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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Acuity Env | LSE:AEV1 | London | Ordinary Share | GB00B57F1L02 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 100.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMAEV1
RNS Number : 4161A
Acuity Environmental VCT PLC
31 January 2011
Annual Review Chairman's Statement
This is the company's first annual report and I would like to take this opportunity to welcome shareholders. The fund was established to invest in environmental projects targeting the waste to energy sector, specifically in the organic food waste market. This opportunity in the market is being driven by Government policy which is seeking to decrease the UK's reliance on landfill and to increase the use of recycling technologies. To that end the UK Government has established attractive financial incentives for energy generated from recycling processes
The Net Asset Value of the fund as at 30 September 2010 was 89.6p for Ordinary Shares which compared with the opening NAV of 94.5p for Ordinary Shares at commencement. As the type of investments are typically long term infrastructure in nature, the lead time on investment is longer than in traditional private equity. The Investment Manager has been evaluating a number of investment opportunities and further details are provided in the investment manager's review. In the meantime, the funds resources are held in cash and in liquidity funds as no investments have been made to date.
Total funds raised in the offer period which ended on the 18th November was GBP5m which was below initial expectations and as a result a decision was taken to only raise one VCT as opposed to two parallel funds set out in the prospectus. This necessitated a number of changes to the Board structure with the resignation of Mark Speeks and the appointment of Nicholas Ross and Philip Ling. William Elliott resigned on 21 October 2010. I would like to take this opportunity to thank both William and Mark for their valuable input in the formation of the company. The board currently operates with three directors, two of whom, Philip Ling and I, are independent.
Overview
As at 30 September 2010, the Net Asset Value per Ordinary Share was 89.6p and the Net Asset Value per A Share was 2.2p. The decrease in NAV per Ordinary Share was largely as a result of the initial set-up costs and the running expenses incurred by the Company over the period.
Investments
The Company has not made any investments to date.
Dividend
The Board do not intend to pay a dividend.
The Board
The Board acknowledge that due to a perceived conflict of interest, Mr William Elliott tendered his resignation to the Board on 21 October 2010. The Board would like to thank Mr Elliott for his contribution during his tenure.
Annual General Meeting
I look forward to meeting as many shareholders as possible at our first Annual General Meeting at 2pm on 24 March 2011 to be held at Howard Kennedy, 19 Cavendish Square, London W1A 2AW.
Risks
Risks associated with the Company are set out in detail in the Report of the Directors' and in note 16 of the Notes to the Accounts. The Company believes that it has insignificant exchange risk and minor credit or interest rate risk.
Outlook
Owing to material structural changes to Acuity Capital Management the Board is currently evaluating a possible change of Investment Manager and strategy for the fund. I will write to you as soon as possible once we have a firm proposal to put to you.
David Eades
Chairman
31 January 2011
Annual Review Financial Highlights
Period ended 30 September 2010 ---------------------------------------- ------- Net Assets GBP4.9m ---------------------------------------- ------- Net asset value per Ordinary share 89.6p Net asset value per A share 2.2p ---------------------------------------- ------- Dividend paid per Ordinary share 0.0p Dividend paid per A share 0.0p ---------------------------------------- ------- Cumulative return to shareholders since launch ---------------------------------------- ------- Dividends paid per Ordinary share 0.0p Dividends paid per A share 0.0p ---------------------------------------- ------- Net asset value plus dividends paid per 89.6p Ordinary share Net asset value plus dividends paid per 2.2p A share
Annual Review Investment Manager's Review
Overview
Market Background
The market opportunity is primarily being driven by legislative changes which are seeking to direct waste away from landfill towards recycling and renewable energy technologies. The two key drivers for change are the landfill escalator tax which is making landfill progressively more expensive and the establishment of local authority waste targets to reduce the amount of municipal waste sent to landfill. Householders therefore increasingly have to separate household waste at source in order for it to be recycled.
The UK government and the Welsh Assembly have prioritised the use of Anaerobic Digestion for the treatment of organic waste at the same time considering a ban on landfill altogether. Therefore market conditions for investment in waste to energy investments remain very favourable with strong demand from both the public and private sectors.
A typical Anaerobic Digestion (AD) plant charges a gate fee for every tonne of waste processed. In addition it receives revenue for the electricity it creates and a subsidy from the government as that electricity is from a renewable source. Two recent AD plants that have just been completed are the Thames Water facility at Didcot which is converting sewage sludge into a biogas, which after treatment is fed directly into the main gas grid. The other is the Adnams Brewery site in Suffolk where waste hops are fed into an AD plant generating a biogas which is also fed directly into the gas supply grid.
Portfolio Activity
Since the fund was launched the investment manager has been working closely with a number of industry specialists to seek out suitable investments for the funds. As the industry is still in its infancy it remains a very fragmented market characterised by a number of small operators and a significant shortage of investment capital. This provides a good funding opportunity as Defra has identified the requirement for the UK to build at least 450 AD plants to meet the current supply of organic waste. The funding required to build these plants is over GBP2.5bn the majority of which will have to be equity funded as the banks are not currently active lenders to this sector.
One of the earliest projects identified by the fund was in conjunction with the MOD. This opportunity was unfortunately delayed in the political and planning process and is therefore no longer being considered as a potential investment for 2011. The local authority tendering process can often take longer than initially planned and for that reason the Investment Manager has been working on a number of projects operated by different industry specialists to ensure a strong pipeline of investments. As at the end of the financial year the Investment Manager was in negotiations on four separate investment plants operated by four different industry specialists. These plants are a mixture of AD and IVC opportunities and are all focussed on the treatment of organic waste. Each plant has a slightly different supply profile but all are expected to generate IRR's of at least 20%. The Investment Manager, through its operating partners, is also in the process of reviewing a number of other longer term projects which are
expected to commence building in 2011. Further details of these will be announced to shareholders once the investments have been completed. In addition the investment manager has been in discussions with third party funders who are seeking to co-invest with the Fund in the manager's pipeline of waste to energy projects.
Summary
There have been some significant industry developments in line with the targeted opportunity set out in the company's prospectus which underpins the growth potential in the waste to energy sector. Although no investment has yet been committed the manager has been working closely with a number of industry operators to establish a high quality pipeline of investments which will come to fruition over time.
Acuity Capital Management Limited 31 January 2011
Annual Review Investment Objectives and Strategy
Investment Objectives:
The Company's Prospectus was published on 19 November 2009.
The Company's objective is to maximise tax free capital gains and income to Shareholders from dividends and capital distributions by investing the Company funds in:
-- a portfolio of Qualifying Investments, primarily in UK unquoted companies specialising in in-vessel-composting ("IVC") and anaerobic digestion ("AD") plant operations, or companies demonstrating similar investment characteristics; and
-- in fixed income funds, securities and cash deposits within the requirements imposed on venture capital trusts. Investment Strategy
The Company will seek to invest in investee companies that it believes are materially de-risked and will provide shareholders with a reliable source of tax free income. Companies will generally reflect the following criteria:
-- a well defined business plan and ability to demonstrate strong demand for its products and services;
-- products or services which are cash generative;
-- objectives of management and shareholders which are similarly aligned;
-- adequate capital resources or access to further resources to achieve the targets set out in its business plan;
-- access to high calibre management teams; and
-- be companies where the Manager believes there are reasonable prospects of an exit, either through a trade sale or flotation in the medium term.
Risk Diversification
The structure of the Company's funds, and its investment strategy, has been designed to reduce risk as much as possible.
The main risk management features include:
-- portfolio of investee companies - the Company will invest in at least 6 different companies, thereby reducing the potential impact of poor performance by any individual investment;
-- establishment of relationships with preferred operating partners the Company will establish such relationships to source a pipeline of IVC and AD plants for investee companies;
-- monitoring of investee companies - the Investment Manager will closely monitor the performance of all the investments made by the Company in order to identify any issues and to enable necessary corrective action to be taken;
-- significant control over investee companies - the Company will ensure that it has significant influence over the management of the business of the investee companies, in particular, through rights contained in the relevant investment agreements and other shareholder and constitutional documents; and
-- significant proportion of investments in fixed income funds, securities and cash deposits - a significant proportion of funds will be invested by the Investment Manager in this way. After the initial three year period, the objective is to keep approximately 10% of the Company's funds in such investments to reduce the overall risk profile of each portfolio.
Change in Investment Policy
A material change in the investment policy of the Company will only be effected with shareholders' approval in accordance with the Listing Rules.
Gearing
It is not intended the Company will borrow. However, the Company will retain the power to borrow up to 25% of its net asset value.
Annual Review Investment Manager and Unquoted Investment Valuation Process
The Investment Manager
The Fund's investments are managed by Acuity Capital Management Limited ("Acuity Capital"). Acuity Capital was established in 1981 and is authorised and regulated by the Financial Services Authority.
Acuity Capital has considerable expertise in quoted and unquoted investments and has a well developed deal flow, including unquoted company proposals that originate from its own contacts and network.
Acuity Capital is also the Investment Manager of Acuity Growth Plc, Acuity VCT 3 Plc and CF Acuity Real Active Management Fund as well as the Company.
The Investment Manager has established an Investment Committee comprising three Acuity Capital executives and two independent members. The independent members of the Investment Committee are Angela Lane and Tony Everett. After 18 years working in private equity at 3i, Angela's final role was as a partner in 3i's Growth Capital business, managing the UK Portfolio. Tony has a background as an entrepreneur and business owner and acts as a consultant to Fleming Family and Partners Private Equity. In addition, the Investment Committee is chaired by Hugh Mumford a senior executive of Electra Partners Group. The Investment Committee meets as required to consider and review investment proposals.
Annual Review Co-investment Arrangements
Co-investment Arrangements with other Acuity VCTs
The Directors welcome the fact that the Investment Manager has three generalist VCT pools of funds, Acuity Growth VCT Plc Ordinary Share pool Acuity Growth VCT Plc 'C' Share pool and Acuity VCT 3 Plc as well as Acuity Environmental VCT Plc (together "the Acuity VCTs"), it can use for co-investment. This will allow the Fund to spread its investment risk and gain access to larger investments than it could do on its own. Where a co-investment opportunity arises between the Company and one or more of the other funds, the Company will invest in an agreed and consistent proportion, on the same terms and in the same securities as the funds with which it co-invests. Costs associated with any such investment will be borne by each fund pro-rata to its investment.
In more detail, the Board has adopted a set of guidelines on its co-investment arrangements with the Acuity VCTs and the Investment Manager as follows:-
-- Other than as set out below, investments will be allocated between the Company and the Acuity VCTs by reference to the size of each fund and to each fund's available cash resources.
-- Where an opportunity arises for a second or subsequent round of investment in a company in which one of the Acuity VCTs has invested at an earlier stage, the fund holding the existing investment will have a preferential right to take up any pro-rata entitlement it may have in the new financing round. The amount it invests on this basis will not be taken into account in determining its co-investment share thereafter.
-- The Company will make an investment in which one or more of the Acuity VCTs have existing investments only when the Board considers that to be in the best interests of the Company.
-- Any potential conflict of interest in a proposed investment by one or more of the Acuity VCTs will be referred by the Investment Manager to the Board of the Company and the other relevant Boards.
-- In the event of a possible conflict of interest between the Investment Manager and the Company, the matter will be decided by those Directors who are independent of the Investment Manager.
The Board of the Company acknowledges that the Investment Manager may occasionally recommend an allocation of investments on a different basis from the one described above. For example, an exception may be made to ensure that Acuity Environmental VCT Plc, Acuity Growth VCT Plc or Acuity VCT 3 Plc maintain their status as a HMRC approved VCT, or in the interests of balancing their portfolios. A different basis may also be necessary to meet the requirements of potential investee companies. In these cases the Directors may use their judgement.
Company Information Contact Details
Acuity Environmental VCT Plc
Board of Directors
David Eades (Chairman) (Appointed - 12/11/2009)
Philip Ling - (Appointed - 15/4/2010)
Nicholas Ross - (Appointed - 15/4/2010)
Dunstana Davies - (Appointed - 19/10/2009) (Resigned - 19/10/2009)
Waterlow Nominees Limited - (Appointed - 19/10/2009) (Resigned - 19/10/2009)
HK Registrars - (Appointed - 19/10/2009) (Resigned - 12/11/2009) William Elliott (Appointed - 12/11/2009) (Resigned - 21/10/2010) Mark Speeks - (Appointed - 19/10/2009) (Resigned - 15/4/2010)
Investment Manager and Administrator Acuity Capital Management Limited Paternoster House
65 St Paul's Churchyard
London EC4M 8AB
Telephone: +44 (0)207 306 3901
Web: www.acuitycapital.co.uk
Enquiries: info@acuitycapital.co.uk
Secretary and Registered Office Acuity Capital Management Limited Paternoster House
65 St Paul's Churchyard
London EC4M 8AB
Telephone: +44 (0)20 7306 3901
Company Number
07049290
Registered Independent Auditors Moore Stephens LLP
150 Aldersgate Street,
London, EC1A 4AB
Telephone: +44 (0) 207 334 9191
Registrar and Transfer Office
The City Partnership (UK) Limited
Thistle House
21 Thistle Street
Edinburgh EH2 1DF
Telephone (UK): 0131 220 8226
Telephone (Overseas): +44 131 220 8226
Any change of address of a shareholder or other relevant amendment to shareholder details should be communicated to the Company's Registrar, The City Partnership (UK) Limited
Company Information Board of Directors
David Eades, Chairman Appointed a Director on 12 November 2009.
David is a Qualified Chartered Certified Accountant and an experienced executive who has led businesses from start-up through to IPO. David is also non-executive Chairman of Brand Acquisitions and Loseley Dairy Ice Cream
and a non-executive Director of Darwin Rhodes Group
Philip Ling Appointed a Director on 15 April 2010.
Philip is a non-executive Chairman of Fin Machine Company and a number of other smaller private companies. Past non-executive directorships have included Ibstock Johnsen plc, PE Consulting plc and Elderstreet Millennium VCT.
William Elliott Appointed a Director on 12 November 2009 (Resigned - 21/10/2010)
Bill is the Chairman of Envar Limited, a leading composting and food waste disposal company which is the Companies' Preferred Operating Partner. Bill has over 20 years experience in the waste management industry.
Nicholas Ross Appointed a Director on 15 April 2010
He is a founding member of Acuity Capital LLP. Prior to the Management buy-out he had been at Electra Quoted Management since 1993. Previously he had several years in investment analysis and fund management. He was responsible for the launch of the three Acuity Capital VCT funds. He is a Managing Partner of Acuity Capital LLP and a Director of Acuity Capital and all three Acuity VCT funds. He also sits on a number of investee company boards.
Accounts Report of the Directors
To the Members of Acuity Environmental VCT Plc
The Directors present the audited accounts of the Company for the period ended 30 September 2010 and their report on its affairs. The Company was incorporated on 19 October 2009 and commenced activities from 18 November 2009.
Investment Company Status
Throughout the period under review the Company was an investment company as defined under Section 833 of the Companies Act 2006.
VCT Status
HM Revenue and Customs has granted the Company approval under Section 274 of the Income Tax Act 2007 as a VCT, the approval being effective from the first day on which the Company's Ordinary and A Shares were listed on the London Stock Exchange being 22 April 2010. The Board continues to direct the affairs of the Company to enable it to maintain approval as a VCT. To date the Company has made no VCT-qualifying investments and the majority of its assets are held as cash and money market funds to generate yield. Although it was unknown at the time the cash was invested, the money market funds had been aggregated and, therefore, potentially breached the 15% test for VCTs (i.e. no more than 15% can be invested in any one investment). On discovering this potential inadvertent breach of the rules, the Company immediately contacted HMRC with a view to seeking a waiver for this potential breach. While the Directors of the Company do not believe at this stage that the Company or its Shareholders will suffer as a result of this, at the date of this report the Company is still in correspondence with HMRC and has not yet received a final determination from HMRC. If VCT status were to be prejudiced as a result of the potential breach of the rules (for consequences of this, see page 32 of the prospectus), the Company will inform Shareholders of this as soon as practicable.Business Review
Objective and Investment Strategy
A review of the Company's Objectives and Investment Strategy is detailed on page 2.
Current and Future Development
A review of the main features of the period is contained in the Chairman's Statement and the Investment Manager's Review on pages 4 and 5 respectively.
The Board regularly reviews the development and strategic direction of the Company. The Board's main focus continues to be on the Company's long-term investment return. Attention is paid to the integrity and success of an investment process and on factors which may have an impact on this approach. Due regard is given to the marketing and promotion of the Company, including effective communication with shareholders and other external parties.
Performance
A detailed review of performance during the period under review is contained in the Investment Manager's Review on page 5.
A number of performance measures are considered by the Board and Investment Manager in assessing the Company's success in achieving its objectives.
The key performance indicators ('KPIs') used to measure the progress and performance of the Company are established industry measures and are as follows:-
-- The movement in net asset value per share
-- The movement in share price
-- The movement of net asset value and share price performance compared to the FTSE All-Share Index
Details of the KPIs are shown in the Financial Highlights on page 3 and through a graph comparing the Company's total return on a share price and net asset value basis over the period to 30 September 2010 with the FTSE All-Share Index total return over the same period as set out in the Directors' Remuneration Report on page 18.
The Board recognises that it is in the long term interests of shareholders to reduce discount volatility and believes that the prime driver of discounts over the longer term is performance. As outlined in the Report of the Directors on page 13, the Board intends to seek approval of its share buy-back authority at the Company's Annual General Meeting in 2011.
Risk Management
Since the Company is seeking to invest in a particular industry sector, there is a significant level of in-built risk. There are also a number of specific risks associated with the investment strategy of the Company as set out in page 10 of the Prospectus which include site identification, acquisition and planning permission risk, construction risk, plant performance and technology risk, contract risk, electricity price risk, renewable obligation scheme risk and regulatory risk. These risks could have a materially negative impact on any investment made by the Company.
However, to provide a level of diversification, the Company is restricted to investing no more than 15% of the value of its total assets at the time of investment in any one individual qualifying investment or non-qualifying investment. The key risks facing the Company include Market Risk, Interest Rate Risk, Credit Risk and Liquidity Risk as further detailed in Note 16 of the Notes to the Accounts.
In addition the Company is also focused on the following key risks:
Macroeconomic risks
In addition to the specific risks set out above, the performance of the Company's underlying investment portfolio is also influenced by a combination of economic growth, interest rates, the availability of well-priced debt finance, the number of active trade
Accounts Report of the Directors
and private equity buyers and the general level of merger and acquisition activity. All of these factors have an impact on the Company's ability to invest and on the Company's ability to exit from its underlying portfolio or on the levels of profitability achieved on exit.
Long-term strategic risk
The Company is subject to the risk that its long-term strategy and its level of performance fails to meet the expectations of its shareholders. The Company constantly monitors the level of discount of its Net Asset Value to the share prices of its Ordinary Shares and A Shares and considers the most effective methodologies to keep this at a minimum including a share buy-back policy.
In addition the Company regularly reviews its Objectives and Investment Strategy in light of prevailing investor sentiment to ensure the Company remains attractive to its shareholders.
Government policy and regulation risk
The Company carries on business as a VCT under section 274 of the Income Tax Act 2007. Continuation of this status is subject to the Company directing its affairs in line with the relevant requirements of the legislation. Anticipated and actual changes in government policy and related tax treatment of VCTs' are closely monitored, as are other changes which could affect results of operations or financial position.
Acuity Capital is an authorised person under the Financial Services and Markets Act 2000 and regulated by the FSA. Changes to the regulatory framework under which Acuity Capital operates are closely monitored by Acuity Capital and reported upon as necessary by Acuity Capital to the Company.
Investment risks
The Company operates in a very competitive market. Changes in the number of market participants, the availability of funds within the market, the pricing of assets, or in the ability of Acuity Capital to access deals on a proprietary basis could have a significant effect on the Company's competitive position and on the sustainability of returns.
In order to source and execute good quality investments the Company is primarily dependent on Acuity Capital having the ability to attract and retain people with the requisite investment experience and whose compensation is in line with the Company's objectives.
Once invested, the performance of the Company's portfolio is dependent upon a range of factors. These include but are not limited to: (i) the quality of the initial investment decision described above; (ii) the ability of the investee company to execute successfully its business strategy; and (iii) actual outcomes against the key assumptions underlying the investee company's financial projections. Any one of these factors could have an impact on the valuation of an investee company and
upon the Company's ability to make a profitable exit from the investment within the desired timeframe.
A rigorous process is put in place by Acuity Capital for managing the relationship with each investee company for the period to anticipated realisation. This includes regular asset reviews and, in many cases, board representation by one of Acuity Capital's executives.
The Company reviews both the performance of Acuity Capital and its incentive arrangements on a regular basis to ensure that both are appropriate to the objectives of the Company.
Operational risks
The Company's investment management, custody of assets and all administrative systems are provided or arranged for the Company by Acuity Capital. Therefore, the Company is exposed to a range of operational risks at Acuity Capital which can arise from inadequate or failed processes, people and systems or from external factors affecting these.
The Company's system of internal control mainly comprises the monitoring of the services provided by Acuity Capital, including the operational controls established by them to ensure they meet the Company's business objectives, as discussed further in the Corporate Governance Statement on page 14.
Share Capital
The share capital of the Company comprises Ordinary Shares of 0.1p each ("Ordinary Shares"), A Shares of 0.1p each ("A Shares") and redeemable preference shares of GBP1 each ("Redeemable Preference Shares"). The Ordinary Shares and A Shares have voting rights attached, and the holders of these are entitled to receive notice of and attend shareholder meetings and to receive dividends once declared and approved. The other rights and obligations attaching to the Ordinary Shares, A Shares and Redeemable Preference Shares are set out in the Company's Articles of Association.
The Company does not hold any shares in treasury.
At 30 September 2010, the Company had no authority to purchase any of its own shares.
At 30 September 2010 a total of 5,268,369 Ordinary Shares, 6,618,367 A Shares and 50,000 Redeemable Preference Shares were in issue.
Results and Dividend
The loss attributable to shareholders amounted to GBP208,000. The loss on Ordinary Shares amounted to GBP202,000 and A shares amounted to a loss of GBP6,000. The Directors do not recommend the payment of a final dividend in respect of the period ended 30 September 2010.
Accounts Report of the Directors
Directors
The Directors who held office from incorporation to the period end are detailed on page 8. Mr DW Eades, Mr PH Ling and Mr NRW Ross , being eligible, will offer themselves for election at the Annual General Meeting in 2011, except for Mr NRW Ross who will not offer himself for re-election. Short biographical details of all the current Directors are provided on page 9. The Board recommends that those Directors retiring at the Annual General Meeting in 2011 and offering themselves for election be elected.
Directors' Interests
The beneficial interests of the Directors in the shares of the Company are shown below. Save as disclosed, no Director had any notifiable interest in the securities of the Company. Director's purchases of Shares of the Company during the period under review are shown in the table below. 77,130 Ordinary and A shares of 0.1p each have been allotted on the 25 November 2010. Management, the individuals engaged or otherwise involved in the management of the Company's investments, were allocated a further 1,322,749 A Shares on the 25 November 2010, with Mr N Ross receiving 317,460 A Shares. No options over shares in the capital of the Company have been granted to the Directors.
30 September 2010 30 September 2010
Ordinary Shares of 0.1p each A Shares of 0.1p each
DW Eades - -
W Elliott - -
(Resigned-
21/10/2010)
PH Ling 105,000 105,000
NRW Ross 52,500 376,500
MW Speeks 52,500 417,000
(Resigned--
15/4/2010)
Directors' Remuneration Report
An Ordinary Resolution to approve the Directors' Remuneration Report will be put to the General Meeting in 2011.
Contracts with Directors
No Director has a service contract with the Company. As a result of being a Managing Partner of Acuity Capital LLP, Mr NRW Ross is deemed to have an interest in the Management Contract between the Company and Acuity Capital.
Change of Accounting Reference Date
The Company changed its accounting reference date during the period from 31 October to 30 September.
Directors' and Officers' Liability Insurance
Directors' and Officers' Liability Insurance is maintained on behalf of the Directors in respect of their positions as Directors of the Company.
Substantial Shareholders
At 31 January 2011 the Directors had not been notified of any interests of 3% or more in the Company's issued share capital.
Independent Auditors
A resolution to appoint Moore Stephens LLP as auditors to the Company will be proposed at the General Meeting in 2011. A separate resolution will be proposed at the Annual General Meeting in 2011 authorising the Directors to fix the remuneration of the auditors.
The Directors confirm that so far as each Director is aware, there is no relevant audit information of which the Company's auditors are unaware and that each Director has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Company's auditors are aware of that information.
Creditor Payment Policy
The Company agrees the terms of payment with its suppliers when agreeing the terms of each agreement. Suppliers are aware of the terms of payment and the Company abides by the terms of payment. The Company's average creditor payment period at 30 September 2010 was 1 day.
Management Fees and Arrangements
Acuity Capital was originally appointed as Investment Manager under an agreement dated 19 November 2009. The agreement was for an initial period of six years and thereafter could be terminated by either party giving not less than one year's notice.
Annual Running Costs (annual costs and expenses incurred by the Company, including irrevocable VAT but excluding exceptional and extraordinary costs) of the Fund are capped at 3.6% of the net asset value as at 30 September. Any excess will be refunded by way of a reduction of management fees payable to the Investment Manager.
On 6 April 2010, the Company announced that the Board and Investment Manager had agreed to waive all the respective director, investment management and administration fees due from the Company until such time as total funds raised by the Company exceed GBP8 million.
Incentive Schemes
To give effect to the Performance Incentive described below, each investor received one Ordinary Share and one A share at the subscription prices of 99.9p for each Ordinary Share and 0.1p for each A share. Management received such number of A Shares in the Company so that at the close of the Offer they owned one-third of the issued A shares in the share capital of
Accounts Report of the Directors
the Company. Subject to the achievement of the Hurdle, being a Performance Value of at least 120p per Share and the payment of Shareholder Proceeds of at least 20p per Share, the Management A shareholders will receive 1% of the first 20p of Shareholder Proceeds and 20% of Shareholder Proceeds thereafter. The offer for subscription closed on the 18 November 2010.
Going Concern
The Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the Accounts as the Company has adequate resources to continue in operational existence for the foreseeable future.
Annual General Meeting
The Annual General Meeting of the Company will be held on 24 March 2011. In addition to the ordinary business, the following special business will be considered:-
Authority to allot shares: Resolution 7
An Ordinary Resolution will be proposed at the Annual General meeting in 2011 to grant the Directors authority under section 551 of the Companies Act 2006 to allot Ordinary Shares up to a maximum aggregate nominal value of GBP550 (representing approximately 10% of the Ordinary Share capital in issue at the date of this Directors' Report), to allot A Shares up to a maximum aggregate nominal value of GBP810 (representing approximately 10% of the A Share capital in issue at the date of this Directors' Report). The authority will expire at the earlier of the conclusion of the Company's Annual General Meeting in 2012 and the expiry of 15 months from the passing of the relevant resolution. The Directors believe that further fundraising through the issue of such shares is in the best interests of the shareholders and recommend that shareholders vote in favour of this Ordinary Resolution.
Disapplication of pre-emption rights: Resolution 8
A Special Resolution will be proposed at the Annual General Meeting in 2011 to grant the Directors authority to allot the equity securities referred to above for cash without first offering the securities to existing shareholders. The Directors' authority under this resolution will expire at the earlier of the conclusion of the Company's Annual General Meeting in 2012 and the expiry of 15 months from the passing of the relevant resolution. The Directors recommend shareholders to vote in favour of this Special Resolution.
Authority to Make Market Purchases of Shares: Resolution 9
The Board wishes to have in place the authority to purchase the Company's own Ordinary Shares and A Shares so that the buy back programme can be established as required. Accordingly, a Special Resolution will be proposed to renew the Board's authority to make market purchases of Ordinary Shares and/or A Shares provided that such authority is limited to the purchase of 14.9 per cent. of the issued Ordinary Share capital and/or 10 per cent. of the issued A Share capital of the Company immediately prior to the passing of the resolution subject to the constraints set out in the Special Resolution.
Accounts Report of the Directors
Corporate Governance
Directors' Attendance at Scheduled Meetings of the Board and Committees of the Board
Hot Features
Premium
Attended
Scheduled Attended Audit Audit
Board Board Committee Committee
----------- --------- -------------- ---------- ----------
DW Eades 2 2 1 1
W Elliott 2 2 1 1
(Resigned:
21/10/10)
PH Ling 2 2 1 1
NRW Ross 2 2 1 1
----------- --------- -------------- ---------- ----------
In addition, a number of Directors attended further Board meetings at short notice to address specific issues.
The Board of Directors
The Board, which meets regularly, comprised four Directors at 30 September 2010 all of whom were non-executive. All of the Directors who held office at 30 September 2010, apart from Mr NRW Ross, have been considered by the Board to be independent from the Investment Manager. The Board has nominated Mr PH Ling as the Senior Independent Director.
All of the Directors of the Company are also Directors of investee companies of associated funds managed by Acuity Capital. The Board has particularly considered the question of the independence of each Director in light of the Code's provisions on that subject.
The Board believes that each of the Company's Directors, apart from Mr NRW Ross, continues to be wholly independent under the Code notwithstanding the directorships noted above. Independence is a state of mind and the character and judgement which accompany this are distinct from and, in the Board's opinion, are not compromised by holding such directorships. With this consideration in mind Mr W Elliott offered his resignation as he believed that he was conflicted as a board director of the Company and Chairman of the preferred operating partner Envar Limited on the 21 October 2010.
The Board has agreed a schedule of matters reserved for its specific approval, which includes a regular review of the Company's Management Agreement with Acuity Capital, together with the monitoring of the performance thereunder. The Management Agreement sets out the matters over which Acuity Capital has authority in accordance with the policies and directions of the Board. The Board Meetings consider as appropriate such matters as overall strategy, investment performance, share price performance, share price discount and communication with shareholders. The Board considers that it meets sufficiently regularly to discharge its duties effectively. The numbers of
scheduled meetings of the Board and the Audit Committee are shown in the table above. All of the Directors will attend the Annual General Meeting.
The Board receives information that it considers to be sufficient and appropriate to enable it to discharge its duties. Each Director receives board papers several days in advance of each scheduled Board meeting and is able to consider in detail the Company's performance and any issues to be discussed at the relevant meeting.
The Directors believe that the Board has the balance, skills and experience which enable it to provide effective strategic leadership and proper governance of the Company. Information about the Directors, including their relevant experience can be found on page 9.
Performance Appraisal
The Board will carry out a formal appraisal process of its own and of its Committees' operation and performance during its first year. This will be implemented by means of questionnaires circulated to the Directors, the results of which will then be reviewed by the Board. Issues covered will include board composition, meeting arrangements and communication. The process to be established is considered by the Board to be constructive in identifying areas for improving the functioning and performance of the Board and of its Committees.
The Chairman will also carry out a formal appraisal of each of the Directors during its first year and the Board, and the other director's will similarly appraise the Chairman. Relevant matters to be considered will include the attendance and participation at Board and Committee meetings, commitment to Board activities and the effectiveness of the contribution made by the relevant Director. As a result of this process the Chairman will confirm whether the performance of each of the Directors being proposed for re-election continues to be effective and that each of them continues to show commitment to his role.
Election of Directors
In accordance with the Code's provisions and the Company's Articles, all the current Director's will retire at the Annual General Meeting to be held in 2011 and offer themselves for re-election.
Independent Professional Advice
Individual Directors may seek independent professional advice in furtherance of their duties at the Company's expense within certain parameters. All Directors have access to the advice and services of the Company Secretary. Any appointment or removal of the Company Secretary would be a matter for consideration by the entire Board.
The Audit Committee
The Board has an Audit Committee established in compliance with the Code. It comprises all the Directors other than the Chairman of the Board and Mr NRW Ross, with Mr PH Ling as Chairman of the
Accounts Report of the Directors
Committee. The Board has taken note of the suggestion that at least one member of the Committee should have recent and relevant experience and is satisfied that the Committee is properly constituted in this respect. Its authority and duties are clearly defined in its written terms of reference which are available to shareholders on request.
The Committee's Responsibilities include:
-- monitoring and reviewing the integrity of the financial statements, the internal financial controls and the independence, objectivity and effectiveness of the external auditors;
-- making recommendations to the Board in relation to the appointment of the external auditors and approving the remuneration and terms of their engagement;
-- developing and implementing the Company's policy on the provision of non-audit services by the external auditors;
-- reviewing the arrangements in place within Acuity Capital whereby their staff may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters insofar as they may affect the Company;
-- considering annually whether there is a need for the Company to have its own internal audit function.
The Committee has reviewed the provision of non-audit services provided by the external auditors and believes them to be cost effective and not an impediment to the external auditors objectivity and independence. It has been agreed that all non-audit work to be carried out by the external auditors, must be approved by the Audit Committee and that any special projects must be approved in advance.
Internal Audit
Following the review carried out by the Audit Committee as to whether there is a need for the Company to have its own internal audit function, the Board has considered and continues to believe that the internal control systems in place within Acuity Capital provide sufficient assurance that a sound system of internal control, which safeguards shareholders' investment and the Company's assets is maintained. An internal audit function, specific to the Company, is therefore considered unnecessary.
The Nomination Committee
The Nomination Committee meets on an ad hoc basis to consider suitable candidates for appointment as Director. It comprises all the Directors apart from Mr NRW Ross, with Mr DW Eades as Chairman of the Committee. It was not necessary to hold any meeting of the Committee during the course of this period. The Committee has written terms of reference which are available to shareholders on request. The Committee is responsible for
identifying and nominating, for the approval of the Board, candidates to fill board vacancies to maintain a balanced Board. Letters of appointment, which specify the terms of appointment, are issued to new Directors.
The current Directors of the Company were appointed with regard to their independence, suitability for the position and their experience in related business areas.
The Remuneration Committee
During the year under review the Remuneration Committee comprised all the Directors of the Company other than the Mr NRW Ross, with Mr D Eades Chairman of the Committee and met once during the year. It was agreed for the Directors to waive Directors' fees until such time as total funds raised by the Company exceed GBP8 million.
The Committee has written terms of reference which are available on Acuity Capital's website. Full details of its role are set out in the Directors' Remuneration Report.
Induction and Training
New Directors will be provided with an induction programme which is tailored to the particular circumstances of the appointee and which includes being briefed fully about the Company by the Chairman and senior executives of Acuity Capital. Following appointment, Directors continue to receive other relevant training and advice as necessary to enable them to discharge their duties.
The Company's Relationship with its Shareholders
The Company places great importance on communication with the Company's shareholders. In addition to the Annual and Half-Yearly Reports shareholders will be sent regular newsletters from the Investment Manager.
At the Annual General Meeting all shareholders are welcome to attend and have the opportunity to put questions to the Board.
The notice of the Annual General Meeting and related papers are sent to shareholders at least 21 working days before the meeting. A separate resolution is proposed on each substantially separate issue including the annual report and accounts.
All proxy votes are counted and, except where a poll is called, the level of proxies lodged for each resolution is announced at the Meeting and is published on Acuity Capital's website. The Chairman and the Senior Independent Director can always be contacted either through the Company Secretary or care of the Company's registered office at Paternoster House, 65 St Paul's Churchyard, London EC4M 8AB.
Internal Control
The Code requires the Directors to review the effectiveness of the Company's system of internal control and report to shareholders that they have done so. The Code extended the earlier reporting requirements and now includes financial, operational and compliance controls and risk management.
Accounts Report of the Directors
The Board confirms that it has an ongoing process for identifying, evaluating and managing the significant risks faced by the Company. This process has been in place throughout the period and has continued since the period end and up to the date of this report. It is reviewed at regular intervals by the Board and accords with the Financial Reporting Council's 'Internal Control: Revised Guidance for Directors on the Combined Code'.
The Board is responsible for the Company's system of internal control and it has reviewed its effectiveness for the period ended 30 September 2010. The system of internal control is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.
Since investment management, custody of assets and all administrative services are provided or arranged for the Company by Acuity Capital, the Company's system of internal control mainly comprises the monitoring of services provided by Acuity Capital, including the operating controls established by them, to ensure they meet the Company's business objectives. The key elements designed to provide effective internal control for the Company are as follows:
-- Financial Reporting - Regular and comprehensive review by the Board of key investment and financial data including management accounts, revenue projections, analyses of transactions and performance comparisons.
-- Investment Strategy - Agreement by the Board of the Company's investment strategy and monitoring of all large investments.
-- Management Agreements - The Board regularly monitors the performance of Acuity Capital to ensure that the Company's assets and affairs are managed in accordance with the guidelines determined by the Board.
-- Investment Performance - The investment transactions and performance of the Company's assets and affairs are managed in accordance with the guidelines determined by the Board.
-- Management Systems - Acuity Capital's system of internal control includes clear lines of responsibility, delegated authority, control procedures and systems. Acuity Capital's compliance department monitors compliance with the Financial Services Authority rules.
The Board keeps under review the effectiveness of the Company's system of internal control by monitoring the operation of key controls of Acuity Capital as follows:
-- The Board reviews the terms of the Management Agreement and receives regular reports from Acuity Capital executives.
-- The Board reviews the certificates provided by Acuity Capital on a six monthly basis, verifying compliance with documented controls.
Voting Policy
Acuity Capital's voting policy as agent for the Company has been adopted. It applies the Statement of Principles drawn up by the Institutional Shareholders Committee, when it considers these in its reasonable judgement to best serve the financial interests of the Company's shareholders. Acuity Capital's voting policy has been reviewed and endorsed by the Board.
The Directors confirm that during the period under review the Company has complied with Section 1 of the Combined Code on Corporate Governance ("the Code") issued by the Financial Reporting Council in 2008.
Acuity Capital Management Limited
Secretary
Registered Office: Paternoster House 65 St Paul's Churchyard
London EC4M 8AB 31 January 2011
AccountsStatement of Directors' Responsibilities in respect of the Annual Report, the Directors' Remuneration Report and the Financial Statements
The Directors are responsible for preparing the Annual Report, the Directors' Remuneration Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice).
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 of the Company and of the 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 its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, The directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Investment Management Company's website.
The accounts of the Company are published on
www.acuitycapital.co.uk which is a website maintained by the Company's Investment Manager, Acuity Capital. Legislation in the United Kingdom governing the preparation and dissemination of the accounts may differ from legislation in other jurisdictions.
In accordance with the FSA's Disclosure and Transparency Rules, the Directors confirm to the best of their knowledge that:-
the financial statements, prepared in accordance with UK Generally Accepted Accounting Practice, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
the Report of the Directors includes a fair review of the development and performance of the business and position of the Company together with a description of the principal risks and uncertainties that it faces.
By order of the Board of Directors
David Eades,
Chairman
Registered Office: Paternoster House 65 St Paul's Churchyard
London EC4M 8AB 31 January 2011
Accounts Directors' Remuneration Report
The Directors submit this report in accordance with the requirements of Schedule 8 of the Large and Medium sized Companies and Groups (Accounts & Reports) Regulations 2008. An Ordinary Resolution for the approval of this report will be put to members at the forthcoming Annual General Meeting. The law requires the Company's Auditors to audit certain of the disclosures provided. Where disclosures have been audited they are indicated as such.
Policy on Directors' Remuneration
In accordance with the Articles of Association of the Company, the aggregate remuneration of the Directors may not exceed GBP100,000 per annum or such higher amount as may from time to time be determined by an Ordinary Resolution of the Company. Subject to this overall limit, the Company's policy is that remuneration of non-executive Directors should be sufficient to attract and retain the Directors needed to oversee the Company and reflect the specific circumstances of the Company, the duties and responsibilities of the Directors and the value and amount of time committed to the Company's affairs. It is intended that this policy will continue for the year ended 30 September 2011 and subsequent years. Non-executive Directors are not eligible to receive bonuses, pension benefits, share options and other benefits.
Directors' Service Contracts
None of the Directors has a service contract with the Company. No arrangements have been entered into between the Company and the Directors to entitle any of the Directors for compensation for loss of office.
Performance Graph
The Company is required to show a graph of total shareholder return against a suitable benchmark index in its Directors' Remuneration Report since the date on which the shares were first listed.
The graph below shows the Company's performance being measured in terms of its Total Shareholder Return and its net asset value per ordinary share over the period from 18 November 2009 to 30 September 2010 against the Total Shareholder Return of the FTSE All-Share Index.
The graph has incorporated the change in net asset value per share because changes in net asset value per ordinary share relative to the FTSE All-Share Index are an important indicator of the performance of the Company's assets.
The Directors consider that since the Company's investment strategy is to invest in a particular industry sector, then the FTSE All-Share Index is an approximate index against which to compare the Company's performance.
Directors' Remuneration for the Period (audited)
Management 30.09.2010
Directors A Shares held
Value
GBP'000
D Eades - -
W Elliot - -
P Ling - -
N Ross 324,000 35
M Speeks 364,500 40
---------------------------------------
The Directors were not remunerated for the period, other than outlined above, which identifies an estimated present value of the future worth to management of their management A Shares.
As a current executive of Acuity Capital, NRW Ross has an interest in the Management Contract between the Company and Acuity Capital. NRW Ross has waived his right to receive a salary from the Fund.
By order of the Board of Directors
Mr D Eades,
Chairman,
Registered Office: Paternoster House, 65 St Paul's Churchyard,
London, EC4M 8AB 31 January 2011
Accounts Independent Auditors' Report
Independent Auditors' Report to the Members of Acuity Environmental VCT Plc
We have audited the financial statements of Acuity Environmental VCT Plc for the period 19th October 2009 to 30 September 2010 which are set out on pages 20 to 33. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors' Responsibilities Statement set out on page 17 , the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements.
Opinion on financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the company's affairs as at 30 September 2010 and of its loss for the period then ended;
-- have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
-- the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006;
-- the information given in the Directors' Report for the financial period for which the financial statements are
prepared is consistent with the financial statements, and
-- The information given in the Corporate Governance Statement set out on pages 14 to 16 with respect to internal control and risk management systems in relation to financial reporting processes is consistent with the financial statements.
Matters on which we are required to report by exception We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
-- adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-- the financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Under the Listing Rules we are required to review:
-- the directors' statement, set out on page 13, in relation to going concern; and
-- the part of the Corporate Governance Statement relating to the company's compliance with the nine provisions of the June 2008 Combined Code specified for our review.
Timothy West, Senior Statutory Auditor
For and on behalf of Moore Stephens LLP, Statutory Auditor
150 Aldersgate Street London
EC1A 4AB
31st January 2011
Accounts Income Statement
19th October 2009
to 30 September
2010
Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000
--------------------- --------------- -------- ----------------------------
Income 1 9 - 9
--------------------- --------------- -------- -------- ------------------
9 - 9
--------------------- --------------- -------- -------- ------------------
Investment
management fees 2 - -
Share based payment 2 - (148) - (148)
Other expenses 3 (69) - (69)
--------------------- --------------- -------- -------- ------------------
(69) (148) (217)
--------------------- --------------- -------- -------- ------------------
Loss on Ordinary
Activities before
interest and
taxation (60) (148) (208)
--------------------- --------------- -------- -------- ------------------
Tax on loss on
ordinary
activities 5 - - -
--------------------- --------------- -------- -------- ------------------
Loss on Ordinary
Activities after
taxation (60) (148) (208)
--------------------- --------------- -------- -------- ------------------
Basic and Diluted 6 (2.2p) (5.5p) (7.7p)
Return to 6 (0.1p) (0.1p) (0.2p)
Shareholders per
Ordinary Share
Basic and Diluted
Return to
Shareholders per A
Share
The total column of this statement represents the Company's Income Statement prepared in accordance with UK GAAP. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year. A Statement of Total Recognised Gains and Losses is not required as all gains and losses of the Company have been reflected in the above statement.
The notes on page 26 to 33 form part of these financial statements.
Accounts Balance Sheet
As at
30 September 2010
Notes GBP'000
------------------------------------ ----- ---------------------------------
Current Assets Debtors 7
Other Investments Cash at bank 8 9 4,500 438
------------------------------------ ----- ---------------------------------
4,947
------------------------------------ ----- ---------------------------------
Current Liabilities
Creditors: amounts falling
due within one year 9 (70)
------------------------------------ ----- ---------------------------------
(70)
------------------------------------ ----- ---------------------------------
Net Current Assets 4,877
------------------------------------ ----- ---------------------------------
Total Assets less current
liabilities 4,877
------------------------------------ ----- ---------------------------------
Net Assets 4,877
------------------------------------ ----- ---------------------------------
Capital and Reserves
Called-up share capital 11 25
Share Premium 12 4,912
Capital Reserve 12 -
Revenue reserve 12 (60)
------------------------------------ ----- ---------------------------------
Total Equity Shareholders'
Funds 4,877
------------------------------------ ----- ---------------------------------
Net Asset Value per Ordinary 13 89.6p
Share
Net Asset Value per A Share 13 2.2p
As at 30 September 2010
Number of Ordinary Shares in issue at end of period 5,268,369
Number of A Shares in issue at end of period 6,618,367
The information on pages 26 to 33 forms part of these Financial Statements.
The Financial Statements on pages 20 to 33 were approved and authorised for issue by the Board of Directors on 31 January 2011 and were signed on their behalf by:
David Eades Chairman
Accounts Cash Flow Statement
19 Ocotber 2009 to 30 September 2010 GBP'000
Notes
Net Cash Outflow from Operating Activities 14 -
Taxation -
Corporation tax paid -
Investing Activities
Purchase of investments -
Sales of investments -
Net Cash Outflow from Investing Activities -
Equity Dividends Paid -
Cash Outflow before Financing -
and Management of Liquid Resources
Management of Liquid Resources
Investment in Liquidity Funds (4,500)
Net Cash Inflow/(Outflow) from Management (4,500)
of Liquid Resources
Financing
Issue of Shares 5,155
Expenses from the issue of shares (217)
Net Cash Inflow from Financing 4,938
Increase in Cash for the Period 15 438
Accounts Reconciliation of Movements in Shareholders' Funds
19 October 2009
30 September 2010
GBP'000
------------------------------------------- ------------------
Total Return on ordinary activities after
taxation (208)
Issue of new shares 5,282
Share issue expenses (345)
Share based payment 148
------------------------------------------- ------------------
Movements in Total Shareholders' Funds 4,877
Total Shareholders Funds as at 19 October
2009 -
------------------------------------------- ------------------
Total Shareholders' Funds at the end of
the period 4,877
Accounts Statement of Accounting Policies
Basis of Accounting
The accounts are prepared on a going concern basis and on the historical cost basis of accounting, modified to include the revaluation of fixed asset investments, in accordance with the Companies Act 2006 and United Kingdom Generally Accepted Accounting Practice (UK GAAP) and the Statement of Recommended Practice for Investment Trust Companies and Venture Capital Trusts issued by the Association of Investment Companies in January 2009 (the "SORP").
In order to reflect the activities of an investment company, supplementary information which analyses the financial statements between items of a revenue and capital nature has been presented alongside the financial statements. In analysing total income between capital and revenue returns, the Directors have followed the guidance contained in the "SORP".
The management fee is allocated between revenue and capital in accordance with the Board's expected long term split of returns, and other expenses are charged to capital only to the extent that a clear connection with the maintenance or enhancement of the value of investments can be demonstrated.
Investments
Purchases and sales of investments are recognised when the contract for acquisition or sale becomes unconditional. Investments are designated at fair value through profit or loss on investments recognised (described in the accounts as investments held at fair value) and are subsequently measured at reporting dates at fair value. Changes in the fair value of investments are recognised in the Income Statement through the capital account.
Other investments comprise investments in liquidity funds with AAA rating and are redeemable on call.
Unquoted Investments
Unquoted investments are held at fair value through profit or loss. The fair value is calculated in accordance with International Private Equity and Venture Capital Valuation Guidelines issued in September 2009 following the methodology outlined below.
Principles of Valuation of Investments General
In valuing investments, the Directors follow the principles recommended in the International Private Equity and Venture Capital Valuation Guidelines issued in September 2009. Investments are valued at fair value at the reporting date.
Fair value represents the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm's length transaction. In estimating fair value, the Directors use a methodology which is appropriate in light of the nature, facts and circumstances of the investment and its materiality in the context of the total investment portfolio. Methodologies are applied consistently from one period to another except where a change results in a better estimate of fair value. Because of the inherent
uncertainties in estimating the value of private equity investments, the Directors exercise due caution in applying the various methodologies.
Unquoted Investments
The principal methodologies applied in valuing unquoted investments including PLUS investments (a UK market focussed on small and medium companies which the Directors do not regard as an active market with sufficient liquidity) include the following:
-- Revenues multiple, Earnings multiple,
-- Price of recent investment
-- Net assets
In applying the Revenues and/or Earnings Multiple methodology, the Directors apply a market based multiple that is appropriate and reasonable to the maintainable earnings of the company. In the majority of cases the Enterprise Value of the underlying business is derived by the use of an Earnings before Interest, Tax and Depreciation multiple applied to current year's earnings where these can be forecast with a reasonable degree of certainty and are deemed to represent the best estimate of maintainable earnings. Where this is not the case, historic earnings will generally be used in their place or by using measurements of value such as the price of a recent transaction, a revenues multiple and net assets.
Where a recent investment has been made, either by the Company or by a third party in one of the Company's investments, this price will be used as the estimate of fair value from the date on which the investment was made. One of the principal methodologies, as above, may be used at any time if this is deemed to provide a better assessment of the fair value of the investment. Unlisted investments may be subject to an impairment adjustment to valuation where necessary.
The fair value of an investment in a company will be arrived at through the following process:
-- The Enterprise Value of the underlying business will be calculated using one of the above methodologies;
-- The Enterprise Value of the underlying business will then be adjusted for surplus assets or excess liabilities to arrive at an Enterprise Value for the Company; and
-- The valuation of the Company's investment will be calculated from the Enterprise Value for the company after deduction of prior ranking debt and other financial instruments and an appropriate discount.
In terms of the discount, this will normally be in the range of 10- 30% (in steps of 5%) applied to the comparable multiple of the company.
Accounts Statement of Accounting Policies
The amount of the discount is a question of judgment and will reflect several factors including the ability of the Company to influence the timing and nature of any realisation. Where the Company has the ability to influence an exit, or is part of a syndicate of like-minded investors who initiate the exit, a smaller discount will be applied. This may vary according to market and investee company circumstances. Where the likelihood of an exit is high, the discount is likely to be lower. Where there is no ability to initiate an exit and exit is not under discussion the discount is likely to be higher. In cases where no exit is contemplated by controlling shareholders, the investment may be valued by discounting the cash flow from the investment itself.
Income
Dividends receivable from equity investments are brought into account on the ex-dividend date or, where no ex-dividend date is quoted, are brought into account when the Company's right to receive payment is established. Fixed returns on non-equity investments and on debt securities are recognised on an effective interest rate basis. Where there is reasonable doubt that a return, which falls within the accounting period, will actually be received by the Company, the recognition of the return is deferred until the reasonable doubt has been removed.
Interest receivable on cash deposits is accounted for on an accruals basis.
Expenses
All expenses are accounted for on an accruals basis. Expenses are charged through the revenue account except for expenses in connection with the disposal of fixed asset investments, which are deducted from the disposal proceeds of the investment and investment management and incentive fees which are dealt with below. A split of expenses is made between Ordinary and A shares in proportion to the Net Asset Value.
Investment Management and Incentive Fees
The investment management fees for the Investment Manager's services are charged 25% to the revenue account and 75% to the capital account. This is in line with the Board's long-term expected split of returns from the investment portfolio of the Company. The payment of the performance fee will be effected through an equity-settled share-based payment.
FRS 20 Share-Based Payment requires the recognition of an expense in respect of share-based payments in exchange for goods or services. Entities are required to measure the goods or services received at their fair value, unless that fair value cannot be estimated reliably in which case that fair value should be estimated by reference to the fair value of the equity instruments granted. The fair value of the share-based payment is calculated by discounting the expected future value of the net assets. Incentive fees are fully charged to the capital account.
Revenue and Capital Reserves
The revenue return in the Income Statement is taken to the revenue reserve.
Gains and losses on the realisation of investments are taken to the realised capital reserve. Gains and losses arising from changes in fair value are considered to be realised only to the extent that they are readily convertible to cash in full at the balance sheet date. Otherwise gains and losses are treated as unrealised.
Taxation
The tax effects of different items in the Income Statement are allocated between capital and revenue on the same basis as the particular item to which they relate using the Company's effective rate of tax for the accounting period.
Due to the Company's status as a venture capital trust and the continued intention to meet the conditions required to comply with Section 274 of the Income Tax Act 2007, no provision for taxation is required in respect of any realised or unrealised appreciation of the Company's investments.
Deferred tax is provided on all timing differences that have originated but not reversed by the balance sheet date. Deferred tax assets are only recognised to the extent that they are recoverable.
Dividends Payable
Dividend distributions to shareholders are recognised as a liability in the period in which they are paid in respect of interim dividends or when approved by members in respect of final dividends.
Share issue expenses and share premium account
Costs of share issues are written off against the premium arising on the issues of share capital.
Accounts Notes to the Accounts
1 Income
For the period ended 30 September 2010
GBP'000
Income from Liquidity Funds 9
9
Income arose on financial assets not designated as fair value through profit or loss.
2 Investment Manager's Fees
For the period ended 30 September 2010
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Acuity Capital
Acuity Capital waived all fees including Management Fees and Administration Fees for the period ended 30 September 2010. Management Fees and Arrangements
Acuity Capital was appointed as Investment Manager under an agreement dated 19 November 2009. The agreement was for an initial period of six years and thereafter could be terminated by either party giving not less than one year's notice. Fees are to be paid quarterly in advance, as a percentage of net assets, at 2.5% per annum. Annual Running Costs (annual costs and expenses incurred by the Company, including irrevocable VAT but excluding exceptional and extraordinary costs) of the Fund are capped at 3.6% of the net asset value as at 30 September. Any excess will be reduced against the management fee payable to the Investment Manager.
An administration fee of GBP60,000 is also payable under the terms of the agreement and is subject to an annual RPI adjustment
On 6 April 2010, the Company announced that the Board and Investment Manager had agreed to waive all the respective director, investment management and administration fees due from the Company until such time as total funds raised by the Company exceed GBP8 million.
Incentive Scheme
To give effect to a Performance Incentive, each investor received one Ordinary Share and one A Share at the subscription prices of 99.9p for each Ordinary share and 0.1p for each A Share. At the close of the Offer the Management owned 20% of the issued A Shares in the share capital of the Company, with a further 13% allotted on the 25 November 2010, therefore holding a third of all A Shares in issue, which vested on allocation. Subject to the achievement of the Hurdle, being a Performance Value of at least 120p per share and the payment of Shareholder Proceeds of at least 20p per share, the Management A shareholders will receive 1% of the first 20p of Shareholder Proceeds and 20% of Shareholder Proceeds thereafter.
The holders of A Shares will be entitled to distributions equivalent to three times the Performance Incentive. 2/3 of the the distributions in respect of the
A Shares will be allocated to Shareholders and 1/3 to the Management, which will result in Management receiving the level of Performance as described above. Share Based Payment
For the period ended 30 September 2010
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Share Based Payment 148 148
The above is an estimate of the fair value of 1,350,000 management A Shares on the date of grant, giving a share based payment charge of 10.8p per share. No amount has been paid to management and it is not estimated that any performance fees will be made to management.
Accounts Notes to the Accounts
3 Other Expenses
For the period ended 30 September 2010 GBP'000
Auditors Remuneration:
Statutory audit 15
Other:
Professional fees 13
Administration expenses 28
Trail Commission 13
69
In addition to the statutory audit fees, the auditor was also paid fees of GBP15,000 during the period, in relation to the listing of the Company.
These fees were borne by Acuity Capital Management Ltd.
4 Directors' Remuneration
Details of Directors' remuneration are shown in the "Directors Remuneration for the Period (audited)" section of the Directors 'Remuneration Report on page 18. The Company had no employees or employee costs in 2010.
5 Taxation on Ordinary Activities
For the period ended 30 September 2010 GBP'000
Analysis of charge in the period
Current tax:
UK Corporation tax at 21% -
Total Current Tax
Factors affecting tax charge for the period
Loss on ordinary activities before tax (60)
Loss on ordinary activities before tax multiplied by corporate tax rate (13)
Effects of:-
Dividend income not subject to tax -
Expenses not deductible for tax purposes -
(Losses)/gains on investments -
Unutilised tax losses arising in the period 13
Total Current Tax -
There is no unprovided deferred tax liability at 30 September 2010.
There has been no recognition of a deferred tax asset GBP14,000 as the Directors' do not anticipate them being used or recovered against taxable profits in the future.
6 Return per Share Ordinary Shares A Shares
----------------------------------------- --------------- ------------------
Revenue return per share based on:
Net revenue after taxation (GBP'000) (58) (2)
--------------- ------------------
Weighted average number of shares
in issue 2,631,286 3,321,893
--------------- ------------------
Pence per Ordinary Share/A Share (2.2) (0.1)
--------------- ------------------
Capital return per share based on:
Net capital gain/(loss) for the
financial year (GBP'000) (144) (4)
--------------- ------------------
Weighted average number of shares
in issue 2,631,286 3,321,893
--------------- ------------------
Pence per Ordinary Share/A Share (5.5) (0.1)
--------------- ------------------
7 Debtors
As at 30 September
2010
GBP' 000
----------------------------------------- --------------- ------------------
Amounts receivable within one year:
Other debtors 9
8 Other Investments
As at 30 September 2010
GBP' 000
Liquidity Funds 4,500
9 Creditors: amounts falling due within one year
As at 30 September 2010
GBP' 000
----------------------------------------------------------------------- ---
Accrued expenses 47
Trail Commission Payable 12
Other creditors 11
-------------------------------------------------------------------- ---
70
----------------------------------------------------------------------- ---
10 Significant Interests
At 30 September 2010 the Company held no significant investments,
amounting to 3% or more of the equity capital.
11 Called Up Share Capital
As at 30 September
2010
Number GBP'000
------------------------------------- --------- ------------------
Issued:
Ordinary Shares of 0.1p each issued
during the period 5,268,367 5
------------------------------------- --------- ------------------
As at 30 September 2010 5,268,367 5
------------------------------------- --------- ------------------
Issued:
A Shares of 0.1p each issued during
the period 6,618,367 7
------------------------------------- --------- ------------------
As at 30 September 2010 6,618,367 7
------------------------------------- --------- ------------------
Issued:
Redeemable Preference Shares of 25p
each one quarter paid up 50,000 13
------------------------------------- --------- ------------------
As at 30 September 2010 50,000 13
------------------------------------- --------- ------------------
The share capital upon incorporation was GBP50,000 divided into 50,000 Redeemable Preference shares of GBP1 each, one-quarter paid up and 2 Ordinary shares of GBP0.001.
On the 3 April 2010, 4,869,352 Ordinary shares were issued at 99.9pence per share and 6,219,352 A shares at 0.1pence per share. This included 1 350,000 A shares issued to Management, pursuant to the offers for subscription by way of a prospectus.
The Redeemable Preference Shares may be redeemed by the Company at any time and on their redemption the holders thereof shall, subject to the provisions of the Companies Act as defined in section 2 of the Companies Act 2006, be paid a sum equivalent to the amount paid-up on each Redeemable preference Share held.
The Redeemable Preference Shares carry the right to receive a fixed cumulative preferential dividend from the revenue profits of the Company which are available for distribution and which the Directors determine to distribute by way of dividend in priority to any dividend payable on the Ordinary Shares and the A Shares at the rate of 0.1% per annum (exclusive of any imputed tax credit available to shareholders) on the nominal amount thereof, but confer no other right to a dividend.
On the 14 April 2010, 157,775 Ordinary shares were issued at 99.9pence per share and 157,775 A shares at 0.1pence per share. On the 28 May 2010 132,800 Ordinary shares were issued at 99.9pence per share and 132,800 A shares at 0.1pence per share. On the 1 July 2010, 17,800 Ordinary shares were issued at 99.9pence per share and 17,800 A shares at 0.1pence per share.
On the 2 August 2010, 58,640 Ordinary shares were issued at 99.9pence per share and 58,640 A shares at 0.1pence per share.
On the 22 September 2010, 32,000 Ordinary shares were issued at 99.9pence per share and 32,000 A shares at 0.1pence per share.
All shares were issued for cash except for 127,617 Ordinary shares and 127,617 A shares which were issued as bonus shares in respect of either early subscriptions or waived commission, as explained in the prospectus.
12 Reserves
Capital Reserve Revenue Reserve
Share Premium (Non-distributable) (Distributable)
GBP'000 GBP'000 GBP'000
As at 19 October 2009 - - -
Issue of shares 5,257 - -
Share issue expenses (345) - -
Share based payment - 148 -
Retained loss for the period - (148) (60)
At 30 September 2010 4,912 - (60)
13 Net Asset Value per Ordinary Share and A Share
Ordinary A Preference Total
Shares Shares Shares
Net assets at 19 October
2009 - - - -
Total revenue return for the
period (58) (2) - (60)
Issue of new shares 5,262 7 13 5,282
Share issue expenses (342) (3) - (345)
Adjustment * (143) 143 - -
--------- --------- -----
4,719 145 13 4,877
========= ========= =====
Number of shares in issue 5,268,369 6,618,367
Net asset value per share
(p) 89.6 2.2
Diluted number of shares ** N/A 7,941,116
Diluted net asset value per
share N/A 1.8
*Unless and until the Hurdle is met (i.e. there is a performance value of at least 120p per share and the Shareholders have received Shareholder Proceeds of at least 20p per share), distributions are made as to 97% to Ordinary Shares and 3% to A Shares.
** 1,322,749 A Shares were issued to management on 25 November 2010, giving management one-third of the total issued A Shares.
14 Reconciliation of Net Revenue on Ordinary Activities Before Taxation to Net Cash Outflow from Operating Activities
As at 30 September
2010
15 GBP'000
---------------------- ------- --------- -------------------------------------
Return on ordinary
activities before
finance costs and
taxation
(Losses)/gains in
investments Share
based payments
Increase in debtors
Increase/(decrease) (208) - 148 9 69
in creditors and
accruals
---------------------- ------- --------- -------------------------------------
Net cash outflow
from operating
activities -
---------------------- ------- --------- -------------------------------------
Analysis of Changes
in Net Funds
---------------------- ------- --------- -------------------------------------
Liquidity
Cash Funds Total
GBP'000 GBP'000 GBP'000
---------------------- ------- --------- -------------------------------------
At beginning of
period Net cash - - -
inflow 438 4,500 4,938
---------------------- ------- --------- -------------------------------------
At end of period 438 4,500 4,938
16 Financial Instruments
Market Risk: Market Risk incorporates the possibility for losses and gains from Investments and encompasses interest risk and price risk
Investment risk management is governed by the Investment Strategy detailed on the annual review on page 2 of these accounts and Market Risk is within that process. On a regular basis the Investment Manager monitors the Fund's Market Risk, in accordance with policies and procedures documented in the Report of the Directors.
The constituent parts of those investments are set out below.
Interest Rate Risk: A proportion of the Fund's financial assets are interest bearing, earning a fixed or a variable rate. Therefore, the Fund has exposure to fair value Interest Rate risk due to fluctuations in the market interest rates.
The interest rate profile of the Company's financial assets as at 30 September 2010 was:
Financial
Assets Weighted
on which Fixed Variable Average
no Rate Rate Total
Interest Financial Financial Interest
Earned Assets Assets Rates
GBP'000 GBP'000 GBP'000 GBP'000 %
---------- --------- --------------- -------------- ------------ ----------
Liquidity
Funds - - 4,500 4,500 0.5
Cash - - 438 438 -
Debtors 9- - - 9- -
---------- --------- --------------- -------------- ------------ ----------
Total 9- - 4,938 4,947
---------- --------- --------------- -------------- ------------ ----------
The only financial liabilities are the creditors shown in note 9, none of which are interest bearing.
The Company's future cash flows can be affected by changes in interest rates resulting in an increase or decrease in income from investments linked to the base rate and by the credit worthiness of the borrowers of the funds. Sensitivity has been tested by assessing the impact on the NAV over a one year period of a fall in the base rate to nil, being the largest possible fall. The estimated impact on performance and NAV is not deemed material. Detail is summarised below:
Liquidity Impact on Return Impact on NAV per Ordinary
Movement in Interest Rate on Share
Funds Net Assets
GBP'000 GBP'000 Pence
Fall by 0.25% 4,500 (11) (0.2)p
Increase by 1.00% 4,500 45 0.9p
The Company has categorised its financial instruments using the fair value hierarchy as follows:
Level 1 - Reflects financial instruments quoted in an active market (Liquidity fund investments)
Level 2 - Reflects financial instruments that have inputs that are observable either directly or indirectly (no such investments are currently held)
Level 3 - Reflects financial instruments that have inputs that are not based on observable market data (no such investments are currently held)
2010
Level 1 Level 2 Level 3 Total
Liquidity Funds (GBP'000) 4,500 - - 4,500
4,500 - - 4,500
16 Financial Instruments (Cont..)
Credit Risk: Credit risk is the risk that a counterparty to a financial instrument is unable to discharge an obligation or commitment entered into with the Company. The Investment Manager has in place a monitoring procedure in respect of counterparty risk which is monitored on an ongoing basis. The carrying amounts of financial assets best represent the maximum credit risk exposure at the balance sheet date.
At the reporting date, the Company's financial assets exposed to credit risk amounted to the following:
2010
Credit Risk GBP'000
Investments in fixed interest instruments -
Investments in variable interest instruments (including cash) 4,938
Interest, dividends and other receivables -
Credit risk arising on floating rate instruments is mitigated by investing in money market companies managed by HSBC Bank PLC which are AAA-rated.
The board regularly reviews this strategy.
Liquidity risk: The liquidity risk is that the Company might encounter difficulty in meeting its obligations arising from holding financial instruments.
The Company's liquidity risk is managed on an ongoing basis by the Investment Manager as presented in the Report of the Directors.
The Company maintains sufficient investments in cash and liquid resources to pay all accounts payable and accrued expenses as they become due. Liquidity funds are redeemable on call.
Management of Capital
The Company's objective when managing capital is to safeguard the Company's ability to continue as a going concern in order to continue to provide returns to shareholders. In compliance with HMRC's VCT Tax legislation, 70% must be invested within 3 years of the the capital being subscribed. The Company balances the funds to Shareholders to issue new shares, sell assets and purchase its
own shares to ensure suitable liquidity to remain a going concern. The company does not have any externally imposed capital requirements.
17 Geographical Analysis
The operations of the Company are wholly in the United Kingdom.
18 Transactions with the Investment Manager
During the period ended 30 September 2010 the Company paid GBP115,000 to Acuity Capital, the Investment Manager, with respect to the costs associated with the fundraising for the Company. At 30 September 2010, the Company owed GBPnil to the Investment Manager. Details of the Investment Manager's fee arrangements are included in Note 2.
19 Post Balance Sheet Events
On the 25 November 2010 the Company issued 77,130 Ordinary and A Shares for consideration of approximately GBP1 per share and 1,322,749 A Shares to management for approximately 0.1p.
Notice is hereby given that the first Annual General Meeting of Acuity Environmental VCT Plc will be held on 24 March 2011 at 2pm at the offices of Howard Kennedy, 19 Cavendish Square, London, W1W 2AW for the purpose of considering and, if thought fit, passing the following Resolutions (of which, Resolutions 1 to 7 will be proposed as Ordinary Resolutions and Resolutions 8 and 9 will be proposed as Special Resolutions):
Ordinary Resolutions
1 To receive, consider and adopt the Reports of the Directors
and Auditors and the Company's Accounts for the year ended 30 September 2010.
2 To approve the Directors' Remuneration Report for the year
ended 30 September 2010.
3 To re-elect Mr Eades as a Director of the Company.
4 To re-elect Mr Ling as a Director of the Company.
5 To re-appoint Moore Stephens LLP as Auditors of the
Company to hold office until the conclusion of the next general meeting at which accounts are laid before the members.
6 To authorise the Directors to fix the remuneration of the
Auditors.
7 THAT the Directors be generally and unconditionally
authorised in accordance with Section 551 of the Companies Act 2006 (the "Act") to allot:
(a) Ordinary shares, or to grant rights to subscribe for or to convert any securities into Ordinary shares, up to a maximum nominal amount of GBP550(representing approximately 10% of the Ordinary share capital in issue at today's date; and
(b) A shares, or to grant rights to subscribe for or to convert any securities into A shares, up to a maximum nominal amount of GBP810 (representing approximately 10% of the A share capital in issue at today's date
(c) This authority to expire at the earlier of the conclusion of the Company's Annual General Meeting next following the passing of this resolution and the expiry of 15 months from the passing of the relevant resolution (unless previously revoked, varied or extended by the Company in general meeting) but so that such authority allows the Company to make offers or agreements before the expiry thereof which would or might require shares to be allotted, or rights to subscribe for or to convert any securities into shares to be granted, after the expiry of such authority.
Special Resolutions
8 To empower the Directors pursuant to Section 570(1) of the
Act to allot or make offers or agreements to allot equity securities (as defined in Section 560(1) of the Act) for cash pursuant to the authority referred to in resolution 8 as if Section 561(1) of the Act did not apply to any such allotments and so that:
(a) reference to allotment in this Resolution shall be construed in accordance with Section 560(2) of the Act; and y; and
(b) the power conferred by this Resolution shall enable the company to make any offer or agreement before the expiry of the said power which would or might require equity securities to be allotted after the expiry of the said power and the directors may allot equity securities in pursuance of such offer or agreement notwithstanding the expiry of such power. and this power, unless previously varied, revoked or renewed, shall come to an end at the conclusion of the annual general meeting of the company next following the passing of this Resolution or, if earlier, on the expiry of 15 months from the passing of this resolution.
9 THAT the Company be and is hereby generally and
unconditionally authorised to make market purchases (within the meaning of Section 693(4) of the Companies Act 2006) of its own Ordinary shares and 'A' shares in the capital of the Company provided that:
(a) the maximum number of Ordinary shares and 'A' shares hereby authorised to be purchased shall not exceed 14.9% of the present issued share capital of the Company;
(b) the minimum price which may be paid for an Ordinary share is 0.1p and for an 'A' shares is 0.1p, exclusive of all expenses;;
(c) the maximum price which may be paid for an Ordinary share or an 'A' share is an amount, exclusive of all expenses, equal to 105% of the average of the middle market quotations of the Ordinary shares or 'A' shares as derived from the Daily Official List of the London Stock Exchange, for each of the five business days immediately preceding the day on which the share is contracted to be purchased;
(d) the Company may validly make a contract to purchase Ordinary shares or 'A' shares under the authority hereby conferred prior to the expiry of such authority which will or may be executed wholly or partly after the expiry of such authority, and may validly make a purchase of Ordinary shares or 'A' shares in pursuance of any such contract;
and this power, unless previously varied, revoked or renewed, shall come to an end at the conclusion of the Annual General Meeting of the Company next following the passing of this Resolution or, if earlier, on the expiry of 15 months from the passing of this resolution.
.
By order of the Board of Directors
Acuity Capital Management Limited
Secretary
Registered Office: Paternoster House 65 St Paul's Churchyard
London EC4M 8AB 31 January 2011
Notes
1. To be entitled to attend and vote at the meeting (and for the purposes of the determination by the Company of the votes they may cast) members must be registered in the register of members of the Company at 6pm on 2010 (or, in the event of any adjournment, 6pm on the date which is two days before the date of the adjourned meeting). Changes to the register of members of the Company after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the meeting.
2. A member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend, speak and vote on his or her behalf. A proxy need not also be a member but must attend the meeting to represent the member. Details of how to appoint the chairman of the meeting or another person as a proxy using the form of proxy are set out in the notes on the form of proxy. If a member wishes a proxy to speak on the member's behalf at the meeting the member will need to appoint his or her own choice of proxy (not the chairman) and give his or her instructions directly to them. Under section 319A of the CA 2006, the Company must answer any question a member asks relating to the business being dealt with at the Annual General Meeting unless:
-- answering the question would interfere unduly with the preparation for the Annual General Meeting or involve the disclosure of confidential information;
-- the answer has already been given on a website in the form of an answer to a question; or
-- it is undesirable in the interests of the Company or the good order of the Annual General Meeting that the question be answered.
3. A reply paid form of proxy is attached to this document. To
be valid, a form of proxy and the power of attorney or other written authority, if any, under which it is signed or an office or notarially certified copy or a copy certified in accordance with the Powers of Attorney Act 1971 of such power and written authority, must be delivered to The City Partnership (UK) Limited, Thistle House, 21 Thistle Street, Edinburgh EH2 1DF not less than 48 hours before the time appointed for holding the Annual General Meeting or adjourned meeting at which the person named in the form of proxy proposes to vote. In the case of a poll taken more than 48 hours after it is demanded, the document(s) must be delivered as aforesaid not less than 24 hours before the time appointed for taking the poll, or where the poll is taken not more than 48 hours after it was demanded, the document(s) must be delivered at the meeting at which the demand is made.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the Annual General Meeting to be held on 2010
and any adjournment(s) thereof by using the procedures described in the CREST Manual on the Euroclear website (www.euroclear.com/CREST). CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear UK & Ireland Limited's specifications and must contain the information required for such instructions, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer's agent (ID ) by pm on 2010. For this purpose, the time of
receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. CREST members and, where applicable, their CREST sponsors or voting service provider(s) should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service provider(s) are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
4. As at 2010 (being the last business day prior to the publication of this notice), the Company's issued voting share capital was Ordinary Shares, carrying one vote each. Therefore, the total voting rights in the Company as at 2010 was .
5. Any person to whom this notice is sent who is a person nominated under section 146 of the CA 2006 to enjoy information rights (a "Nominated Person") may, under an agreement between him/her and the member by whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the meeting. If a Nominated Person has no such proxy appointment right or
does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights.
6. The statement of the rights of members in relation to the appointment of proxies in paragraph 2 above does not apply to Nominated Persons. The rights described in this paragraph can only be exercised by members of the Company.
7. In order to facilitate voting by corporate representatives at the meeting, arrangements will be put in place at the meeting so that (a) if a corporate shareholder has appointed the chairman of the meeting as its corporate representative with instructions to vote on a poll in accordance with the directions of all of the other corporate representatives for that shareholder at the meeting, then on a poll those corporate representatives will give voting directions to the chairman and the chairman will vote (or withhold a vote) as corporate representative in accordance with those directions; and (b) if more than one corporate representative for the same corporate shareholder has not appointed the chairman of the meeting as its corporate representative, a designated corporate representative will be nominated, from those corporate representatives who attend, who will vote on a poll and the other corporate representatives will give voting directions to that designated corporate representative. Corporate shareholders are referred to the guidance issued by the Institute of Chartered Secretaries and Administrators on proxies and corporate representatives - www.icsa.org.uk- for further details of this procedure. The guidance includes a sample form of representation letter if the chairman is being appointed as described in (a) above.
8. Appointment of a proxy will not preclude a member from subsequently attending and voting at the meeting should the member subsequently decide to do so. A member can only appoint a proxy using the procedures set out in these notes and the notes to the form of proxy.
9. Except as provided above, members who have general queries about the Annual General Meeting should call on or for overseas callers on (no other methods of communication will be accepted): Calls to this number are charged at p per minute from a BT landline. Other telephony provider costs may vary.
10. Members may not use any electronic address provided either in this notice of General Meeting, or any related documents (including the Chairman's letter and form of proxy), to communicate with the Company for any purposes other than those expressly stated.
11. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, the proxy will vote or abstain from voting at his or her discretion. The proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the Annual General Meeting.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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