical trial as soon as possible during 2021.
During the year, the company completed two successful fund raises totalling £48 million
(£46.1 million net proceeds) from the issue of shares and convertible loan notes (CLN): In
August, it raised £15 million at a price of 5.5p per share (includes a residual amount of
£1.75m held in CLN, and which included a significant new US institutional investor (Redmile
Group LLC, “Redmile”). This funding will allow planned trials to continue while partnering
discussions are pursued. In October, a further £33m was raised predominately from
Redmile: £15.1m in equity at 11p per share and £17.9m in CLN. Redmile now holds just
under 30% of the equity and all of the CLN, and Vulpes Life Science Fund 14.5%. These
additional funds will extend the utility of the company's ImmunoBodyTM, ModitopeTM, and
AvidiMab™/tumour-associated glycans ("TaG") antibody products and platforms and to
accelerate and broaden its development pipeline of new potential novel therapies and
increase the funding available for the company's C-19 vaccine.
As a result of these developments, the Scancell share price has seen much volatility with prices ranging
from 4p to 20p during the year. These valuations are based on a bid price of 13.5p per share and the
bid price was 24.5p per share at 19 February 2021.
Richard Manley
Seneca Partners Limited
22 February 2021
35
Business Review
Company Performance
The Board is responsible for the Company’s investment strategy and performance.
The graph below compares the NAV return (rebased to 100) of the Company’s Ordinary shares over the period from
October 2001 to December 2020 and the B shares from August 2018 to December 2020, with the total return from
a notional investment (rebased to 100) in the FTSE All-Share index over the same period. This index is considered
to be the most appropriate broad equity market index for comparative purposes. However, the Directors wish to
point out that VCTs have very restrictive investment criteria in their observance of the VCT rules.
Ordinary Share Performance
)
p
(
n
r
u
t
e
R
350.00
300.00
250.00
200.00
150.00
100.00
50.00
-
Q 4 2001
Q 4 2002
Q 4 2003
Q 4 2004
Q 4 2005
Q 4 2006
Q 4 2007
Q 4 2008
Q 4 2009
Q 4 2010
Q 4 2011
Q 4 2012
Q 4 2013
Q 4 2014
Q 4 2015
Q 4 2016
Q 4 2017
Q 4 2018
Q 4 2019
Q 4 2020
Ordinary Share NAV Total Return*
Ordinary Share NAV Total Return Including Income Tax Reliefs**
FTSE All-Share Index Total Return***
* Includes Ordinary share dividends reinvested. Rebased to 100p at launch
** Includes Ordinary share dividends reinvested and income tax relief on initial investment and Ordinary share reinvestments. Rebased to 100p at launch
*** Rebased to 100p at launch
B Share Performance
)
p
(
n
r
u
t
e
R
140.00
120.00
100.00
80.00
60.00
40.00
20.00
-
Q 3 2018
Q 4 2018
Q 1 2019
Q 2 2019
Q 3 2019
Q 4 2019
Q 1 2020
Q 2 2020
Q 3 2020
Q 4 2020
B Share NAV Total Return*
B Share NAV Total Return Including Income Tax Reliefs**
FTSE All-Share Index Total Return***
* Includes B share dividends reinvested. Rebased to 100p at launch
** Includes B share dividends reinvested and income tax relief on initial investment and B share reinvestments. Rebased to 100p at launch
*** Rebased to 100p at launch
36
AIC methodology: The NAV Total Return to the investor, including the original amount invested (rebased to
100p) from launch, assuming the dividends paid were re-invested at the NAV of the Company at the time the
shares were quoted.
Results - Return on ordinary activities as per Income Statement
Net return attributable to Ordinary shareholders
Net return attributable to B shareholders
Total
Key Performance Indicators (KPIs)
Year ended
Year ended
31 December 2020
31 December 2019
£’000
1,045
252
1,297
£’000
(547)
(168)
(715)
The Board uses a number of measures to assess the Company’s success in meeting its strategic objectives.
The KPIs it monitors include:
KPI
Objective
Total Return (Net Asset Value plus
cumulative dividends paid) per
share for both share classes
To provide shareholders with an attractive income and capital return by
investing its funds in a portfolio of both unquoted and AIM/AQSE quoted UK
companies which meet the relevant criteria under the VCT rules.
the
total expenses of
The
Company as a proportion of
shareholders’ funds
To maintain efficient operation of the VCT whilst minimising running costs.
The Total Return for the Ordinary shares and B shares is included in the Financial Summary on page 1 and
the change in the Total Return is explained in the Chairman’s Statement on pages 8 to 9. The Total Return for
each share class increased during the year with the B share Total Return increasing 1.8% to 97.8p and the
Ordinary share Total Return increasing 15.5% to 95.5p.
The increase in the Ordinary share Total Return is principally as a result of the increase in the share prices of
the Ordinary share pool’s AIM quoted investee companies and the subsequent realisations of these AIM quoted
investments during the year as detailed in the Investment Manager’s report on page 28.
Whilst the NAV per Ordinary share decreased by 0.2p from 30.4p to 30.2p during the year, this was after the
payment of dividends per Ordinary share totalling 13.0p. A better understating of the underlying performance
of the Company’s Ordinary share portfolio during the year is therefore provided by considering the NAV
movement per Ordinary share during the year before dividends which shows an increase of 12.8p (a 42%
increase compared to 31 December 2019).
37
The increase in the B share Total Return in 2020 amounted to 1.7p which was principally due to the increase
in the share prices of the B share pool’s AIM quoted investee companies, the subsequent full and partial
realisations of these AIM quoted investments during the year, offset by the impact of the Company’s running
costs on the B share pool and a reduction in the fair value of one of the B share pool’s seven unquoted company
investments as a result of the impact of C-19. Whist the overall NAV dropped by 1.3p, this was more than
explained by the dividends of 3.0p per B share, paid in the period.
The Company has also invested £1.36 million into six new companies during the period in the B share pool
and has also made four realisations as detailed in the Chairman’s Statement on pages 8 to 9 (as well as one
further investment from the Ordinary share portfolio being dissolved, that had previously been fully provided
for). The new investments made are in line with the Company’s expectations for deploying capital raised and
indicative of the healthy pipeline of growth capital investment opportunities. The disposals are also in keeping
with the Company’s strategy on realising investments at an appropriate time.
We have also achieved dividend payments for both share classes.
• An interim capital dividend of 8 pence per Ordinary share for the year to 31 December 2020 was paid on
23 August 2020. A further interim capital dividend of 5 pence per Ordinary share for the year to 31
December 2020 was paid on 30 October 2020.
• An interim dividend of 1.5 pence per B share for the year to 31 December 2020 was paid on 15 May 2020.
A second interim dividend of 1.5 pence per B share for the year to 31 December 2020 was paid on 24
December 2020.
The Company was able to maintain efficient operation of the VCT whilst minimising running costs as a
proportion of shareholder’s funds. For a three-year period with effect from 1 July 2018, expenses of the
Company are capped at 3% of the weighted average net asset value of the B shares, including the
management fee (but excluding any performance fee). Accordingly, Seneca reduced its management fee by
£86,000 in the year to 31 December 2020 (2019: a reduction of £75,000) to keep expenses in line with this
cap.
Viability Statement
In accordance with provision 30 and 31 of The UK Corporate Governance Code 2018, the Directors have
assessed the prospects of the Company over a longer period than the 12 months required by the “Going
Concern” provision. The Board regularly considers the Company’s strategy, including investor demand for the
Company’s shares, and a three-year period is considered to be a reasonable time horizon for this.
The Board has carried out a robust assessment of the principal risks facing the Company and its current
position, including those which may adversely impact its business model, future performance, solvency or
liquidity. The principal risks faced by the Company and the procedures in place to monitor and mitigate them
are set out below.
In addition to the above, the Company is also facing risks resulting from the impact of the C-19 pandemic. The
Company’s Board and Investment Manager are focused on ensuring that investee companies are taking the
required actions to minimise the potential impact that the C-19 pandemic could have on them. The Board and
Seneca will continue to review risks posed by C-19 and keep those risks under regular review.
The Board has also considered the Company’s cash flow projections and found these to be realistic and
reasonable. The assets of the Company consist mainly of securities, four of which are AIM quoted, relatively
liquid and readily accessible, as well as more than £5 million of cash as at 31 December 2020 (47% of net
38
assets). Since 31 December 2020, an additional unquoted investment has been made of £500k, but the
Company has also realised a further £914k from these AIM quoted investments, further strengthening the
Company’s liquidity.
Based on the above assessment the Board confirms that it has a reasonable expectation that the Company
will be able to continue in operation and meet its liabilities as they fall due over the three-year period to 31
December 2023.
Principal risks, risk management and regulatory environment
The Board carries out a regular review of the risk environment in which the Company operates, including
principal and emerging risks. The main areas of risk identified by the Board are as follows:
VCT qualifying status risk: the Company is required at all times to observe the conditions laid down in
Chapter 3 of Part 6 Income Tax Act 2007 for the maintenance of approved VCT status: these rules have
subsequently been updated on several occasions. The loss of such approval could lead to the Company losing
its exemption from corporation tax on capital gains, to investors being liable to pay income tax on dividends
received from the Company and, in certain circumstances, to investors being required to repay the initial
income tax relief on their investment.
The Board keeps the Company’s VCT qualifying status under regular review. The Board has also engaged
Philip Hare & Associates LLP as VCT Status advisor.
Funds raised by VCTs are first included in the investment tests from the start of the accounting period
containing the third anniversary of the date on which the funds were raised. The value used in the qualifying
tests is not necessarily the original investment cost due to the complex rules required by HMRC, therefore the
allocation of Qualifying Investments as defined by the legislation can be different to the portfolio weighting as
measured by market value relative to the net assets of the VCT.
The main specific regulations that must have been met, and which the Directors are confident have been
complied with, are:
• The Company’s income in the period has been derived wholly or mainly (70% plus) from shares or
securities.
• The Company has not retained more than 15% of its income from shares and securities.
• At least 80% by value of the Company’s investments has been represented throughout the period by
shares or securities comprised in qualifying holdings of the company. New funds raised are included
in this requirement from the beginning of the accounting period in which the third anniversary of the
share issue date falls. By virtue of a disregard of disposal proceeds, of which there have been £1.1m
of relevant share sales (exit proceeds that occurred in the prevailing 12-month period are deducted
from the total investments balance), as at the end of December 2020 the percentage is 100% in respect
of the 80% Qualifying Holdings test. Note, these exit proceeds are only deducted to the point that the
test reaches 100% but without these the Company was still well above the 80% qualifying requirement.
• At least 70% by value of the Company’s qualifying holdings has been represented throughout the
period by holdings of eligible shares (investments made before 6 April 2018 from funds raised before
6 April 2011 are excluded).
• At least 30% of funds raised after 31 December 2018 must be invested in qualifying investments by
the anniversary of the accounting period in which those funds were raised. This was the first year of
this new test, and as at 31 December 2020, 39% of funds raised in the year to 31 December 2019 had
been invested in qualifying investments.
39
• No holding in any company has at any time in the period represented more than 15% by value of the
Company’s investments at the time of investment or when the holding is added to.
• The Company’s ordinary capital has throughout the period been listed on a regulated European
market.
• No investment made by the VCT has caused the investee company to receive more than £5m (or
£10m for knowledge intensive companies) of State Aid investment in the year ended on the date of
the VCT's investment, nor more than the lifetime limit of £12m (or £20m for knowledge intensive
companies). Furthermore, the use of funds has not been contrary to the EU State Aid guidelines.
Investment risk: the majority of the Company's investments are in smaller quoted and unquoted companies
which are VCT qualifying holdings, which by their nature entail a higher level of risk and lower liquidity than
investments in large quoted companies. The Directors and the Investment Manager aim to limit the risk
attached to the portfolio as a whole by careful selection and timely realisation of investments, by carrying out
due diligence procedures and by maintaining a spread of holdings in terms of financing stage. The Board
reviews the investment portfolio on a regular basis.
Financial risk: by its nature, as a VCT, the Company is exposed to market price risk, credit risk, liquidity risk,
fair value and cash flow risks. All of the Company’s income and expenditure is denominated in sterling and
hence the Company has no direct foreign currency risk. The indirect risk results from investees doing business
overseas. The Company is financed through equity. The Company does not use derivative financial
instruments.
Cash flow risk: the risk that the Company’s available cash will not be sufficient to meet its financial obligations
is managed by frequent budgeting and close monitoring of available cash resources.
Liquidity risk: the Company’s investments may be difficult to realise. The spread between the buying and
selling price of shares may be wide and thus the price used for the valuation may not be achievable.
Regulatory risk: the Company is required to comply with the Companies Acts, the rules of the UK Listing
Authority and United Kingdom Accounting Standards. Breach of any of these might lead to suspension of the
Company’s Stock Exchange listing, financial penalties or a qualified audit report.
Reputational risk: inadequate or failed controls might result in breaches of regulation or loss of shareholder
trust.
Internal control risk: the Board reviews annually the system of internal controls, financial and non-financial,
operated by the Company. These include controls designed to ensure that the Company's assets are
safeguarded and that proper accounting records are maintained.
The Board seeks to mitigate the internal risks by setting policies, regular review of performance, enforcement
of contractual obligations and monitoring progress and compliance. In the mitigation and management of these
risks, the Board applies rigorously the principles detailed in the Financial Reporting Council’s Guidance on Risk
Management, Internal Controls and Related Financial and Business Reporting. Details of the Company’s
internal controls are contained in the Corporate Governance section starting on page 50.
Further details of the Company’s financial risk management policies are provided in note 16 to the Financial
Statements.
40
Gender and Diversity
The Board consists of four Directors comprising three Independent Directors, two of whom were appointed
prior to the appointment of Seneca, with a further Independent Director appointed in December 2019. The
fourth Director is the CEO of Seneca. The Board considers diversity when reviewing Board composition and
has made a commitment to consider diversity when making future appointments. The Board will always appoint
the best person for the job. It will not discriminate on the grounds of gender, race, ethnicity, religion, sexual
orientation, age or physical ability. However, the Board fully supports the aims of the Hampton Alexander
Report and the renewed focus and emphasis on diversity in the AIC Code of Corporate Governance (the “2019
AIC Code”) and in due course will strive to comply with these recommendations.
41
Details of Directors
John Hustler (Non-Executive Chairman)
John joined Peat Marwick, now KPMG, in 1965 and became a Partner in 1983. Since leaving KPMG in 1993
to form Hustler Venture Partners Limited, he has advised and been a director of a number of growing
companies. He is presently Chairman of Octopus Titan VCT plc. He was also a member of the Council of The
Institute of Chartered Accountants in England and Wales and Chairman of its Corporate Finance Faculty from
1997-2000, and was a member of the Council of the British Venture Capital Association from 1989-1991. John
has been a Director of the Company since inception and has extensive historic knowledge of the Ordinary
share pool investments and the recent development of the Company’s B share pool. His knowledge remains
highly relevant to the ongoing success of the Company.
John has a beneficial interest in Scancell.
Richard Roth (Non-Executive Director and Chairman of the Audit Committee)
Richard is a director of all the Oxford Technology Venture Capital Trusts and Chairman of Oxford Technology
2 Venture Capital Trust Plc. He is a Chartered Management Accountant and worked in the airline industry for
a number of companies including easyJet and was CFO of RoyalJet. He has subsequently had a number of
consulting assignments, in particular helping companies determine their strategy, and implementing business
improvements. He has invested in a number of small (mainly unquoted) companies and has also advised
several potential start-up businesses – mainly travel-related. Richard has been a VCT investor for 20 years
and this, combined with his multiple VCT directorships, provides the Company with valuable and detailed
knowledge regarding the successful ongoing operation of a VCT.
Richard has a beneficial interest in Scancell, and Fuel3D.
Richard Manley (Non-Executive Director)
Richard is CEO of Seneca Partners Limited. He qualified as a chartered accountant with KPMG in 2004, joined
NM Rothschild’s Leveraged Finance team in Manchester in 2007 before joining Cenkos Fund Managers in
2008.
Richard joined Seneca on launch in 2010 and has been involved in the development of all areas of Seneca’s
business and played a key role in its journey from start up to managing more than £100m by 2020. He has
been a continuous member of Seneca’s investment and credit committees and has been involved in all of
Seneca’s EIS and VCT growth capital investments to date. Richard became Managing Partner of Seneca
Partners Limited in 2016 and CEO in 2017. As CEO of the Investment Manager, Richard is well placed to
provide the Company with timely and accurate updates in relation to the development of the B share portfolio,
ongoing fundraise progress, upcoming investments and the continuing administration of the Company.
Alex Clarkson (Non-Executive Director)
Alex is a Managing Director of Bamburgh Capital. He qualified as a chartered accountant with
PricewaterhouseCoopers in 1998, joined Brewin Dolphin Securities in 2000 before becoming co-founder of
Zeus Capital in 2003. Alex then went on to co-found Bamburgh Capital in 2011, executing a large number of
transactions acting on both the “buy” and “sell” side and raising funding. During this time, Alex was co-founder
of Compass BioScience Group Limited and Collbio, two acquisitive companies, and became interim CFO of
Collbio which undertook an IPO on the London Stock Market within an 18-month period, changing its name to
Collagen Solutions. Given Alex’s experience of public markets and growth capital investing, his expertise and
knowledge are highly relevant to the ongoing success of the Company.
Alex has a beneficial interest in Scancell.
42
Directors’ Report
The Directors present their Report and the audited Financial Statements for the year ended 31 December
2020.
The Directors consider that the Annual Report and Financial Statements, taken as a whole are fair, balanced
and understandable and provide the information necessary for shareholders to assess the Company’s
performance, business model and strategy.
Review of Business Activities
The Directors are required by section 417 of the Companies Act 2006 to include a Business Review to
shareholders. This is set out on page 36 and forms part of the Strategic Report. The purpose of the Business
Review is to inform members of the Company and help them assess how the Directors have performed their
duty under section 172 of the Companies Act 2006 (duty to promote the success of the Company). The
Company’s section 172 Statement on page 6, the Chairman's Statement on page 8 to 13, and the Investment
Manager’s Report on pages 14 to 35 also form part of the Strategic Report.
The purpose of this review is to provide shareholders with a snapshot summary setting out the business
objectives of the Company, the Board’s strategy to achieve those objectives, the risks faced, the regulatory
environment and the key performance indicators used to measure performance.
Directors’ Shareholdings – Ordinary shares
The Directors of the Company during the period and their interests (in respect of which transactions are
notifiable under Disclosure and Transparency Rule 3.1.2R) in the issued Ordinary shares of 1p are shown in
the table below:
John Hustler
Alex Clarkson
Richard Manley
Richard Roth
31 December 2020
Number of Shares
190,000
-
-
209,612
31 December 2019
Number of Shares
190,000
-
-
209,612
All of the Directors’ shares were held beneficially. There have been no changes in the Directors’ Ordinary share
interests between 31 December 2020 and the date of this report.
Directors’ Shareholdings – B Shares
The Directors of the Company during the period and their interests (in respect of which transactions are
notifiable under Disclosure and Transparency Rule 3.1.2R) in the issued B shares of 1p are shown in the table
below:
John Hustler
Alex Clarkson
Richard Manley
Richard Roth
31 December 2020
Number of Shares
-
-
62,071
15,000
31 December 2019
Number of Shares
-
-
51,010
15,000
All of the Directors’ B shares were held beneficially. There have been no changes in the Directors’ B share
interests between 31 December 2020 and the date of this report.
43
Directors’ and Officers’ Liability Insurance
The Company has maintained directors’ and officers’ liability insurance cover on behalf of the Directors,
Company Secretary and Investment Manager.
Whistleblowing
The Board has approved a Whistleblowing Policy for the Company, its Directors and any employees,
consultants and contractors, to allow them to raise concerns, in confidence, in relation to possible improprieties
in matters of financial reporting and other matters.
Bribery Act
The Board has approved an Anti-Bribery Policy to ensure full compliance with the Bribery Act 2010 and to
ensure that the highest standards of professional and ethical conduct are maintained.
Management
Seneca as the Company’s Investment Manager is responsible for the management of the Company’s B share
pool investments. Responsibility for the management of the Ordinary share pool investments has been
delegated to those members of the current Board of Directors who served immediately prior to 23 August 2018,
namely John Hustler and Richard Roth.
The strategies and policies which govern the Investment Manager have been set by the Board in accordance
with section 172 of the Companies Act 2006.
Corporate Governance Statement
The Board has considered the principles and recommendations of the 2019 AIC Code. The Company’s
Corporate Governance policy is set out on pages 50 to 54.
The 2019 AIC Code is available on the AIC website (www.theaic.co.uk). It includes an explanation of how the
2019 AIC Code adapts the Principles and Provisions set out in the UK Corporate Governance Code (the “UK
Code”) to make them relevant for investment companies.
The Company has complied with the recommendations of the 2019 AIC Code and the relevant provisions of
the UK Corporate Governance Code, except as set out below:
• The Company does not have a Chief Executive Officer or a Senior Independent Director. The Board
does not consider this necessary as it does not have any executive directors.
• New Directors do not receive a formal induction on joining the Board, though they do receive one
tailored to them on an individual basis.
• The Company conducts a formal review as to whether there is a need for an internal audit function.
However, the Directors do not consider that an internal audit would be an appropriate control for this
VCT at this time.
• The Company does not have a Remuneration Committee as it does not have any executive directors.
• The Company does not have a Nomination Committee as these matters are dealt with by the Board.
For the reasons set out in the AIC Guide, and as explained in the UK Corporate Governance Code, the Board
considers the above provisions are not relevant to the position of the Company, being an investment company
44
run by the Board and managed by the Investment Manager. In particular, all of the Company’s day-to-day
administrative functions are outsourced to third parties. As a result, the Company has no executive directors,
employees or internal operations.
Directors
Biographical details of the Directors are shown on page 42.
In accordance with the Articles of Association and good governance, all four Directors will retire and offer
themselves for re-election at the forthcoming AGM.
The Board is satisfied that, following individual performance appraisals, the Directors who are retiring continue
to be effective and demonstrate commitment to their roles and therefore offer themselves for re-election with
the support of the Board. Further details regarding the Company’s succession planning are set out in the
Corporate Governance policy on pages 51 to 52.
The Board did not identify any conflicts of interest between the Chairman’s interest and those of the
shareholders, especially with regard to the relationship between the Chairman and the Investment Manager.
No concerns about the operation of the Board or the Company were raised by any Director during the period
and had any been raised they would be mentioned in the minutes or in writing to the Chairman to be circulated
to the Board in accordance with Provision 5.2 of the 2019 AIC Code.
The Board is cognisant of shareholders’ preference for Directors not to sit on the boards of too many listed
companies (“over-boarding”). The Board is satisfied that all Directors have the time to focus on the
requirements of the Company.
International Financial Reporting Standards
As the Company is not part of a group it is not mandatory for it to comply with International Financial Reporting
Standards (“IFRS”). The Company does not anticipate that it will voluntarily adopt IFRS. The Company has
adopted Financial Reporting Standard 102 – The Financial Reporting Standard Applicable in the United
Kingdom and the Republic of Ireland.
Environmental, Social and Governance (“ESG”) Practices
The Board recognises the requirement under section 414c of the Companies Act 2006 to detail information
about environmental matters (including the impact of the Company’s business on the environment), employee
and human rights, social and community issues, including information about any policies it has in relation to
these matters and effectiveness of these policies.
Given the size and nature of the Company’s activities and the fact that it has no employees and only four non-
executive Directors, the Board considers there is limited scope to develop and implement environmental, social
and community policies, but recognises the importance of including consideration for such matters in
investment decisions. The Board has taken into account the requirement of section 172(1) of the Companies
Act 2006 and the importance of ESG matters when making decisions which could impact shareholders,
stakeholders and the wider community. The Company’s Section 172(1) statement has been provided in the
Strategic Report on page 6, where the Directors consider the information to be of strategic importance to the
Company.
45
The Company seeks to ensure that its business is conducted in a manner that is responsible to the
environment. The management and administration of the Company is undertaken by the Investment Manager
who recognises the importance of its environmental responsibilities, monitors its impact on the environment
and implements policies to reduce any negative environmental impact and which promote environmental
sustainability.
The Investment Manager recognises that managing investments on behalf of clients involves taking into
account a wide set of responsibilities in addition to seeking to maximise financial returns for investors. Industry
practice in this area has been evolving rapidly and the Company seeks to be an active participant by working
to define and strengthen its principles accordingly. This involves both integrating ESG considerations into the
Investment Manager’s investment decision-making process as a matter of course, and also signing up to major
external bodies who are leading influencers in the formation of industry best practice. The following is an outline
of the kinds of ESG considerations that the Investment Manager is taking into account as part of its investment
process.
Environmental
Seneca, as part of its commercial due diligence practices and ongoing monitoring, examines potential issues
which could arise from supply chains, climate change and environmental policy compliance. The Investment
Manager looks for management teams who are aware of the issues and are proactive in responding to them.
Social
Seneca seeks to avoid unequivocal social negatives, such as profiting from forced labour within its investment
portfolio and to support positive impacts which will more likely find support from customers and see rising
demand. Seneca does not tolerate modern slavery or human trafficking within its business operations and
takes a risk-based approach in respect of our portfolio companies. Seneca actively engages with portfolio
companies and their boards to discuss material risks, ranging from business and operational risks to
environmental and social risks.
Governance
Seneca examines and, where appropriate, engages with companies on board membership, remuneration,
conflicts of interest such as related party transactions, and business leadership and culture. In addition, the
Company, as a matter of course, exercises its voting rights when possible.
Greenhouse Gas (“GHG”) Emissions and Streamlined Energy & Carbon
Reporting (“SECR”)
Under the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 (‘the 2013
Regulations’) and the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon
Report) Regulations 2018, quoted companies of any size are required under Part 15 of the Companies Act
2006 to disclose information relating to their energy use and GHG emissions.
All of the Company’s activities are outsourced to third parties. The Company therefore has no greenhouse gas
emissions to report from its operations, nor does it have direct responsibility for any other emissions producing
sources under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013 and the
Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations
2018. For the same reasons as set out above, the Company considers itself to be a low energy user under the
SECR regulations and therefore is not required to disclose energy and carbon information. A low energy user is
defined as an organisation that uses 40 MWh or less during the reporting period.
46
Going Concern
The Company’s business activities and the factors likely to affect its future performance and financial position
are set out in the Chairman’s Statement and Investment Manager’s Report on pages 8 to 13 and pages 14 to
35. Further details on the management of the principal risks are set out on pages 39 to 40 and financial risks
may be found in note 16 to the Financial Statements.
The Board receives regular reports from Seneca who acts as both the Investment Manager and the
Administration Manager, and the Directors believe that, as no material uncertainties leading to significant doubt
about going concern have been identified, it is appropriate to continue to adopt the going concern basis in
preparing the Financial Statements.
The assets of the Company consist mainly of securities, four of which are AIM quoted, relatively liquid
and readily accessible, as well as more than £5 million of cash as at 31 December 2020 (47% of net assets).
After reviewing the Company’s forecasts and expectations, the Directors have a reasonable expectation that
the Company has adequate resources to continue in operational existence for the foreseeable future. The
Company therefore continues to adopt the going concern basis in preparing its Financial Statements.
The Company is also facing risks resulting from the impact of the C-19 pandemic. The Company’s Board and
Investment Manager are focused on ensuring that investee companies are taking the required actions to
minimise the potential impact that the C-19 pandemic could have on them. The Board and Seneca will continue
to review risks posed by C-19 and keep those risks under regular review but do not consider the pandemic to
have any impact on the Company’s own ability to continue as a going concern.
Share Capital
As disclosed on page 99 the Board has authority to make market purchases of the Company’s own B shares.
No shares were purchased by the Company during the year (2019: nil).
At the last AGM held on 28 April 2020, the Board received authority to allot up to 35,000,000 B shares in
connection with any offer(s) for subscription (and any subsequent top up offer of B shares) and up to 405,800
Ordinary shares (for any miscellaneous offers of such shares), which represented approximately 479% of the
Company’s issued B share capital and approximately 5% of its issued Ordinary share capital as at 28 April
2020.
During the year, the Company did not issue any Ordinary shares (2019: nil). During the year, the Company
issued 2,701,500 B shares raising £2.4 million before expenses (2019: 2,325,078 shares and £2.3 million) No
further shares have been issued between 31 December 2020 and the date of this report.
The Company’s issued Ordinary share capital as at 31 December 2020 was 8,115,376 Ordinary shares of 1p
each (31 December 2019: 8,115,376 Ordinary shares of 1p each) and 9,062,948 B shares of 1p each (31
December 2019: 6,361,448 B shares of 1p each).
The total number of shares in issue for both the Ordinary shares and B shares of 1p each as at 31 December
2020 and 19 February 2021 was 17,178,324 (31 December 2019: 14,476,824) with each share having one
vote.
In accordance with Schedule 7 of the Large and Medium Size Companies and Groups (Accounts and Reports)
Regulations 2008, as amended, the Directors disclose the following information:
47
• The Company’s capital structure and voting rights are summarised above, and there are no restrictions
on voting rights nor any agreement between holders of securities that result in restrictions on the
transfer of securities or on voting rights;
• There exist no securities carrying special rights with regard to the control of the Company;
• The rules concerning the appointment and replacement of directors, amendment of the Articles of
Association and powers to issue or buy back of the Company’s shares are contained in the Articles of
Association of the Company and the Companies Act 2006;
• The Company does not have an employee share scheme;
• There are no agreements to which the Company is party that may affect its control following a takeover
bid; and
• There are no agreements between the Company and its Directors providing for compensation for loss
of office that may occur following a takeover bid or for any other reason, apart from their normal notice
period and any fees potentially due under the performance fee arrangements set out on page 58 and
note 6.
Substantial Shareholdings
At 31 December 2020 and at the date of this report, there was one holding of 3% and over of the Company’s
ordinary share capital. This holding related to Share Nominees Ltd and amounted to 3.34%.
Annual General Meeting
The Notice convening the 2021 AGM of the Company is set out at the end of this document (and a form of
proxy in relation to the meeting is enclosed separately). Part of the business of the AGM will be to consider
resolutions in relation to the following matters:
Resolutions 3 to 6 will seek the re-election of the existing four members of the Board as non-executive
Directors of the Company.
Resolution 7 will seek the re-appointment of UHY Hacker Young LLP as Independent Auditor to the Company.
Resolution 8 will seek authorisation to determine the auditor’s remuneration.
Resolution 9 will authorise the Directors to allot further B shares and Ordinary shares. This will enable the
Directors until the next AGM to allot up to 35,000,000 B shares in connection with any offer(s) for subscription
(and any subsequent top up offer of B shares) and up to 405,800 Ordinary shares (for any miscellaneous offers
of such shares), representing approximately 386% of the Company’s issued B share capital and approximately
5% of its issued Ordinary share capital as at 19 February 2021.
Resolution 10 will authorise the Board, pursuant to the Act, to make one or more market purchases of up to
14.99% of the issued B share capital of the Company from time to time. The price paid must not be less than
1p per B share, nor more than 5% above the average middle market price of a B share for the preceding five
business days. Any B shares bought back under this authority may be cancelled by the Board.
Resolution 11 will, under sections 570 of the Act, disapply pre-emption rights in respect of any allotment of
the B shares and/or Ordinary shares authorised under Resolution 9.
Resolution 12 will adopt amended Articles of Association which are substantially in the same form as the
Company’s current Articles of Association save that:
48
(i)
(ii)
(iii)
existing Clause 146 regarding Unclaimed Dividends has been deleted and replaced with a
new Clause 146 which provides the authorisation for all dividends, interest or other sum
payable and unclaimed for 12 months after having become payable to be invested or
otherwise made use of by the Board for the benefit of the Company until claimed and the
Company shall not be constituted a trustee in respect thereof. All dividends unclaimed for a
period of six years after having been declared or become due for payment shall (if the Board
so resolves) be forfeited and shall cease to remain owing by the Company; and
existing Clauses 53 to 56 (including the insertion of new Clauses 55A and 56A) have been
amended to include the ability for the Company to hold partially virtual general meetings.
Existing Clause 102 will be amended to authorise an increase in the total remuneration
payable to the Directors to £100,000 to allow for the appointment of a new non-executive
Director.
The Directors intend to use the authorities in Resolutions 9 and 11 for the purposes of the current Offer and a
further offer for subscription of B shares. The Directors have no current intention to utilise the authority in
relation to the Ordinary shares.
Copies of the Articles of Association of the Company (including a mark-up of the new articles of association
proposed to be adopted pursuant to resolution 12) will be available for inspection at the registered office of the
Company during usual business hours on any weekday (Saturday and Public Holidays excluded) from the date
of this notice, until the end of the Annual General Meeting and at the place of the Annual General Meeting for
at least 15 minutes prior to and during the meeting. However, given that shareholders will be unable to attend
the AGM this year, the Articles of Association will also be available on the Company’s website at
https://senecavct.co.uk/reports-documents/.
Recommendation
The Board believes that the passing of the resolutions above are in the best interests of the Company and its
shareholders as a whole and unanimously recommends that you vote in favour of these resolutions as the
Directors intend to do in respect of their beneficial shareholdings.
By Order of the Board
Craig Hunter
Company Secretary
22 February 2021
49
Corporate Governance
The Board has considered the principles and recommendations of the 2019 AIC Code.
The 2019 AIC Code addresses the Principles and Provisions set out in the UK Code, as well as setting out
additional Provisions on issues that are of specific relevance to Seneca Growth Capital.
The Board considers that reporting against the Principles and Provisions of the 2019 AIC Code, which has
been endorsed by the Financial Reporting Council (and associated disclosure requirements under paragraph
9.8.6 of the Listing Rules) provides more relevant information to shareholders.
The Company is committed to maintaining high standards in corporate governance and has complied with the
Principles and Provisions of the 2019 AIC Code, except as set out below. The Company strongly believes that
achieving its corporate governance objectives contributes to the long-term sustainable success of the
Company.
The 2019 AIC Code is available on the AIC website (www.theaic.co.uk). It includes an explanation of how the
2019 AIC Code adapts the Principles and Provisions set out in the UK Code to make them relevant for
investment companies.
Board of Directors
The Company has a Board of four non-executive Directors, details of each can be found on page 42. They
meet on a regular basis to review the investment performance and monitor compliance with the investment
policy laid down by the Board as set out in the Strategic Report on page 3.
The Board has a formal schedule of matters specifically reserved for its decision which include:
●
●
the consideration and approval of future developments or changes to the investment policy, including
risk and asset allocation;
the consideration and review of the Company’s compliance with HMRC conditions for maintenance of
approved VCT status as advised by Philip Hare & Associates LLP;
● consideration of corporate strategy;
● approval of the appropriate dividend to be paid to shareholders;
●
the appointment, evaluation, removal and remuneration of the Investment Manager, who also acts as
the Administration Manager;
the performance of the Company, including monitoring the discount of the share price to net asset
value; and
●
● monitoring shareholder profiles and considering shareholder communications.
The Chairman leads the Board in the determination of its strategy and in the achievement of its objectives. The
Chairman is responsible for organising the business of the Board, ensuring its effectiveness and setting its
agenda. He facilitates the effective contribution of the Directors and ensures that they receive accurate, timely
and clear information and that the Company communicates effectively with shareholders in accordance with
the Board’s duty to promote the success of the Company.
The Company Secretary is responsible for advising the Board through the Chairman on all governance matters.
All of the Directors have access to the advice and services of the Company Secretary, who has administrative
responsibility for the meetings of the Board and its Committees. Directors may also take independent
professional advice at the Company's expense where necessary in the performance of their duties.
50
The Company’s Articles of Association and the schedule of matters reserved to the Board for decision provide
that the appointment and removal of the Company Secretary is a matter for the full Board.
Attendance at Board and Audit Committee meetings during the year were as follows:
John Hustler
Alex Clarkson
Richard Manley
Richard Roth
Board meetings attended
(9 held in year)
9
9
9
9
Audit Committee meetings attended
(2 held in year)
2
2
2
2
In addition to formal Board meetings, the Board communicates on a regular basis in carrying out its
responsibilities in managing the Company.
Independence of Directors
The Board regularly reviews the independence of its members and is satisfied that the Company’s Directors
are independent in character and judgment and that there are no relationships or circumstances which could
affect their objectivity (with the exception of Richard Manley who is the CEO of the Investment Manager).
The 2019 AIC Code recommends that where a Director has served for more than nine years, the Board should
state its reasons for believing that the individual remains independent. The Board is of the view that a term of
service in excess of nine years is not in itself prejudicial to a Director’s ability to carry out his or her duties
effectively and from an independent perspective; the nature of the Company’s business is such that individual
Directors’ experience and continuity of Board membership can significantly enhance the effectiveness of the
Board as a whole. However, the Board has applied the provision that all Directors are to seek annual re-election
and has determined a policy of tenure for the Chairman and believe that both are essential in balancing the
business of the Company whilst providing opportunity for regular refreshment and increasing the diversity of
the Board.
Directors are appointed with the expectation that they will serve for a period of at least three years and all
Directors will retire at the first general meeting after election and will be subject to annual re-election thereafter
in line with practices recommended in the 2019 AIC Code. It is the Company’s policy of tenure to review
individual appointments every year, with increased scrutiny after nine years of service to consider whether the
Director is still independent and still fulfils the role. However, in accordance with the principles of the 2019 AIC
Code, we do not consider it necessary to mandatorily replace a Director, including the Chairman, after a
predetermined period of tenure. A more flexible approach to Chairman tenure will help the Company manage
succession planning in the context of the business needs of the Company, whilst at the same time still
addressing the need for regular refreshment and diversity. The Company’s report on Gender and Diversity is
on page 41.
Given that the Chairman has now served as a Director for nearly 20 years, the Board and Chairman have had
a number of conversations over the last 12 months with regard to his ongoing tenure and the process for
identifying his potential successor. Whilst the Board has determined that John Hustler, 74, is capable of
carrying out his duties effectively, given the policies outlined above, plans are now being made for
his succession.
51
Remuneration in addition to the Directors’ fees is potentially payable to those Directors serving prior to 23
August 2018 subject to certain conditions as set out in the Directors’ Remuneration Report and Policy on pages
58 to 59. Having regard for the historic nature and circumstances under which the performance incentive fees
were agreed, the Board does not believe that the performance incentive fees in any way impact or hinder the
Directors’ independence or present a conflict of interest which could compromise or override independent
judgment of the Directors.
Performance Evaluation
In accordance with the 2019 AIC Code, each year a formal performance evaluation is undertaken of the Board
as a whole, its Committees and the Directors in the form of one-to-one meetings or telephone calls between
the Chairman and each Director. The Directors were made aware of the annual performance evaluation on
their appointment. The Board considers the size of the Company, the number of independent non-executive
Directors on the Board and the robustness of the reviews to be such that an external Board evaluation is
unnecessary. Annual evaluations of the Board consider its composition, diversity, succession planning and
how effectively members work together to achieve objectives as well as individual contributions. The Chairman
provides a summary of the findings to the Board, which are discussed at the next meeting and an action plan
agreed. The performance of the Chairman is evaluated by the other Directors. The Board has not appointed a
Senior Independent Director, as it does not believe that such an appointment is necessary when the Board is
comprised solely of non-executive Directors. As suggested in the 2019 AIC Code, this role can be, and in this
instance is, fulfilled by the Chairman of the Audit Committee, Richard Roth.
The Board sets out the assessment of its members and explains why its members are and continue to be of
importance to the long-term sustainable success of the business on page 45.
The Board reviews the performance of the Investment Manager on an ongoing basis, both formally and outside
of Board meetings with regard to its appointment, evaluation, removal and remuneration, in both contexts of
its role as Investment Manager and Administration Manager. The Board considers the Company’s size to be
such that it would be unnecessarily burdensome to establish a separate management engagement committee
to perform this role.
Board Committees
The Board does not have a separate remuneration committee, as the Company has no employees or executive
directors. Detailed information relating to the remuneration of Directors is given in the Directors’ Remuneration
Report and Policy on pages 58 to 59.
The Board as a whole considers the selection and appointment of Directors and reviews Directors’
remuneration on an annual basis. The Board considers the Company’s size to be such that it is unnecessary
to form a separate committee for the purposes of nomination. When making an appointment, the Board draws
on its members’ extensive business experience and range of contacts to identify suitable candidates. To date
the use of formal advertisements and external search consultants have not been used. However, the Board
would consider their use as and when appropriate. The Board speaks regularly about Board composition and
succession planning in order to identify and address any issues that may arise.
The Board has appointed an Audit Committee to make recommendations to the Board in line with its terms of
reference. The committee is chaired by Richard Roth and consists of all four Directors. The Audit Committee
believes Richard Roth possesses appropriate and relevant financial experience as per the requirements of the
2019 AIC Code. The Board considers that the members of the Committee have collectively the skills and
experience required to discharge their duties effectively.
52
The Audit Committee’s terms of reference, and how it discharges its duties are listed on pages 55 to 57.
Internal Control
The Directors have overall responsibility for keeping under review the effectiveness of the Company’s systems
of internal controls. The purpose of these controls is to ensure that proper accounting records are maintained,
the Company’s assets are safeguarded and the financial information used within the business and for
publication is accurate and reliable; such a system can only provide reasonable and not absolute assurance
against material misstatement or loss. The system of internal controls is designed to manage rather than
eliminate the risk of failure to achieve the business objectives. The Board continually reviews financial results
and investment performance. The Board also monitors and evaluates external service providers and maintains
regular discussions with the Investment Manager about the services provided. The Investment Manager
reviews the service contracts on an annual basis and discusses any recommendations with the Board as
relevant.
City Partnership are the custodian of the documents of title relating to the Company’s unquoted investments.
Seneca are also the Administration Manager in addition to their role as the Investment Manager.
The Directors confirm that they have established a continuing process throughout the year and up to the date
of this report for identifying, evaluating and managing the significant potential risks faced by the Company and
have reviewed the effectiveness of the internal control systems. As part of this process an annual review of the
internal control systems is carried out in accordance with the FRC’s Guidance on Risk Management, Internal
Control and Related Financial and Business Reporting.
The risk management and internal control systems include the production and review of monthly bank
statements and quarterly management accounts. All outflows made from the Company’s accounts require the
authority of signatories from the Board. The Company is subject to a full annual audit. Further to this, the Audit
Partner has open access to the Directors of the Company.
Financial Risk Management Objectives and Policies
The Company is exposed to the risks arising from its operational and investment activities. Further details can
be found in note 16 to the Financial Statements.
Relations with Shareholders
Shareholders have the opportunity to meet the Board at the AGM. In addition, shareholders have the
opportunity to engage directly with the Board as part of the regular shareholder update presentations as
detailed in the Strategic Report on page 6 and the Board is available to answer any questions a shareholder
may have and is happy to respond to written queries made by shareholders during the course of the year. The
Board can be contacted at the Company’s registered office: 9 The Parks, Haydock, WA12 0JQ.
There was no resolution proposed at the last AGM which received 20% or more of votes cast against it for the
purposes of disclosure under Provision 4 of the UK Code.
53
Compliance Statement
As previously indicated, the Board considers that reporting against the principles and recommendations of the
2019 AIC Code will provide better information to shareholders.
The Company has complied with the recommendations of the 2019 AIC Code and the relevant provisions of
the UK Corporate Governance Code, except as set out below:
• The Company does not have a Chief Executive Officer or a Senior Independent Director. The Board
does not consider this necessary as it does not have any executive directors.
• New Directors do not receive a formal induction on joining the Board, though they do receive one
tailored to them on an individual basis.
• The Company conducts a formal review as to whether there is a need for an internal audit function.
However, the Directors do not consider that an internal audit would be an appropriate control for this
VCT at this time.
• The Company does not have a Remuneration Committee as it does not have any executive directors.
• The Company does not have a Nomination Committee as these matters are dealt with by the Board.
For the reasons set out in the 2019 AIC Code, and as explained in the UK Corporate Governance Code, the
Board considers the above provisions are not relevant to the position of the Company, being an investment
company run by the Board and managed by the Investment Manager. In particular, all of the Company’s day-
to-day administrative functions are outsourced to third parties. As a result, the Company has no executive
directors, employees or internal operations.
By Order of the Board
Craig Hunter
Company Secretary
22 February 2021
54
Audit Committee Report
This report is submitted in accordance with the 2019 AIC Code in respect of the year ended 31 December 2020
and describes the work of the Audit Committee in discharging its responsibilities.
The Committee’s key objective is the provision of effective governance of the appropriateness of the
Company’s financial reporting, the performance of the auditor and the management of the internal control and
business risks systems. The Directors forming the Audit Committee can be found on page 51.
The Audit Committee’s terms of reference include the following responsibilities:
●
reviewing and making recommendations to the Board in relation to the Company’s published Financial
Statements and other formal announcements relating to the Company’s financial performance;
● advising the Board on whether the Annual Report and Financial Statements, taken as a whole, is fair,
balanced and understandable;
● advising the Board on whether the Annual Report and Financial Statements provides necessary
●
information for shareholders to assess performance, business model and strategy;
reviewing and making recommendations to the Board in relation to the Company’s internal control
(including internal financial control) and risk management systems;
● periodically considering the need for an internal audit function;
● making recommendations to the Board in relation to the appointment, re-appointment and removal of
the external auditor and approving the remuneration and terms of engagement of the external auditor;
reviewing and monitoring the external auditors’ independence and objectivity and the effectiveness
of the audit process, taking into consideration relevant UK professional regulatory requirements; and
●
● monitoring the extent to which the external auditor is engaged to supply non-audit services.
As part of the process of working with the Board to maximise effectiveness, meetings of the Committee usually
take place immediately prior to a Board meeting when appropriate and a report is provided on relevant matters
to enable the Board to carry out its duties.
The Committee reviews its terms of reference and its effectiveness periodically and recommends to the Board
any changes required as a result of the review. The terms of reference are available on request from the
Company Secretary. The Committee meets at least twice each year and on an ad hoc basis as necessary. It
has direct access to the Company’s external auditor. The Committee is happy to recommend UHY Hacker
Young LLP for reappointment at the AGM in relation to the audit for the year ending 31 December 2021. UHY
Hacker Young LLP do not provide any non-audit services and as such, the Committee does not believe there
is any risk that any non-audit services can influence their independence or objectivity due to any associated
fee. When considering whether to recommend the reappointment of the external auditor the Committee takes
into account the quality of service, tenure of the current auditor in addition to comparing the fees charged by
similar sized audit firms. Once the Committee has made a recommendation to the Board in relation to the
appointment of the external auditor, this is then ratified at the AGM through an Ordinary Resolution.
The effectiveness of the external audit is assessed as part of the Board evaluation conducted annually and by
the quality and content of the Audit Plan and Report provided to the Committee by the Auditor and the resulting
discussions on topics raised. The Committee also challenges the Auditor when present at a Committee meeting
if appropriate.
55
The Company does not have an independent internal audit function as it is not deemed appropriate given the
size of the Company and the nature of the Company’s business. However, the Committee considers annually
whether there is a need for such a function and if so would recommend this to the Board.
The Committee will monitor the significant risks at each meeting and the Administration Manager will work
closely with the Auditors to mitigate the risks and the resulting impact.
During the year ended 31 December 2020, the Audit Committee discharged its responsibilities by:
●
●
●
●
●
●
●
reviewing and approving the external auditor’s terms of engagement and remuneration;
reviewing the external auditor’s plan for the audit of the Company’s Financial Statements, including
identification of key risks and confirmation of auditor independence;
reviewing Seneca’s statement of internal controls in relation to the Company's business and assessing
the effectiveness of those controls in minimising the impact of key risks;
reviewing the appropriateness of the Company’s accounting policies;
reviewing the Company’s draft Annual Financial and Interim results statements prior to Board
approval;
reviewing the Company’s going concern status as referred to on pages 47 and 82; and
reviewing the external auditor’s Report to the Audit Committee on the annual Financial Statements.
The Committee has considered the Report and Financial Statements for the year ended 31 December 2020
and has reported to the Board that it considers them to be fair, balanced and understandable and providing
the information necessary for shareholders to assess the Company’s performance, business model and
strategy.
Significant Risks
The Audit Committee is responsible for considering and reporting on any significant risks that arise in relation
to the audit of the Financial Statements. The Committee and the Auditors have identified the most significant
risks for the Company as:
● Valuation and ownership of investment portfolio: The Auditors give special audit consideration to the
valuation and ownership of investments and the supporting data provided by Seneca and the Board
of Seneca Growth Capital. The impact of this risk could be a large movement in the Company’s net
asset value. Guidelines, discussions, reviewing and challenging the basis and reasonableness of
assumptions made in conjunction with available supporting information goes into the valuation
process. The valuations are supported by investee company Financial Statements and/or third-party
evidence where possible. Otherwise, valuations are supported by the share price of the most recent
fundraising and/or management information. These give comfort to the Audit Committee.
● Management override of financial controls: The Auditors specifically review all significant accounting
estimates that form part of the Financial Statements and consider any material judgements applied by
the Board or Investment Manager during the preparation of the Financial Statements.
● Compliance with HMRC conditions for maintenance of approved VCT status: Philip Hare & Associates
LLP provide the Company with advice on the on-going compliance with the HMRC rules and
regulations concerning VCTs and the Investment Manager and the Board review the advice.
● Recognition of revenue from investments: Revenue is recognised when the Company’s right to the
return is established in accordance with the Statement of Recommended Practice. The Company had
no revenue in 2020, and Seneca has confirmed this to the Audit Committee.
● Performance Fees: The Auditors give special audit consideration to the performance fees as these are
directly linked to the NAV which is dependent upon investment valuations. The Audit Committee gives
56
due consideration to the valuation methodology as referenced above and maintains controls around
performance fees to mitigate any risks to the Company’s costs.
These issues were discussed with Seneca, the Board of Seneca Growth Capital and the Auditors at the
conclusion of the audit of the Financial Statements.
The Audit Committee is also responsible for considering and reporting on any significant issues that arise in
relation to the audit of the Financial Statements. The Audit Committee can confirm that there were no significant
issues to report to the shareholders in respect of the audit of the Financial Statements for the year ended 31
December 2020.
Richard Roth
Audit Committee Chairman
22 February 2021
57
Directors’ Remuneration Report and Policy
Introduction
This report is submitted in accordance with the requirements of s420-422 of the Companies Act 2006, in
respect of the year ended 31 December 2020. A resolution to approve the Directors’ Remuneration Report will
be proposed at the Annual General Meeting on 29 March 2021. The statement of Directors’ Remuneration
Policy was last approved by shareholders at the Annual General Meeting on 10 June 2019. The Directors’
Remuneration Report was last approved at the Annual General Meeting on 28 April 2020.
The Company’s independent auditor, UHY Hacker Young LLP, is required to give its opinion on certain
information included in this report as indicated below. Their report on these and other matters is set out on
pages 61 to 69.
Consideration by the Directors of Matters Relating to Directors’
Remuneration
The Board as a whole considers Directors’ remuneration and has not appointed a separate committee in this
respect.
Statement of the Company’s policy on Directors’ Remuneration
The Board manages the Company and consists of four Directors, who meet formally as a Board at least four
times a year and on other occasions as necessary, to deal with the important aspects of the Company’s affairs.
Seneca is the Company’s Investment Manager and are responsible for the management of the investments
made from the B share pool, although management of the investments in the Company’s Ordinary share pool
has been delegated to the remaining members of the Board of the Company serving immediately prior to the
appointment of Seneca (the Commercial Advisory Committee or “CAC”), which now consists of John Hustler
and Richard Roth. Directors are appointed with the expectation that they will serve for a period of at least three
years. All Directors retire at the first general meeting after election and thereafter will be subject to re-election
on an annual basis in line with practices recommended in the 2019 AIC Code. Re-election will be recommended
by the Board but is dependent upon a shareholder vote.
Each Director has received a letter of appointment. A Director may resign by notice in writing to the Board at
any time. Members of the CAC are entitled to a pro rata proportion of any performance fees payable to the
CAC accruing at the date of resignation up to five years from the date of resignation.
Each Director’s annual fee is currently £15,000 per annum inclusive of all expenses, with the exception of
Richard Roth whose fee was increased from £15,000 per annum to £20,000 per annum inclusive of all
expenses with effect from 1 October 2020. As part of the Board’s regular review of Directors’ fees, it was
determined that Richard Roth’s Director’s fee would increase to reflect the work performed by him in respect
of his role as Chairman of the Audit Committee. It was also decided that Richard Roth would receive a one-off
payment of £2,500 in respect of the work he performed as part of this role for the period prior to 1 October
2020.
The performance incentive fees relevant to those Directors serving up to 7 October 2015 were revised under
an agreement dated 7 October 2015 (the “Accrued Performance Incentive Fee”). The new arrangements froze
the sum due to those Directors serving up to 7 October 2015 at £702,000 (the accrued liability as disclosed in
the 2014 audited Financial Statements) which will only start to become payable once a further 14.75p of
dividends have been paid in respect of each Ordinary share (such that original subscribing shareholders will
58
have received 80p per share in dividends). As no liability is payable to any relevant Director more than five
years after his resignation from the Company, James Otter is no longer entitled to any such fee: as explained
in Note 6, his potential share of any liability has been extinguished and the remaining total potential liability
under the Accrued Performance Incentive Fee has been reduced to £468,000. This liability will then be paid at
the rate of 16.67% of subsequent dividends until a liability of £468,000 has been discharged; this is in keeping
with the original approved arrangement. Following the payment of this liability, any further performance fee in
the future will be payable at the reduced rate of 10% of total distributions above the audited total return at 31
December 2014, with the outstanding balance subject to a hurdle rate of 6% per annum, and will be split
between the members of the CAC based on a formula driven by relative length of service starting from 7
October 2015 (“Further Performance Incentive Fee”). Further details of the revised arrangements are set out
in note 6 to the Financial Statements.
The Company entered into an agreement with Charles Breese following his resignation on 10 June 2019 that
he will be entitled to a pro rata proportion of performance fees as set out in note 6 to the Financial Statements.
Company Performance
The Board is responsible for the Company’s investment strategy and performance. The performance table on
page 36 shows the performance of the Company.
Directors’ Emoluments (Information Subject to Audit)
Amount of each Director’s emoluments:
Directors’ fees
John Hustler (Chairman)
Charles Breese
Richard Roth
Alex Clarkson
Richard Manley
Total
Year ended
31 December 2020
£
15,000
-
18,750
15,000
-
48,750
Year ended
31 December 2019
£
12,897
6,375
12,897
981
-
33,150
Richard Manley, a director of the Investment Manager, has elected to waive his Director’s fee until the operating
costs are less than the expenses cost cap.
The Directors did not receive any other form of emoluments in addition to the Directors’ fees during the year
apart from the additional fees paid to Richard Roth as detailed above in respect to his role as Chairman of the
Audit Committee. John Hustler and Richard Roth, as members of the CAC, may be entitled to performance
fees in the future as referred to above. Directors may be entitled to fees from investee companies when acting
on the Company’s behalf as Director, Observer or Consultant to those investees; however, no Directors
currently perform such a role in relation to the Ordinary share pool and any fee that could be payable in relation
to the B share pool would be payable to Seneca and would be disclosed in note 19. The Board would ensure
that any such fee would not present a conflict of interest which could impact its independent judgment.
By order of the Board
Craig Hunter
Company Secretary
22 February 2021
59
Directors’ Responsibilities Statement
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance
with applicable laws and regulations.
Company law requires the Directors to prepare Financial Statements for each financial year. Under that law
the Directors have elected to prepare the Financial Statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards and applicable laws). 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 profit or loss of the Company for that period.
In preparing these Financial Statements, the Directors are required to:
● select suitable accounting policies and then apply them consistently;
● make judgements and estimates that are reasonable and prudent;
● state whether applicable UK Accounting Standards have been followed, subject to any material
departures disclosed and explained in the Financial Statements; and
● prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that
the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Company’s transactions 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 the maintenance and integrity of the corporate and financial information
included on the Company’s website. Legislation in the United Kingdom governing the preparation and
dissemination of Financial Statements may differ from legislation in other jurisdictions.
Each of the Directors confirms that, to the best of their knowledge:
●
●
●
●
there is no relevant audit information of which the Company’s auditor is unaware;
the Directors have taken all steps that they ought to have taken to make themselves aware of any
relevant audit information and to establish that the auditor is aware of that information;
the Financial Statements, prepared in accordance with the applicable set of accounting standards,
give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;
and
the Investment Manager’s Report, Business Review and Directors’ Report includes a fair review of the
development and performance of the business and the position of the Company, together with a
description of the principal risks and uncertainties that it faces.
On behalf of the Board
John Hustler
Chairman
22 February 2021
60
Report of the Independent Auditor to the Members
of Seneca Growth Capital VCT Plc
Opinion
We have audited the Financial Statements of Seneca Growth Capital VCT Plc for the year ended 31 December
2020, which comprise the Income Statement, the Statement of Changes in Equity, the Balance Sheet, the
Statement of Cash Flows and the related notes to the Financial Statements, including 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).
In our opinion the Financial Statements:
• give a true and fair view of the state of the Company’s affairs as at 31 December 2020 and of the
Company’s return 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities
for the audit of the Financial Statements section of our report. We are independent of the Company in
accordance with the ethical requirements that are relevant to our audit of the Financial Statements in the UK,
including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the Financial Statements, we have concluded that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statement is appropriate. Our evaluation of the Directors’
assessment of the entity’s ability to continue to adopt the going concern basis of accounting included:
Evaluation of management assessment
Key observations
We evaluated the Directors’ going concern assessment
and performed the following procedures:
At 31 December 2020, the Company held cash of
£5,056,000 at bank.
• We assessed the appropriateness of the cash
flow forecasts in the context of the Company’s
2020 financial performance and evaluated the
Directors’ sensitivities performed against this
forecast.
• We evaluated the key assumptions in the
forecast, which were consistent with our
knowledge of the business and considered
The Company’s cash flow forecasts to 1 March
2022 (‘the going concern period’) have been
approved by the Board. These are prepared
based on certain key assumptions, against which
plausible sensitivities have been applied. These
included considering further investments being
made, no further shares to be issued and no
further investments to be realised over the
forecast period.
61
The forecast shows that the Company has at all
times available cash and liquidity to meets its
liabilities as they fall due.
Based on the audit procedures performed we
concluded that the Company has appropriately
adopted the going concern basis of preparation.
Further, we did not
identify any material
disclosures that should be included regarding any
material uncertainty in respect of the going
concern basis of preparation.
whether these were supported by the evidence
we obtained.
• We compared the prior year forecast against
current year actual performance to assess
management’s ability to forecast accurately.
We factored in to our assessment the previous
expectation of
raise
expectations in light of C-19 and accordingly
the investments made in 2020.
the B share
fund
• We examined and confirmed the Directors’
assessment of the liquidity of the AIM listed
shares.
• We also reviewed the disclosures relating to
going concern basis of preparation and found
that these provided an explanation of the
Directors’ assessment that was consistent with
the evidence we obtained.
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 reporting on how they have applied the AIC Code of Corporate Governance (the
“2019 AIC Code”), we have nothing material to add or draw attention to in relation to the Directors’ statement
in the Financial Statements about whether the Directors considered it appropriate to adopt the going concern
basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the
relevant sections of this report.
Our approach to the audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in
the Financial Statements. In particular, we looked at where the Directors made subjective judgements, for
example in respect of significant accounting estimates that involved making assumptions and considering
future events that are inherently uncertain.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on
the Financial Statements as a whole, taking into account an understanding of the structure of the Company,
their activities, the accounting processes and controls, and the industry in which it operates. Our planned audit
testing was directed accordingly and was focused on areas where we assessed there to be the highest risk of
material misstatement.
The audit team met and communicated regularly throughout the audit with the Audit Committee and the
Investment Manager in order to ensure we had a good knowledge of the business of the Company. During the
audit, we reassessed and re-evaluated audit risks and tailored our approach accordingly.
62
The audit testing included substantive testing on significant transactions, balances and disclosures, the extent
of which was based on various factors such as our overall assessment of the control environment, the
effectiveness of controls and the management of specific risks.
We communicated with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant findings, including any significant deficiencies in internal control that we
identified during the audit.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the Financial Statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the Financial Statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete
list of all risks identified during our audit. Going concern is a significant key audit matter and is described above.
In arriving at our audit opinion above, the other key audit matters were as follows:
Key risks
Valuation of Investments and recognition of
realised gains and losses
The investment portfolio and associated realised
and unrealised gains and losses are the key driver
to the financial performance of the Company. Due
to the nature of the Company’s business, there is
an inherent risk that if incorrectly valued this will
have the greatest impact on both the Income
Statement and Balance Sheet.
The investment portfolio at the year-end had a
carrying value of £6,123,584.
Approach taken for the assessed risks
Our audit work included, but was not restricted to:
• For quoted shares, we tested the value of
the investments by reference to market
price information at the year-end.
• The unquoted
investment valuations
include significant assumptions and
judgement by management and there is
inherent estimation uncertainty.
We obtained an understanding of how the
valuations were performed considered
in
whether
accordance with published guidance and
reviewed and challenged the assumptions
applied to the valuation inputs.
the method chosen was
We verified and benchmarked key inputs
and estimates to independent information
from our own research and against metrics
from the investments.
Where appropriate, we have performed
the valuation
sensitivity analysis on
calculations.
Alternative valuations methods were
with
considered
discussed
and
63
management to provide alternative views
on the value of the investments.
Further, we also considered the economic
environment in which the investments
operate in to identify factors that could
impact the investment valuation.
• We agreed the purchase and sale of
investments to supporting evidence of the
transaction and cash movements on a
sample basis and recalculated the realised
the sale of
losses on
gains and
investments
individual
the
for both
transactions on a sample basis and for the
total portfolio.
• Checking the movement in unrealised
gains and losses for arithmetical accuracy
and validated by reviewing the opening
costs to prior year balances on a sample
basis.
The Company's accounting policy on fixed asset
investments held at fair value through profit or loss
is shown on page 83 to the Financial Statements
and related disclosures are included in note 10.
testing did not
Key observations
Our
identify any material
misstatements in the valuation of the Company’s
investment portfolio as at the year end.
Compliance with the VCT rules
Our audit work included, but was not restricted to:
Compliance with the VCT rules is necessary to
maintain the VCT status and associated tax
benefits.
We
obtained
• Review of the design and implementation
of controls around the ongoing internal
assessment and monitoring of VCT
compliance.
an
understanding of the processes adopted
and evidenced the work completed by the
Investment Manager on documenting
compliance with the key VCT rules and
management’s review of this on a regular
basis. Further, an external VCT Adviser is
to complete a six monthly
employed
assessment of the Company’s compliance
with the VCT Rules that is reviewed by
management, copies of which we
reviewed.
64
• Testing
conditions
the eleven
for
maintaining approval as a VCT as set out
by HMRC. Each of the conditions was
reviewed in turn in order to assess whether
it had been met as at the year-end.
Key observations
We reviewed the documentation maintained, that
confirmed the Company was in compliance with the
VCT rules during the period and at the year end.
Further our own testing of compliance with the
individual VCT rules did not identify any breaches.
Our application of materiality
The scope and focus of our audit was influenced by our assessment and application of materiality. We apply
the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements on our audit and on the Financial Statements.
We define financial statement materiality as the magnitude by which misstatements, including omissions, could
reasonably be expected to influence the economic decisions taken on the basis of the Financial Statements
by reasonable users.
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.
Materiality Measure
Company
Overall materiality
We determined materiality for the Financial Statements
as a whole to be £223,000.
How we determine it
Based on a benchmark of 2% of gross assets.
Rationale for benchmarks applied
Performance materiality
We believe 2% of gross assets to be the most
appropriate benchmark, as it primarily comprises the
Company’s investment portfolio, which is considered to
be the key driver of the Company’s total return
performance and forms part of the net asset value
calculation being the performance measure investors
use to assess the Company’s performance.
On the basis of our risk assessment, together with our
assessment of the Company’s control environment, our
judgement is that performance materiality for the
Financial Statements should be 75% of materiality, and
was set at £167,250.
65
Specific materiality
Reporting threshold
We also determine a lower level of specific materiality
for certain areas such as Director’s remuneration. Area
materiality for the disclosure of the cash element of
Director’s remuneration has been set at £2,000 and
performance materiality of £1,000.
We agreed with the Audit Committee that we would
report to them all misstatements over £11,150 (5% of
overall materiality) identified during the audit, as well as
differences below that threshold that, in our view,
warrant reporting on qualitative grounds. We also
report to the Audit Committee on disclosure matters
the overall
identified when assessing
that we
presentation of the Financial Statements.
Other information
The other information comprises the information included in the Annual Report other than the Financial
Statements and our auditor’s report thereon. The Directors are responsible for the other information contained
within the Annual Report. Our opinion on the Financial Statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the Financial Statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material misstatement in the Financial
Statements themselves.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information; we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in
accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the Strategic Report and the Directors’ Report for the financial year for which
the Company’s Financial Statements are prepared is consistent with the Financial Statements; and
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of
the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.
66
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept, or returns adequate for our audit have not been
•
received from branches not visited by us; or
the Financial Statements and the part of the Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Corporate Governance Statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability
and that part of the Corporate Governance Statement relating to the Company’s compliance with the provisions
of the UK Corporate Governance Statement specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of
the Corporate Governance Statement is materially consistent with the Financial Statements or our knowledge
obtained during the audit:
• Directors’ statement with regards the appropriateness of adopting the going concern basis of
accounting and any material uncertainties identified set out on page 47;
• Directors’ explanation as to their assessment of the Company’s prospects, the period this
assessment covers and why the period is appropriate set out on page 38;
• Directors’ statement on fair, balanced and understandable set out on page 43;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks
set out on page 39;
• The section of the Annual Report that describes the review of effectiveness of risk management and
internal control systems set out on page 53; and
• The section describing the work of the Audit Committee set out on page 55 to 57.
Responsibilities of Directors
As explained more fully in the Directors’ Responsibilities Statement set out on page 60, 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.
67
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:
Based on our understanding of the Company and the industry in which it operates, we identified that the
principal risks of non-compliance with laws and regulations related to the acts by the Company which were
contrary to applicable laws and regulations including fraud and we considered the extent to which non-
compliance might have a material effect on the Financial Statements. We also considered those laws and
regulations that have a direct impact on the preparation of the Financial Statements such as the Companies
Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the
Financial Statements (including the risk of override of controls), and determined that the principal risks were
related to inflated investment valuations and profit.
Audit procedures performed included: review of the Financial Statement disclosures to underlying supporting
documentation, review of correspondence with legal advisors, and enquiries of management in so far as they
related to the Financial Statements, and testing of journals and evaluating whether there was evidence of bias
by the Directors that represented a risk of material misstatement due to fraud.
There are inherent limitations in the audit procedures described above 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 would become aware of it. Also, 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 or intentional misrepresentations, or through collusion.
A further description of our responsibilities for the audit of the Financial Statements is located on the Financial
Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Other matters which we are required to address
Following the recommendation of the Audit Committee, we were appointed by Seneca Growth Capital VCT Plc
to audit the Financial Statements for the year ending 31 December 2018 and subsequent financial periods.
Our ongoing appointment is confirmed by shareholders annually. The period of total uninterrupted engagement
is 3 years, covering the years ending 31 December 2018 to 31 December 2020.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Company and we
remain independent of the Company in conducting our audit.
Our audit opinion is consistent with the additional report to the Audit Committee.
68
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.
Daniel Hutson (Senior Statutory Auditor)
For and on behalf of
UHY Hacker Young
Chartered Accountants
Statutory Auditors
Quadrant House
4 Thomas More Square
London, E1W 1YW
22 February 2021
69
Combined Income Statement
Note
2
6
3
4
7
Gain on disposal of fixed asset investments
Gain/(loss) on valuation of fixed asset investments
Income
Performance fee
Investment management fee net of cost cap
Other expenses
Return on ordinary activities before tax
Taxation on return on ordinary activities
Return on ordinary activities after tax
Return on ordinary activities after tax attributable
to:
Owners of the fund
Combined
Year to 31 December 2020
Capital
£’000
Revenue
£’000
Total
£’000
Combined
Year to 31 December 2019
Capital
£’000
Revenue
£’000
Total
£’000
-
-
-
-
(10)
(150)
(160)
-
948
682
-
948
682
-
(140)
(140)
(31)
(41)
(2)
1,457
(152)
1,297
-
-
-
-
(7)
(123)
(130)
52
52
(752)
(752)
-
136
(21)
-
(585)
-
136
(28)
(123)
(715)
-
-
-
-
-
(160)
1,457
1,297
(130)
(585)
(715)
(160)
1,457
1,297
(130)
(585)
(715)
There was no other Comprehensive Income recognised during the year
● The ‘Total’ column of the income statement and statement of comprehensive income is the profit and
loss account of the Company; the supplementary revenue return and capital return columns have been
prepared under guidance published by the Association of Investment Companies.
● All revenue and capital items in the above statement derive from continuing operations.
● The Company has only one class of business and derives its income from investments made in shares
and securities and from bank and money market funds.
● The Company has two share classes, the Ordinary share and B share class.
The Company has no recognised gains or losses other than the results for the year as set out above.
The accompanying notes are an integral part of the Financial Statements.
70
Ordinary Share Income Statement
(non-statutory analysis)
Note
Gain on disposal of fixed asset investments
Gain/(loss) on valuation of fixed asset investments
10
Income
Performance fee
Investment management fee
Other expenses
Return on ordinary activities before tax
Taxation on return on ordinary activities
Return on ordinary activities after tax
Return on ordinary activities after tax attributable
to:
Ordinary shareholders
Earnings per share – basic and diluted
2
6
3
4
7
8
Ordinary shares
Year to 31 December 2020
Capital
£’000
Revenue
£’000
Total
£’000
Ordinary shares
Year to 31 December 2019
Capital
£’000
Revenue
£’000
Total
£’000
-
-
-
-
-
-
-
-
-
720
467
-
720
467
-
(140)
(140)
-
-
(2)
1,045
(2)
1,045
-
-
1,045
1,045
-
-
-
-
-
4
4
-
4
38
38
(725)
(725)
-
136
-
-
(551)
-
-
136
-
4
(547)
-
(551)
(547)
-
0.0p
1,045
12.8p
1,045
12.8p
4
0.0p
(551)
(6.7)p
(547)
(6.7)p
71
B Share Income Statement (non-statutory analysis)
Note
Gain on disposal of fixed asset investments
Gain/(loss) on valuation of fixed asset investments
10
Income
Performance fee
Investment management fee net of cost cap
Other expenses
Return on ordinary activities before tax
Taxation on return on ordinary activities
Return on ordinary activities after tax
Return on ordinary activities after tax attributable
to:
B shareholders
Earnings per share – basic and diluted
2
6
3
4
7
8
B shares
Year to 31 December 2020
Capital
£’000
Revenue
£’000
Total
£’000
B shares
Year to 31 December 2019
Revenue
£’000
Capital
£’000
Total
£’000
-
-
-
-
14
14
(27)
(27)
-
-
-
-
(7)
(21)
(28)
(127)
(134)
-
(34)
(127)
(168)
-
-
-
228
215
-
-
(41)
(150)
252
-
252
(134)
(34)
(168)
-
-
-
-
(10)
(150)
(160)
-
(160)
228
215
-
-
(31)
-
412
-
412
(160)
(2.2)p
412
5.7p
252
3.5p
(134)
(2.5)p
(34)
(0.7)p
(168)
(3.2)p
72
Combined Statement of Changes in Equity
Capital
reserve
realised
gains/
(losses)
£’000
1,029
-
Capital
reserve
holding
gains/
(losses)
£’000
(1,309)
-
Special
distributable
reserve
£’000
10,839
-
-
-
-
(2,444)
-
-
8,395
-
-
-
-
(1,301)
-
-
-
7,094
-
(21)
136
-
52
-
1,196
-
-
(33)
(140)
-
948
-
(267)
1,704
-
-
-
-
-
(752)
(2,061)
-
-
-
-
-
-
682
267
(1,112)
Revenue
reserve
£’000
(1,967)
-
(130)
-
-
-
-
-
(2,097)
-
(160)
-
-
-
-
-
-
(2,257)
Total
£’000
9,281
2,262
(130)
(21)
136
(2,444)
52
(752)
8,384
2,390
(160)
(33)
(140)
(1,301)
948
682
-
10,770
Share
capital
£’000
121
24
Share
premium
£’000
568
2,238
-
-
-
-
-
-
-
-
-
-
-
-
145
27
2,806
2,363
-
-
-
-
-
-
-
-
-
-
-
-
-
172
-
5,169
Balance as at 1 January 2019
B share issue
Revenue return on ordinary activities after
tax
Expenses charged to capital
Performance fee allocated as capital
expenditure
Dividends paid
Current period gains on disposal
Current period losses on fair value of
investments
Balance as at 31 December 2019
B share issue
Revenue return on ordinary activities after
tax
Expenses charged to capital
Performance fee allocated as capital
expenditure
Dividends paid
Current period gains on disposal
Current period gains on fair value of
investments
Prior years' unrealised losses now realised
Balance as at 31 December 2020
The accompanying notes are an integral part of the Financial Statements.
73
Ordinary Shares - Statement of Changes in Equity
Balance as at 1 January 2019
Revenue return on ordinary activities after
tax
Performance fee allocated as capital
expenditure
Dividends paid
Current period gains on disposal
Current period losses on fair value of
investments
Balance as at 31 December 2019
Revenue return on ordinary activities after
tax
Expenses charged to capital
Performance fee allocated as capital
expenditure
Dividends paid
Current period gains on disposal
Current period gains on fair value of
investments
Prior years' unrealised losses now realised
Balance as at 31 December 2020
Share
capital
£’000
81
Share
premium
£’000
-
Special
distributable
reserve
£’000
7,412
Capital
reserve
realised
gains/
(losses)
£’000
1,047
Capital
reserve
holding
gains/
(losses)
£’000
(1,309)
-
136
-
38
-
-
-
-
-
(725)
Revenue
reserve
£’000
(1,949)
4
-
-
-
-
-
-
(2,272)
-
-
5,140
1,221
(2,034)
(1,945)
-
-
-
(1,055)
-
-
-
4,085
-
(2)
(140)
-
720
-
(267)
1,532
-
-
-
-
-
467
267
(1,300)
-
-
-
-
-
-
-
(1,945)
Total
£’000
5,282
4
136
(2,272)
38
(725)
2,463
-
(2)
(140)
(1,055)
720
467
-
2,453
-
-
-
-
-
81
-
-
-
-
-
-
-
81
-
-
-
-
-
-
-
-
-
-
-
-
-
-
74
B Shares - Statement of Changes in Equity
Share
capital
£’000
40
24
-
-
-
-
Share
premium
£’000
568
2,238
-
-
-
-
Special
distributable
reserve
£’000
3,427
-
-
-
(172)
-
-
64
27
-
-
-
-
-
91
-
2,806
2,363
-
-
-
-
-
5,169
-
3,255
-
-
-
(246)
-
-
3,009
Capital
reserve
realised
gains/
(losses)
£’000
(18)
-
-
(21)
-
14
Capital
reserve
holding
gains/
(losses)
£’000
-
-
-
-
-
-
-
(25)
-
-
(31)
-
228
-
172
(27)
(27)
-
-
-
-
-
215
188
Revenue
reserve
£’000
(18)
-
(134)
-
-
-
-
(152)
-
(160)
-
-
-
-
Total
£’000
3,999
2,262
(134)
(21)
(172)
14
(27)
5,921
2,390
(160)
(31)
(246)
228
215
(312)
8,317
Balance as at 1 January 2019
B share issue
Revenue return on ordinary activities after tax
Expenses charged to capital
Dividends paid
Current period gains on disposal
Current period losses on fair value of
investments
Balance as at 31 December 2019
B share issue
Revenue return on ordinary activities after tax
Expenses charged to capital
Dividends paid
Current period gains on disposal
Current period gains on fair value of
investments
Balance as at 31 December 2020
75
Combined Balance Sheet
Fixed asset investments*
Current assets:
Debtors
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
Called up equity share capital
Share premium
Special distributable reserve
Capital reserve – realised gains and losses
– holding gains and losses
Revenue reserve
Total equity shareholders' funds
*At fair value through profit and loss
Combined as at
31 December 2020
Combined as at
31 December 2019
Note
£'000
-
7
5,056
(223)
(193)
10
11
12
12
13
14
14
14
14
14
£'000
6,123
-
-
4,840
10,770
172
5,169
7,094
1,704
(1,112)
(2,257)
10,770
£'000
3
3,909
(236)
(53)
£'000
4,761
3,676
8,384
145
2,806
8,395
1,196
(2,061)
(2,097)
8,384
The accompanying notes are an integral part of the Financial Statements.
The statements were approved by the Directors and authorised for issue on 22 February 2021 and are
signed on their behalf by:
John Hustler
Chairman
Company No: 04221489
76
Ordinary Share Balance Sheet
(non-statutory analysis)
Ordinary shares as at
31 December 2020
Ordinary shares as at
31 December 2019
£'000
-
527
(22)
(193)
£'000
-
470
(22)
(53)
£'000
2,141
505
2,453
81
-
4,085
1,532
(1,300)
(1,945)
2,453
30.2p
£'000
2,068
448
2,463
81
-
5,140
1,221
(2,034)
(1,945)
2,463
30.4p
Fixed asset investments*
Current assets:
Debtors
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
Called up equity share capital
Share premium
Special distributable reserve
Capital reserve – realised gains and losses
– holding gains and losses
Revenue reserve
Total equity shareholders' funds
Net asset value per share
*At fair value through profit and loss
Note
10
12
13
9
77
B Share Balance Sheet (non-statutory analysis)
B shares as at
31 December 2020
Note
£'000
7
4,529
(201)
-
10
12
13
9
£'000
3,982
4,335
8,317
91
5,169
3,009
172
188
(312)
8,317
91.8p
B shares as at
31 December 2019
£'000
£'000
3
3,439
(214)
-
2,693
3,228
5,921
64
2,806
3,255
(25)
(27)
(152)
5,921
93.1p
Fixed asset investments*
Current assets:
Debtors
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
Called up equity share capital
Share premium
Special distributable reserve
Capital reserve – realised gains and losses
– holding gains and losses
Revenue reserve
Total equity shareholders' funds
Net asset value per share
*At fair value through profit and loss
78
Combined Statement of Cash Flows
Combined Year to
31 December 2020
£'000
Combined Year to
31 December 2019
£'000
Note
Cash flows from operating activities
Return on ordinary activities before tax
Adjustments for:
(Increase)/decrease in debtors
Increase/(decrease) in creditors
Gain on disposal of fixed asset investments
(Gain)/loss on valuation of fixed asset investments
Cash from operations
Income taxes paid
Net cash used in operating activities
Cash flows from investing activities
Purchase of fixed asset investments
Sale of fixed asset investments
Total cash inflow/(outflow) from investing activities
Cash flows from financing activities
Dividend paid
Issue of B shares
Awaiting B share issue
Total cash inflow/(outflow) from financing activities
Increase/(decrease) in cash and cash equivalents
Opening cash and cash equivalents
Closing cash and cash equivalents
11
12
7
10
10
12
The accompanying notes are an integral part of the Financial Statements.
1,297
(4)
143
(948)
(682)
(194)
-
(194)
(1,360)
1,628
268
(1,301)
2,390
(16)
1,073
1,147
3,909
5,056
(715)
20
(143)
(52)
752
(138)
-
(138)
(2,248)
80
(2,168)
(2,444)
2,262
(49)
(231)
(2,537)
6,446
3,909
79
Ordinary Shares Statement of Cash Flows
(non-statutory analysis)
Cash flows from operating activities
Return on ordinary activities before tax
Adjustments for:
(Increase)/decrease in debtors
Increase/(decrease) in creditors
Gain on disposal of fixed asset investments
(Gain)/loss on valuation of fixed asset investments
Cash from operations
Income taxes paid
Net cash used in operating activities
Cash flows from investing activities
Sale of fixed asset investments
Total cash inflow from investing activities
Cash flows from financing activities
Dividend paid
Total cash outflow from financing activities
Increase/(decrease) in cash and cash equivalents
Opening cash and cash equivalents
Closing cash and cash equivalents
Note
10
7
10
Ordinary shares
Year to
31 December 2020
£'000
Ordinary shares
Year to
31 December 2019
£'000
1,045
-
140
(720)
(467)
(2)
-
(2)
1,114
1,114
(1,055)
(1,055)
57
470
527
(547)
-
(174)
(38)
725
(34)
-
(34)
38
38
(2,272)
(2,272)
(2,268)
2,738
470
80
B Shares Statement of Cash Flows
(non-statutory analysis)
Cash flows from operating activities
Return on ordinary activities before tax
Adjustments for:
(Increase)/decrease in debtors
Increase in creditors
Gain on disposal of fixed asset investments
(Gain)/loss on valuation of fixed asset investments
Cash from operations
Income taxes paid
Net cash used in operating activities
Cash flows from investing activities
Purchase of fixed asset investments
Sale of fixed asset investments
Total cash outflow from investing activities
Cash flows from financing activities
Dividend paid
Issue of B shares
Awaiting B share issue
Total cash inflow from financing activities
Increase/(decrease) in cash and cash equivalents
Opening cash and cash equivalents
Closing cash and cash equivalents
B shares
Year to
31 December 2020
£'000
B shares
Year to
31 December 2019
£'000
Note
10
7
10
10
12
252
(4)
3
(228)
(215)
(192)
-
(192)
(1,360)
514
(846)
(246)
2,390
(16)
2,128
1,090
3,439
4,529
(168)
20
31
(14)
27
(104)
-
(104)
(2,248)
42
(2,206)
(172)
2,262
(49)
2,041
(269)
3,708
3,439
81
Notes to the Financial Statements
1. Principal Accounting Policies
Basis of preparation
The Financial Statements have been prepared under the historical cost convention, except for the
measurement at fair value of certain financial instruments, and in accordance with UK Generally Accepted
Accounting Practice (“GAAP”), including FRS 102 and with the Companies Act 2006 and the Statement
of Recommended Practice (SORP) ‘Financial Statements of Investment Trust Companies and Venture
Capital Trusts (revised 2019)’.
The principal accounting policies have remained materially unchanged from those set out in the
Company’s 2019 Annual Report and Financial Statements. A summary of the principal accounting
policies is set out below.
The Company is a public company and is limited by shares. The Company held all fixed asset investments
at fair value through profit or loss. Accordingly, all interest income, fee income, expenses and gains and
losses on investments are attributable to assets held at fair value through profit or loss.
The most important policies affecting the Company’s financial position are those related to investment
valuation and require the application of subjective and complex judgements, often as a result of the need
to make estimates about the effects of matters that are inherently uncertain and may change in
subsequent periods. These are discussed in more detail below.
Going Concern
The assets of the Company consist mainly of securities, four of which are AIM quoted, quite liquid
and readily accessible, as well as cash. As at 31 December 2020, 47% of net assets was cash. After
reviewing the Company’s forecasts and expectations, the Directors have a reasonable expectation that
the Company has adequate resources to continue in operational existence for the foreseeable future.
The Company therefore continues to adopt the going concern basis in preparing its Financial Statements.
In addition to the above, the Company is also facing risks resulting from the impact of the C-19 pandemic.
The Company’s Board and Investment Manager are focused on ensuring that investee companies are
taking the required actions to minimise the potential impact that the C-19 pandemic could have on them.
The Board and Seneca will continue to review risks posed by C-19 and keep those risks under regular
review.
Key judgements and estimates
The preparation of the Financial Statements requires the Board to make judgements and estimates
regarding the application of policies affecting the reported amounts of assets, liabilities, income and
expenses. Estimates and assumptions mainly relate to the fair valuation of the fixed asset investments
particularly unquoted investments. Estimates are based on historical experience and other assumptions
that are considered reasonable under the circumstances. The estimates and the assumptions are under
continuous review with particular attention paid to the carrying value of the investments.
Investments are regularly reviewed to ensure that the fair values are appropriately stated. Unquoted
investments are valued in accordance with current International Private Equity and Venture Capital
Valuation (IPEV) guidelines, which can be found on their website at www.privateequityvaluation.com,
although this does rely on subjective estimates such as appropriate sector earnings or revenue multiples,
82
forecast results of investee companies, asset values of investee companies and liquidity or marketability
of the investments held. The material factors affecting the returns and net assets attributable to
shareholders of the different share classes are the valuations of the Ordinary and B share pools and
ongoing general expenses.
Although the Directors believe that the assumptions concerning the business environment and estimate
of future cash flows are appropriate, changes in estimates and assumptions could result in changes in
the stated values. This could lead to additional changes in fair value in the future.
Functional and presentational currency
The Financial Statements are presented in Sterling (£). The functional currency is also Sterling (£).
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly
liquid investments with original maturities of three months or less and bank overdrafts.
Fixed asset investments
The Company’s principal financial assets are its investments and the policies in relation to those assets
are set out below.
Purchases and sales of investments are recognised in the Financial Statements at the date of the
transaction (trade date).
These investments will be managed and their performance evaluated on a fair value basis and
information about them is provided internally on that basis to the Board. Accordingly, as permitted by
FRS 102, the investments are measured as being fair value through profit or loss on the basis that they
qualify as a group of assets managed, and whose performance is evaluated, on a fair value basis in
accordance with a documented investment strategy. The Company's investments are measured at
subsequent reporting dates at fair value.
In the case of investments quoted on a recognised stock exchange, fair value is established by reference
to the closing bid price on the relevant date or the last traded price, depending upon convention of the
exchange on which the investment is quoted. In the case of AIM quoted investments this is the closing bid
price. In the case of unquoted investments, fair value is established by using measures of value such as
the price of recent transactions, earnings or revenue multiples, discounted cash flows and net assets.
These are consistent with the IPEV guidelines.
Gains and losses arising from changes in fair value of investments are recognised as part of the capital
return within the Income Statement and allocated to the capital reserve - holding gains/(losses).
In the preparation of the valuations of assets the Directors are required to make judgements and
estimates that are reasonable and incorporate their knowledge of the performance of the investee
companies.
Fair value hierarchy
Paragraph 34.22 of FRS 102 regarding financial instruments that are measured in the balance sheet at
fair value requires disclosure of fair value measurements dependent on whether the stock is quoted and
the level of the accuracy in the ability to determine its fair value. The fair value measurement hierarchy
is as follows:
83
For quoted investments:
Level 1: quoted prices in active markets for an identical asset. The fair value of financial instruments
traded in active markets is based on quoted market prices at the balance sheet date. A market is
regarded as active if quoted prices are readily and regularly available, and those prices represent actual
and regularly occurring market transactions on an arm’s length basis. The quoted market price used for
financial assets held is the bid price at the Balance Sheet date.
Level 2: where quoted prices are not available (or where a stock is normally quoted on a recognised
stock exchange that no quoted price is available), the price of a recent transaction for an identical asset,
providing there has been no significant change in economic circumstances or a significant lapse in time
since the transaction took place. The Company held no such investments in the current or prior year.
For investments not quoted in an active market:
Level 3: the fair value of financial instruments that are not traded in an active market is determined by
using valuation techniques. These valuation techniques maximise the use of observable data (eg: the
price of recent transactions, earnings/revenue multiple, discounted cash flows and/or net assets) where
it is available and rely as little as possible on entity specific estimates.
There have been no transfers between these classifications in the year (2019: none). The change in fair
value for the current and previous year is recognised through the profit and loss account.
Current asset investments
No current asset investments were held at 31 December 2020 or 31 December 2019. Should current
assets be held, gains and losses arising from changes in fair value of investments are recognised as part
of the capital return within the Income Statement and allocated to the capital reserve - gains/(losses) on
disposal.
Income
Investment income includes interest earned on bank balances and from unquoted loan note securities,
and dividends. Fixed returns on debt are recognised on a time apportionment basis so as to reflect the
effective yield, provided it is probable that payment will be received in due course.
The Company has not generated any income in 2020 (2019: £nil).
Expenses
All expenses are accounted for on an accruals basis. Expenses are charged wholly to revenue with the
exception of the performance and management fee. The performance fee is charged 100% to the capital
reserve and the investment management fee charged to the B shares has been split 25% revenue and
75% capital, in line with industry practice and to reflect the Board’s estimated split of investment returns
which will be achieved by the Company’s B shares over the long term. Expenses and liabilities not specific
to a share class are allocated to the B share pool for a period of three years from 1 July 2018 in line with
the Articles of Association.
Revenue and capital
The revenue column of the Income Statement includes all income and revenue expenses of the
Company. The capital column includes gains and losses on disposal and holding gains and losses on
investments, as well as those expenses that have been charged as capital costs. Gains and losses arising
from changes in fair value of investments are recognised as part of the capital return within the Income
84
Statement and allocated to the appropriate capital reserve on the basis of whether they are realised or
unrealised at the Balance Sheet date.
Taxation
Current tax is recognised for the amount of income tax payable in respect of the taxable profit for the
current or past reporting periods using the applicable tax rate. 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.
Deferred tax is recognised on an undiscounted basis in respect of all timing differences that have
originated but not reversed at the balance sheet 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.
Financial instruments
The Company’s principal financial assets are its investments and its cash and the policies in relation to
those assets are set out above. Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument is any contract that
evidences a residual interest in the assets of the entity after deducting all of its financial liabilities. Where
the contractual terms of share capital do not have any terms meeting the definition of a financial liability
then this is classed as an equity instrument.
Capital management is monitored and controlled using the internal control procedures set out on page
53 of this report. The capital being managed includes equity and fixed-interest investments, cash
balances and liquid resources including debtors and creditors.
The Company does not have any externally imposed capital requirements.
Reserves
Called up equity share capital represents the nominal value of shares that have been issued.
Share premium account includes any premiums received on issue of share capital. Any transaction costs
associated with the issuing of shares are deducted from share premium.
Special distributable reserve includes cancelled share premium and capital redemption reserves
available for distribution and may be used to cover dividend payments.
Capital reserve – holding gains and losses created when the Company revalues the investments still held
during the period with any gains or losses arising being credited/ charged to the Capital reserve.
Capital reserve – gains and losses on disposal created when an investment is sold. Any balance held in
the Capital reserve – holding gains and losses is transferred to the Capital reserve – realised gains and
losses on disposal and recognised as a movement in reserves.
Revenue reserve – represents the aggregate value of accumulated realised profits (excluding capital
profits), less losses and dividends.
85
Dividends Payable
Dividends payable are recognised as distributions in the Financial Statements when the Company’s
liability to make payment has been established. This liability is established for interim dividends when
they are declared by the Board, and for final dividends when they are approved by shareholders.
2. Income Investment Management Investment Management
Dividends received
Loan note interest receivable
Year to
31 December 2020
£’000
-
-
-
Year to
31 December 2019
£’000
-
-
-
Investment income includes interest earned on bank balances and dividends.
The Company has not generated any income in the period and as such we have not included any
segmental reporting. In the event the Company had generated income, we would disclose information
about the Company’s operating segments and the geographical areas in which they operate, which is
currently in the United Kingdom.
3. Investment Management Fees for B shares
Gross Investment management fee
Cost cap refund from Seneca
Investment management fee net of cost cap
Year to
31 December 2020
£’000
127
(86)
41
Year to
31 December 2019
£’000
103
(75)
28
Seneca is entitled to an annual management fee of 2% of the weighted net asset value of the B share
pool (2019: 2%) and, with effect from 1 August 2019, is also entitled to an annual fee of £9,000 (plus
VAT, if applicable) in relation to management accounting services. These fees are payable quarterly in
arrears. Seneca will also be entitled to certain monitoring fees from investee companies and the Board
reviews the amounts (please see note 19).
Seneca are also entitled to receive a performance related incentive fee (the “Performance Incentive Fee”)
in relation to the B share pool of an amount equal to 20% of the shareholder proceeds arising, provided
that the payment of such a fee shall also be conditional upon (i) a return being generated on the B share
pool for B shareholders in respect of that performance period of more than 5% per annum (pro-rated if
that period is less than a year) and (ii) that such a return calculated for the period from 23 August 2018
to the end of the relevant performance period exceeds 5% per annum.
Shareholder proceeds are all amounts paid by way of dividend or other distributions, share buy backs,
proceeds on a sale or liquidation of the Company in relation to the B shares and calculated on a per share
basis, and any other proceeds or value received or deemed to be received by the holders of the relevant
shares (excluding any income tax relief on subscription).
For the avoidance of doubt, no Performance Incentive Fee will be payable to the extent that the
shareholder proceeds paid by the Company to the holders of the B shares have been justified by
86
reference to distributable reserves otherwise attributable to the Ordinary share pool (as permitted in
accordance with the Articles).
For a three-year period with effect from 1 July 2018, expenses of the Company are capped at 3% of the
weighted average net asset value of the B shares, including the management fee (but excluding any
performance fee). Following this initial period, expenses are capped at 3% across both the Ordinary share
pool and the B share pool pro-rata to their respective net asset values.
The Investment Manager will indemnify the Company for any excess over the cost cap, with an amount
equal to such excess either being paid by Seneca to the Company or refunded by way of a reduction to
its fees. Accordingly, Seneca reduced its management fee by £86,000 in the year to 31 December 2020
(2019: reduced by £75,000).
Expenses are charged wholly to revenue with the exception of the (net) investment management fee
which has been charged 75% to the capital reserve in line with industry practice and the performance
fee.
4. Other Expenses
Directors’ remuneration
Fees payable to the Company’s auditor for the audit of the Financial Statements
Legal and professional expenses
Accounting and administration services
Other expenses (revenue)
Other expenses (capital)
Year to
31 December 2020
£'000
50
22
59
7
12
2
152
Year to
31 December 2019
£'000
33
15
49
12
14
-
123
All expenses were charged to the Ordinary shares for the period to 30 June 2018. In line with the offer
for subscription for B shares, and following the initial allotment of B shares on 23 August 2018, all the
Company’s general expenses are chargeable to the B share pool for a period of three years from 1 July
2018 (subject to the cost cap discussed in note 3). Any expenditure related specifically to assets in one
pool is chargeable to that pool. It should be noted that the only items specifically relating to the Ordinary
share pool relate to a £2k legal fee (2019: £4k credit of released accruals for advisory fees).
5. Directors’ Remuneration
Directors’ emoluments:
John Hustler (Chairman)
Charles Breese
Richard Roth
Alex Clarkson
Richard Manley
Year to
31 December 2020
£
Year to
31 December 2019
£
15,339
-
19,608
15,339
-
50,286
12,897
6,375
12,897
981
-
33,150
Richard Manley, a director of the Investment Manager, has elected to waive his Director’s fee, until the
Company’s operating costs are less than the expenses cost cap.
87
As part of the Board’s regular review of Directors’ fees, it was determined that Richard Roth’s Director’s
fee would increase to £20,000 per annum inclusive of all expenses with effect from 1 October 2020 to
reflect the work performed by him in respect of his role as Chairman of the Audit Committee. It was also
decided that Richard Roth would receive a one-off payment of £2,500 in respect of the work he performed
as part of this role for the period prior to 1 October 2020. Apart from this, none of the Directors received
any other remuneration from the Company during the year.
Directors’ emoluments include remuneration and employers’ National Insurance contributions.
Certain Directors may become entitled to receive a share of the performance incentive fee related to the
Ordinary share pool as detailed in the Directors’ Remuneration Report on page 58 and in note 6.
The Company has no employees other than non-executive Directors. The average number of non-
executive Directors in the year was four (2019: four).
6. Performance Fees for Ordinary shares
The performance incentive fees are calculated separately on the Ordinary shares and the B shares.
Performance incentive fees in relation to the Ordinary shares are potentially payable to past and current
members of the CAC. The current members of the CAC are John Hustler and Richard Roth.
The CAC entered into an agreement to take over management of the Company’s investments on 30 July
2007 (the “2007 Agreement”), and at that time, a revised performance incentive scheme was
implemented, such that its members would be entitled to 20% of all cash returns above the initial net cost
to subscribing shareholders of 80p (the “Accrued Performance Incentive Fee”).
On 7 October 2015, the performance incentive fee structure was further amended as follows. In respect
of the period to 31 December 2014, the Accrued Performance Incentive Fee on the Ordinary share class
of up to £702,000 shall be payable to James Otter (a former director of the Company who was also a
member of the CAC), Charles Breese (a former director of the Company who was also a member of the
CAC) and John Hustler, in equal proportions (with the liability to pay a director his share of such fee being
extinguished if the fee is due for payment five years after his ceasing to be a member of the CAC. Such
extinguished fees are credited back to the Company).
The liability to pay James Otter his share of any potential Accrued Performance Incentive Fee was
extinguished on 7 October 2020 - the fifth anniversary of his ceasing to be a member of the CAC. No
payment has, or will be paid, to James Otter under these schemes as the required shareholder
distributions had not been made in time. The fee of £17,667 that had been accrued at 31 December 2019
for his potential benefit has been credited back to the Company, with the total potential liability for the
Company now reduced from £702,000 to £468,000.
As a result of the reduction in the Accrued Performance Incentive Fee by one third, the amount of the
Accrued Performance Incentive Fee shall be 16.67% of any dividends and capital distributions returned
to shareholders, which in total exceed the sum of 80p per Ordinary share (the "Hurdle"). This includes
dividends paid to date on the Ordinary shares, being 65.25p per share. As a result of this, for every £1
potentially distributable in excess of the Hurdle, 80p shall be distributed to shareholders and 13.33p shall
be paid as the Accrued Performance Incentive Fee, with 6.67p (being one third of the original 20p)
retainable by the Company up until an amount of 114.65p per Ordinary share has been distributed to
Ordinary shareholders, after which no further payment is payable in respect of the Accrued Performance
Incentive Fee or otherwise under the terms of the 2007 Agreement (as amended). The Accrued
88
Performance Incentive Fee shall be paid at the same time as payments are made to the Ordinary
shareholders. All distributions by way of dividends and capital distributions in relation to the Ordinary
share class shall count towards the Accrued Performance Incentive Fee and where non-cash dividends
are declared, the Company's auditors shall assess their value by reference to a distribution per share.
Following payment in full of the Accrued Performance Incentive Fee, a further performance incentive fee
may become payable to the CAC in relation to the period after 7 October 2015 (the, “Further Performance
Incentive Fee”).
Following the amendment on 7 October 2015, any returns above the 31 December 2014 levels are
subject to a further hurdle (the “Further Hurdle”), and the Further Performance Incentive Fee reduces the
share to the CAC to 10% of sums returned to Ordinary shareholders by way of dividends and capital
distributions of whatever nature, which in total exceed the Further Hurdle (excluding any initial tax relief
on the subscription for the Ordinary shares). The "Base Figure" for the Further Hurdle shall be 90.4p per
Ordinary share and shall be increased by a sum equal to notional interest thereon, at the rate of 1.467%
per quarter from 1 January 2015, compounded with quarterly rests. For the purposes of determining the
increase in the Base Figure, the amount on which notional interest is to accrue in each quarter shall be
reduced by the amount of all sums returned to Ordinary shareholders by way of dividends and capital
distributions in the previous quarter. Shareholders will need to have received distributions of 114.65p per
Ordinary share, together with the amount to take account of notional interest as calculated above, before
any Further Performance Incentive Fee is payable.
As at 31 December 2020, the Total Gross Return in respect of the Ordinary shares is 97.85p, and so
3.57p per Ordinary share, totalling £290,000 would have accrued, though only two thirds of the Accrued
Performance Incentive Fee, 2.38p per Ordinary share totalling £193,000, has been accrued as part of
this liability as a result of James Otter’s liability being extinguished as detailed above, resulting in the
remainder being retainable by the Company (31 December 2019: 83.25, 0.65p and £53,000).
Assuming no dividends are paid on the Ordinary shares in 2021, the Total Gross Return would need to
exceed 163.3p at 31 December 2021 before any Further Performance Incentive Fee could be due, and
at that time, it would be 10% of any dividends or capital distributions made above this threshold. If the
Further Performance Incentive Fee is not triggered (as it has not been in this financial year) the Further
Hurdle, net of dividends paid, increments by a compound annual growth rate of 6%, applied quarterly as
described above.
If the CAC consider it necessary to engage external advisors in support of managing its portfolio, the
costs of this will be borne by the Ordinary share pool. The Further Performance Incentive Fee shall be
divided among such members of the CAC (past, present and future) who have been members of that
committee since the 7 October 2015, on a pro rata basis, linked to the relative amount of time since the
date of the 7 October 2015 agreement for which each individual has been a member of the CAC. An
individual will not be entitled to payment of any of Further Performance Incentive Fee if he ceased to be
a member of the CAC in certain conditions, or ceased to be a member of the CAC more than five years
before the payment of any amount of Further Performance Incentive Fee becomes due and any such
fees will be credited back to the Company. For the purposes of the Further Performance Incentive Fee,
the method of determining distributions will follow that used in calculating the Accrued Performance
Incentive Fee.
89
7. Tax on Ordinary Activities
The corporation tax charge for the period was £nil (2019: £nil).
The tax charge is calculated on return on ordinary activities before taxation at the applicable rate of 19.0%
(2019: 19.0%)
Current tax reconciliation:
Return on Ordinary activities before tax
Current tax at 19% (2019: 19%)
Gains/losses not subject to tax
Performance fee accrual not tax deductible
Excess management expenses carried forward
Total current tax charge and tax on results of ordinary activities
Year to
31 December 2020
£’000
1,297
Year to
31 December 2019
£’000
(715)
246
(310)
37
27
-
(136)
133
-
3
-
The company has excess management expenses of £2,896,000 (2019: £2,755,000) to carry forward to
offset against future taxable profits.
Approved VCTs are exempt from tax on capital gains within the Company. Since the Directors intend that
the Company will continue to conduct its affairs so as to maintain its approval as a VCT, no current
deferred tax has been provided in respect of any capital gains or losses arising on the revaluation or
disposal of investments.
8. Earnings per Share
The earnings per Ordinary share is based on 8,115,376 (31 December 2019: 8,115,376) shares, being
the weighted average number of Ordinary shares in issue during the year, and a return for the year
totalling £1,045,000 (31 December 2019: (£547,000)).
The earnings per B share is based on 7,248,338 (31 December 2019: 5,269,973) shares, being the
weighted average number of B shares in issue during the year, and a return for the year totalling £252,000
(31 December 2019: (£168,000)).
There are no potentially dilutive capital instruments in issue and, therefore, no diluted returns per share
figures are relevant. The basic and diluted earnings per share are therefore identical.
9. Net Asset Value per Share
The calculation of NAV per Ordinary share as at 31 December 2020 is based on 8,115,376 Ordinary
shares in issue at that date (31 December 2019: 8,115,376).
The calculation of NAV per B share as at 31 December 2020 is based on 9,062,948 B shares in issue at
that date (31 December 2019: 6,361,448).
90
10.
Fixed Asset Investments
Ordinary Shares
Valuation and net book amount:
Book cost as at 1 January 2020
Cumulative revaluation
Valuation at 1 January 2020
Movement in the year:
Purchases at cost
Disposals – cost
Disposals – revaluation
Revaluation in year
Valuation at 31 December 2020
Book cost at 31 December 2020
Revaluation to 31 December 2020
Valuation at 31 December 2020
B Shares
Valuation and net book amount:
Book cost as at 1 January 2020
Cumulative revaluation
Valuation at 1 January 2020
Movement in the year:
Purchases at cost
Disposals – cost
Disposals – revaluation
Revaluation in year
Valuation at 31 December 2020
Book cost at 31 December 2020
Revaluation to 31 December 2020
Valuation at 31 December 2020
Level 1:
AIM-quoted investments
£’000
Level 3:
Unquoted
investments
£’000
Total
investments
£’000
1,117
117
1,234
-
(391)
(3)
780
1,620
726
894
1,620
2,985
(2,151)
834
-
(270)
270
(313)
521
2,715
(2,194)
521
4,102
(2,034)
2,068
-
(661)
267
467
2,141
3,441
(1,300)
2,141
Level 1:
AIM-quoted
investments
£’000
Level 3:
Unquoted
investments
£’000
Total
investments
£’000
720
(90)
630
576
(286)
-
415
1,335
1,010
325
1,335
2,000
63
2,063
784
-
-
(200)
2,647
2,784
(137)
2,647
2,720
(27)
2,693
1,360
(286)
-
215
3,982
3,794
188
3,982
Further details of the fixed asset investments held by the Company are shown within the Investment
Manager’s Report on pages 14 to 35.
All investments are initially measured at their transaction price. Subsequently, at each reporting date, the
investments are valued at fair value through profit or loss, and all capital gains or losses on investments
91
are so measured. Unquoted fixed asset investments are valued at fair value in accordance with the IPEV
guidelines.
The changes in fair value of such investments recognised in these Financial Statements are treated as
unrealised holding gains or losses.
The launch of the B Share pool took place relatively recently in August 2018, and all but one of the B
Share unquoted investments have taken place in the two years ending 31 December 2020. As these
companies are at an early stage of the investment cycle, it is the Board’s view that the most appropriate
valuation methodology is to hold the B Share unquoted investments at cost or in line with the price of the
most recent investment received by the investee company. This is consistent with the approach adopted
for the valuation of the Ordinary share pool’s unquoted investments.
When using this methodology however, a detailed assessment of the respective value of each portfolio
company is also performed in order to gain the necessary comfort as to whether a fair value reduction or
uplift is in fact required. This process involves a review of the progress made by each investee company,
recent developments in the M&A market and comparisons to listed competitors across all relevant key
performance indicators. Further, all of these are considered in the context of the exit equity waterfall
structure as detailed in each investee company’s articles of association.
FRS 102 requires the Directors to consider the impact of changing one or more of the assumptions used
as part of the valuation process to reasonable possible alternative assumptions. As noted above, whilst
the methodologies adopted for the 31 December 2020 investee company valuations are not based on
revenue or earnings multiples, the Board do consider revenue multiple based valuation methodologies in
support of the valuations adopted where relevant.
In view of the FRS 102 requirement, the Board have considered the impact that introducing reasonable
alternative assumptions to this revenue multiple based valuation methodology could have on the value
of the Company’s investment pool as at 31 December 2020.
As a result of this analysis the Board have concluded that such reasonable possible alternative
assumptions could result in an increase in the valuation of the B share pool unquoted investments by
£81,000 or a decrease in the valuation of B share pool investments by £48,000. It was considered that
only one B share portfolio company was relevant for this exercise due to its more mature trading profile.
It was not considered that any of the Ordinary share pool portfolio companies were relevant for this
exercise.
Throughout this exercise, and in determining the value of the Company’s equity investments where
trading multiples are considered, multiples used are reviewed and compared to industry peers, based on
size, stage of development, revenue generation and growth rate, as well as their wider strategy and
market position. These multiples are calculated in the traditional manner, by dividing the enterprise value
of the comparable group by its revenue, EBITDA or earnings depending on what is the norm in a particular
sector driven by how acquisitions in that sector are typically valued. 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.
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11. Debtors
Prepayments and accrued income
12. Creditors
Amounts falling due within one year
Trade creditors
PAYE/NIC
Awaiting B share allotment
Other creditors
Accruals
Total amounts falling due within one year
Amounts falling due after one year
Accruals
Total amounts falling due after one year
31 December 2020
£’000
7
31 December 2019
£’000
3
31 December 2020
£’000
31 December 2019
£’000
1
7
154
23
37
223
193
193
8
-
170
22
36
236
53
53
The amount falling due after more than one year relates to the potential liability for a performance fee on
the Ordinary share portfolio. More details are in note 6. The awaiting B share issue included in the
combined and B share cash flow statements shows the movement in cash awaiting B share issue in the
year since the prior year end.
13. Share Capital
Allotted and fully paid up:
8,115,376 Ordinary shares of 1p (2019: 8,115,376 shares of 1p)
9,062,948 B shares of 1p (2019 : 6,361,448)
31 December 2020
£’000
31 December 2019
£’000
81
91
172
81
64
145
The capital of the Company is managed in accordance with its investment policy with a view to the
achievement of its investment objective as set on page 4.
During the year, the Company did not issue, nor buy back, any Ordinary shares.
The Company issued a total of 2,701,500 B shares at prices between 79.5 to 94.7p per B share during
the year. These were issued pursuant to the offer for subscription for B shares launched on 16 July 2019
and a further offer for subscription for B shares launched on 13 October 2020 to raise, in aggregate, up
to £10 million with an over-allotment facility of up to a further £10 million (before issue costs). The
Company has not bought back any B shares.
The total proceeds received for the shares issued in the period was £2,390k (net of facilitated fees, gross
of Seneca’s promoter fee) for the B share pool.
93
Share Rights
As regards Income: shareholders shall be entitled to receive such dividends as the Directors resolve to
pay out in accordance with the Articles. Under the Articles of the Company, all the assets of the Company
and all the liabilities of the Company will be allocated either to the Ordinary share pool or the B share
pool. The Ordinary shares will be entitled to the economic benefit of the assets allocated to the Ordinary
share pool and the B shares will be entitled to the economic benefit of assets allocated to the B share
pool. Therefore, although the rules in the CA 2006 and elsewhere in relation to the payment of
distributions will be applicable to the Company on a company-wide basis, the income arising on the
portfolios will belong to one or the other of the share classes depending on which portfolio generated the
income.
As regards Capital: similarly, the capital assets of the Company will be allocated to either the Ordinary
share pool or the B share pool. On a return of capital on a winding-up or on a return of capital (other than
on a purchase by the Company of its shares) the surplus capital shall be divided amongst the holders of
the relevant share class pro rata according to the number of shares of the relevant class held and the
aggregate entitlements of that share class. The Ordinary shares will not be entitled to any capital assets
held in the B share pool and the B shares will not be entitled to any capital assets held in the Ordinary
share pool. In relation to the purchase by the Company of its shares, the purchase of Ordinary shares
may only be financed by assets in the Ordinary share pool and the purchase of the B shares may only
be financed by assets in the B share pool.
As regards voting and general meetings: subject to disenfranchisement in the event of noncompliance
with a statutory notice requiring disclosure as to beneficial ownership, each shareholder present in person
or by proxy shall on a poll have one vote for each share of which he/she is the holder. The Ordinary
shareholders may not be entitled to vote on certain matters which concern the B share class only and
vice versa.
As regards Redemption: none of the B shares or the Ordinary shares are redeemable. The Articles
provide that reserves (whether created upon the cancellation of the share premium account arising from
the issue of Ordinary shares or B shares or otherwise) may also be used for the benefit of the other share
class. While this will not transfer any net asset value between the different share classes, it will permit
those reserves to be treated as distributable profits on a Company-wide basis such that on an accounting
basis dividends and share buybacks in respect of both share classes may be facilitated by the availability
of those reserves.
14. Movement in Shareholders’ Funds
Shareholders’ funds at start of year
Return on ordinary activities after tax
Increase due to issue of B shares
Dividend paid
Shareholders’ funds at end of year
Year ended
31 December 2020
£’000
8,384
1,297
2,390
(1,301)
10,770
Year ended
31 December 2019
£’000
9,281
(715)
2,262
(2,444)
8,384
The analysis of changes in equity by the various reserves are shown in the Statement of Changes in
Equity on page 73.
When the Company revalues its investments during the period, any gains or losses arising are
credited/charged to the Income Statement. Changes in fair value of investments held are then transferred
94
to the capital reserve - holding gains/(losses). When an investment is sold any balance held on the capital
reserve - holding gains/(losses) reserve is transferred to the capital reserve – gains/(losses) on disposal
as a movement in reserves.
The purpose of the special distributable reserve was to create a reserve which will be capable of being
used by the Company to pay dividends and for the purpose of making repurchases of its own shares in
the market with a view to narrowing the discount at which the Company’s shares trade to net asset value,
providing shareholder authority has been granted.
Distributable reserves are represented by the special distributable reserve, the capital reserve
gains/(losses) on disposal and the revenue reserve reduced by negative holding reserves (if any) which
total £5,429,000 as at 31 December 2020 (2019: £5,433,000). Although the distributable reserves total
£5,429,000 as at 31 December 2020, only £2,002,000 is actually able to be distributed as the reserves
contain £3,427,000 from the cancellation of the share premium account on the newly issued B shares,
which cannot be distributed until the beginning of 2022 without breaching VCT rules.
An interim capital dividend of 8 pence per Ordinary share for the year to 31 December 2020 was paid on
28 August 2020. A further interim capital dividend of 5 pence per Ordinary share for the year to 31
December 2020 was paid on 30 October 2020.
An interim dividend of 1.5 pence per B share for the year to 31 December 2020 was paid on 15 May
2020. A second interim dividend of 1.5 pence per B share for the year to 31 December 2020 was paid on
24 December 2020.
15.
Financial Instruments
The Company's financial instruments comprise equity investments, cash balances and liquid resources
including creditors.
Classification of financial instruments
The Company held the following categories of financial instruments, all of which are included in the
balance sheet at fair value, at 31 December 2020 and 31 December 2019:
Financial assets at fair value through profit or loss
Fixed asset investments
Total
Financial assets measured at amortised cost
Cash at bank and in hand
Total
Financial liabilities measured at amortised cost
Creditors
Accruals
Performance fee
Total
31 December 2020
£’000
31 December 2019
£’000
6,123
6,123
5,056
5,056
31
37
193
261
4,761
4,761
3,909
3,909
30
36
53
119
Fixed asset investments (see note 10) are valued at fair value. Unquoted investments are carried at fair
value as determined by the Directors in accordance with the IPEV guidelines. The fair value of all other
95
financial assets and liabilities is represented by their carrying value in the balance sheet. The Directors
believe that the fair value of the assets held at the year-end is equal to their book value.
The Company’s creditors are initially recognised at fair value, which is usually the transaction price, and
then thereafter at amortised cost.
16.
Financial Risk Management
In carrying on its investment activities, the Company is exposed to various types of risk associated with
the financial instruments and markets in which it invests. The most significant types of financial risk facing
the Company are market risk, credit risk and liquidity risk. The Company's approach to managing these
risks is set out below together with a description of the nature and amount of the financial instruments
held at the balance sheet date.
Market risk
The Company’s strategy for managing investment risk is determined with regard to the Company’s
investment objective, as outlined on page 4. The management of market risk is part of the investment
management process. The Company's portfolio is managed with regard to the possible effects of adverse
price movements and with the objective of maximising overall returns to shareholders in the medium
term. Investments in unquoted companies, by their nature, usually involve a higher degree of risk than
investments in companies quoted on a recognised stock exchange, though the risk can be mitigated to a
certain extent by diversifying the portfolio across business sectors and asset classes. The overall
disposition of the Company's assets is regularly monitored by the Board.
Details of the Company’s investment portfolio at the balance sheet date are set out on pages 14 to 35.
29.4% (2019: 34.5%) by value of the Company’s net assets comprise investments in unquoted
companies held at fair value. The valuation methods used by the Company include the application of a
price/earnings ratio derived from listed companies with similar characteristics, and consequently the value
of the unquoted element of the portfolio can be indirectly affected by price movements on the London
Stock Exchange. A 10% overall increase in the valuation of the unquoted investments at 31 December
2020 would have increased net assets and the total return for the year by £317,000 (2019: £290,000)
disregarding the impact of the performance fee; an equivalent change in the opposite direction would
have reduced net assets and the total return for the year by the same amount.
27.4% (2019: 22.2%) by value of the Company’s net assets comprises equity securities quoted on AIM.
A 10% increase in the bid price of these securities as at 31 December 2020 would have increased net
assets and the total return for the year by £296,000 (2019: £186,000) disregarding the impact of the
performance fee; a corresponding fall would have reduced net assets and the total return for the year by
the same amount.
Credit risk
There were no significant concentrations of credit risk to counterparties at 31 December 2020 or 31
December 2019.
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or
commitment that it has entered into with the Company. The Board carries out a regular review of
counterparty risk. The carrying values of financial assets represent the maximum credit risk exposure at
the balance sheet date.
96
Liquidity risk
The Company’s financial assets include investments in unquoted equity securities which are not traded
on a recognised stock exchange and which generally are illiquid. They also include investments in AIM-
quoted companies, which, by their nature, involve a higher degree of risk than investments on the main
market. As a result, the Company may not be able to realise some of its investments in these instruments
quickly at an amount close to their fair value in order to meet its liquidity requirements, or to respond to
specific events such as deterioration in the creditworthiness of any particular issuer.
The Company’s liquidity risk is managed and monitored on a continuing basis by the Board in accordance
with policies and procedures laid down by the Board.
17. Events After the Balance Sheet Date
The share price of SkinBio rose substantially since the year end when it was 22p and this allowed the
Company to sell a total of 1,750,000 SkinBio shares from the B share pool in January 2021 for a total of
£621k and generating a profit versus original cost of £341k (a 2.2x return on the original investment).
In addition the Company was able to realise nearly 50% of its holdings in Abingdon Health Plc
(“Abingdon”) for a small profit. The Company sold a total of 78,000 shares in Abingdon from the B share
pool in January 2021 for a total of £76k at 98 pence per share.
One additional unquoted investment was made in the B share pool in January 2021 into Solascure Ltd.
for £500,000.
Following recent press coverage, the share price of Scancell rose significantly from 13.5p at 31 December
2020 and was 24.5p at 19 February 2021 and this allowed the Company to take the opportunity to sell
1,000,000 Scancell shares from the Ordinary share pool in February 2021 at 21.7p per Scancell share.
As a result of the above, the Company is pleased to announce an updated unaudited NAV of 99.4p per
B share and 44.0p per Ordinary share at 19 February 2021.
The Company also declared an interim B share dividend of 1.5p per B share on 18 February 2021 to be
paid on 14 May 2021 to shareholders on the B share register on 30 April 2021, with an ex-dividend date
of 29 April 2021.
The Directors are not aware of any other post balance sheet events which need to be brought to the
attention of shareholders.
18. Contingencies, Guarantees and Financial Commitments
There were no contingencies, guarantees or financial commitments as at 31 December 2020 (2019: £nil).
19. Related Party Transactions
The Board acted as the investment manager of the Company until Seneca was appointed on 23 August
2018. Certain Directors are entitled to participate in a performance bonus as detailed in note 6. During
the year, Seneca has earnt £127,000 in management fees (2% of the weighted average net assets of the
B share portfolio) (2019: £103,000). However, only £41,000 is recoverable by Seneca as a result of the
cost cap, as detailed in note 3 and this was paid to Seneca during the year (2019: £28,000).
97
Seneca as Investment Manager accrued £76,191 (2019: £138,132) transaction fees and directors’ fees
from investee companies in relation to the arrangement and monitoring of investments. As a related party,
we believe that this transaction is disclosable, and the Board ensures it is managed from a conflicts of
interest point of view. Seneca may also become entitled to a performance fee. See note 3 to the financial
statements for more information on these fees.
As detailed in the offer for subscription document dated 13 October 2020, Seneca (as promoters of the
Offer) is entitled to charge the Company up to 5.5% of investors’ subscriptions. A total of £6,595 has
been paid to Seneca, based on the allotments of £2,396,950 (net of facilitated fees, gross of the promoter
fee) as at 31 December 2020 (2019: £20,294).
98
Shareholder Information and Contact Details
Dividends
Dividends will be paid by the Registrar on behalf of the Company. Shareholders who wish to have
dividends paid directly into their bank account rather than by cheque to their registered address should
contact the Company’s Registrar, Neville, whose details can be found on page 101. Other queries relating
to dividends and shareholdings should also be directed to Neville.
Share Price
The share price of both the Company’s Ordinary shares and B shares are published daily on the London
Stock Exchange’s website (www.londonstockexchange.com), and other financial websites, and can also
be accessed through the Company’s website (www.senecavct.co.uk). The Ordinary share price may be
found using the TIDM/EPIC code HYG, and the B share price may be found using the TIDM/EPIC code
SVCT.
Latest mid-market share price (19 February 2021)
Ordinary shares
33.5p per share
B shares
84.0p per share
Buying and selling shares
The Company’s Ordinary and B shares, which are listed on the London Stock Exchange, can be bought
and sold in the same way as any other company quoted on a recognised stock exchange via a
stockbroker. There may be tax implications in respect of all or part of your holdings, so shareholders
should contact their independent financial adviser if they have any queries.
The Company does not currently operate a share buyback policy for its Ordinary shares, but is authorised
to buy back its B shares (within approved limits). If you are considering selling your shares or trading in
the secondary market, please contact the Company’s Corporate Broker, Panmure Gordon (UK) Limited
as follows:
Chris Lloyd
Paul Nolan
020 7886 2716 chris.lloyd@panmure.com
020 7886 2717 paul.nolan@panmure.com
Risk Warning - Financial Scams
We have been made aware that a number of existing shareholders and those of other VCTs have been
contacted in connection with fraudulent financial scams. In these instances, shareholders have received
unsolicited phone calls from persons claiming to work for a corporate finance firm, offering to buy
shareholder’s VCT shares at an inflated price in connection with a possible take-over of the VCT and
asking shareholders to sign a non-disclosure agreement.
The claims made are false and are invariably an attempt to obtain confidential personal information from
shareholders with a view to fraudulently extract money from them.
Shareholders are warned to be very suspicious if they receive any similar type of communication and we
would recommend that you do not respond with any personal information.
99
If you are in any doubt, we recommend that you seek professional financial advice before taking any
action. You can also call Seneca Partners Limited on 01942 295 981 if you wish to check that any
correspondence or communication you receive from the Company is genuine.
Notification of change of address
Communications with shareholders are mailed to the registered address held on the share register unless
shareholders have agreed to be contacted via e-mail. In the event of a change of address or other
amendment this should be notified to Neville Registrars, under the signature of the registered holder.
Other information for Shareholders
Previously published Annual Reports and Half-yearly Reports are available for viewing on the Company’s
website at www.senecavct.co.uk, and in line with current trends all future communications will also be
made available there. The Company has introduced e-communication for its shareholders, and we
continue to encourage all of our investors to switch to receiving updates from the Company via e-mail
and documents in soft copy. This enables you to receive documents more quickly and has the added
benefits of being more environmentally friendly and reducing printing and postage costs.
Should you wish to switch to e-mail communication and documents in the future by e-mail, please contact
our Registrars, Neville Registrars Limited, Neville House, Steelpark Road, Halesowen, B62 8HD, e-mail
info@nevilleregistrars.co.uk, or phone 0121 585 1131. Please also contact them for any other queries
related to your shareholding in the Company.
100
Directors and Advisers
Board of Directors
John Hustler (Chairman)
Alex Clarkson
Richard Manley
Richard Roth
Company Number
Registered in England & Wales
No 04221489
Secretary and Registered Office
Craig Hunter
9 The Parks
Haydock
WA12 0JQ
Investment Manager and
Administration Manager
Seneca Partners Limited
9 The Parks
Haydock
WA12 0JQ
Tel: 01942 271746
Corporate Broker
Panmure Gordon (UK) Limited
One New Change
London
EC4M 9AF
Tel: 020 7886 2500
Independent Auditor
UHY Hacker Young LLP
Quadrant House
4 Thomas More Square
London
E1W 1YW
VCT Adviser
Philip Hare & Associates LLP
1 Temple Avenue
Temple
London
EC4Y 0HA
Bankers
The Royal Bank of Scotland plc
62/63 Threadneedle Street
London
EC2R 8LA
Registrars
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen
B62 8HD
Tel: 0121 585 1131
www.nevilleregistrars.co.uk
Financial Adviser
Beaumont Cornish Limited
Building 3
566 Chiswick High Road
London
W4 5YA
101
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting (“AGM”) of Seneca Growth Capital VCT Plc (“the Company”) will be
held as a closed meeting at 14:00 on Monday, 29 March 2021 at the Company’s registered address 9 The Parks, Haydock,
WA12 0JQ in accordance with the provisions of the Corporate Insolvency and Governance Act 2020. In light of the
unprecedented restrictions on movement and gatherings due to the Covid-19 pandemic, the meeting will take place with either
two Directors who hold shares in the Company or one Director and an investment manager from Seneca Partners Limited,
who is also a shareholder, present only, to constitute the minimum quorum for the AGM to take place under the Company's
Articles of Association and company law requirements. Shareholders should note that only the formal business set out in the
notice of AGM will be considered at the AGM.
Although shareholders will not be permitted to attend the AGM this year there will be a shareholder update presentation and
a question and answer (“Q&A”) session at 10:00 on 8 March 2021, further details of which can be found on the Company’s
website at https://senecavct.co.uk/march-2021-shareholder-presentation/.
Shareholders wishing to vote on any of the matters of business are urged to do so through completion of a proxy form
appointing the chairman of the AGM, which can be submitted to the Company’s Registrar as detailed in the Notes. Proxy
forms should be completed and returned in accordance with the instructions thereon and the latest time for the receipt of proxy
forms is 14:00 on Saturday, 27 March 2021. Proxy votes can be also be submitted by CREST.
All resolutions will be decided by a poll and therefore it is essential that shareholders wishing to vote submit their proxy forms
by 14:00 on Saturday, 27 March 2021.
Shareholders will have the opportunity to ask questions prior to submitting their proxy votes at the shareholder update
presentation on 8 March 2021 as detailed above.
Resolutions 1 to 9 (inclusive) will be proposed as Ordinary Resolutions and resolutions 10 to 12 (inclusive) will be proposed
as Special Resolutions.
Ordinary Business
To consider and if thought fit, pass the following as Ordinary Resolutions:
1. THAT the Directors’ Annual Report and Financial Statements and the auditors’ report thereon for the year ended 31
December 2020 be received.
2. THAT the Directors’ Remuneration Report in respect of the year ended 31 December 2020 be approved.
3. THAT John Hustler be re-elected as a Director of the Company.
4. THAT Richard Manley be re-elected as a Director of the Company.
5. THAT Alex Clarkson be re-elected as a Director of the Company.
6. THAT Richard Roth be re-elected as a Director of the Company.
Biographical details for each Director and their individual contributions to the Company towards its long-term sustainable
success can be found on page 42 of the Annual Report.
7. THAT UHY Hacker Young LLP be re-appointed as auditors of the Company until the conclusion of the next Annual
General Meeting of the Company at which accounts are laid before the Members.
8. THAT the Directors be authorised to determine the auditor’s remuneration.
102
Special Business
To consider and if thought fit, pass the following as an Ordinary Resolution:
9. AUTHORITY TO ALLOT RELEVANT SECURITIES
THAT, in addition to existing authorities, the Directors 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:
a. B ordinary shares of 1p each in the capital of Company ("B shares") up to an aggregate nominal amount
of £350,000 in connection with offer(s) for subscription;
b. B shares for cash and otherwise than pursuant to sub-paragraph a. above, up to an aggregate nominal
amount of £80,000; and
c. ordinary shares of 1p each in the capital of Company ("Ordinary Shares") for cash, up to an aggregate
nominal amount of £4,058
provided that this authority shall expire at the later of the conclusion of the Company’s next Annual General Meeting
following the passing of this resolution and the expiry of 15 months from the passing of this resolution (unless
previously revoked, varied or extended by the Company in a general meeting) but so that such authority shall allow
the Company to make offers or agreements before the expiry thereof which would or might require relevant securities
to be allotted after the expiry of such authority and the Directors shall be entitled to allot shares pursuant to any such
offers or agreements as if the authority conferred by this resolution had not expired.
To consider and if thought fit, pass the following as a Special Resolution:
10. AUTHORITY TO PURCHASE RELEVANT SECURITIES
THAT the Company be and is hereby generally and unconditionally authorised within the meaning of
section 701 of the Act to make one or more market purchases (within the meaning of section 693(4) of the
Act) of B shares provided that:
a.
b.
c.
the maximum number of B shares hereby authorised to be purchased is an amount equal to 14.99% of
the issued B share capital of the Company from time to time;
the minimum price which may be paid for a B share is 1 pence per share, the nominal amount thereof;
the maximum price which may be paid for a B share is an amount equal to the higher of:
i.
ii.
105% of the average of the middle market prices shown in the quotations for a B share in The
London Stock Exchange Daily Official List for the five business days immediately preceding the
day on which that share is purchased; and
the amount stipulated by Article 5(6) of Market Abuse Regulation (596/2014/EU);
d.
e.
the authority hereby conferred shall (unless previously renewed or revoked) expire on the earlier of the
conclusion of the Company’s next Annual General Meeting following the passing of this resolution and the
date which is 15 months after the date on which this resolution is passed; and
the Company may make a contract or contracts to purchase its own B 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 shares in pursuance of any such contract or contracts as if the
authority conferred hereby had not expired.
To consider and, if thought fit, pass the following as a Special Resolution:
11. EMPOWERMENT TO MAKE ALLOTMENTS OF EQUITY SECURITIES
THAT, in addition to existing authorities, the Directors pursuant to section 570(1) of the Act be and are
hereby empowered to allot or make offers or agreements to allot equity securities (as defined in section
560(1) of the Act) for cash pursuant to the authority referred to in Resolution 9 as if section 561(1) of the
Act did not apply to any such allotments and so that:
a.
b.
reference to allotment in this resolution shall be construed in accordance with section 560(2) of the Act;
and
the power conferred by this resolution shall enable the Company to make any offer or agreement 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 offer or agreement
notwithstanding the expiry of such power,
103
and this power, unless previously varied, revoked or renewed, shall come to an end at the conclusion of the Annual
General Meeting of the Company next following the passing of this resolution or, if earlier, on the expiry of 15 months
from the passing of this resolution.
To consider and, if thought fit, pass the following as a Special Resolution:
12. ALTERATION TO THE ARTICLES OF ASSOCIATION
THAT with effect from the conclusion of the meeting the draft articles of association produced to the meeting and,
for the purposes of identification, initialled by the chairman be adopted as the Articles of Association of the Company
in substitution for, and to the exclusion of, the Company's existing Articles of Association.
By order of the Board
Craig Hunter
Company Secretary
22 February 2021
Notes:
Registered Office:
9 The Parks
Haydock
WA12 0JQ
i.
ii.
iii.
iv.
v.
vi.
Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, entitlement to attend and vote at the meeting (and the number of votes
that may be cast thereat), will be determined by reference to the Register of Members of the Company at the close of business on the day which is
two days before the day of the meeting or of the adjourned meeting. Changes to the Register of Members of the Company after the relevant deadline
shall be disregarded in determining the rights of any person to attend and vote at the meeting. Please note that no shareholders or other persons
(other than the minimum required to form a quorum as previously explained in this notice) will be permitted to physically attend the
meeting or vote in person at the meeting due to the Covid-19 pandemic and, therefore, the Board strongly encourages members to appoint
the chairman of the meeting as their proxy to exercise their right to vote at the meeting in accordance with their instructions.
For legal reasons Neville Registrars Limited will be unable to give advice on the merits of the proposals or provide financial, legal, tax or investment
advice. The member will need to indicate in the box next to the proxy holder’s name the number of shares in relation to which they are authorised
to act as proxy.
Any person to whom this notice is sent who is a person nominated under section 146 of the Act to enjoy information rights (a “Nominated Person”)
may, under an agreement between him/her and the member by whom he/she was nominated, have a right to be appointed (or to have someone
else appointed) as a proxy for the meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may,
under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights.
The statement of the rights of members in relation to the appointment of proxies in paragraphs (ii) to (iii) above does not apply to Nominated
Persons. The rights described in these paragraphs can only be exercised by members of the Company.
If the recipient of this document has been nominated to receive general shareholder communications directly from the Company, it is important to
remember that the member's main contact in terms of their investment remains as it was (being the registered shareholder, or perhaps custodian
or broker, who administers the investment on their behalf). Therefore, any changes or queries relating to a member's personal details and holding
(including any administration thereof) must continue to be directed to that member's existing contact at their investment manager or custodian. The
Company cannot guarantee that it will deal with any matters that are directed to it in error. The only exception to this is where the Company, in
exercising one of its powers under the Act, writes to a member directly for a response.
CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so for the AGM and
any adjournment(s) of it by using the procedures described in the CREST Manual (available from https://www.euroclear.com/site/public/EUI).
CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s),
should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy
appointment made by means of CREST to be valid, the appropriate CREST message (a CREST Proxy Instruction) must be properly authenticated
in accordance with Euroclear UK & Ireland Limited's (EUI) specifications and must contain the information required for such instructions, as
described in the CREST Manual. The message must be transmitted so as to be received by the issuer's agent (CREST ID 7RA11) by 14:00 on
Saturday, 27 March 2021. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message
by the CREST Applications Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by
CREST. CREST members and, where applicable, their CREST sponsors or voting service providers should note that EUI does not make available
special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of
CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member
or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such
action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection,
CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the
CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction
in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. Given that no shareholders or other
persons (other than the minimum required to form a quorum as previously explained in this notice) will be permitted to physically attend
the meeting or vote in person at the meeting due to the Covid-19 pandemic, the Board strongly encourages members to appoint the
chairman of the meeting, rather than any other person, as their proxy to exercise their right to vote at the meeting in accordance with
their instructions.
104
vii.
viii.
ix.
x.
xi.
A reply-paid Form of Proxy or a reply-paid envelope is enclosed with this document if received by post. To be valid, the enclosed Form of Proxy for
the meeting, together with the power of attorney or other authority, if any, under which it is signed or a notarially certified or office copy thereof,
must be deposited at the offices of the Company’s registrar, Neville Registrars Limited, Neville House, Steelpark Road, Halesowen B62 8HD or,
due to the current restrictions as a result of Covid-19, may be emailed to info@nevilleregistrars.co.uk so as to be received not later than 14:00 on
Saturday, 27 March 2021 or 48 hours before the time appointed for any adjourned meeting or, in the case of a poll taken subsequent to the date
of the meeting or adjourned meeting, so as to be received no later than 24 hours before the time appointed for taking the poll.
A member can only appoint a proxy using the procedure set out in these notes and the notes to the Form of Proxy.
As at 19 February 2021 (being the last business day prior to the publication of this notice), the Company’s issued share capital comprised 8,115,376
Ordinary shares and 9,062,948 B shares, all of which carry one vote each. Therefore, the total voting rights in the Company as at 19 February 2021
was 17,178,324.
Copies of the directors’ letters of appointment, the Register of Directors’ Interests in shares of the Company and copies of the Articles of Association
of the Company (including a mark-up of the new articles of association proposed to be adopted pursuant to resolution 12) will be available for
inspection at the registered office of the Company during usual business hours on any weekday (Saturday and Public Holidays excluded) from the
date of this notice, until the end of the Annual General Meeting and at the place of the Annual General Meeting for at least 15 minutes prior to and
during the meeting.
If a corporate shareholder has appointed a corporate representative, the corporate representative will have the same powers as the corporation
could exercise if it were an individual member of the Company. If more than one corporate representative has been appointed, on a vote on a show
of hands on a resolution, each representative will have the same voting rights as the corporation would be entitled to. If more than one authorised
person seeks to exercise a power in respect of the same shares, if they purport to exercise the power in the same way, the power is treated as
exercised; if they do not purport to exercise the power in the same way, the power is treated as not exercised. Given that no shareholders or
other persons (other than the minimum required to form a quorum as previously explained in this notice) will be permitted to physically
attend the meeting or vote in person at the meeting due to the Covid-19 pandemic, the Board strongly encourages members to appoint
the chairman of the meeting, rather than any other person, as their proxy to exercise their right to vote at the meeting in accordance with
their instructions and not to appoint a corporate representative.
xii.
Further information, including the information required by section 311A of the Act, regarding the meeting is available on the Company’s website,
www.senecavct.co.uk.
105
Seneca Growth Capital VCT Plc
9 The Parks
Haydock
WA12 0JQ
www.senecavct.co.uk