Company No: 04221489

For the year ended 31 December 2022

Annual Report

and Financial Statements

Annual Report & Financial Statements for the year ended 31 December 2022

Contents

Financial Headlines                                                               

01

Financial Summary                                                                

03

Strategic Report                                                                   

05

Our Strategy                                                                      

06

Chair’s Statement                                                                 

09

Investments 



13

Investment Manager’s Report                                                       

14

Business Review 



34

Governance                                                                      

39

Details of Directors                                                                

40

Directors’ Report                                                                  

41

Corporate Governance 



47

Statutory Reports                                                                

51

Audit Committee Report                                                           

52

Directors’ Remuneration Report and Policy                                          

54

Directors’ Responsibilities Statement                                                

58

Auditor’s Report 



59

Report of the Independent Auditor to the Members of Seneca Growth Capital VCT Plc    

60

Financial Statements                                                             

65

Combined Income Statement                                                       

66

Ordinary Share Income Statement (Non-statutory Analysis)                            

67

B Share Income Statement (Non-statutory Analysis)                                   

68

Combined Balance Sheet                                                           

69

Ordinary Share Balance Sheet (Non-statutory Analysis)                                

70

B Share Balance Sheet (Non-statutory Analysis)                                       

71

Combined Statement of Changes in Equity                                           

72

Ordinary Shares Statement of Changes in Equity (Non-statutory Analysis)                

73

B Shares Statement of Changes in Equity (Non-statutory Analysis)                      

74

Combined Statement of Cash Flows                                                 

75

Ordinary Shares Statement of Cash Flows (Non-statutory Analysis)                      

76

B Shares Statement of Cash Flows (Non-statutory Analysis)                            

77

Notes to the Financial Statements                                                   

78

Shareholder Information and Contact Details                                         

93

Directors and Advisers                                                             

95

Notice of Annual General Meeting                                                   

96

Annual Report & Financial Statements for the year ended 31 December 2022

Financial

Headlines

01

Annual Report & Financial Statements for the year ended 31 December 2022

B Shares

Ordinary Shares

£39m

1084p

£59m

371p

927p

20p

807p

30p

Amount raised during the year from the issue of B shares

Ordinary share NAV plus cumulative dividends paid at 31 December 2022 (“Total Return”)

Amount invested during the year into ten new investee companies and one follow-on

investment by the B share pool

Ordinary share NAV at 31 December 2022

B share NAV plus cumulative dividends paid at 31 December 2022 (“Total Return”)

Interim capital dividends paid per Ordinary share during year

B share NAV at 31 December 2022

Interim dividends paid per B share during year

02

Annual Report & Financial Statements for the year ended 31 December 2022

Financial Calendar

Financial Summary

The Company’s financial calendar is as follows:

Year to 31 December 2022

Year to 31 December 2022

Ordinary share

pool

B share

pool

Ordinary share

pool

B share

pool

Net assets (£’000s)

3,008

15,122

3,157

14,606

Return on ordinary activities after

tax (£’000s)

13

(2,762)

1,029

1,067

Earnings per share (p)

02

(165)

126

89

Net asset value per share (p)

371

807

389

1001

Dividends paid since inception (p)

7125

1200

6925

900

Total return (NAV plus

cumulative dividends paid) (p)

10835

9270

10815

10910

18 May 2023

Annual General Meeting will be held at 1100 am

at 9 The Parks, Haydock, WA12 0JQ

July 2023

Half-yearly results to 30 June 2023 published

March 2024

Annual results for the year to 31 December 2023

announced and Annual Report and Financial

Statements published

03

Annual Report & Financial Statements for the year ended 31 December 2022

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 and made an initial allotment

of B shares on 23 August 2018, at which point

the Company’s name was changed to Seneca

Growth Capital VCT and Seneca Partners Limited

(“Seneca”) was appointed as the Company’s

Investment Manager

The Company has raised £183 million under the

Company’s B share offers as at 31 December 2022

It launched a new offer of B shares on 26 August

2022 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”) and had

raised £985k under this Offer by the year end

The Company’s Investment Manager, Seneca, is

registered as a full-scope UK Alternative Investment

About Seneca Growth Capital

VCT Plc

Fund Manager (AIFM) The Company’s Board is

composed of four non-executive directors, three of

whom are independent

As the Company’s Investment Manager, Seneca is

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

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 targets well

managed businesses with strong leadership that can

demonstrate established and proven concepts and

which are seeking an injection of growth capital to

support their continued development The B share

pool made ten new investments and a follow-on

investment during the year, details of which are

04

Annual Report & Financial Statements for the year ended 31 December 2022

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

Chair’s Statement

Investment Manager’s Report

Business Review

included on pages 14 to 29 The Company intends to

distribute a proportion of the net profits it receives

from realisations of B share pool investments by

way of special tax-free dividends This is intended to

provide B share 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

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 a further 9% of its holding in Scancell

Holdings Plc (“Scancell”) which enabled the payment

of a further 20p of dividends per Ordinary share

during the year

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 34

to 38 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

In 2015, a sunset clause for VCT income tax relief was

introduced which meant that income tax relief would

no longer be given to subscriptions made on or after

6 April 2025, unless the legislation was renewed by

HM Treasury On 23 September 2022, the Government

in the Autumn Statement announced its intention to

extend the legislation, safeguarding venture capital

schemes beyond 2025 The Company also noted

the announcement by the AIC on 28 February 2023

regarding the intention that the sunset clause will

be removed however, the Budget on 15 March 2022

did not make specific reference to this, and at the

time of writing details of how this will proceed have

not been published by the Government The new

agreement between the UK and EU known as the

Windsor Framework, published on 27 February 2023,

is considered to remove any potential barriers in the

Government progressing this

05

Annual Report & Financial Statements for the year ended 31 December 2022

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

either share pools’ assets are managed The Ordinary

share pool does not envisage making any new

investments from the funds in this share pool, apart

from any follow-on investment in existing 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 The Directors have not

made any new Ordinary share pool investments

during the year but will continue to monitor

portfolio companies for any follow-on investment

opportunities that are suitable should they arise, 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 26 August 2022 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 which 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 objectives 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 These robust internal controls are discussed

in the Business Review on page 38, the Corporate

Governance policy on pages 47 to 50 and within the

Audit Committee Report on pages 52 to 53

Our Strategy

Qualifying Investments

Compliance with required VCT tax rules and

regulations is considered with all investment

decisions made The Company is further monitored

on a continual basis by Shoosmiths 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; and

•

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 trading

companies which fall within the following limits:

•

Have fewer than 250 full time equivalent

employees (500 if a knowledge intensive

company);

•

Have no more than £15 million of gross assets

at the time of investment and no more than £16

million immediately post investment;

•

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 subject to certain exceptions;

•

Have raised no more than £5 million of State

Aided funds in the previous 12 months (or £10

million if a knowledge intensive company) and

less than the lifetime limit of £12 million (or £20

million if a knowledge intensive company);

•

Produce a business plan to show that its funds

are being raised for growth and development;

•

Not be in financial difficulty;

•

Be an unquoted company or listed on AIM;

•

Have a permanent establishment in the United

Kingdom;

•

Not be under the control of any other company,

nor control any company which is not a

qualifying subsidiary of the company; and

•

Are operating a trade which is not an “excluded

activity”

06

Annual Report & Financial Statements for the year ended 31 December 2022

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 which 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

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 may 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 risk in the portfolio that

is derived from any particular investment accounting

for too much of the fund, at the point of investment

or addition to an existing investment no more than

15% of the portfolio 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

The 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”)

which provides shareholders with more information

about the risks, potential returns and charges within

VCTs Although well intended, there were widespread

concerns about the application of some aspects of

the prescribed methodologies to VCTs Specifically,

there were concerns that:

1

the risk indicator in the KID (a number on a scale

of 1 to 7, with 1 being “lower risk” and 7 being

“higher risk”) may have understated the level of

risk; and

2

investment performance scenarios included in

the KID may have indicated future returns for

shareholders that were too optimistic

In what is one of the first examples of the Financial

Conduct Authority (“FCA”) confirming UK divergence

from EU rules following Brexit, revised requirements

for what information should be included in a KID

were published in March 2022 and these came into

full effect on 31 December 2022 Amongst other

changes, these revised requirements addressed both

of the concerns highlighted above by:

1

stating that a VCT must have a risk indicator of 6

or 7 (on the same scale of 1 to 7); and

2

replacing the investment performance scenarios

included with text describing:

a)

what the investment risks are and what an

investor could get in return;

b)

what could affect an investor’s return

positively; and

c)

what could affect an investor’s return

negatively

As before, the Company is required to publish a KID

and retail investors must be directed to this before

buying shares in the Company The KID is published

on the Company website wwwsenecavctcouk/

current-offer/ The KID has been prepared using the

methodology prescribed in the FCA’s guidance

The Board is aware of the new regulations regarding

the KID and has produced a revised KID in line with

the new Regulations The Board recommends that

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

07

Annual Report & Financial Statements for the year ended 31 December 2022

variations to the above since the date of the relevant

balance sheet) The Company did not borrow any

funds in 2022

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 34 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 7,

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 Company has also introduced regular

shareholder presentations in addition to the AGM,

in order to engage directly with shareholders At the

November 2022 Shareholder Update Presentation,

the Board had the opportunity to address five queries

put forward by shareholders, the answers to which

are available on our website at wwwsenecavct

couk/november-2022-shareholder-update-

presentation/ It was a great opportunity to engage

directly with shareholders and discuss the current

portfolio, investment process and objectives as well

as the wider investment market Any shareholder

queries that arise throughout the year are discussed

by the Board and factored into any decision-making

and responses are made available to shareholders 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 page 36

Investment Manager

The Company’s most important business relationship

is with the Investment Manager There is regular

contact with the Investment Manager, and 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 page 36

Portfolio Companies

The Company holds minority investments in its

portfolio companies and it has appointed the

Investment Manager to manage the B share portfolio,

and 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 While

the Board has little day-to-day involvement with the

B share and Ordinary share portfolio, the Investment

Manager provides updates on the B share portfolio

at least quarterly and John Hustler and Richard Roth

also provide updates on the Ordinary share portfolio

at least quarterly

There were ten investee company additions to

the B share portfolio and a B share pool follow-

on investment into quoted company Arecor

Therapeutics Plc (“Arecor”) during the year The

Company achieved one full and three partial exits

in the year - one full and two partial exits from the

B share pool and one partial exit from the Ordinary

share pool, as detailed in the Chair’s Statement

on pages 9 to 12 and the Investment Manager’s

Report on pages 14 to 33 The Board and Investment

Manager believe that the full realisation of B share

pool quoted company Clean Power Hydrogen Plc

(“CPH2”) and partial realisations from each share

pool, which were all profitable, were in the best

interests of all key stakeholders

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 page 43

08

Annual Report & Financial Statements for the year ended 31 December 2022

I am pleased to present the 2022 Annual Report on

behalf of the Board to shareholders

Overview

It has been an impressive year of new investments

from the B share pool, with £5,920k deployed into

ten new investee companies and one follow-on

investment in Arecor Seneca continues to deliver on

its investment strategy aimed at achieving a broadly

even split of both AIM/AQSE quoted investments

and unquoted investments across a diverse spread

of sectors and delivering returns for investors

where possible through realisations The B share

pool achieved three full and partial exits in the year,

generating £964k in gross proceeds and £235k of

profits Crucially, we have continued to pay B share

dividends of 3p per annum and have now paid a total

of 12p of B share dividends since 2019 which have

been covered by profits on exits

It was also encouraging to see the Ordinary share

pool continue to realise profitable returns for

Ordinary shareholders with a further partial exit

of our largest quoted investment, Scancell, which

enabled us to pay a 2p capital dividend to Ordinary

shareholders

Whilst there was some softening of AIM prices during

2022, we and the Company’s Investment Manager,

Seneca, continue to believe that the benefits

offered by AIM quoted investments, including

access to capital, greater liquidity for harvesting

profits and stronger reporting and governance

requirements, will continue to generate attractive

investment returns for investors over the medium

and longer-term The reduction in the B share NAV

was largely driven by the AIM quoted investments,

but our relatively high percentage cash holding and

unquoted company portfolio continues to dilute

such impact Seneca also believe that the Company’s

exposure to the AIM market will better position us to

participate more directly in any market recovery

The total value of the B share unquoted portfolio

at the financial year end was valued above original

investment cost, with 2022 seeing an uplift in value

of two unquoted holdings We are pleased with the

progress being made across the B share portfolio

and in particular have been impressed by the

positive trading updates and announcements made

by portfolio companies, including such companies

as Bright Network (UK) Ltd (“Bright Network”) and

quoted company Evgen Pharma plc Bright Network

is on track to double in size over its current financial

year and has started to expand internationally

Chair’s Statement

Evgen Pharma plc announced a string of positive

announcements including a substantial out-licensing

deal with Swiss biotech company Stalicla SA worth

$161 million in milestones and double digit royalties,

with up to $6 million in milestones to be received by

the end of 2023

In August 2022, the Company launched its fifth offer

for B shares and has now raised £192 million since

2018 following the recent allotment of £933k of

B shares in April 2023 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 18 August 2023 unless it reaches

its total target of £20 million before then

With 31% of the B share pool’s NAV as at 31

December 2022 represented by cash, we were happy

to see the Company’s B share pool end the year well

placed to take advantage of the growing number

of AIM quoted and private company investment

opportunities being reviewed by Seneca

I have set out below further detail in relation to 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:

•

Three exits generating £235k of profits;

•

An unrealised loss totalling £2,015k in the year

as a result of the softening in the AIM market;

•

Two dividends paid during the year totalling 30p

per B share; and

•

The Company’s running costs (capped at 3% of

B share NAV)

The net result of the above was an overall decrease

in the Total Return per B share to 927p as at 31

December 2022 (2021: 1091p)

B Shares - Investment Portfolio Review

In the year, the B share portfolio consisted of twenty-

six companies, sixteen of which are quoted on AIM/

AQSE The net reduction in value across the sixteen

quoted companies during the year, after accounting

for the profit on those exited, was 20% This is a

more modest reduction in value when compared

to the FTSE AIM All-Share Total Return index which

decreased by over 30% in the same year

09

Annual Report & Financial Statements for the year ended 31 December 2022

Throughout the year, the Company completed ten

new investments, one follow-on investment and was

able to make three full and partial exits from the B

share pool at a weighted average return of 13x on

original investment cost Further details in relation to

the B share pool’s investment portfolio are included in

the Investment Manager’s Report on pages 18 to 29

B Shares – Update and Outlook

B shareholders will be pleased to know the Board

declared an interim B share dividend of 15p per B

share on 7 March 2023 to be paid on 19 May 2023 to

shareholders on the B share register on 5 May 2023,

with an ex-dividend date of 4 May 2023

We have previously communicated our ambition

to increase dividends to 5% per annum of the B

share NAV by 2023 This ambition remains but

of course is dependent on a number of factors

including investment performance and in particular

the performance of the B share pool’s AIM quoted

investments, given that as at 31 December 2022

these represented 368% of the B share NAV

We are encouraged by the continued progress being

made by the B share pool and Seneca’s continued

work with the investee companies in the B share

portfolio to navigate current market headwinds, the

benefit of which we have seen with the increase

in the carrying values for two of the ten unquoted

investee companies, and; one of these uplifts has

been driven by a material and successful funding

round, while the other has been revalued as a result

of significant revenue growth and a move into

profitability We remain confident that the portfolio

retains its potential to provide attractive returns for B

shareholders over the medium term

The Board is also pleased with the progress

that Seneca has made since its appointment as

Investment Manager in 2018 in terms of developing

a diverse portfolio of growth capital investments

and securing a number of exits for the B share pool,

which have combined to enhance the Company’s

presence and reputation in the market

Following the end of the financial year, we have

raised an additional £933k, issuing 1,233,811

additional B shares on 5 April 2023 The allotment

was made at the 31 March 2023 unaudited B share

NAV (as announced on 4 April 2023) of 738p per B

share which was 69p (86%) lower than the B share

NAV as at 31 December 2022, predominantly a result

of a reduction in the share prices of some of the B

share pool’s AIM quoted investments since that date

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 2023 from, inter alia, the investments they

currently have in the later stages of due diligence

Ordinary Share Pool

Ordinary Shares - Results

The NAV per Ordinary share decreased by 18p from

389p to 371p during the year and this was after the

payment of the dividend per Ordinary share of 20p

on 23 December 2022

This decrease was principally driven by the dividend

payment in the year Excluding the dividend

payment, the NAV per Ordinary share remained

relatively flat, with the reduction in value of the

Ordinary share portfolio’s AIM quoted investment in

Arecor and the write down in the carrying value of

unquoted investments in Insense Limited (“Insense”)

and Fuel 3D Technologies Limited (“Fuel3D”)

offsetting the impact of the increase in the AIM

quoted share price of Scancell during the year

The quoted bid price of Scancell shares (the Ordinary

share pool’s largest investment) increased from 195p

as at 31 December 2021 to 240p at the year end

At times during the year the Scancell bid price was

above the year end price of 240p The Company

was able to sell 1,000,000 shares during the year,

generating £258k of proceeds at a 43x return for

Ordinary shareholders

As a result of the Scancell realisation, your Board was

very pleased to be able to pay a dividend of 2p per

Ordinary share during the year whilst still maintaining

a relatively stable Ordinary share pool NAV The

Total Return in relation to the Ordinary shares is now

1084p comprising cumulative distributions of 713p

per Ordinary share and a residual NAV per Ordinary

share of 371p as at 31 December 2022 Ordinary

Shareholders will be pleased to know the Board

declared a further interim Ordinary share capital

dividend of 2p per Ordinary share on 7 March 2023

to be paid on 19 May 2023 to shareholders on the

Ordinary share register on 5 May 2023, with an ex-

dividend date of 4 May 2023

On 22 November 2022, OR Productivity Limited

was put into administration; however, this has not

had any impact on the Ordinary share NAV as it

was already held at £nil value in the Ordinary share

portfolio

As previously reported, the Board remains focused

on identifying exit opportunities for the remainder of

the Ordinary share pool investment portfolio

Ordinary Shares - Investment Portfolio Review

The remaining Ordinary share portfolio now

comprises two AIM quoted holdings valued at

£2,915k, and five unquoted holdings valued at £59k

as at 31 December 2022

Shareholders will note that the AIM quoted holdings

represented 97% of the Ordinary share pool’s NAV

at the year end, with Scancell comprising 80% and

Arecor 17% of the Ordinary share pool NAV As a

result, the NAV per Ordinary share now fluctuates

largely in line with the movement in the AIM quoted

investments, particularly the Scancell share price

10

Annual Report & Financial Statements for the year ended 31 December 2022

Whilst the Scancell share price showed volatility

during 2022, 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 both the Scancell

and Arecor share prices under review and consider

their 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 Based on the composition of the Ordinary

share pool’s fixed assets as at 31 December 2022, the

NAV per Ordinary share moves by 12p for every 1p

movement in Scancell for reference

Further details in relation to the Ordinary share pool’s

investment portfolio are included in the Investment

Manager’s Report on pages 30 to 33

Ordinary Shares – Update and Outlook

As noted above, the Ordinary share pool’s NAV

fluctuates largely in line with the movement in the

AIM quoted investments and following the year end

there was a reduction Scancell’s share price, offset

by an increase in Arecor’s share price As at 31 March

2023, shares in Scancell were valued at 155p per

share (31 December 2022: 24p) and shares in Arecor

were valued at 250p per share (31 December 2022:

230p) As a result, on 4 April 2023 the Company

announced an updated unaudited NAV per Ordinary

share of 284p as at 31 March 2023

The Commercial Advisory Committee (“CAC”),

which now consists of myself and Richard Roth, will

continue to monitor the share price movement of its

AIM quoted holdings and the commercial progress

of its unquoted investments whilst continuing 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

In addition, the Ordinary share portfolio held £409k

in cash as at 31 December 2022 This cash is available

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 an investee company Despite three of

the Ordinary share pool’s portfolio companies seeking

further funds during the year, we did not consider

further investment from the Ordinary share pool

likely to improve the overall prospects for a timely

realisation from the respective investee company and

therefore no further Ordinary share pool investments

were made in the year The interim capital dividend

previously referred to will consume £162k of this cash

Ordinary shareholders will recall that, following the

appointment of Seneca as Investment Manager in

August 2018, the Ordinary share pool did not incur

any running costs until July 2021 From July 2021,

the Company’s running costs were to be shared

between the Ordinary and B share pool pro-rata to

their respective NAVs subject to a 3% cost cap In the

current year, the Ordinary share pool’s proportion of

the running costs was £28k

Fund Raising

During the year the Company has allotted 4,188,693 B

shares raising gross proceeds of £3,874k in the process

Annual General Meeting

The Company’s AGM will be held at 11:00 am on

Thursday, 18 May 2023 at the Company’s registered

address 9 The Parks, Haydock, WA12 0JQ

For any shareholders wishing to attend the AGM this

year in person, we request that you please inform

us in advance by e-mailing enquiries@senecavct

couk so that we may register your attendance with

the facilities manager in order to issue you with the

appropriate attendance pass For those unable to

attend, we will be hosting our bi-annual shareholder

update presentation with a question and answer

(Q&A) session included, starting at 2:00 pm on

10 May 2023 Shareholders should note that only

the formal business set out in the notice of AGM

will be considered at the AGM and we encourage

shareholders to attend the presentation and ask

questions prior to the AGM Further details about

the shareholder update presentation can be found

on the Company’s website at wwwsenecavctcouk/

may-2023-shareholder-presentation/

We strongly encourage shareholders to vote on

the matters of business through the completion

of a proxy form, 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 11:00 am on 16 May 2023

Proxy votes can also be submitted by CREST where

shares are so held

The Board has reviewed my performance and

has asked me to continue as Chair A resolution

for my re-election is included in the AGM Notice

Consideration has been given to my long tenure as

Chair and the Board has commenced the process of

identifying my potential successor but has asked that

I continue as Chair until such time as my successor

has been appointed We are in advanced stages in

the search for another independent non-executive

Director and expect to make the appointment within

the coming weeks Alex Clarkson and Richard Manley

have indicated that they are willing to continue as

non-executive directors and resolutions for their re-

appointment are included in the AGM notice

Due to personal and increased business

commitments, Richard Roth has informed the Board

that he will retire as an independent non-executive

Director of the Company at the forthcoming AGM

with effect from 18 May 2023 I would like to thank

Richard for his considerable contribution to the VCT

over the last eight years and I wish him well in his

other ventures Richard Roth’s successor as Audit

Chair will be announced in due course

11

Annual Report & Financial Statements for the year ended 31 December 2022

As shareholders will recall Richard and I comprise

the CAC and, following his retirement from the

Board, we are reviewing the future of the CAC’s

responsibilities; however, for the time being, I have

asked Richard to continue to be a member of the

CAC for a period of three months following his

retirement and he has agreed

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 2023/2024

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 convene

a separate general meeting to approve the necessary

increase in share capital

The Notice of AGM also includes a special resolution

authorising the amounts standing to the credit of

the share premium account of the Company and

the capital redemption reserve of the Company be

cancelled, which, if approved by the Company’s

shareholders and subject to subsequent confirmation

by the Court, may be used by the Company to deliver

returns to shareholders in the future, whether in the

form of dividends, distributions or purchases of the

Company’s own shares

A summary of the resolutions to be proposed by the

Company at the AGM is included on pages 45 to 46

VCT Qualifying Status

Shoosmiths 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 2022

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, cost

effective and ecologically friendly than receiving

paper copies by post and we therefore encourage

you to contact Neville, whose details are on page 95,

to advise them of your wish to switch to electronic

communication

Auditor

As previously announced, Hazlewoods LLP (“HZW”)

was appointed as the Company’s new independent

auditor on 23 May 2022 and has audited the

Company’s annual results for the year ending 31

December 2022 Shareholders will be asked to

reappoint HZW at the AGM for the audit of the

accounts for the year ending 31 December 2023

Future Prospects

We are pleased with the progress of both the

Ordinary and B share pools during the year

We are pleased that Seneca have continued to

develop the portfolio of B share pool investee

companies during the year, having completed ten

new investments in the year, the most investments

in a single year since launching the B share pool

in 2018, bringing the total number of investee

companies in the portfolio to twenty-five as at

31 December 2022 Seneca have also completed

a total of eight full and partial exits since 2019

and have over £46 million of cash on the B share

pool balance sheet at 31 December 2022 As a

result, Seneca believes that it is 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

Your Board continues to view the future of our

Company with confidence

John Hustler

Chair

20 April 2023

12

Annual Report & Financial Statements for the year ended 31 December 2022

Investments

13

Annual Report & Financial Statements for the year ended 31 December 2022

We have 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 2022

The B Share Pool

Performance and Dividends

We are pleased with the development of the B share portfolio, having completed more investments in 2022

than in any previous year since launching the B share pool with ten new investments and one follow-on

investment We continue to deliver on our investment strategy of providing a diverse spread of investments for B

shareholders across both AIM/AQSE quoted companies and unquoted companies and believe that this remains

the most effective strategy to deliver our target returns

Whilst there has been some softening in AIM prices in the year contributing to the decrease in NAV Total Return

per B share to 927p as at 31 December 2022 (2021: 1091p), the benefits offered by AIM quoted investments,

including access to capital markets, improved liquidity, stronger reporting and governance requirements as well

as the ability to participate more directly in any market recovery, mean AIM remains a core part of the B Share

portfolio and deployment strategy

The negative revenue return of 14p per B share for the year is principally a result of the impact of the Company’s

running costs on the B share pool; however, shareholders will recall that the Company’s total running expenses

are capped at 3% of the B share NAV As a result, Seneca reduced its annual management fee for 2022 from

£303k to £285k to ensure the Company’s annual running expenses stayed within this 3% limit

The negative capital return of 151p per B share for the year was principally due to the decrease in the value of

the B share pool’s AIM holdings, partially offset by the profitable exits made in the year which generated £235k

of profits

Bright Network, the talent attraction and recruitment business focussed on the graduate sector, continued

its impressive development and returned record trading results for the year to March 2022 with turnover and

profits materially up on the prior year As a result we increased the fair value of Bright Network from £281k

to £457k as at 31 December 2022 The second uplift in the unquoted B share portfolio was driven by the

completion of a material and successful funding round by Fabacus Holdings Limited (“Fabacus”) at an increased

valuation As a result, Fabacus was revalued to £702k from £563k Another unquoted portfolio company,

SolasCure Limited (“SolasCure”), reached a significant milestone in the year with the commencement of their

first in-human clinical trial although its valuation remained unchanged in the year

Silkfred Limited, an online marketplace for independent ladies’ fashion brands, completed a funding round at

a reduced valuation due to a softening in investor appetite to invest in companies with retail exposure As a

result, we reduced the fair value of our investment by 50% from £500k to £250k in line with the price of the last

fundraise

The two B share dividends paid during the year were in line with the Company’s target for 2022 at 3p per year

and it should be noted that the profits realised through the eight full and partial B share portfolio exits to date

exceeds the total value of dividends paid Furthermore, 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

Investee Company Updates

We are excited about the progress being made by B share investee companies with the vast majority having

reported positive trading figures and results despite the challenging economic conditions and volatility in the

AIM market in 2022 As noted above and in the Chair’s statement, we are delighted to have increased the B share

portfolio by ten new investee companies and uplifted two unquoted portfolio valuations as a result of their

continued progress and success

Investment Manager’s Report

14

Annual Report & Financial Statements for the year ended 31 December 2022

Investments into new companies in the year:

Company

Description

Amount invested

Clean Power Hydrogen Plc

– Manufacturer in the Hydrogen

power generation sector

£500k

Verici Dx Plc

– Developer and manufacturer of tests to

understand how a patient will and is responding to organ

transplant, with an initial focus on kidney transplants

£280k

Celadon Pharma Plc

– UK-based pharmaceutical company

that has obtained a Schedule 1 Controlled Drugs licence from

the UK Home Office, focusing on growing indoor hydroponic,

high-quality cannabis initially for the chronic pain market

£530k

ProBiotix Health Plc

– A company established by OptiBiotix

Health Plc, a B share pool existing investment, to develop

probiotics to tackle cardiovascular disease and other lifestyle

conditions which are affecting growing numbers of people

across the world

£777k

Alderley Lighthouse Labs

– A northwest based full-service

diagnostic business spun out from the UK Lighthouse Lab

Network - the largest diagnostic network in British history

£500k

Oxford BioDynamics Plc

– A global biotechnology company,

advancing personalised healthcare by developing and

commercialising precision medicine tests for life-changing

diseases

£700k

Bidstack Group plc

– An advertising technology company

which provides dynamic, targeted and automated native in-

game advertising for the global video games industry across

multiple platforms

£1,125k

Northcoders Group plc

– A northwest based market leading

provider of coding and software development training for

businesses and individuals

£300k

Geomiq Ltd

– Developer of the digital manufacturing platform

of choice for 1200+ professional engineers and procurement

teams from over 500 fast-moving hardware companies, and

has partnered with over 220 suppliers on an international basis

£334k

Convenient Collect Ltd (t/a Hubbox)

– Software for retailers

including global brands as Macy's, GAP, UGG, Hobbs, Charlotte

Tilbury, and Belstaff to offer local pickup options at checkout

for customers who want alternatives to home delivery

£716k

15

Annual Report & Financial Statements for the year ended 31 December 2022

It has been our priority to ensure that we are investing in businesses that are well funded with sufficient cash

runway to ensure they are in the best possible position to avoid having to seek further funding in the first 12-18

months, particularly under current market conditions As a result, we are pleased to report that the £6 million

deployed in the year formed part of a combined total fundraise of £87 million across all eleven investments

(being the ten noted in the table above plus a follow on investment into Arecor) This is indicative of the size

and type of companies we like to invest in and the degree of growth capital we think is important to deploy to

sufficiently fund these businesses We are excited about the potential that lies within the B share investment

portfolio and have included updates in relation to the top ten investments by value in the B share pool investee

companies later in this Investment Manager’s Report

AIM Quoted Investments

We were encouraged that during the year we continued to see a high volume of AIM investment opportunities

and whilst the softening of the market has led to some unrealised losses in relation to the AIM investments made

by the B share pool, it has also meant we were able to deploy funds at more attractive values This resulted in

seven new AIM investments being added to the B share portfolio and one follow-on AIM investment in portfolio

company Arecor to support the business as it completed the strategic acquisition of Tetris Pharma

The AIM market continued to provide opportunities to both invest and de-risk existing holdings yielding

attractive returns for investors As such we took the opportunity to fully realise our investment in Clean Power

Hydrogen Plc (“CPH2”) and to partially realise our holdings in SkinBioTherapeutics Plc (“SkinBio”) and Bidstack

Group plc (“Bidstack”)

In early 2022, the Company was able to realise a profitable exit for its holding in CPH2 providing a return of 13x

on original investment cost

The Company was also able to sell 125,000 shares in SkinBio, which represented 27% of the original holding of

4,677,107 shares, reducing the remaining holding to 1,857,107 shares These were sold at a share price of 515p

per share providing a return of 32x on original investment cost

Following our investment in Bidstack, we assessed our holdings post-IPO and in line with our AIM strategy

of harvesting early profits where possible we took advantage of a brief increase in share price to realise a

proportion of our shares at a profit and to de-risk our holding as both company specific and macro trends

evolved Throughout November and December 2022, we sold 7,350,000 Bidstack shares at a 11x return

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

up to 31 December 2022, Seneca has raised and deployed more than £140 million of EIS and VCT capital into

over 65 SME companies, through over 130 funding rounds, since we undertook our first EIS investment in 2012

This includes £12 million raised and deployed to date by the B share pool, a significant proportion of which has

been co-invested with Seneca EIS funds Seneca has recently made its 30th exit from its EIS funds and has now

returned more than £70m of exit proceeds to investors

The twenty-five investments in the B share portfolio had a value of £10,602k as at 31 December 2022 and all

but four 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/AQSE quoted companies and are pleased to have

completed eight additional AIM/AQSE quoted investments in the year

Fundraising

Our fourth B share offer concluded in August 2022, bringing total funds raised to £17,335k Our fundraising

efforts have since continued under our fifth B share Offer, with a further £985k being raised under this Offer as

at 31 December 2022 We are encouraged by the funds raised 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

16

Annual Report & Financial Statements for the year ended 31 December 2022

Post year end events and outlook

Following the financial year end reporting period, quoted portfolio company Bidstack announced on 3 January

2023 that they received notification that their largest customer and reseller had served notice that they wanted

to withdraw from a major contract with Bidstack As a result, Bidstack’s share price fell by c30%, closing at 195p

on 3 January 2023, down from the 275p closing bid price as at 31 December 2022

Further, on 9 January 2023 Poolbeg Pharma Plc (“Poolbeg”) announced positive initial data analysis from the

successful completion of a POLB 001 trial to address the significant unmet medical need to treat a common

inflammatory response to severe influenza The Poolbeg share price increased by 50% in the days following

the announcement from 59p as at 31 December 2022 to 89p per share at close of trading on the day of the

announcement The full data read-out is expected in Q2 2023 following a final quality check of the unblinded

data

The net impact on the B share NAV as a result of these two changes in share price was not material to the B

share NAV

We also note the successful exit of B share portfolio unquoted investee company Qudini Ltd (“Qudini”) in

January 2023 This was the result of the sale of the company to US software business Verint Systems, a leader

in workforce engagement management The consideration comprised an upfront payment equal to the B share

pool’s initial investment and the potential to receive up to a further 044x of the initial investment subject to

Qudini’s trading performance in the three years following the sale The upfront payment has further bolstered

the liquidity of the B share pool to enable the continued development of the portfolio

On 21 February 2023, Ten80 Group Ltd was put into liquidation; however, this has not had any impact on the B

share NAV as it was already held at £nil value in the B share portfolio

On 6 March 2023, we completed an investment of £376k into AIM quoted Engage XR Holdings Plc (“Engage

XR”) Engage XR is a professional Metaverse platform used by large fortune 500 companies looking for an

immersive way to engage employees in remote events, training/ development and collaboration The company

raised €99 million (before expenses) which provides them with a robust cash runway through to 2025 when the

company expects to hit profitability

The Company also declared an interim B share dividend of 15p per B share on 7 March 2023 to be paid on 19

May 2023

The Company raised an additional £933k following the financial year end and issued 1,233,811 additional B

shares on 5 April 2023 at the 31 March 2023 unaudited B share NAV (as announced on 4 April 2023) of 738p per

B share Due to a softening in the bid prices of some of the B share pool’s AIM/AQSE quoted investments since

the financial year end, the B share pool’s unaudited NAV per B share reduced by 69p to 738p (31 December

2022: 807p)

The B share pool also completed a follow-on investment of £500k into Old Street Labs Limited (t/a “Vizibl”) in

April 2023

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

17

Annual Report & Financial Statements for the year ended 31 December 2022

Investment Portfolio –

B Shares

Equity

held

%

Investment at

cost

£’000

Unrealised

profit/(loss)

£’000

Carrying

value at

31 December

2022

£’000

Movement

in the year to

31 December

2022

£’000

SolasCure Limited

25

750

333

1083

0

Convenient Collect Ltd

58

716

0

716

0

Fabacus Limited

18

500

202

702

139

Alderley Lighthouse Labs

347

500

0

500

0

Old Street Labs Ltd

35

500

0

500

0

Qudini Ltd

22

500

0

500

0

Bright Network Ltd

17

235

222

457

176

Geomiq Ltd

11

334

0

334

0

Silkfred Limited

<10

500

(250)

250

(250)

Ten80 Group Ltd

75

400

(400)

0

0

Total unquoted investments

4,935

107

5,042

65

Unquoted Investments

18

Annual Report & Financial Statements for the year ended 31 December 2022

Shares

held

Investment at

cost

£’000

Unrealised

profit/(loss)

£’000

Carrying

value at

31 December

2022

£’000

Movement

in the year to

31 December

2022

£’000

Polarean Imaging plc

1,644,070

986

(82)

904

0

Bidstack Group plc

32,123,391

916

(32)

884

(32)

ProBiotix Health Plc

3,722,445

1

777

(70)

707

(71)

Arecor Therapeutics plc

252,947

620

(38)

582

(309)

Oxford Biodynamics Plc

3,500,000

700

(130)

570

(130)

Poolbeg Pharma plc

7,550,000

755

(310)

445

(234)

Northcoders Group plc

100,000

300

0

300

0

SkinBioTherapeutics plc

1,857,107

297

(19)

278

(483)

Aptamer Group plc

495,726

580

(332)

248

(406)

Evgen Pharma plc

5,000,000

400

(180)

220

(30)

Celadon Pharmaceuticals plc

320,956

530

(369)

161

(369)

Gelion plc

250,492

363

(240)

123

(228)

Verici DX plc

799,865

280

(192)

88

(192)

OptiBiotix plc

2

350,000

103

(57)

46

(72)

Abingdon Health plc

78,250

75

(71)

4

(20)

Total quoted investments

7,682

(2,122)

5,560

(2,576)

Total investments

12,617

(2,015)

10,602

(2,511)

1

Includes 194,135 shares received as a dividend in specie on 31 March 2022 (“Dividend Shares”) as a result of the spin out

and listing on AQSE of the ProBiotix Health Plc (“Probiotix”) division of B share pool investee company OptiBiotix Health

Plc (“OptiBio”) as a standalone entity in addition to the 3,528,310 shares purchased by the B share pool as part of the same

transaction. These Dividend Shares were received as a result of the B share pool’s shareholding in OptiBio at the point of

the ProBiotix IPO.

2

The cost of the B share pool’s remaining holding in OptiBio at the point of the ProBiotix IPO has been split between

the Dividend Shares and the remaining OptiBio shares pro-rata to their respective values on 31 March 2022. As a result,

the £140k original investment cost of the B share pool’s remaining holding in OptiBio, has been reduced by the amount

allocated to the Dividend Shares of £37k.

Quoted Investments

Investment

Date

No of

Shares

sold

Investment

at cost

£’000

Sale

Proceeds

£’000

Realised

profit/(loss)

£’000

Exit Multiple

SkinBioTherapeutics plc*

February

2019

125,000

20

64

44

31

Clean Power Hydrogen Plc

February

2022

1,111,111

500

672

172

13

Bidstack Group plc*

October

2022

7,350,000

209

228

19

11

Total

729

964

235

13

*Partial exit

Exits for the Year

19

Annual Report & Financial Statements for the year ended 31 December 2022

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

Solscure’s Aurase product 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 is now underway

Chronic wounds are a growing global problem,

and alternative methods of treatment for hard to

heal wounds are extremely expensive, ineffective,

impractical and slow Solascure’s proprietary

technology utilises “maggot theory” debridement

without the cost or labour input of live maggots In

simple terms, it uses maggot enzymes to facilitate

and also 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

Progress made by the company in 2022 includes:

The enrolment of 45 patients for the phase I clinical

trial across eight sites

including 1 in the UK, 2 in

Hungary and 5 in the US (the trial completed in Q1

2023 with results expected to be announced later in

the year)

Three different national regulators and a host of

other ethics review boards have seen and approved

the protocol and supporting documents for the

phase I clinical trial, with no adverse comments or

rejections

Commencement of a £13 million funding round to

complete the phase I trial and better position the

business to obtain a strategic partner to enter the

next phase clinical and product development At the

date of this report, the round was oversubscribed in

excess of £25 million

Solascure Limited

Initial investment date

January 2021

Cost

£750,000

Valuation

£11 million

Equity type

Unquoted

Equity held

25%

Last statutory accounts

30 June 2022

Turnover

Not Disclosed

Profit/loss before tax

Not Disclosed

Net assets

£59 million

Valuation method

Price of last fundraise

B Share Pool –

Investment Portfolio

Listed below are details of the Company’s ten largest B share pool investments

by value as at 31 December 2022

20

Annual Report & Financial Statements for the year ended 31 December 2022

Polarean Imaging Plc

Initial investment date

March 2021

Cost

£986,000

Valuation

£904,000

Equity type

Quoted

Equity held

<10%

Last statutory accounts

31 December 2021

Turnover

£12 million

Loss before tax

£140 million

Net assets

£345 million

Valuation method

Bid price of 55p per

share

Polarean Imaging Plc (“Polarean”) is a healthcare

technology company with a proprietary drug-device

combination that provides a visual representation

of ventilation and gas exchange in the lungs This is

achieved by the patient inhaling polarised Xenon-129

gas (a non-radioactive, noble gas) whilst having

an MRI scan Polarean technology is effectively an

add-on feature for research and clinical medical

environments using MRI scanners There are an

estimated 35,000 MRI scanners being used globally

In March 2021, Polarean raised additional

capital ahead of the final US Food and Drug

Administration’s (“FDA”) approval to position the

business for commercial scale and as part of that

£20m round, with up to £9m VCT/EIS qualifying,

Seneca came in as a cornerstone investor with

just under £1m invested through the VCT and a

further £400k in EIS funds Seneca had invested

from its EIS funds in March 2020 to provide working

capital support during the period from initial FDA

submission in H2 2020 to anticipated clearance and

through to commercial launch

Progress made by the company in 2022 includes:

FDA approval for XENOVIEW, the first and only

hyperpolarised MRI contrast agent for novel

visualization of lung ventilation without exposing

patients to any ionizing radiation and its associated

risks for both adolescents and adults representing a

significant market opportunity Polarean’s commercial

team are now ready to rapidly launch the product for

clinical application and sales

Net cash of US$16 million as at December 2022,

which based on strategic decisions, could finance

the company into 2024

Participation in a research collaboration with Oxford

University Hospitals NHS Trust for long-COVID

and the company’s product was featured in top-

tier academic research publications exploring its

application in Asthma, COPD, cardiopulmonary

disease, endobronchial valve replacement and long-

COVID

Selection as one of the featured companies

surrounding novel developments in interstitial lung

disease at the 2022 ATS Respiratory Innovation

Summit

21

Annual Report & Financial Statements for the year ended 31 December 2022

Bidstack is an advertising technology company which

provides dynamic, targeted and automated native in-

game advertising for the global video games industry

across multiple platforms Its proprietary technology

is capable of inserting advertisements within video

games Bidstack’s customers are games publishers

and developers (on the supply side), and advertising

agencies, brands and media-buying platforms (on

the demand side)

Progress made by the company since initial

investment in October 2022 includes:

Expanding its exclusive native in-game advertising

partnership with a leading, global AAA game

publisher through the addition of two mobile titles

Signing with global mobile developer Outfit7 for its

portfolio of games which have global reach (up to

470 million monthly active users)

Securing a partnership with Unity as a “Unity Verified

Solution” The status has been rigorously tested

and will see the Bidstack software development

kit featured on Unity platforms as a “best in class”

monetisation solution for game developers

Bidstack plc

Initial investment date

October 2022

Cost (of the portion of

the original investment

still held as at 31

December 2022)

£916,000

Valuation

£884,000

Equity type

Quoted

Equity held

25%

Last statutory accounts

31 December 2021

Turnover

£26 million

Loss before tax

£79 million

Net assets

£101 million

Valuation method

Bid price of 275p per

share

22

Annual Report & Financial Statements for the year ended 31 December 2022

HubBox has developed plug-and-play software

that gives shoppers a choice between home

delivery and local pickup when they check-out on

a retailer’s website This software has been created

in conjunction with the largest global delivery

network providers (including UPS and DPD) and is

compatible with major ecommerce platforms like

Shopify Couriers are facing eroding margins on

home deliveries as costs associated with the ‘last

mile’ problem rise, and retailers are suffering from

lost deliveries and failed delivery charges

HubBox provides ecommerce software that

integrates with both the retailer and the courier,

enabling the retailer to offer shoppers the option

to Click & Collect from the courier’s network of

Pick Up Points The software turns what would

otherwise be a complex, costly and lengthy piece of

custom development work for retailers into a simple

integration that can be completed in a matter of

hours

Progress made by the company since initial

investment in December 2022 includes:

Partnering with leading UK courier DPD as their

software partner for DPD Pickup With 6,500 pickup

locations across the UK, DPD’s network is far

reaching and offers a secure way for shoppers to pick

up their parcels from a chosen location, including

retailers like Sainsbury’s, Post Office and Matalan, as

well as newsagents and pharmacies

Teaming up with UPS Europe UPS has an ever-

expanding network of secure-pickup locations

across the world with over 30,000 access points in

European countries alone including Austria, Belgium,

Germany France the Netherlands and Switzerland

Convenient Collect Ltd (t/a HubBox)

Initial investment date

December 2022

Cost

£716,000

Valuation

£716,000

Equity type

Unquoted

Equity held

58%

Last statutory accounts

31 December 2021

Turnover

Not Disclosed

Profit/loss before tax

Not Disclosed

Net assets

£419,000

Valuation method

Cost and price of

recent investment

(reviewed for any fair

value adjustment)

23

Annual Report & Financial Statements for the year ended 31 December 2022

ProBiotix was formerly a wholly owned subsidiary

of OptiBiotix Health Plc (another of the Company’s

investments) In March 2022, the company spun

out of OptiBiotix Health Plc, raised £25 million

and listed on the AQSE Growth Market with a

market cap of £26 million The separate listing

of ProBiotix had been a publicly stated strategic

possibility for some time, following in the footsteps

of SkinBiotherapeutics plc which spun out and listed

in 2017

The focus of ProBiotix’s operations is human

microbiome-modulating compounds that tackle

cardiovascular disease and other lifestyle conditions

using the LP-LDL ‘good bacteria’ strain which is

generally recognised to have the ability to reduce

‘bad’ cholesterol in humans by more than a third

The separate listing of ProBiotix was designed to

accelerate commercial progress, grow direct-to-

consumer product sales and expand into further key

markets like dairy and pharma

Progress made by the company since April 2022

includes:

Strengthening the management team with the

appointment of new CEO Steen Andersen who

has more than 30 years’ experience in building

businesses in the probiotics industry

Confirming orders received during the year to the

end of August 2022 (£112 million) exceeding those

invoiced and reported in the full year results for 2021

The company is well funded with over £2 million in

the bank at June 2022 that will fund the expansion

of products into new territories, increase direct-to-

consumer sales and develop new technologies

ProBiotix Health Plc

Initial investment date

April 2022

Cost

£777,000

Valuation

£707,000

Equity type

Quoted

Equity held

30%

Last statutory accounts

30 June 2022

Turnover

£306,000

Loss before tax

£74,000

Net Assets

£26 million

Valuation method

Bid price of 19p per

share

24

Annual Report & Financial Statements for the year ended 31 December 2022

Fabacus Holdings Limited

Initial investment date

February 2019

Cost

£500,000

Valuation

£702,000

Equity type

Unquoted

Equity held

18%

Last statutory accounts

31 August 2021

Turnover

Not Disclosed

Profit/loss before tax

Not Disclosed

Net assets

£105 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

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 2022 includes:

Completed a fundraise in conjunction with Wealth

Club, a UK investment service for high net worth

individuals and sophisticated investors, at an

increased valuation of £38 million based on a robust

pipeline and steady revenue growth

Teamed up with Skydance Animation to launch

global consumer rewards activations through its

licensed products for Apple Original Films, Luck and

Spellbound

Plans announced to grow revenue to over £100

million by 2027, working alongside the world’s

largest licensees

25

Annual Report & Financial Statements for the year ended 31 December 2022

Arecor raised £20 million in its AIM IPO on 3 June

2021 Arecor was an existing investee company of

the Ordinary share portfolio and the B share pool

invested £425k in the IPO The Ordinary share pool

also supported the IPO with a further investment of

£85k

Arecor is a globally focused biopharmaceutical

company that is aiming to transform patient care by

bringing innovative medicines to market through

the enhancement of existing therapeutic products

By applying its innovative proprietary formulation

technology platform, Arestat™, Arecor is developing

a portfolio of proprietary products in diabetes

and other indications and is working with leading

pharmaceutical and biotechnology companies to

deliver enhanced reformulations of their therapies

Arecor’s treatments for people living with chronic

disease are designed to advance patient care and

improve clinical outcomes Its product portfolio for

diabetes currently includes novel insulin formulations

to deliver an ultra-rapid acting insulin (AT247), and

an ultra-concentrated rapid acting insulin (AT278)

Progress made by the company in 2022 includes:

The completion of a £6 million placing to support

both the strategic acquisition of global pharma

company Tetris Pharma Ltd and the further

development of the company’s key commercial

diabetes products The acquisition of Tetris Pharma

provides Arecor with the infrastructure to directly

market selected niche products from its Specialty

Hospital products franchise, which should accelerate

Arecor’s goal of becoming a research-led self-

sustaining pharmaceutical company

Initiating the phase I US clinical trial for AT247,

an ultra-rapid acting insulin product candidate,

delivered by continuous subcutaneous infusion via

an insulin pump over three days

Presenting positive phase I clinical data of AT278,

its ultra-rapid acting, ultra-concentrated insulin

product candidate, at leading international diabetes

conference “The International Conference on

Advanced Technologies and Treatments of Diabetes”,

in April 2022

Signing an exclusive formulation study collaboration

with a top five global pharmaceutical company

Securing enhanced IP protection through the grant

of three European patents (two post-period end) and

one US patent

Launching its Ogluo® product in Germany and

Austria, enabled by an agreement signed with Syneos

Health in December to provide an outsourced

contract sales force

Transferring AT307 to Hikma Pharmaceuticals plc, a

British multinational pharmaceutical company, which

will now take responsibility for the development of

the AT307 product and seeking FDA approval

Reporting results in line with market expectations,

including a closing cash balance of £128 million as

at 31 December 2022

Arecor Therapeutics Plc

Initial investment date

May 2021

Cost

£620,000

Valuation

£582,000

Equity type

Quoted

Equity held

<10%

Last statutory accounts

31 December 2021

Turnover

£12 million

Loss before tax

£69 million

Net assets

£185 million

Valuation method

Bid price of 230p per

share

26

Annual Report & Financial Statements for the year ended 31 December 2022

Oxford Biodynamics Plc

Initial investment date

October 2022

Cost

£700,000

Valuation

£570,000

Equity type

Quoted

Equity held

20%

Last statutory accounts

30 September 2022

Turnover

£154,000

Loss before tax

£76 million

Net assets

£113 million

Valuation method:

Bid price of 163p per

share

Oxford BioDynamics is a global biotechnology

company, advancing personalized healthcare by

developing and commercializing precision medicine

tests for life-changing diseases

Its flagship product is EpiSwitch® CiRT (Checkpoint

Inhibitor Response Test) for cancer, a predictive

immune response profile for immuno-oncology

checkpoint inhibitor treatments, launched in

February 2022

Oxford BioDynamics has participated in more

than 40 partnerships with big pharma and leading

institutions including Pfizer, EMD Serono, Genentech,

Roche, Biogen, Mayo Clinic, Massachusetts General

Hospital and Mitsubishi Tanabe Pharma

The company has created a valuable technology

portfolio, including biomarker arrays, molecular

diagnostic tests, bioinformatic tools for 3D genomics

and an expertly curated 3D genome knowledgebase

comprising hundreds of millions of data points from

over 10,000 samples in more than 30 human diseases

Progress made by the company since initial

investment in October 2022 includes:

Obtaining a unique US reimbursement code for its

EpiSwitch CiRT product; a key milestone for the

company, patients and their doctors This code

allows the insurance reimbursement under Medicare,

Medicaid and private payers

Positive initial results reported by Massachusetts

General Hospital from an interim analysis conducted

for the REFINE-ALS biomarker trial The EpiSwitch

platform was chosen for its ability to prognose

at presentation, from a blood sample, which ALS

patients are likely to have a fast or slow progressing

disease before starting treatment The results were

encouraging and allowed the medical team to

examine clinically meaningful systematic biomarkers

in the trial

27

Annual Report & Financial Statements for the year ended 31 December 2022

Alderley Lighthouse Labs is a next generation UK

diagnostic laboratory, operating from a 3,500 sqft

facility providing first-class office and laboratory

space at Alderley Science Park in the Northwest of

England

The business incorporates a broad testing repertoire

across blood and molecular testing It is led by two

founding directors Mark Wigglesworth and Simon

Chapman, with extensive and expert knowledge of

the UK’s diagnostic market, having played a pivotal

role in the rapid deployment of COVID-19 diagnostic

testing in the North of England throughout the

global pandemic

The UK diagnostics market has been disrupted by

COVID and combined with the economic pressures

on the NHS, is accelerating further change in the

sector and growth in commercial opportunities for

private diagnostics

Progress made by the company in 2022 includes:

Recruitment of initial team of 11 completed including

5 qualified Biomedical Scientists hand-picked from

the North West’s COVID-19 screening programme

bringing clinical leadership experience, cutting-edge

informatics capability and fulfilling key corporate

accreditation requirements

Gained all of the necessary accreditations including

UKAS 15189, CQC and successful GCP audit This a

major milestone in establishing a presence in this

arena, acting as a significant barrier to new entrants

and competing offerings

Laboratory testing equipment with a replacement

value in excess of £12m commenced operations

providing testing capacity of up to £10m+ per

annum

Industry leading IT platform which facilitates real

time integration with customer data sets deployed

and enables preferential interaction with new

consumer facing digital organisations

Establishing a well-advanced pipeline of revenue and

new contract opportunities, including a number of

successful validation studies and projects on behalf

of global commercial partners

Alderley Lighthouse Labs Limited

Initial investment date

October 2022

Cost

£500,000

Valuation

£500,000

Equity type

Unquoted

Equity held

346%

Last statutory accounts

N/A

Turnover

N/A

Loss before tax

N/A

Net assets

£363,000

Valuation method

Cost and price of

recent investment

(reviewed for any fair

value adjustment)

28

Annual Report & Financial Statements for the year ended 31 December 2022

Old Street Labs Limited (t/a Vizibl)

Initial investment date

March 2019

Cost

£500,000 (follow on

investment of a further

£500,000 made in April

2023)

Valuation

£500,000

Equity type

Unquoted

Equity held

35%

Last statutory accounts

31 March 2022

Turnover

Not Disclosed

Profit/loss before tax

Not Disclosed

Net liabilities

£31 million

Valuation method

Revenue multiple

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

Progress made by the company in 2022 includes:

Securing new contracts with Santander, British

American Tobacco, Johnson & Johnson and Kraft

Heinz

Launching the Supplier Sustainability Management

(SSM) module, which has seen the business tap into

significant ESG / sustainability budgets By 2030, all

large corporates are required to report on the impact

of both their business and their suppliers on the

environment, meaning that reporting, analysis and

improvement tools are trading at a premium The

Vizibl SSM module is market leading in this space

29

Annual Report & Financial Statements for the year ended 31 December 2022

Shareholders will recall that 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 prior to Seneca’s

appointment as Investment Manager on 23 August 2018, which now includes John Hustler and Richard Roth

Due to personal and increased business commitments, Richard Roth has informed the Board that he will retire as

an independent non-executive Director of the Company at the forthcoming AGM with effect from 18 May 2023

Following Richard’s retirement from the Board, the Directors are reviewing the future of the CAC’s

responsibilities; however, for the time being, the Board have asked Richard to continue to be a member of the

CAC for a period of three months following his retirement and he has agreed

Performance

AIM Quoted Investments

The Ordinary share pool’s largest investment is AIM quoted Scancell, which represented 80% of the Ordinary

share pool’s NAV as at 31 December 2022 As at the financial year-end, the Scancell share price increased by 23%

from 195p as at 31 December 2021 to 24p at 31 December 2022, predominantly driven by a run of positive news

releases in the final quarter of the year, the highlight being a potential $624 million licensing deal for Scancell’s

proprietary GlyMab® platform At times during the year the Scancell bid price was above the year end price of

240p The Company was able to sell a small portion of Scancell shares during the year (1,000,000 shares, 9%,

were sold from a holding at the start of the year of 11,000,000 shares) realising £258k and generating a profit

versus original cost of £198k (a 43x return on the original investment) and a profit versus the 31 December 2021

carrying value of £64k The Ordinary share pool’s remaining stake in Scancell of 10,000,000 shares increased in

value by £450k during the year to stand at £2,400k as at 31 December 2022

As at 31 December 2022, the Ordinary share pool’s investment in Arecor represented 17% of the Ordinary share

pool’s NAV and the quoted bid price of Arecor shares decreased from 370p as at 31 December 2021 to 230p,

softening the year end NAV per Ordinary share

As noted above, the Ordinary share pool’s NAV fluctuates largely in line with the movement in the AIM quoted

investments and following the year end there was a reduction Scancell’s share price, offset by an increase in

Arecor’s share price As at 31 March 2023, shares in Scancell were valued at 155p per share (31 December 2022:

24p) and shares in Arecor were valued at 250p per share (31 December 2022: 230p) As a result, on 4 April 2023

the Company announced an updated unaudited NAV per Ordinary share of 284p as at 31 March 2023

However, both Scancell and Arecor have significant commercial opportunities ahead of them and as such we

remain optimistic about the future of these businesses and will continue to monitor their progress

Unquoted Investments

The Company adjusted the fair value of two Ordinary share pool unquoted investee companies in the year,

resulting in a total Ordinary share unquoted portfolio value of £59k

Insense informed the Company that its largest shareholder was no longer able to fund the business and as they

had not been successful in raising funds from new or existing shareholders to sustain the business, we reduced

the fair value of the investment from £121k down to £nil

The Board also made a 50% provision against the fair value of Fuel 3D (£117k as at 31 December 2021) as a result

of slower than expected progress and commercial traction Therefore, the carrying value of Fuel3D was £59k as

at 31 December 2022

On 23 November 2022, OR Productivity Limited was put into administration; however, this has not had any

impact on the Ordinary share NAV as it was already held at £nil value in the Ordinary share portfolio

Dividends and Outlook

As a result of the above AIM quoted Scancell realisation, the Ordinary share pool was able to pay a dividend of

2p per Ordinary share during the year

The Total Return in relation to the Ordinary shares is now 1084p comprising cumulative distributions of 713p

per Ordinary share and a residual NAV per Ordinary share of 371p as at 31 December 2022

As referred to in the Chair’s Statement and announced on 7 March 2023, the Board have declared a further

Ordinary share pool interim capital dividend of 2p per Ordinary share payable on 19 May 2023

The Ordinary Share Pool

30

Annual Report & Financial Statements for the year ended 31 December 2022

Investment Portfolio –

Ordinary Shares

Equity

held

%

Investment at

cost

£’000

Unrealised

profit/(loss)

£’000

Carrying

value at

31 December

2022

£’000

Movement

in the year to

31 December

2022

£’000

Fuel 3D Technologies Limited

<10

299

(240)

59

(58)

Insense Limited

46

509

(509)

0

(121)

OR Productivity Limited

37

765

(765)

0

0

Microarray Limited

30

132

(132)

0

0

ImmunoBiology Limited

12

868

(868)

0

0

Total unquoted investments

2,573

(2,514)

59

(179)

Shares

held

Investment at

cost

£’000

Unrealised

profit/(loss)

£’000

Carrying

value at

31 December

2022

£’000

Movement

in the year to

31 December

2022

£’000

Scancell Holdings plc

10,000,000

605

1,795

2,400

450

Arecor Limited

223,977

227

288

515

(314)

Total quoted investments

832

2,083

2,915

136

Total investments

3,405

(431)

2,974

(43)

Unquoted Investments

Quoted Investments

Exits for the Year

Investment

Date

No of

Shares sold

Investment

at cost

£’000

Sale

Proceeds

£’000

Realised

profit/(loss)

£’000

Exit

Multiple

Scancell Holdings plc *

December

2003

1,000,000

60

258

198

43

Total

60

258

198

43

*Partial exit

As noted in the Chair’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 realisations in the last five years have enabled the payment of a total of 47p per Ordinary share

in dividends to Ordinary shareholders, representing 736% of the NAV per Ordinary share as at 31 December

2017 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 AIM holdings)

31

Annual Report & Financial Statements for the year ended 31 December 2022

Ordinary Share Pool –

Investment Portfolio

Listed below are details of the Company’s Ordinary share pool investments as

at 31 December 2022

Scancell Holdings plc

Initial investment date

December 2003

Cost (of the portion of

the original investment

still held as at 31

December 2022)

£605,000

Valuation

£24 million

Equity type

Quoted

Equity held

12%

Last statutory accounts

30 April 2021

Turnover

£nil

Loss before tax

£37 million

Net assets

£181 million

Valuation method

Bid price of 24p per

share

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

The ImmunoBody platform technology 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

pharmaceutical businesses 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 2022 includes:

Signing a licensing agreement with Genmab

to develop and commercialise an anti-glycan

mAb, with the company being eligible to receive

milestone payments of up to $208 million for each

product developed and commercialised, up to

a maximum of $624 million if Genmab develops

and commercialises products across all defined

modalities

The enrolment of fourteen patients, including

dosing in the expansion phase of the monotherapy

arms in the multicentre Phase 1/2 Modi-1 clinical

trial (ModiFY) First patient dosed in Cohort 3 of

ModiFY in combination with a checkpoint inhibitor

(CPI) There have been no safety issues to date

Expansion of SCIB1 Phase 2 combination trial

(SCOPE) protocol to include SCIB1 in combination

with checkpoint double therapy leading to

significantly increased recruitment rate

In-licensing of the SNAPvax™ technology from

Vaccitech plc to formulate and manufacture Modi-

2, with the aim of initiating a Phase 1 clinical study

in cancer patients during H1 2024

Completing the recruitment in COVIDITY Phase

1 clinical trial in South Africa, with safety and

immunogenicity data expected in Q1 2023,

providing read across to our second-generation

ImmunoBody® platform

32

Annual Report & Financial Statements for the year ended 31 December 2022

Arecor was admitted to the AIM market on 3 June

2021 and raised £20 million at that point Arecor was

an existing investee company of the Ordinary share

portfolio and the B share pool invested £425k in the

IPO The Ordinary share pool also supported the IPO

with a further investment of £85k

For more information on the company and progress

made in the year, please see page 26, B Share Pool

Investment Portfolio summary

Arecor Therapeutics Plc

Initial investment date

January 2008

Cost

£227,000

Valuation

£515,000

Equity type

Quoted

Equity held

<10%

Last statutory accounts

31 December 2021

Turnover

£12 million

Loss before tax

£7 million

Net assets

£185 million

Valuation method

Bid price of 230p per

share

Richard Manley

Seneca Partners Limited

20 April 2023

33

Annual Report & Financial Statements for the year ended 31 December 2022

Business Review

Company Performance

The Board is responsible for the Company’s investment strategy and performance

The graphs below compares the NAV return (rebased to 100) of the Company’s Ordinary shares over the period

from launch in October 2001 to December 2022 and the B shares from launch in August 2018 to December

2022, with the total return from a notional investment (rebased to 100) in the FTSE AIM All-Share Index over

the same period This index is considered to be the most appropriate equity market against which investors can

measure the relative performance of the Company due to average market cap per listing, risk profile and its

investor base being more directly comparable to the Company’s However, the Directors wish to point out that

VCTs have very restrictive investment criteria in their observance of the VCT rules

* Ordinary Share Historic NAV total return rebased to 100p at launch

** Ordinary Share Historic NAV total return plus 30% upfront income tax relief rebased to 100p at launch

*** AIM All Share total return basis, rebased to 100

Ordinary Share NAV Total Return*

Ordinary Share NAV Total Return Including Income Tax Reliefs**

FTSE All-Share Index Total Return***

Ordinary Share Performance

34

Annual Report & Financial Statements for the year ended 31 December 2022

* B Share Historic NAV total return rebased to 100p at launch

** B Share Historic NAV total return plus 30% upfront income tax relief rebased to 100p at launch

*** AIM All Share total return basis, rebased to 100

The NAV Total Return to the investor, is calculated in accordance with AIC Methodology, which includes the NAV

plus dividends paid (rebased to 100p) from launch

B Share Performance

B Share NAV Total Return*

B Share NAV Total Return Including Income Tax Reliefs**

FTSE All-Share Index Total Return***

35

Annual Report & Financial Statements for the year ended 31 December 2022

Results - Return on ordinary activities as per Income Statement

Year ended

31 December 2022

£’000

Year ended

31 December 2021

£’000

Net return attributable to Ordinary shareholders

13

1,029

Net return attributable to B shareholders

(2,762)

1,067

Total

(2,749)

2,096

Key Performance Indicators (KPIs)

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

We have previously communicated our ambition to increase dividends

to 5% per annum of the B share NAV by 2023 This ambition remains but

of course is dependent on a number of factors including investment

performance and in particular the performance of the B share pool’s AIM

quoted investments, given that as at 31 December 2022 these represented

368% of the B share NAV

It also remains our ambition 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 total expenses of the

Company as a proportion of

shareholders’ funds

To maintain efficient operation of the VCT whilst minimising running costs

(noting that Seneca has agreed to cap running costs at 3% of both the

Ordinary and B share NAVs)

The Total Return for the Ordinary shares and B shares

is included in the Financial Summary on page 3 and

the change in the Total Return is explained in the

Chair’s Statement on pages 9 to 12 The Total Return

for the B share class decreased during the year by

15% to 927p and the Ordinary share Total Return

increased marginally by 02% to 1084p

The decrease in the B share Total Return in 2022

amounted to 164p which was principally due to the

decrease in the share prices of the B share pool’s

AIM quoted investee companies combined with the

impact of the B share pool’s share of the Company’s

running costs, offset by the uplift in value of two

of the B share pool’s unquoted investments and

the profits generated from three full and partial

realisations of AIM quoted investments during the

year

The Company has also invested £5,920k into ten new

investee companies and one follow-on investment

during the year from the B share pool and has also

made three B share pool realisations as detailed in

the Chair’s Statement on pages 9 to 12 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

indicative of the potential for harvesting profits from

AIM quoted investments to which the B share pool

has a material exposure

The increase in the Ordinary share Total Return

amounted to 02p and is principally as a result of

the increase in the share prices of the Ordinary

share pool’s AIM quoted investment Scancell and

the profits generated from the partial realisation of

AIM quoted Scancell shares during the year, offset

by the impact of a reduction in the fair value of two

unquoted investment companies and the allocation

of running costs to the Ordinary share pool, as

detailed in the Investment Manager’s report on page

30

We have also made dividend payments for both share

classes

1

An interim capital dividend of 2 pence per

Ordinary share for the year to 31 December

2022 was paid on 23 December 2022

2

An interim dividend of 15 pence per B share

for the year to 31 December 2022 was paid on

20 May 2022 A second interim dividend of 15

pence per B share for the year to 31 December

2022 was paid on 16 December 2022

36

Annual Report & Financial Statements for the year ended 31 December 2022

The Company was again 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 were capped at 3% of the weighted

average net asset value of the B shares, including the

management fee (but excluding any performance

fee) Since July 2021, expenses remain capped at

3% but are now allocated across both the B share

pool and the Ordinary share pool pro rata to their

respective weighted average net asset values Seneca

reduced its management fee by £18,000 in the year

to 31 December 2022 (2021: reduced by £35,000) 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

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, sixteen of which are AIM quoted,

relatively liquid and readily accessible, as well as

more than £5 million of cash as at 31 December 2022

(28% of net assets) Since 31 December 2022, two

additional investments have been made totalling

£876k, though the Company’s overall liquidity

remains strong

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 2025

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 Shoosmiths 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 investee

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 the impact of disposals which have

been held for more than 12 months (£03m

of proceeds have been realised from such

disposals in the year), as at 31 December 2022

the percentage of shares or securities comprised

in qualifying holdings is 984% in respect of

the 80% Qualifying Holdings test Note, even

without the disregarding of the impact of

disposals which have been held for more than 12

months as noted above 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

37

Annual Report & Financial Statements for the year ended 31 December 2022

in which those funds were raised As at 31

December 2022, 35% of funds raised in the year

to 31 December 2021 and 34% of the funds

raised in the year to 31 December 2022 had

already been invested in qualifying investments

•

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 47

Further details of the Company’s financial risk

management policies are provided in Note 15 to the

Financial Statements

Independence, 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

Throughout the year under review, the Board

consisted of four male non-executive directors

Upcoming regulation applicable from April 2023 will

require a Company to report on a comply or explain

basis against three key indicators: 40% of the Board

should be comprised of women; one senior board

position is to be held by a woman; and one Director

should be from an ethnic minority background

Whilst not currently complying, the Board will

be mindful in any future recruitment, providing

a suitable candidate possesses the key skills and

experience required for the position 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 The Board also 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

38

Annual Report & Financial Statements for the year ended 31 December 2022

Governance

39

Annual Report & Financial Statements for the year ended 31 December 2022

Details of Directors

John Hustler

(Non-Executive Chair)

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

John was appointed to the Board of Octopus Titan VCT plc in November 2007 and served as Chair of the Board

until June 2022 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 Chair of the Audit Committee)

Richard is the Chair of Oxford Technology 2 Venture Capital Trust Plc, which has recently merged with the 3

other Oxford Technology Venture Capital Trusts, of which he was (and still is) also a director He is a Chartered

Management Accountant and worked in the airline industry for a number of companies including easyJet and

the Monarch Group, 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 Richard

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 over 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, Fuel3D and Arecor

Richard Manley

(Non-Executive Director)

Richard is CEO of and significant shareholder in Seneca 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 Richard 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 £100 million

He has been a continuous member of Seneca’s investment and credit committees and has been involved in all

of Seneca’s EIS growth capital investments to date leading 30 of these Richard became Managing Partner in

2016 and CEO in 2017 He joined the Board of the Company in August 2018 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 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 over 20 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 highly 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 Alderley Lighthouse Labs

40

Annual Report & Financial Statements for the year ended 31 December 2022

Directors’ Report

The Directors present their Report and the audited

Financial Statements for the year ended 31

December 2022

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 34 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(1)

Statement on page 8, the Chair’s Statement on page

9 to 12, and the Investment Manager’s Report on

pages 14 to 33 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 year 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:

31 December

2022

31 December

2021

Number of

Shares

Number of

Shares

John Hustler

190,000

190,000

Alex Clarkson

-

-

Richard Manley

-

-

Richard Roth

209,612

209,612

All of the Directors’ shares were held beneficially

There have been no changes in the Directors’

Ordinary share interests between 31 December 2022

and the date of this report

Directors’ Shareholdings – B Shares

The Directors of the Company during the year 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:

31 December

2022

31 December

2021

Number of

Shares

Number of

Shares

John Hustler

31,841

19,735

Richard Roth

15,000

15,000

Alex Clarkson

10,060

10,060

Richard Manley

96,059

71,846

All of the Directors’ B shares were held beneficially

There have been no changes in the Directors’ B share

interests between 31 December 2022 and the date of

this report

Directors’ and Officers’ Liability

Insurance

The Company has, as permitted by legislation and

the Company’s Articles of Association, 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

41

Annual Report & Financial Statements for the year ended 31 December 2022

Bribery Act

The Board has a zero tolerance policy in relation to

bribery and corruption 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 Through internal controls reporting it

has sought to ensure adequate safeguards are in

place at its main third party suppliers

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 47 to 50

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 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 The Investment Manager was

required to appoint a depositary as part of it

becoming a full-scope AIFM on 16 June 2022

The Depositary is responsible for monitoring

the cash flows of the Company, overseeing the

holding of financial assets in custody on behalf

of the Company, verifying ownership interests,

oversight and supervision of the Investment

Manager and the Company and maintaining

accurate records in relation to the above as

required under the Alternative Investment Fund

Managers Directive (Directive 2011/61/EU),

transposed into UK law under the European

Union (Withdrawal) Act 2018 and as set out in

Fund 311 of the FCA Handbook of rules and

guidance As a result, the Directors do not

consider that a formal internal audit function

would be required as an additional internal

control for the 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 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 40

Richard Roth has informed the Board that having

served as a non-executive Director for nearly eight

years, he will retire as an independent non-executive

Director of the Company at the forthcoming AGM

with effect from 18 May 2023 The appointment of a

new Audit Chair and the recruitment of a new non-

executive Director will be undertaken in due course

In accordance with the Articles of Association

and good governance in line with practices

recommended in the 2019 AIC Code, following

notification of Richard Roth’s wish to retire, only

three of the four Directors will offer themselves for

re-election at the forthcoming AGM

The Board is satisfied that, following individual

performance appraisals, the Directors who are

retiring and offer themselves for re-election continue

to be effective and demonstrate commitment to

their roles and have the full support of the Board

Further details regarding the Company’s succession

planning are set out in the Corporate Governance

policy on pages 47 to 50

The Board did not identify any conflicts of

interest between the Chair’s interest and those

of the shareholders, especially with regard to the

relationship between the Chair and the Investment

Manager

42

Annual Report & Financial Statements for the year ended 31 December 2022

No concerns about the operation of the Board or the

Company were raised by any Director during the year

and had any been raised they would be mentioned in

the minutes or in writing to the Chair 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 8, where

the Directors consider the information to be of

strategic importance to the Company

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 was approved by the FCA

with full-scope UK Alternative Investment Fund

Manager (“AIFM”) permission (as defined in regulation

2 of the AIF Regulations) on 16 June 2022 This full-

scope UK AIFM permission means that Seneca can

manage assets (including leverage) of greater than

€100 million Additionally, the Investment Manager

is subject to increased requirements under the AIFM

Regulations 2013 (SI 2013/1773), and therefore

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 considering

guidance issued by 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 Seneca has also

been certified by Airfriendly Ltd as a Carbon Neutral

Business Airfriendly Ltd calculate the Investment

Manager’s carbon emissions to the ISO 14064

and GHG Protocol Emissions Standard and then

Airfriendly Ltd invests in or supports projects verified

by five leading Carbon Certification bodies in the

world to neutralise Seneca’s carbon footprint

The Company utilises video conferencing facilities

for the majority of Board meetings to avoid

unnecessary travel where possible to reduce

our carbon imprint The Board met virtually for

all but two Board meeting during the year The

Company also encourages shareholders to receive

communications from the Company electronically

to reduce the impact of production and delivery of

additional paper products

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

43

Annual Report & Financial Statements for the year ended 31 December 2022

their boards to discuss material risks, ranging from

business and operational risks to environmental and

social risks

Seneca is also a proud signatory to the Investing in

Women Code, and commits to adopting internal

practices to improve female entrepreneurs’ access

to finance, tools and resources needed to grow their

businesses Partners include the UK Business Angels

Association, the British Private Equity and Venture

Capital Association, UK Finance, and the British

Business Bank

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

Going Concern

The Company’s business activities and the factors

likely to affect its future performance and financial

position are set out in the Chair’s Statement and

Investment Manager’s Report on pages 9 to 12 and

pages 14 to 33 Further details on the management

of the principal risks are set out on pages 37 to 38

and financial risks may be found in Note 15 to the

Financial Statements

The Board receives regular reports from Seneca

which 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, sixteen of which are AIM quoted, relatively

liquid and readily accessible, as well as more than

£5 million of cash as at 31 December 2022 (28% 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 notes the continuing material market

volatility as a result of macroeconomic pressures

caused by the disruption in global supply chains and

increased costs from inflationary pressures as a result

of the military invasion of Ukraine by Russian forces

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 these conditions could have on them

The Board and Seneca will continue to review these

potential risks and keep those risks under regular

review but do not consider the current conditions to

have a material impact on the Company’s own ability

to continue as a going concern

Share Capital

As disclosed on page 93 the Board has authority to

make market purchases of the Company’s own B

shares During the year, the Company purchased

27,793 B shares (equal to 016% of the opening

number of B shares in issue) at a price of 904p per

share (2021: nil)

At the last AGM held on 27 April 2022, 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 240% of the Company’s issued B share

capital and approximately 5% of its issued Ordinary

share capital as at 23 March 2022

During the year, the Company did not issue any

Ordinary shares (2021: nil) During the year, the

Company issued 4,188,693 B shares raising £39

million before expenses (2021: 5,525,711 shares and

£57 million) The Company issued 1,233,811

B shares

on 5 April 2023, raising an additional £933k between

31 December 2022 and the date of this report

44

Annual Report & Financial Statements for the year ended 31 December 2022

The Company’s issued Ordinary share capital as at 31

December 2022 was 8,115,376 Ordinary shares of 1p

each (31 December 2021: 8,115,376 Ordinary shares

of 1p each) and 18,749,559 B shares of 1p each (31

December 2021: 14,588,659 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 2022 was 26,864,935 and as at 19

April 2023 was 28,098,746 (31 December 2021:

22,704,035) 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:

•

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 56 and Note 5

Substantial Shareholdings

At 31 December 2022 and at the date of this

report, there was one holding of 3% and over of

the Company’s ordinary share capital of which we

had been notified This holding related to Mr and

Mrs Ian William Currie and at the date of this report

amounted to 32%

Annual General Meeting

The Notice convening the 2023 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:

Resolution 1

will seek the approval of the Directors’

Annual Report and Financial Statements and the

auditors’ report thereon for the year ended 31

December 2022 The Directors are obliged to lay the

Directors’ Annual Report and Financial Statements

and the auditors’ report thereon for the year ended

31 December 2022 before shareholders at a general

meeting

Resolution 2

seeks shareholder approval of the

Directors’ Remuneration Report 2022 which gives

details of the Directors’ remuneration for the

financial year ended 31 December 2022 and which

is set out on pages 54 to 57 of the Directors’ Annual

Report and Financial Statements for financial year

ended 31 December 2022 In line with legislation, this

vote will be advisory and the Directors’ entitlement

to remuneration is not conditional on the resolution

being passed

Resolutions 3 to 5

will seek the re-election of

John Hustler, Richard Manley and Alex Clarkson as

non-executive Directors of the Company Richard

Roth has informed the Board that having served as

a non-executive Director for nearly eight years, he

will retire as an independent non-executive Director

of the Company at the forthcoming AGM with effect

from 18 May 2023 The appointment of a new Audit

Chair and the recruitment of a new non-executive

Director will be undertaken in due course

Resolution 6

will seek the re-appointment of

Hazlewoods LLP as Independent Auditor to the

Company and authorisation to determine the

auditor’s remuneration

Resolution 7

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 175% of the Company’s issued B share

capital and approximately 5% of its issued Ordinary

share capital as at 19 April 2023

Resolution 8

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 9

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 8

45

Annual Report & Financial Statements for the year ended 31 December 2022

Resolution 10

will authorise the cancellation of

the share premium account and capital redemption

reserves of the Company One of the main principles

of company law is that the capital of a company

should be maintained The principle of maintenance

of capital underlies various provisions of the Act – for

example, a company may only make distributions

to its members out of distributable profits and a

company may only buy back its own shares in limited

circumstances

A company can, however, reduce its share capital in

circumstances where creditors will not be adversely

affected, provided that the company complies with

certain procedural requirements The Act provides

that a company may reduce its capital by special

resolution, subject to confirmation by the Court A

special reserve will then be created from the sums

set free from such a cancellation which can be

regarded as a distributable reserve

The Company has completed previous cancellations

of its share premium and capital redemption reserves

and the special reserve created by such cancellations

has enhanced the ability of the Company to make

distributions and buy back shares

The Board considers it prudent to take the

opportunity to seek the approval of Shareholders

pursuant to Resolution 10 for the cancellation of the

share premium account and the capital redemption

reserve (subject to the sanction of the Court)

The sums set free by the proposals above would

create further distributable reserves to fund

distributions to Shareholders and buybacks, to set

off or write off losses and for other distributable and

corporate purposes of the Company The Board will

seek Court approval of this resolution as and when

required, and will only use such reserves taking into

account the VCT restrictions on returns of capital

Resolution 11

will seek authority to amend the

Company’s Articles of Association to increase the

maximum aggregate fees paid to Directors from

£100,000 to £150,000 per annum This was last

amended in 2018 and the increase in now considered

necessary in anticipation of new non-executive

directors joining the Board Total expenses, however,

remain allocated to each share pool on a pro-rata

basis and capped at 3% of the net asset value of each

respective share pool

The Directors intend to use the authorities in

Resolutions 7 and 9 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 amended articles of

association proposed to be adopted pursuant to

Resolution 11) 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

The Articles of Association will also be available on

the Company’s website at www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

ISCA Administration Services Limited

Company Secretary

20 April 2023

46

Annual Report & Financial Statements for the year ended 31 December 2022

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 the Company

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

40 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 7

The Board has a formal schedule of matters

specifically reserved for its decision which include:

1

the consideration and approval of future

developments or changes to the investment

policy, including risk and asset allocation;

2

the consideration and review of the Company’s

compliance with HMRC conditions for

maintenance of approved VCT status as advised

by Shoosmiths LLP;

3

consideration of corporate strategy;

4

approval of the appropriate dividend to be paid

to shareholders;

5

the appointment, evaluation, removal and

remuneration of the Investment Manager, which

also acts as the Administration Manager;

6

the performance of the Company, including

monitoring the discount of the share price to

net asset value; and

7

monitoring shareholder profiles and considering

shareholder communications

The Chair leads the Board in the determination of

its strategy and in the achievement of its objectives

The Chair 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 Chair 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

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:

Board meetings

attended

(13 held in year)

Audit Committee

meetings attended

(2 held in year)

John Hustler

13

2

Alex Clarkson

13

2

Richard Manley

13

2

Richard Roth

13

2

In addition to formal Board meetings, the Board

communicates on a regular basis in carrying out its

responsibilities in managing the Company

Diversity

The Directors are aware of the need to have a

Board which, as a whole, comprises an appropriate

balance of skills, experience and diversity Upcoming

regulation applicable from April 2023 will require

a Company to report on a comply or explain basis

against three key indicators: 40% of the Board should

be comprised of women; one senior board position

is held by a woman; and one Director should be from

an ethnic minority background Throughout the year

47

Annual Report & Financial Statements for the year ended 31 December 2022

and at the date of this report the Board of Directors

comprised of four males all identifying themselves

as Caucasian by ethnic background Diversity of the

Directors is something the Board will be mindful

of in any future recruitment, providing a suitable

candidate possesses the key skills and experience

required for the position

Consumer Duty

The Directors, having noted the requirements in

respect of Consumer Duty, have reviewed the

Investment Manager’s implementation plan, which

was in place by 31 October 2022, and are working

with the Investment Manager to ensure that

implementation of the Consumer Duty requirements

is completed by 31 July 2023, when the new

requirements come into effect

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 Chair 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

Chair, after a predetermined period of tenure A

more flexible approach to Chair 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 Independence, Gender and Diversity is on

page 38

Given that the Chair has now served as a Director for

more than 20 years, the Board and Chair have had a

number of conversations over the last four years with

regard to his ongoing tenure and the process for

identifying his potential successor Whilst the Board

has determined that John Hustler, 76, is capable of

carrying out his duties effectively, given the policies

outlined above, plans are now being made for his

succession In addition, further to Richard Roth’s

announcement that he will retire as an independent

non-executive Director of the Company at the

forthcoming AGM, the Board are also now making

plans to recruit a further new non-executive

Director

In view of the above, the Board is pleased that we

are already in advanced stages in the search for an

independent non-executive Director and expect to

make the appointment within the coming weeks

Remuneration in addition to the Directors’ fees in the

form of a performance incentive fee 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 54 to 57 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 Chair 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 Chair 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 Chair 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, the duties of this

role can be, and in this instance are, fulfilled by the

Chair 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 42

48

Annual Report & Financial Statements for the year ended 31 December 2022

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

54 to 57

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

in addition to the use of external recruitment

consultants During the year the Board engaged an

outside recruitment company to assist in finding

a suitable candidate to join as a new independent

non-executive Director The process involved

the identification of key skills a candidate should

possess which the recruitment agency then used

to assist with the drawing up of a long-list of

possible candidates for the Board, which acting

as a nomination committee, then reduced to a

short-list of candidates who were interviewed We

are in advanced stages in the search for another

independent non-executive Director and expect to

make the appointment within the coming weeks

The Board continues to speak 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

The Audit Committee’s terms of reference, and how

it discharges its duties are listed on pages 52 to 53

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

Neville Registrars is the custodian of the documents

of title relating to the Company’s unquoted

investments

Seneca is also the Administration Manager in addition

to its 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

Additionally, the Investment Manager is required to

have a depositary as part of its full-scope AIFM status

Seneca appointed Thompson Taraz Depositary Limited

who is responsible for monitoring the cash flows of the

Company, overseeing the holding of financial assets in

custody on behalf of the Company, verifying ownership

interests, oversight and supervision of the Investment

Manager and the Company and maintaining accurate

records in relation to the above as required under

the Alternative Investment Fund Managers Directive

(Directive 2011/61/EU), transposed into UK law under

the European Union (Withdrawal) Act 2018 and as set

out in Fund 311 of the FCA Handbook of rules and

guidance

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 15 to the Financial Statements

49

Annual Report & Financial Statements for the year ended 31 December 2022

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 starting on page

5 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 or via email at enquiries@

senecavctcouk

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 The Investment Manager was required

to appoint a depositary as part of its full-scope

AIFM status who is responsible for monitoring

the cash flows of the Company, overseeing the

holding of financial assets in custody on behalf

of the Company, verifying ownership interests,

oversight and supervision of the Investment

Manager and the Company and maintaining

accurate records in relation to the above as

required under the Alternative Investment Fund

Managers Directive (Directive 2011/61/EU),

transposed into UK law under the European

Union (Withdrawal) Act 2018 and as set out in

Fund 311 of the FCA Handbook of rules and

guidance As a result, the Directors do not

consider that a formal internal audit function

would be a required additional internal 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

ISCA Administration Services Limited

Company Secretary

20 April 2023

50

Annual Report & Financial Statements for the year ended 31 December 2022

Statutory

Reports

51

Annual Report & Financial Statements for the year ended 31 December 2022

Audit Committee Report

This report is submitted in accordance with the 2019

AIC Code in respect of the year ended 31 December

2022 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 49

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 During the

year we tendered the Company’s audit and after

a rigorous selection process HZW were chosen to

fill the casual vacancy The Committee is happy

to recommend HZW for reappointment at the

AGM in relation to the audit for the year ending 31

December 2023 HZW 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

A resolution to approve the reappointment of HZW

will be proposed at the AGM on 18 May 2023 which

has been included in the Notice of AGM on pages 96

to 98

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

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 Investment Manager was required to

appoint a depositary as part of its full-scope AIFM

status who is responsible for monitoring the cash

flows of the Company, overseeing the holding

of financial assets in custody on behalf of the

Company, verifying ownership interests, oversight

and supervision of the Investment Manager and

the Company and maintaining accurate records

52

Annual Report & Financial Statements for the year ended 31 December 2022

in relation to the above as required under the

Alternative Investment Fund Managers Directive

(Directive 2011/61/EU), transposed into UK law under

the European Union (Withdrawal) Act 2018 and as set

out in Fund 311 of the FCA Handbook of rules and

guidance As a result, the Directors do not consider

that a formal internal audit function would be a

required additional internal control for this VCT at

this time

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 2022, the Audit

Committee discharged its responsibilities by:

•

tendering for and appointing new auditors;

•

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 44 and 78; 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

2022 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 the Company 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:

Shoosmiths 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 2022,

and Seneca has confirmed this to the Audit

Committee

•

Performance Fees: The Auditors give special

audit consideration to any performance fees

as these are directly linked to the NAV which

is dependent upon investment valuations The

Audit Committee gives due consideration to the

valuation methodology as referenced above and

maintains controls around performance fees

to mitigate any risks to the Company’s costs

Details of the performance fee in relation to

the Ordinary share pool are included on pages

56 and 83 There is no performance fee due in

respect of the B share pool

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 2022

Richard Roth

Audit Committee Chair

20 April 2023

53

Annual Report & Financial Statements for the year ended 31 December 2022

Annual Remuneration Report

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

2022 A resolution to approve the Directors’

Remuneration Report will be proposed at the

Annual General Meeting on 18 May 2023 The

Directors’ Remuneration Policy and the Directors’

Remuneration Report were last approved by

shareholders at the Annual General Meeting on 27

April 2022

The Company’s independent auditor, HZW, 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

60 to 64

Statement from the Chair of the

Board in relation to Directors’

Remuneration Matters

The Board is mindful of its obligation to set

remuneration at levels which will attract and

maintain an appropriate calibre of individuals

whilst simultaneously protecting the interests of

shareholders

During the year to 31 December 2022, the Board

reviewed its existing remuneration levels, having

considered the remuneration payable to non-

executive directors of comparable VCTs, the demand

for non-executive directors within the financial

sector and the increasing regulatory requirements

with which the sector is required to comply The

Board agreed to leave Directors’ fees unchanged

during the year (and in line with the prior year as

shown in the table on page 56) but continue to keep

them under review As with any Board comprising

solely of non-executive directors it is unlikely that

a Director can fully abstain from any discussion

or decision concerning their own fees Director’s

remuneration consists of a base fee for all Directors

and each Director participated in the process of

setting the level of this fee Additional fees have been

set for the role of Chair of the Audit Committee and

the individual Director did not participate in setting

the additional fee for their own specific role The

Board considers that this process is consistent with

the spirit of the AIC Code on the setting of Directors’

fees

The Company’s Articles of Association limit the

aggregate amount that can be paid to the Directors

in fees to £100,000 per annum A special resolution

has been included in this year’s AGM to amend

Directors’ Remuneration Report

and Policy

the Company’s Articles of Association to increase

the limit of the aggregate amount of Directors’

fees which can be paid to £150,000 per annum to

allow for the appointment of a new Director and to

increase fees as necessary in line with market rates

and inflation

At the Annual General Meeting held on 27 April 2022,

the following votes were cast on the Poll voting on

the Remuneration Report:

Number of

votes

% of votes

cast

For

2,285,883

9952

Against

4,979

022

At Chair’s discretion

6,000

026

Total votes cast

2,296,862

10000

Number of votes

withheld

38,950

The Remuneration Policy was also last approved by

the shareholders at the Annual General Meeting held

on 27 April 2022

Number of

votes

% of votes

cast

For

2,265,415

9952

Against

4,979

022

At Chair’s discretion

6,000

026

Total votes cast

2,276,394

10000

Number of votes

withheld

59,418

Directors’ interests

The Directors’ interests, including those of

connected persons in the issued share capital of the

Company are outlined below There is no minimum

holding requirement that the Directors need to

adhere to

54

Annual Report & Financial Statements for the year ended 31 December 2022

Ordinary Shares

31 December 2022

31 December 2021

Shares

% of share capital

Shares

% of share capital

John Hustler

(Chair)

190,000

234

190,000

234

Richard Roth

(Chair of the Audit Committee)

209,612

258

209,612

258

Alex Clarkson

-

-

-

-

Richard Manley

-

-

-

-

B Shares

31 December 2022

31 December 2021

Shares

% of share capital

Shares

% of share capital

John Hustler

(Chair)

31,841

017

19,735

014

Richard Roth

(Chair of the Audit Committee)

15,000

008

15,000

010

Alex Clarkson

10,060

005

10,060

007

Richard Manley

96,059

051

71,846

049

There have been no changes in the Directors’

interests since 31 December 2022 No options over

the share capital of the Company have been granted

to the Directors

Details of the Directors’ remuneration are disclosed

below and in Note 4 on page 82

Pensions (Information Subject to Audit)

None of the Directors receives, or is entitled to

receive, pension benefits from the Company

Share options and long-term incentive schemes

(Information Subject to Audit)

The Company does not grant any options over the

share capital of the Company nor operate long-term

incentive schemes

Relative spend on pay

The table below sets out:

a)

the remuneration paid to the Directors; and

b)

the distributions made to shareholders by way

of dividends paid in the financial year ended 31

December 2022 and the preceding financial year

No shares are held in Treasury

Year ended

31 December

2022

Year ended

31 December

2021

Change

%

Total

remuneration

65,000

53,750

2093

Dividends paid

(Note 13)

700,400

727,000

(366)

Directors’ Emoluments (Information Subject to

Audit)

The total emoluments in respect of qualifying

services of each person who served as a Director

during the year are as set out in the table below

Richard Roth is entitled to a higher fee due to his role

as Chair of the Audit Committee

55

Annual Report & Financial Statements for the year ended 31 December 2022

Directors’ Fees

31 December

2022

31 December

2021

£

£

John Hustler

(Chair)

15,000

15,000

Richard Roth

(Chair of the

Audit Committee)

20,000

20,000

Alex Clarkson

15,000

15,000

Richard Manley*

15,000

3,750

Total

65,000

53,750

* Richard Manley, a director of the Investment

Manager, elected to waive his Director’s fee until the

operating costs were less than the expenses cost

cap, which occurred in Q3 2021 As such, Richard

Manley’s Director’s fee was taken for the 2022

financial year as payment to the Investment Manager

The Directors did not receive any other form of

emoluments in addition to the Directors’ fees during

the year John Hustler and Richard Roth, as members

of the CAC, may be entitled to performance fees

in the future as referred to below 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

18 The Board will ensure that any such fee would

not present a conflict of interest which could impact

its independent judgement

Total Shareholder Return Performance Graph

The graphs on pages 34 to 35 compare the NAV

return (rebased to 100) of the Company’s Ordinary

shares over the period from October 2001 to

December 2022 and the B shares from August 2018

to December 2022, with the total return from a

notional investment (rebased to 100) in the FTSE AIM

All-Share Index over the same period This index is

considered to be the most appropriate equity market

against which investors can measure the relative

performance of the Company due to average market

cap per listing, risk profile and its investor base being

more directly comparable to the Company’s

Statement of the Company’s policy on Directors’

Remuneration

The Board manages the Company and consists of

four non-executive 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 is 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 CAC), which now

consists of John Hustler and Richard Roth

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 875p of dividends have been

paid in respect of each Ordinary share (such that

original subscribing shareholders will 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 5, 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 5 to the Financial

Statements

The Company entered into an agreement with

Charles Breese following his resignation on 10 June

2019 that he may be entitled to a pro rata proportion

of performance fees as set out in Note 5 to the

Financial Statements

The Board as a whole considers Directors’

remuneration and has not appointed a separate

committee in this respect

56

Annual Report & Financial Statements for the year ended 31 December 2022

The Board intend to raise the basic fee payable to all non-executive Directors from £15,000 per annum to

£17,500 per annum with effect from the upcoming AGM on 18 May 2023 The Company will also cover the

travel expenses of the non-executive Directors with effect from the same date The additional fee of £5,000 per

annum currently paid to the Chair of the Audit Committee remains unchanged

Company Strategy

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

Terms of Appointment

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

By order of the Board

ISCA Administration Services Limited

Company Secretary

20 April 2023

57

Annual Report & Financial Statements for the year ended 31 December 2022

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

Chair

20 April 2023

Directors’ Responsibilities

Statement

58

Annual Report & Financial Statements for the year ended 31 December 2022