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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Calculus Vct Plc | LSE:CLC | London | Ordinary Share | GB00BYQPF348 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 60.00 | 50.00 | 70.00 | 60.00 | 60.00 | 60.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Investment Advice | 1.53M | 648k | 0.0105 | 57.14 | 37.04M |
From Apr 2019 to Apr 2024
TIDMCLC
RNS Number : 7522B
Calculus VCT PLC
20 June 2016
Calculus VCT plc
(Previously Investec Structured Products Calculus VCT plc)
Annual Financial Report
For the year ended 29 February 2016
The full Annual Report and Accounts can be accessed via the following website:
www.calculuscapital.com or by contacting the Company Secretary on telephone 020 7493 4940.
Investment Objective
The Company's principal objectives for investors are to:
-- invest in a portfolio of Venture Capital Investments that will provide investment returns sufficient to allow the Company to maximise annual dividends and with the goal of capital growth over the medium to long term;
-- generate sufficient returns from a portfolio of qualifying investments to provide attractive long-term returns within a tax efficient vehicle;
-- review the appropriate level of dividends annually to take account of investment returns achieved and future prospects; and
-- maintain VCT status to enable qualifying investors to retain their income tax relief of up to 30 per cent on the initial investment and receive tax-free dividends and capital growth.
Full details of the Company's investment policy can be found within the Strategic Report.
Hot Features
Premium
Ordinary Share
Fund C Share Fund
12 Months 12 Months 12 Months 12 Months
to 29 to 28 to to
February February 29 February 28 February
Financial Highlights 2016 2015 2016 2015
Total return per share (8.11)p (1.53)p (8.37)p 3.14p
Net asset value per share 31.36p 66.43p 77.27p 90.07p
Cumulative dividends paid 70.05p 43.00p 18.00p 13.50p
Accumulated shareholder value 101.41p 109.43p 95.27p 103.57p
Share price 37.00p 85.50p 90.00p 90.00p
Premium/(discount) to NAV 17.98% 28.71% 16.47% (0.08)%
Recommended final dividend - 5.25p 4.5p 4.5p
Strategic Report
The Strategic Report has been prepared in accordance with the requirements of Section 414A of the Companies Act 2006 (the "Act"). Its purpose is to inform members of the Company and help them assess how the Directors have performed their legal duty under Section 172 of the Act, to promote the success of the Company.
Chairman's Statement
I am delighted to present your Company's results for the year ended 29 February 2016.
The net asset value per Ordinary share was 31.36 pence as at 29 February 2016 compared to 66.43 pence as at 28 February 2015. This is after paying an annual dividend to Ordinary shareholders in July 2015 of 5.25 pence per share and the special interim dividend of 21.8 pence per share in December 2015, bringing the total cumulative shareholder value to 101.41 pence per Ordinary share.
The net asset value per C share was 77.27 pence as at 29 February 2016 compared to 90.07 pence as at 28 February 2015. This is after paying a dividend to C shareholders in 2015 of 4.5 pence per share, bringing total cumulative shareholder value to 95.27 pence per C share.
The net asset values have subsequently decreased to 31.11 pence per Ordinary share and increased to 80.14 pence per C share as at 31 May 2016.
Non Qualifying Portfolio
The Structured Products portfolio, managed by Investec Structured Products, performed well in both the Ordinary and C share portfolios returning 48.9% and 27.0% respectively. The final Structured Product in the Ordinary share portfolio matured in November 2015 and the Board were delighted to pay a special dividend and exceed the interim return target of returning 70 pence per Ordinary shareholders by 14 December 2015.
There is one final Structured Product based on the FTSE 100 Index in the C share portfolio that is due to mature in March 2017. At 29 February 2016, the FTSE 100 was trading at 6,097.09. This means that while the level of the FTSE 100 will change, if the Structured Products in the C share fund were to mature at this level, it would yield the maximum payoff for investors, increasing the overall return on the Structured Products on the C share portfolio to 36.5%
Your Board is pleased that the Structured Products portfolio has achieved its planned return for the Ordinary shares and we expect the Structured Products portfolio for the C shares to also meet its planned return.
Venture Capital Investments
Calculus Capital Limited manages the portfolio of VCT Qualifying Investments made by the Company.
The total return for the qualifying portfolio for the Ordinary shares is down 5.2% compared to original cost. In some respects, this is understandable as 'lemons' ripen before the 'plums'. We are hopeful that the portfolio will start to deliver positive returns going forward.
The total return for the qualifying holdings on the C shares is up 1.8% on original cost. That performance is after taking some write downs and we are hopeful that the portfolio will now start to deliver increasing returns.
During the year, Solab Group Limited ("Solab") (previously Hampshire Cosmetics) redeemed GBP150,000 of its loan stock at par and Venn Life Science Holdings plc ("Venn") was sold at a loss, both to raise funds to pay the July dividend on the Ordinary share portfolio. Hembuild Group Limited ("Hembuild") redeemed GBP125,000 of loan notes in May 2015 before the company entered administration in November 2015.
The C share fund sold its holding in Horizon Discovery plc ("Horizon") in September 2015, achieving a return of over 1.8x.
The qualifying portfolio on the Ordinary shares showed a decrease in value of 22.0 per cent in the year to 29 February 2016 on a like-for-like basis. Although AnTech Limited ("AnTech"), Metropolitan Safe Custody Limited ("Metropolitan"), Dryden Human Capital Group Limited ("Dryden"), Human Race Group Limited ("Human Race") and Solab saw an uplift in value, Brigantes Energy Limited ("Brigantes"), Corfe Energy Limited ("Corfe") and Terrain Energy Limited ("Terrain"), all in the oil and gas sector, lost just over GBP275,000 in aggregate in the year primarily as a result of the lower oil price. Hembuild was written down by GBP190,000 when it entered administration.
The qualifying portfolio on the C shares showed a decrease in value of 7.1 per cent in the year to 29 February 2016 on a like-for-like basis. Increased valuations on Solab, Human Race and Metropolitan were offset by the fall in Scancell Holdings plc's ("Scancell") share price. The Board remain confident about Scancell's long term prospects.
An analysis of the Qualifying Investments can be found in the Investment Manager's Review that follows this Statement.
D Share Issue and Merger
At the Extraordinary General Meetings in November 2015, shareholders approved the issue of up to GBP8 million of D shares by means of an offer for subscription. At the same meetings, shareholders approved mergers of the Ordinary and C Share classes into a single class with the D shares following realisation or liquidation of the Structured Products investments attributable to those classes. The directors anticipate that the Ordinary shares class will be merged into the D shares class on a relative net asset value basis in due course, potentially simultaneously with the merger of the C shares class into the D shares class. The merger of the C shares class into the D shares class will not occur until after the last Structured Product investment attributable to that class is realised or liquidated, which is expected with the maturity of the last such investment in March 2017.
The Board was pleased to announce that, in connection with the offer for subscription for D Ordinary shares of 1p each that opened on 26 October 2015, applications were received for in excess of the minimum requirement of GBP1 million for the offer to proceed in respect of the 2015/2016 and 2016/2017 tax years in aggregate. An allotment of 876,181 D shares in respect of the 2015/2016 tax year took place on 8 March 2016 at an average issue price of GBP1.0264 per share. A second allotment of 644,598 D shares in respect of 2015/2016 tax year took place on 4 April 2016 at an average issue price of GBP1.0333 per share. A third allotment of 291,305 D shares in respect of the 2016/2017 tax year took place on 3 May 2016 at an average issue price of GBP1.0333 per share.
Name change
In October 2015, the VCT changed its name from Investec Structured Products Calculus VCT plc to Calculus VCT plc to reflect the maturity of the final Structured Products on the Ordinary share portfolio and the change in investment policy on the D shares. There is one remaining Structured Product on the C share portfolio which is due to mature in March 2017.
Dividend
In line with our aim to provide a regular tax-free dividend stream, the Directors are pleased to announce a dividend of 4.5 pence per C share. Subject to shareholder approval, the dividends will be paid on 5 August 2016 to C shareholders on the register on 8 July 2016. This will take cumulative dividends paid to 22.50 pence per C share. The directors anticipate that, following the announcement of the company's interim results to 31 August 2016, a dividend equivalent to 4.5% of NAV will be paid to D shareholders. The timing and amount of the next dividend to Ordinary shareholders is dependent on any realisations of investments in the Ordinary share class portfolio or the timing of the merger of the Ordinary share class into the D share class.
Annual General Meeting
The Company's Annual General Meeting will be held at 11.00 am on Tuesday, 26 July 2016 at the offices of Calculus Capital Limited, 104 Park Street, London, W1K 6NF.
Changes to VCT tax legislation
Last year saw a series of regulatory changes which affect how VCTs can invest. It is no longer possible for VCTs to undertake management buyouts either as a purchase of equity or as a purchase of a company's trade and its assets. Subject to certain caveats, companies must also be under seven years old (ten years for knowledge intensive companies) to be eligible for investment and there is a lifetime investment limit on the amount any single company can receive of GBP12million (GBP20million for knowledge intensive companies). Other changes to the legislation that mean that new investment in reserve power businesses will no longer qualify and, from 6th April 2016, any new investment into the energy generation sector will also not qualify for relief. HMRC has also indicated that it will be more cautious about giving approval for companies that are clearly set up with the intention of not having a long term future, so called 'limited life' companies. These changes in the legislation have affected individual VCTs to differing extents. Investment for the purposes of growth and development, which is Calculus Capital Limited's core model, is, by and large, unaffected by the changes other than the prohibition on investment in companies older than seven years that have not previously raised tax advantaged funding within seven years of first commercial sale.
The recent budget statement introduced further changes to the rules governing non-qualifying investments for VCTs with effect from 6 April 2016. VCT's can now only invest in ordinary shares or securities in companies listed on a European regulated market and shares or units in an Alternative Investment Fund or Undertakings for Collective Investments in Transferable Securities that can be redeemed within 7 days. These changes are unlikely to affect the Ordinary or C share investors and will not affect the new D shares' core investment policy in respect of non-qualifying assets to invest in a variety of investments selected to preserve capital value, whilst generating income. However certain of the potential investments listed in the VCT's investment policy, such as investment directly or indirectly in ground rent assets, are either precluded or very unlikely to be possible following these changes. The Directors do not believe that these restrictions will materially affect the investment returns available to the VCT.
Outlook
The Company exceeded its target of returning 70 pence to each Ordinary shareholder by its interim return date of 14 December 2015. The C share portfolio continues to be invested in Structured Products and as long as the FTSE 100 remains above 5,247, the Company is on target to return the same amount to C shareholders by 14 March 2017.
As mentioned in the previous section, 2015 saw a number of changes affecting VCT legislation. Although the new legislation may affect some of our investment opportunities and brings greater complexity, the Board does not believe the changes will materially impact our ability to invest in UK growth companies. Whilst the general economic outlook may be uncertain for the UK in 2016 with continued uncertainty in the Eurozone, the Board believe the portfolios have considerable upside potential and we hope to see the qualifying portfolios recovering some lost value in the coming year.
Michael O'Higgins
Chairman
20 June 2016
Investment Manager's Review
(Qualifying Investments)
Calculus Capital Limited manages the portfolio of Qualifying Investments made by the Company. To maintain its qualifying status as a Venture Capital Trust, the Company needed to be greater than 70 per cent invested in Qualifying Investments by the end of the relevant third accounting period and to maintain it thereafter. At 29 February 2016, the qualifying percentage for the Company was 92.0 per cent.
During the year under review, the Company made no new Qualifying Investments. The qualifying portfolio showed a decrease in value of 17.0 per cent in the year to 29 February 2016 on a like-for-like basis.
Further detail on the qualifying investments can be found below.
AnTech - Ordinary share portfolio
AnTech is both a specialist engineering company manufacturing products for the oil and gas industry and an oil and gas services company providing directional coil drilling services. AnTech's Products Division supplies customised and standard products used mainly in production. Its Coil Tube Drilling Services Division has developed a new generation of directional drilling tools which transform the manner and efficiency with which oil and gas wells can be drilled with coiled tubing. These tools, COLT and POLARIS, are effective for interventions in existing wells to enhance production yield and extend well life, which is particularly attractive in a low oil price environment. The tools were used commercially in France in late 2014 and Ohio in 2015 with successful results. In early 2016, a significant Mid-Form Contract was signed with Saudi Aramco, the world's largest oil company, for drilling later this year and a further order has been secured for drilling in Ohio. In February 2016, funds managed by Calculus Capital Limited made a GBP2.35m investment in AnTech in order to provide working capital for the anticipated growth of the Services business.
Ordinary
Latest Audited Share C Share
Results 2015 2014 Fund Fund
(group) GBP'000 GBP'000 Investment Information GBP'000 GBP'000
----------------------- -------- -------- ----------------------- -------- --------
31 31
Year ended Aug Aug -
----------------------- -------- -------- ----------------------- -------- --------
Turnover 3,796 2,900 Total cost 270 -
----------------------- -------- -------- ----------------------- -------- --------
Income recognised
Pre-tax profit/(loss) 217 458 in year/period 13 -
----------------------- -------- -------- ----------------------- -------- --------
Net assets 6,130 5,898 Equity valuation 142 -
----------------------- -------- -------- ----------------------- -------- --------
Valuation basis: Last price paid Loan stock valuation 150 -
------------------------------------------- ----------------------- -------- --------
Total valuation 292 -
----------------------- -------- -------- ----------------------- -------- --------
Voting rights* 1.00% -
----------------------- -------- -------- ----------------------- -------- --------
* Other funds managed by Calculus Capital Limited have combined voting rights of 31.0 per cent.
Brigantes - Ordinary share portfolio
Brigantes and Corfe were originally intended as one investment, but were split because it enabled a larger fundraising under the then rules for tax advantaged investment schemes. Brigantes currently owns interests in the following licences: PL1/10 onshore Northern Ireland, P2123 offshore Northern Ireland, P1918 adjacent to Wytch Farm in Dorset and PEDL070 which contains the Avington oilfield in Hampshire. A first well on the PL1/10 licence targeting the Woodburn prospect was drilled in May/June 2016, but did not encounter any hydrocarbon accumulation - the data collected in the well is being evaluated to decide where to focus future exploration activity in the basin. A farm-in agreement has been signed on P1918 and the P1918 group has been awarded the neighbouring licences in the 14th Onshore licencing round.
Ordinary
Share C Share
Latest Audited 2015 2014 Fund Fund
Results GBP'000 GBP'000 Investment Information GBP'000 GBP'000
------------------------ -------- -------- ----------------------- -------- --------
31 31
Year ended Jul Jul
------------------------ -------- -------- ----------------------- -------- --------
Turnover 45 73 Total cost 127 -
------------------------ -------- -------- ----------------------- -------- --------
Income recognised
Pre-tax profit/(loss) (225) (266) in year/period - -
------------------------ -------- -------- ----------------------- -------- --------
Net assets 511 725 Equity valuation 108 -
------------------------ -------- -------- ----------------------- -------- --------
Valuation basis: Comparable companies,
discounted cash flow Loan stock valuation - -
-------------------------------------------- ----------------------- -------- --------
Total valuation 108 -
------------------------ -------- -------- ----------------------- -------- --------
Voting rights* 3.33% -
------------------------ -------- -------- ----------------------- -------- --------
* Other funds managed by Calculus Capital Limited have combined voting rights of 25.6 per cent.
Corfe - Ordinary share portfolio
Corfe has interests in five licences: Osprey, Lulworth Banks and Ballard Point (adjacent to Wytch Farm) in Dorset, Burton on the Wolds in the East Midlands and Avington oilfield in Hampshire. A farm-in agreement has been signed on P1918 and the P1918 group has been awarded the neighbouring licences in the 14th Onshore licencing round.
Ordinary
Share C Share
Latest Audited 2015 2014 Fund Fund
Results GBP'000 GBP'000 Investment Information GBP'000 GBP'000
------------------------ -------- -------- ----------------------- -------- --------
31 31
Year ended Jul Jul
------------------------ -------- -------- ----------------------- -------- --------
Turnover 45 73 Total cost 76 -
------------------------ -------- -------- ----------------------- -------- --------
Income recognised
Pre-tax profit/(loss) (413) (331) in year/period - -
------------------------ -------- -------- ----------------------- -------- --------
Net assets 1,403 1,445 Equity valuation 45 -
------------------------ -------- -------- ----------------------- -------- --------
Valuation basis: Comparable companies,
discounted cash flow Loan stock valuation - -
-------------------------------------------- ----------------------- -------- --------
Total valuation 45 -
------------------------ -------- -------- ----------------------- -------- --------
Voting rights* 2.0% -
------------------------ -------- -------- ----------------------- -------- --------
* Other funds managed by Calculus Capital Limited have combined voting rights of 27.3 per cent.
Dryden - Ordinary share portfolio
Dryden is headquartered in the UK and specialises in the actuarial, insurance and compliance recruitment sector. In the last year, the company has made significant progress in implementing new systems and working processes thereby delivering operational improvement. Trading for the financial year to 31 March 2016 was ahead of last year's performance. The company will continue to invest in efficiency improving systems, processes and training, and recruit new high performing recruitment consultants who are aligned with management's strategy of growth and continuous performance improvement.
Ordinary
Latest Audited Share C Share
Results 2015 2014 Fund Fund
(group) GBP'000 GBP'000 Investment Information GBP'000 GBP'000
----------------------------- -------- -------- ----------------------- -------- --------
31 31
Year ended Mar Mar
----------------------------- -------- -------- ----------------------- -------- --------
Turnover 4,034 3,905 Total cost 100 -
----------------------------- -------- -------- ----------------------- -------- --------
Income recognised
Pre-tax profit/(loss) (1,113) (1,683) in year/period - -
----------------------------- -------- -------- ----------------------- -------- --------
Net assets/(liabilities)(1) 1,729 (3,984) Equity valuation 7 -
----------------------------- -------- -------- ----------------------- -------- --------
Valuation basis: Sales multiple Loan stock valuation - -
------------------------------------------------- ----------------------- -------- --------
Total valuation 7 -
----------------------------- -------- -------- ----------------------- -------- --------
Voting rights* 0.25% -
----------------------------- -------- -------- ----------------------- -------- --------
*Other funds managed by Calculus Capital Limited have combined voting rights of 1.9 per cent.
Human Race - Ordinary and C share portfolio
Human Race owns and operates over 60 events for over 90,000 participants of all abilities and ages. This makes the business the largest owner and deliverer of mass participation events in the UK. The portfolio includes the London Winter Run, Windsor Triathlon, Wiggle Dragon Ride, Run or Dye series, Tour de Yorkshire Ride (alongside ASO - owners of the Tour de France), the Eton Triathlon Super Sprints, Kingston Breakfast Run, and an off road winter series. The London Winter Run was the largest inaugural 10k run ever in the UK with 14,000 entries in the first year. A roll out of the Winter Run concept is now planned throughout the UK with events having taken place in Liverpool and Manchester. In addition, an exciting partnership is being forged with ASO with a venture alongside the Tour de Yorkshire (a pro ride over 3 days) and the acquisition of a smaller established sportive called the Lionheart Ride.
Ordinary
Share C Share
Latest Results 2015* 2014 Fund Fund
(group) GBP'000 GBP'000 Investment Information GBP'000 GBP'000
----------------------- -------- -------- ----------------------- -------- --------
31 31
Year ended Dec Dec - -
----------------------- -------- -------- ----------------------- -------- --------
Turnover 4,431 2,870 Total cost 300 150
----------------------- -------- -------- ----------------------- -------- --------
Income recognised
Pre-tax profit/(loss) (421) (479) in year/period 26 13
----------------------- -------- -------- ----------------------- -------- --------
Net assets 1,333 1,329 Equity valuation 110 55
----------------------- -------- -------- ----------------------- -------- --------
Valuation basis: Comparable
companies & transaction Loan stock valuation 200 100
------------------------------------------- ----------------------- -------- --------
Total valuation 310 155
----------------------- -------- -------- ----------------------- -------- --------
Voting rights 1.93% 0.97%
----------------------- -------- -------- ----------------------- -------- --------
*Unaudited
Other funds managed by Calculus Capital Limited have combined voting rights of 38.7 per cent.
Metropolitan - Ordinary and C share portfolio
Metropolitan runs two safe custody sites, one in Knightsbridge, the other in St. Johns Wood. These profitable, stable businesses serve several thousand customers, providing access to the vaults seven days a week. Since investment, Metropolitan has undergone an extensive refurbishment programme which should be completed by 2017. Thereafter capital expenditure will principally be incurred to increase capacity. The Company is paying down debt and distributing surplus cash by way of dividends. Additional opportunities are being considered to expand the brand's reach further and grow sales.
Ordinary
Share C Share
Latest Audited 2015 2014 Fund Fund
Results GBP'000 GBP'000 Investment Information GBP'000 GBP'000
------------------ --------- --------- ----------------------- -------- --------
30 30
Year ended Jun Jun
------------------ --------- --------- ----------------------- -------- --------
Turnover 1,970 1,700 Total cost 90 40
------------------ --------- --------- ----------------------- -------- --------
Income recognised
Pre-tax profit 200 200 in year/period 2 1
------------------ --------- --------- ----------------------- -------- --------
Net assets 3,800 3,600 Equity valuation 155 69
------------------ --------- --------- ----------------------- -------- --------
Valuation basis: Earnings multiple Loan stock valuation - -
---------------------------------------- ----------------------- -------- --------
Total valuation 155 69
------------------ --------- --------- ----------------------- -------- --------
Voting rights* 2.23% 0.99%
------------------ --------- --------- ----------------------- -------- --------
* Other funds managed by Calculus Capital Limited have combined voting rights of 38.9 per cent.
MicroEnergy Generation Services Limited ("MicroEnergy") - Ordinary share portfolio
Following the acquisition of an additional 15 turbines with an effective date of 1st April 2015, MicroEnergy owns and operates a fleet of 168 small onshore wind turbines (<5kW) installed on farm land in East Anglia and Yorkshire. Revenues come from two sources, both of which are inflation protected, being directly linked to RPI. Firstly, there is the Government backed feed-in tariff (FIT) paid by the electricity suppliers for every kilowatt of electricity generated for twenty years. Secondly, there is an export tariff for any surplus electricity not used by the site owner that is exported to the grid. Annual generation to 31 March 2016 is ahead of last year at 820,000kWh equating to GBP259,000.
Ordinary
Share C Share
Latest Audited 2015 2014 Fund Fund
Results GBP'000 GBP'000 Investment Information GBP'000 GBP'000
----------------------- -------- -------- ----------------------- -------- --------
31 31
Year ended Mar Mar
----------------------- -------- -------- ----------------------- -------- --------
Turnover 173 212 Total cost 150 -
----------------------- -------- -------- ----------------------- -------- --------
Income recognised
Pre-tax profit/(loss) (31) (25) in year/period - -
----------------------- -------- -------- ----------------------- -------- --------
Net assets 2,683 2,714 Equity valuation 132 -
----------------------- -------- -------- ----------------------- -------- --------
Valuation basis: Discounted cash
flow Loan stock valuation - -
------------------------------------------- ----------------------- -------- --------
Total valuation 132 -
----------------------- -------- -------- ----------------------- -------- --------
Voting rights* 5.12% -
----------------------- -------- -------- ----------------------- -------- --------
*Other funds managed by Calculus Capital Limited have combined voting rights of 5.8 per cent.
Pico's Limited ("Benito's Hat") - C share portfolio
Benito's Hat (trading name of Pico's Limited) is a Mexican-themed restaurant brand centred on an authentic experience and high-quality food, at an affordable price point. Offering tailor-made burritos, tacos and salads, the brand has a devoted customer following and has won many accolades from food critics. 'Like-for-like' financial performance of the 'core estate' (continuing sites that have been operating for over a year) has improved. The Company closed certain sites which underperformed against budget. There is significant competition for new sites within the M25 and the Company is maintaining a high level of vigilance in ongoing site selection.
The Company will look to raise further funds in the future to continue its expansion program of new site openings and is in ongoing discussions with a number debt providers.
Ordinary
Latest Audited Share C Share
Results 2015 2014 Fund Fund
(group) GBP'000 GBP'000 Investment Information GBP'000 GBP'000
----------------------- -------- -------- ----------------------- -------- --------
26 27
Year ended Jul Jul - -
----------------------- -------- -------- ----------------------- -------- --------
Turnover 4,740 3,385 Total cost - 50
----------------------- -------- -------- ----------------------- -------- --------
Income recognised
Pre-tax profit/(loss) (548) (661) in year/period - -
----------------------- -------- -------- ----------------------- -------- --------
Net assets 2,424 2,972 Equity valuation - 58
----------------------- -------- -------- ----------------------- -------- --------
Valuation basis: Comparable companies
& transactions Loan stock valuation - -
------------------------------------------- ----------------------- -------- --------
Total valuation - 58
----------------------- -------- -------- ----------------------- -------- --------
Voting rights* - 0.92%
----------------------- -------- -------- ----------------------- -------- --------
* Other funds managed by Calculus Capital Limited have combined voting rights of 38.2 per cent.
Quai Administration Services Limited ("Quai") - C share portfolio
Quai provides platform technology combined with back office administration services for the high-volume personal savings industry. Quai's platform administers thousands of individual savings plans at a fraction of the cost incurred by established insurance companies and wealth managers. Mass distribution of individual savings plans is pressurising providers to offer efficient, high-volume, low-margin schemes. Quai has progressed well, with five live customers on its platform, three soon to go live and three more expected to sign contracts in the coming weeks. Financial performance in the year to October 2015 was the same as the prior year as revenue conversion was slower than anticipated. Recent wins have targeted clients with large books of assets under management. In February 2016, Calculus Capital Limited participated in a further funding round alongside members of the Quai board and other private individuals, to accelerate development of the Company's technology platform and expand the sales and marketing teams.
Ordinary
Share C Share
Latest Unaudited 2015* 2014 Fund Fund
Results (group) GBP'000 GBP'000 Investment Information GBP'000 GBP'000
-------------------------- -------- -------- ----------------------- -------- --------
31 31
Year ended Oct Oct - -
-------------------------- -------- -------- ----------------------- -------- --------
Turnover 698 721 Total cost - 150
-------------------------- -------- -------- ----------------------- -------- --------
Income recognised
Pre-tax loss (1,747) (1,791) in year/period - -
-------------------------- -------- -------- ----------------------- -------- --------
Net assets/(liabilities) (227) 194 Equity valuation - 150
-------------------------- -------- -------- ----------------------- -------- --------
Valuation basis: Last price paid Loan stock valuation - -
---------------------------------------------- ----------------------- -------- --------
Total valuation - 150
-------------------------- -------- -------- ----------------------- -------- --------
Voting rights - 2.10%
-------------------------- -------- -------- ----------------------- -------- --------
*Unaudited
Scancell - C share portfolio
Scancell is a clinical stage immunotherapy company. The company has two vaccine platform technologies: SCIB1 for melanoma entered clinical trials in June 2010; MODI-1 is targeted to enter clinical trials in advanced breast and ovarian cancer in 2017. The company believes the Moditope platform could play a major role in cancer immunotherapies. Encouraging survival data on patients treated with SCIB1, combined with the laboratory data showing the potential value of a SCIB1/checkpoint inhibitor combination, has set the stage for an expanded clinical trial programme in melanoma in 2017. The trial will be led by leading US melanoma specialists at Massachusetts General Hospital, Harvard Medical School, MD Anderson, Memorial Sloan Kettering and the Division of Medical Oncology at University of Colorado. The aim is to demonstrate improved response compared to anti-PD-1 monotherapy without additional toxicity.
Since the year end, Scancell has raised funds through a firm placement and an open offer, raising GBP3.4m and GBP3.8m, respectively. The funds will be used to prepare for further clinical studies on both SCIB1 and Moditope(R).
The D share portfolio has invested GBP50,000 in Scancell since the year end.
Ordinary
Share C Share
Latest Unaudited 2015 2014 Fund Fund
Results GBP'000 GBP'000 Investment Information GBP'000 GBP'000
----------------------- -------- -------- ----------------------- -------- --------
30 30
Year ended Apr Apr
----------------------- -------- -------- ----------------------- -------- --------
Turnover - - Total cost - 100
----------------------- -------- -------- ----------------------- -------- --------
Income recognised
Pre-tax profit/(loss) (2,828) (2,468) in year/period - -
----------------------- -------- -------- ----------------------- -------- --------
Net assets 6,754 9,077 Equity valuation - 78
----------------------- -------- -------- ----------------------- -------- --------
Valuation basis: Bid price Loan stock valuation - -
------------------------------------------- ----------------------- -------- --------
Total valuation - 78
----------------------- -------- -------- ----------------------- -------- --------
Voting rights* - 0.20%
----------------------- -------- -------- ----------------------- -------- --------
* As at 20 June 2016, the D shares held 0.1% of the voting rights. Other funds managed by Calculus Capital Limited have combined voting rights of 18.5 per cent.
Solab (formerly Hampshire Cosmetics) - Ordinary and C share portfolio
Solab is a long established manufacturer of fragrances, shampoos and skincare products for customers, including L'Oreal and Penhaligon. More recently it has been broadening its activities, particularly into animal care products. The cosmetics business has been affected by significant reduction in volumes from the The Body Shop. This is due to a decision to in-source manufacturing to French factories to maintain employment there following The Body Shop's acquisition by L'Oreal. New business has only partially replaced lost turnover but is expected to be fully recovered in 2017. Revenues from animal care and veterinary have increased substantially with profitability anticipated in 2016.
Ordinary
Share C Share
Latest Unaudited 2015* 2014 Fund Fund
Results (group) GBP'000 GBP'000 Investment Information GBP'000 GBP'000
------------------------ -------- -------- ----------------------- -------- --------
31 31
Year ended Dec Dec
------------------------ -------- -------- ----------------------- -------- --------
Turnover 22,477 26,021 Total cost 100 150
------------------------ -------- -------- ----------------------- -------- --------
Income recognised
Pre-tax profit/(loss) (317) 181 in year/period 3 8
------------------------ -------- -------- ----------------------- -------- --------
Net assets 2,510 2,691 Equity valuation 153 62
------------------------ -------- -------- ----------------------- -------- --------
Valuation basis: Comparable companies,
comparable transactions & DCF Loan stock valuation - 100
-------------------------------------------- ----------------------- -------- --------
Total valuation 153 162
------------------------ -------- -------- ----------------------- -------- --------
Voting rights* 4.45% 1.81%
------------------------ -------- -------- ----------------------- -------- --------
*Unaudited
*Other funds managed by Calculus Capital Limited have combined voting rights of 1.23 per cent.
Terrain - Ordinary and C share portfolio
Terrain has taken advantage of attractive prices in the current market and has recently completed the acquisition of interests in the Whisby and Lidsey licences and increased its interest in Keddington. It has also been awarded Louth in the 14th Licensing Round. Terrain now has interests in twelve petroleum licences; Keddington, Kirklington, Dukes Wood, Burton on the Wolds, Whisby and Louth in the East Midlands, Larne and an offshore licence to the north of Larne in Northern Ireland, Brockham and Lidsey in the Weald Basin and Egmating and Starnberger See in Germany. The company is currently producing from wells at Brockham and Lidsey. A sidetrack at Keddington was drilled in February 2016 encountering some 60m of oil bearing sands which is due to be completed and tested in Q2 2016. New wells at Larne, Whisby and Lidsey as well as a sidetrack at Brockham are due to be drilled in 2016. In February 2016, Terrain completed a GBP1m funding round to provide capital for its licence commitments.
Ordinary
Share C Share
Latest Audited 2014 2013 Fund Fund
Results GBP'000 GBP'000 Investment Information GBP'000 GBP'000
----------------------- -------- -------- ----------------------- -------- --------
31 31
Year ended Dec Dec
----------------------- -------- -------- ----------------------- -------- --------
Turnover 212 237 Total cost 100 50
----------------------- -------- -------- ----------------------- -------- --------
Income recognised
Pre-tax profit/(loss) (635) (768) in year/period - -
----------------------- -------- -------- ----------------------- -------- --------
Net assets 6,617 7,168 Equity valuation 144 67
----------------------- -------- -------- ----------------------- -------- --------
Valuation basis: Last price paid Loan stock valuation - -
------------------------------------------- ----------------------- -------- --------
Total valuation 144 67
----------------------- -------- -------- ----------------------- -------- --------
Voting rights 1.15% 0.53%
----------------------- -------- -------- ----------------------- -------- --------
*Other funds managed by Calculus Capital Limited have combined voting rights of 8.91 per cent.
The One Place Capital Limited ("Money Dashboard") - C share portfolio
Money Dashboard (the trading name of The One Place Capital Limited) empowers consumers to take control of their finances. By using Money Dashboard consumers are able to view all of their internet enabled current accounts, savings accounts and credit cards in one secure place, providing the true view of their financial lives. Calculus Capital Limited invested in Money Dashboard in November 2013. Since investment the Company has achieved a number of milestones. User numbers have grown and the Company now has over 100,000 registered users; a mobile application has been launched, a 'productised' version of the data insights offering has been developed and branded "TrueView" and sales of TrueView data contracts are gaining traction with financial institutions.
Revenue growth has been slower than was anticipated, leading to further investments by Calculus Capital Limited funds in July 2014 and July 2015.
Ordinary
Share C Share
Latest Results 2015* 2014 Fund Fund
(group) GBP'000 GBP'000 Investment Information GBP'000 GBP'000
-------------------------- -------- -------- ----------------------- -------- --------
30 30
Year ended Apr Apr
-------------------------- -------- -------- ----------------------- -------- --------
Turnover 219 18 Total cost - 127
-------------------------- -------- -------- ----------------------- -------- --------
Income recognised
Pre-tax profit/(loss) (2,446) (1,662) in year/period - -
-------------------------- -------- -------- ----------------------- -------- --------
Net assets/(liabilities) 478 484 Equity valuation - 127
-------------------------- -------- -------- ----------------------- -------- --------
Valuation basis: Last price paid Loan stock valuation - -
---------------------------------------------- ----------------------- -------- --------
Total valuation - 127
-------------------------- -------- -------- ----------------------- -------- --------
Voting rights* - 1.28%
-------------------------- -------- -------- ----------------------- -------- --------
*Unaudited
*Other funds managed by Calculus Capital Limited have combined voting rights of 41.3 per cent.
Tollan Energy Limited ("Tollan") - Ordinary share portfolio
Tollan owns a portfolio of solar systems on roof tops in Northern Ireland. The solar generating capacity, which is installed on residential and some commercial roofs in the Belfast area, benefits from Northern Ireland Renewable Obligation Certificates (NIROCs). In addition, the company benefits from the export tariff for any surplus electricity not used by the homeowner that is exported to the grid. The portfolio is now fully installed and comprises 334 systems (1.55MW). The systems have demonstrated stable generation levels of 978,000 kWh in the year to 31 March 2016 (974,000 kWh in 2015).
Ordinary
Share C Share
Latest Unaudited 2015 2014 Fund Fund
Results GBP'000 GBP'000 Investment Information GBP'000 GBP'000
----------------------- -------- -------- ----------------------- -------- --------
31 31
Year ended Mar Mar*
----------------------- -------- -------- ----------------------- -------- --------
Turnover 174 23 Total cost 150 -
----------------------- -------- -------- ----------------------- -------- --------
Income recognised
Pre-tax profit/(loss) 9 (155) in year/period - -
----------------------- -------- -------- ----------------------- -------- --------
Net assets 2,205 2,195 Equity valuation 146 -
----------------------- -------- -------- ----------------------- -------- --------
Valuation basis: Discounted cash
flow
*December 2012 to March 2014 Loan stock valuation - -
------------------------------------------- ----------------------- -------- --------
Total valuation 146 -
----------------------- -------- -------- ----------------------- -------- --------
Voting rights 6.38% -
----------------------- -------- -------- ----------------------- -------- --------
Venn - C share portfolio
Venn's is consolidating a number of small European Contract Research Organisations (CRO) to build a mid-sized CRO focused on the European market, offering clients a full service, multi-centred capability in Phase II-IV trials across a range of principal disease areas. In October the company announced the signing of an international contract, worth 1m Euros and covering multiple regions including France, the UK and the US. The Phase I-II project will centre on acute T-cell leukaemia, and follows a previously successful trial with the same company. In early 2016 the company announced that it expected full-year revenues for 2015 to be at least double the 4.1m Euros delivered in 2014. This strong performance has been delivered through success in winning contracts, facilitated by international expansion. Recently, Venn secured contracts worth 3.4m Euros, in an extension of its existing phase-II program with a leading US-based biotechnology firm. The company is now generating free cash flows.
The strong financial results announced at the close of 2015, along with the recent contract wins, should filter through to the share price, which has remained relatively flat the past year.
Ordinary
Share C Share
Latest Unaudited 2015 2014 Fund Fund
Results E'000 E'000 Investment Information GBP'000 GBP'000
----------------------- ------- -------- ----------------------- -------- --------
Year ended 31-Dec 31-Dec
----------------------- ------- -------- ----------------------- -------- --------
Turnover 11,474 4,883 Total cost - 80
----------------------- ------- -------- ----------------------- -------- --------
Income recognised
Pre-tax profit/(loss) (327) (1,829) in year/period - -
----------------------- ------- -------- ----------------------- -------- --------
Net assets 10,233 1,802 Equity valuation - 51
----------------------- ------- -------- ----------------------- -------- --------
Valuation basis: Bid price Loan stock valuation - -
------------------------------------------ ----------------------- -------- --------
Total valuation - 51
----------------------- ------- -------- ----------------------- -------- --------
Voting rights - 0.4%
----------------------- ------- -------- ----------------------- -------- --------
*Other funds managed by Calculus Capital Limited have combined voting rights of 7.4 per cent.
Developments since the year end
On 5 April 2016, an investment of GBP50,000 was made in Scancell on behalf of the D share fund. Also in the D share portfolio, GBP326,000 has been invested in each of three money market funds with Fidelity Institutional Liquidity Fund, Aberdeen Sterling Liquidity Fund and Goldman Sachs Sterling Liquidity Fund.
Other than as disclosed above there have been no developments since the year end.
Calculus Capital Limited
20 June 2016
Investment Manager's Review
(Structured Products)
Our non-Qualifying Investments are managed by Investec Structured Products. As at the date of this report, the Company held one remaining Structured Product in the C share fund based on the FTSE 100 Index.
In line with the Company's strategy set out in the original offer documents, part of the initial cash raised was used to build a portfolio of Structured Products. The portfolio of Structured Products was constructed with different issuers and differing maturity periods to minimise risk and create a diversified portfolio. The majority of this portfolio has now reached full term and paid a positive return, with all products which have reached full term paying their maximum return. The recent changes are listed below.
In the Ordinary share fund, the remaining Investec product matured on 19 November 2015, the proceeds of which were used to pay the special interim dividend.
The C share fund retains one product in its portfolio, which is due to mature in 2017; the strike of this is 5,246.99.
The continued strong performance of the FTSE 100 has supported valuations in the Structured Products portfolio. The FTSE 100 has remained above all of the products' strike levels. As at 29 February 2016, the FTSE 100 was at 6,097.09. Over the past year, 5 year swap rates have decreased and volatility has remained low, as the UK economic recovery continues to be slow as a whole.
No new investments were made in Structured Products during the period.
The Structured Products will achieve their target return subject to the Final Index Level of the FTSE 100 being higher than the Initial Index Level. The capital is at risk on a one-for-one basis ("CAR") if the FTSE 100 Index falls more than 50 per cent at any time during the investment term and fails to fully recover at maturity such that the Final Index Level is below the Initial Index Level. As at 29 February 2016, the following investments had been made in Structured Products:
Ordinary Share Fund:
Matured/sold
FTSE
100 Initial
Index Maturity Return/Capital
Strike Level Notional Purchase Price at Date/Date at Risk
Issuer Date at Maturity Investment Price Maturity/Sale Sold (CAR)
---------------------- ---------- ------------ ----------- -------- ----------------- ---------- --------------
125.1%
if FTSE
100 higher*;
CAR if
FTSE
100 falls
more
HSBC Bank Returned than
plc 01/07/2010 4,805.75 GBP500,000 GBP1.00 GBP1.2510 06/07/2012 50%
---------------------- ---------- ------------ ----------- -------- ----------------- ---------- --------------
Autocallable
10.5%
p.a.;
CAR if
FTSE
The Royal 100 falls
Bank of more
Scotland Returned than
plc 18/03/2011 5,718.13 GBP50,000 GBP1.00 GBP1.1050 19/03/2012 50%
---------------------- ---------- ------------ ----------- -------- ----------------- ---------- --------------
137%
if FTSE
100 higher*;
CAR if
FTSE
100 falls
more
Nomura than
Bank International** 28/05/2010 5,188.43 GBP350,000 GBP0.98 Sold at GBP1.2625 30/03/2012 50%
---------------------- ---------- ------------ ----------- -------- ----------------- ---------- --------------
134%
if FTSE
100 higher*;
CAR if
FTSE
100 falls
Morgan more
Stanley than
International 10/06/2010 5,132.50 GBP500,000 GBP1.00 Sold at GBP1.3224 31/10/2012 50%
---------------------- ---------- ------------ ----------- -------- ----------------- ---------- --------------
126%
if FTSE
100 higher*;
CAR if
FTSE
Abbey 100 falls
National more
Treasury than
Services 03/08/2011 5,584.51 GBP50,000 GBP1.00 Sold at GBP1.1900 21/06/2013 50%
---------------------- ---------- ------------ ----------- -------- ----------------- ---------- --------------
162.5%
if FTSE
100 higher*;
CAR if
FTSE
The Royal 100 falls
Bank of more
Scotland Sold at than
plc 05/05/2010 5,341.93 GBP275,000 GBP0.96 GBP1.6057 06/11/2014 50%
---------------------- ---------- ------------ ----------- -------- ----------------- ---------- --------------
185%
if FTSE
100 higher*;
CAR if
FTSE
Abbey 100 falls
National more
Treasury Sold at than
Services 25/05/2010 4,940.68 GBP350,000 GBP0.99 GBP1.7920 06/11/2014 50%
---------------------- ---------- ------------ ----------- -------- ----------------- ---------- --------------
185%
if FTSE
100 higher*;
CAR if
FTSE
100 falls
Investec more
Bank Returned than
plc 14/05/2010 5,262.85 GBP500,000 GBP0.98 GBP1.817466 19/11/2015 50%
---------------------- ---------- ------------ ----------- -------- ----------------- ---------- --------------
C Share Fund:
FTSE
100 Initial Price as Return/Capital
Strike Index Notional Purchase at 29 February Maturity at Risk
Issuer Date Level Investment Price 2016 Date (CAR)
--------- ---------- ------------ ----------- -------- --------------- ---------- --------------
182%
if FTSE
100 higher*;
CAR if
FTSE
100 falls
Investec more
Bank than
plc 05/08/2011 5,246.99 GBP328,000 GBP1.00 GBP1.582387 10/03/2017 50%
--------- ---------- ------------ ----------- -------- --------------- ---------- --------------
Matured
FTSE
100 Initial
Index Return/Capital
Strike Level Notional Purchase Price at Maturity at Risk
Issuer Date at Maturity Investment Price Maturity Date (CAR)
---------------------- ---------- ------------ ----------- --------- ---------- ---------- --------------
Autocallable
10.5%
p.a.;
CAR if
FTSE
The Royal 100 falls
Bank of more
Scotland Returned than
plc 18/03/2011 5,718.13 GBP200,000 GBP1.00 GBP1.1050 19/03/2012 50%
---------------------- ---------- ------------ ----------- --------- ---------- ---------- --------------
137%
if FTSE
100 higher*;
CAR if
FTSE
100 falls
more
Nomura Returned than
Bank International** 28/05/2010 5,188.43 GBP350,000 GBP1.2625 GBP1.3700 20/02/2013 50%
---------------------- ---------- ------------ ----------- --------- ---------- ---------- --------------
126%
if FTSE
100 higher*;
CAR if
FTSE
Abbey 100 falls
National more
Treasury Returned than
Services 03/08/2011 5,584.51 GBP200,000 GBP1.00 GBP1.2600 05/02/2014 50%
---------------------- ---------- ------------ ----------- --------- ---------- ---------- --------------
The total valuation of the amount invested in Structured Products in the C share fund as at 29 February 2016 was GBP519,023.
* The Final Index Level is calculated using 'averaging', meaning that the average of the closing levels of the FTSE 100 is taken on each Business Day over the last 2-6 months of the Structured Product plan term (the length of the averaging period differs for each plan). The use of averaging to calculate the return can reduce adverse effects of a falling market or sudden market falls shortly before maturity. Equally, it can reduce the benefits of an increasing market or sudden market rises shortly before maturity.
** The Nomura Structured Product was sold prior to maturity with a return on initial investment of 28.8 per cent. This was sold to the C share fund.
Investec Structured Products
20 June 2016
Investment Portfolio - Top Ten Holdings
as at 29 February 2016
Ordinary Share Fund
Book
Cost Valuation % of
Company GBP'000 GBP'000 Portfolio
--------------------------------------- -------- --------- ----------
Unquoted equity investments
Metropolitan Safe Custody Limited 90 155 10.4%
Solab Group Limited 100 153 10.3%
Tollan Energy Limited 150 145 9.7%
Terrain Energy Limited 100 144 9.7%
AnTech Limited 120 142 9.5%
MicroEnergy Generation Services
Limited 150 132 8.8%
Human Race Group Limited 100 110 7.4%
Brigantes Energy Limited* 127 108 7.2%
Corfe Energy Limited* 76 45 3.0%
Dryden Human Capital Group
Limited 100 7 0.5%
--------------------------------------- -------- --------- ----------
Other unquoted equity investments 105 - -%
--------------------------------------- -------- --------- ----------
Unquoted loan notes
AnTech Limited 150 150 10.1%
Human Race Group Limited 200 200 13.4%
Other unquoted loan notes 202 - -%
--------------------------------------- -------- --------- ----------
Non-qualifying equity investments* (3) (1) (0.1)%
--------------------------------------- -------- --------- ----------
Total unquoted qualifying investments 1,767 1,490 99.9%
--------------------------------------- -------- --------- ----------
Non-qualifying investments
--------------------------------------- -------- --------- ----------
Aberdeen Sterling Liquidity
Fund 1 1 0.1%
Non-qualifying equity investments* 3 1 0.1%
--------------------------------------- -------- --------- ----------
Total non-qualifying 4 2 0.1%
--------------------------------------- -------- --------- ----------
Total investments 1,771 1,492 100.0%
--------------------------------------- -------- --------- ----------
*The valuations of certain investments include small purchases made which are non-qualifying investments.
C Share Fund
Book
Cost Valuation % of
Company GBP'000 GBP'000 Portfolio
----------------------------------- -------- --------- ----------
Quoted equity investment
Scancell Holdings plc 100 78 5.4%
Venn Life Sciences plc 80 51 3.6%
Unquoted equity investments
Quai Administration Services
Limited 150 150 10.4%
The One Place Capital Group
Limited 127 127 8.8%
Metropolitan Safe Custody Limited 40 69 4.8%
Terrain Energy Limited 50 67 4.7%
Solab Group Limited 50 62 4.3%
Pico's Limited 50 58 4.0%
Human Race Group Limited 50 55 3.8%
Other unquoted equity investments 24 - -%
----------------------------------- -------- --------- ----------
Unquoted loan notes
Solab Group Limited 100 100 7.0%
Human Race Group Limited 100 100 7.0%
Other unquoted loan notes 39 - -%
----------------------------------- -------- --------- ----------
Total qualifying investments 960 917 63.8%
----------------------------------- -------- --------- ----------
Non-qualifying investments
----------------------------------- -------- --------- ----------
Structured products
----------------------------------- -------- --------- ----------
Investec Bank structured product 328 519 36.1%
Other non-qualifying investments 1 1 0.1%
----------------------------------- -------- --------- ----------
Total non-qualifying 329 520 36.2%
----------------------------------- -------- --------- ----------
Total investments 1,289 1,437 100.0%
----------------------------------- -------- --------- ----------
Other Statutory Information
Company activities and status
The Company is registered as a public limited company and incorporated in England and Wales with registration number 07142153. Its shares have a premium listing and are traded on the London Stock Exchange.
On incorporation, the Company was an investment company under section 833 of the Companies Act 2006. On 18 May 2011, investment company status was revoked by the Company. This was done in order to allow the Company to pay dividends to shareholders using the special reserve (a distributable capital reserve), which had been created on the cancellation of the share premium account on 20 October 2010.
Company business model
The Company's business model is to conduct business as a VCT. Company affairs are conducted in a manner to satisfy the conditions to enable it to obtain approval as a VCT under sections 258-332 of the Income Tax Act 2007 ("ITA 2007").
Investment policy
Shareholders voted in favour for a change in investment policy at the Extraordinary General Meeting in November 2015. The principal change of investment policy is to increase the options for non-qualifying investments.
It is intended that a minimum of 75 per cent of the monies raised by the Company will be invested within 60 days in a variety of investments which will be selected to preserve capital value, whilst generating income, and may include:
-- Bonds issued by the UK Government
-- Fixed income securities issued by major companies and institutions, liquidity funds and fixed deposits with counterparty credit rating of not less that A minus (Standard & Poor's rate)/A3 (Moody's rated); and
-- Investments directly or indirectly in ground rent assets
As mentioned in the Chairman's Statement, recent legislative changes have since prohibited investment in ground rent funds.
The Company's policy is to build a diverse portfolio of Qualifying Investments of primarily established unquoted companies across different industries and investments which may be by way of loan stock and/or fixed rate preference shares as well as ordinary shares to generate income. The amount invested in anyone sector and anyone company will be no more than 20 per cent and 10 per cent respectively of the qualifying portfolio. These percentages are measured as at the time of investment. The Board and its Managers, Calculus Capital Limited, will review the portfolio of investments on a regular basis to assess asset allocation and the need to realise investments to meet the Company's objectives or maintain VCT status.
Where investment opportunities arise in one asset class which conflict with assets held or opportunities in another asset class, the Board will make the investment decision. Under its Articles, the Company has the ability to borrow a maximum amount equal to 25 per cent of the aggregate amount paid on all shares issued by the Company (together with any share premium thereon). The Board will consider borrowing if it is in the shareholders' interests to do so. In particular, because the Board intends to minimise cash balances, the Company may borrow on a short-term to medium-term basis for cashflow purposes and to facilitate the payment of dividends and expenses in the early years.
Alternative investments funds directive (AIFMD)
The AIFMD regulates the management of alternative investment funds, including VCTs. The VCT is externally managed under the AIFMD by Calculus Capital Limited which is a small authorised Alternative Investment Fund Manager.
Risk diversification
The Board controls the overall risk of the Company. Calculus Capital Limited will ensure the Company has exposure to a diversified range of Venture Capital Investments from different sectors. Investec Structured Products ensured the Company had exposure to a diversified range of Structured Products but there is now just one remaining Structured Product in the C share portfolio. The Board believes that investment in these two asset classes provides further diversification.
Since November 2015, the types of non-qualifying investment include:
-- Bonds issued by the UK Government; and
-- Fixed income securities issued by major companies and institutions, liquidity funds and fixed deposits with counterparty credit rating of not less that A minus (Standard & Poor's rate)/A3 (Moody's rated).
The board believe this change will provide further diversification.
VCT regulation
The Company's investment policy is designed to ensure that it will meet, and continue to meet, the requirements for approved VCT status from HM Revenue & Customs. Amongst other conditions, the Company may not invest more than 15 per cent (by value at the time of investment) of its investments in a single company and must have at least 70 per cent by value of its investments throughout the period in shares or securities in qualifying holdings, of which 30 per cent by value must be ordinary shares which carry no preferential rights ("eligible shares"). For funds raised from 6 April 2011, the requirement for 30 per cent to be invested in eligible shares was increased to 70 per cent.
Key strategic issues considered during the year
Performance
The Board reviews performance by reference to a number of key performance indicators ("KPIs") and considers that the most relevant KPIs are those that communicate the financial performance and strength of the Company as a whole, being;
-- total return per share -- net asset value per share -- share price and discount/premium to net asset value
The financial highlights of the Company can be found on the contents page of the Report and Accounts.
Further KPIs are those which show the Company's position in relation to the VCT tests which it is required to meet in order to meet and maintain its VCT status. A summary of these tests are set out below. The Company has received approval as a VCT from HM Revenue & Customs.
Principal risks and uncertainties facing the Company and management of risk
The Company is exposed to a variety of risks. The principal financial risks, the Company's policies for managing these risks and the policy and practice with regard to financial instruments are summarised in note 16 to the Accounts.
The Board has also identified the following additional risks and uncertainties:
- Regulatory risk
The Company has received approval as a VCT under ITA 2007. Failure to meet and maintain the qualifying requirements for VCT status could result in the loss of tax reliefs previously obtained, resulting in adverse tax consequences for investors, including a requirement to repay the income tax relief obtained, and could also cause the Company to lose its exemption from corporation tax on chargeable gains.
The Board receives regular updates from the Managers and financial information is produced on a monthly basis. The Manager monitors VCT regulation and presents its findings to the Board on a quarterly basis. The Managers build in 'headroom' when making investments to allow for changes in valuation. This 'headroom' is reviewed prior to making and realising qualifying investments.
The Board has appointed an independent adviser to monitor and advise on the Company's compliance with the VCT rules.
- Venture capital investments
There are restrictions regarding the type of companies in which the Company may invest and there is no guarantee that suitable investment opportunities will be identified.
Investment in unquoted companies and AIM-traded companies involves a higher degree of risk than investment in companies traded on the main market of the London Stock Exchange. These companies may not be freely marketable and realisations of such investments can be difficult and can take a considerable amount of time. There may also be constraints imposed upon the Company with respect to realisations in order to maintain its VCT status which may restrict the Company's ability to obtain the maximum value from its investments.
Calculus Capital Limited has been appointed to manage the Qualifying Investments portfolio, and has extensive experience of investing in this type of investment. Regular reports are provided to the Board and a representative of Calculus Capital Limited is on the Company's board. Risk is managed through the investment policy which limits the amount that can be invested in any one company and sector to 10 per cent and 20 per cent of the qualifying portfolio respectively at the time of investment.
- Structured products
Structured products are subject to market fluctuations and the C share portfolio may not realise the full return from the final structured product in the event of a long-term decline of the FTSE 100 index. Investec Structured Products has been appointed to manage the structured products portfolio for its expertise in these types of financial products. Restrictions have been agreed with Investec Structured Products relating to approved counterparties and maximum exposure to any one counterparty.
- Liquidity/marketability risk
Due to the holding period required to maintain up-front tax reliefs, there is a limited secondary market for VCT shares and investors may therefore find it difficult to realise their investments. As a result, the market price of the shares may not fully reflect, and will tend to be at a discount to, the underlying net asset value. The level of discount may also be exacerbated by the availability of income tax relief on the issue of new VCT shares. The Board recognises this difficulty, and has taken powers to buy back shares, which could be used to enable investors to realise investments.
Employees, environmental, human rights and community issues
The Company has no employees and the Board comprises entirely non-executive Directors. Day-to-day management of the Company's business is delegated to the Investment Managers (details of the respective management agreements are set out in the Directors' Report) and the Company itself has no environmental, human rights, or community policies. In carrying out its activities and in its relationships with suppliers, the Company aims to conduct itself responsibly, ethically and fairly.
Gender Diversity
The Board of Directors comprised three male Directors and one female Director during, and at the end of, the year to 29 February 2016.
Statement regarding annual report and accounts
The Directors consider that taken as a whole, the Annual Report and Accounts is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.
On behalf of the Board
Michael O'Higgins
Chairman
20 June 2016
Board of Directors
Michael O'Higgins (Chairman)*
Kate Cornish-Bowden (Audit Committee Chairman)*
John Glencross
Steve Meeks*
*independent of the Investment Managers
Investment Managers
Calculus Capital
Calculus Capital Limited is the Venture Capital Investments portfolio manager
(VCT Qualifying Investments).
Investec Structured Products
Investec Structured Products (a trading name of Investec Bank plc) is the
Structured Products portfolio manager (non VCT Qualifying Investments).
Extract from the Directors' Report
Corporate Governance
The Board is accountable to shareholders for the governance of the Company's affairs and is committed to maintaining high standards of corporate governance and to the principles of good governance as set out in the UK Corporate Governance Code (the "Code") issued by the Financial Reporting Council ("FRC") in September 2014, a copy of which can be found at www.frc.org.uk.
Pursuant to the Listing Rules of the Financial Conduct Authority, the Company is required to provide shareholders with a statement on how the main and supporting principles set out in the Code have been applied and whether the Company has complied with the provisions of the Code. The Board has established corporate governance arrangements that it believes are appropriate to the business of the Company as a venture capital trust. The Board has reviewed the Code, and considers that it has complied throughout the period, except as disclosed below:
-- Directors are not appointed for a specified term as all Directors are non-executive and the Articles of Association require that all Directors retire by rotation at Annual General Meetings of the Company.
-- In light of the responsibilities retained by the Board and its Committees and the responsibilities delegated to the Investment Managers, the Administrator, the Registrars and legal advisers, the Company has not appointed a chief executive officer, deputy chairman or senior independent director.
-- Given the structure of the Company and the Board, the Board does not believe it necessary to appoint separate remuneration or nomination committees, and the roles and responsibilities normally reserved for these committees will be a matter for the full Board.
-- The Company does not have an internal audit function as all of the Company's management functions are performed by third parties whose internal controls are reviewed by the Board. However, the need for an internal audit function will be reviewed annually.
A full statement on Corporate Governance and the Company's compliance with the UK Corporate Governance Code can be found at
http://www.calculuscapital.com/cms/media/Investec_RA2015_Corporate-Governance-Secured-for-Website-pp.pdf
A report from the Audit Committee can be found on page 25 of the Report and Accounts.
Dividend
Details of the C share dividend recommended by the Board are set out in the Strategic Report on page 2 of the Accounts.
Share Capital
The capital structure of the company is set out in note 12 of the Accounts. At the year end, no shares were held in Treasury. No shares were issued or bought back during the year. As mentioned in the Strategic Report, the Company issued 1,812,084 D shares after the year end.
Management
Calculus Capital Limited is the Venture Capital Investments' portfolio manager (VCT Qualifying Investments). Calculus Capital Limited was appointed as Investment Manager pursuant to an agreement dated 2 March 2010, a supplemental agreement was entered into on 7 January 2011 in relation to the management of the C Share Fund and a further supplemental agreement entered into on 26 October 2015 in relation to the management of the D share fund and covers the addition of company secretarial duties (together, the "Calculus Management Agreements"). Pursuant to the Calculus Management Agreements, Calculus Capital Limited has agreed to meet the annual expenses of the Company in excess of 3.0 per cent of the aggregate gross amounts raised under the Ordinary share and C share offers, and 3.4 per cent of the aggregate gross amounts raised on the D share offer, all from 14 December 2015.
Pursuant to the Calculus Management Agreements, Calculus Capital Limited will receive an annual management fee of 1 per cent of the net asset value of the Ordinary Share Fund and C Share Fund, and 1.75 per cent of the net asset value of the D Share Fund, calculated and payable quarterly in arrears.
Calculus Capital Limited is also entitled to a fee of GBP15,000 per annum with effect from 1 February 2016 for the provision of company secretarial services.
For the year to 29 February 2016, Calculus Capital Limited waived GBP10,521 of its fees (2015: nil).
Investec Structured Products was appointed as Investment Manager pursuant to an agreement dated 2 March 2010, and a supplemental agreement was entered into on 7 January 2011 in relation to the management of the C Share Fund (together, the "Investec Management Agreements"). Investec Structured Products does not receive a fee in relation to its appointment under these agreements, although it is entitled to receive a one off commission equal to 0.75 per cent of the amount invested in any Structured Product (excluding those issued by Investec). Pursuant to the Investec Management Agreements, Investec Structured Products had agreed to meet the annual expenses of the Company in excess of 3.0 per cent of the aggregate gross amounts raised under the ordinary share and C share offers until the interim return date of 14 December 2015.
Investec Structured Products' appointment as Investment Manager shall terminate in March 2017 on maturity of the final Structured Product in the C share portfolio.
A Performance Incentive Agreement between the Company, Calculus Capital Limited and Investec Structured Products dated 2 March 2010 in relation to the Ordinary Share Fund has been signed. Investec Structured Products and Calculus Capital Limited will each receive a performance incentive fee payable in cash of an amount equal to 10 per cent of dividends and distributions paid to ordinary shareholders following the payment of such dividends and distributions provided that shareholders have received in aggregate distributions of at least 105p per ordinary share (including the relevant distribution being offered).
A Performance Incentive Agreement between the Company, Calculus Capital Limited and Investec Structured Products dated 7 January 2011 in relation to the C Share Fund has also been signed pursuant to which Investec Structured Products and Calculus Capital Limited will be entitled to performance incentive fees as set out below:
-- 10 per cent of C Shareholder Proceeds in excess of 105p up to and including Proceeds of 115p per C share, such amount to be paid within ten business days of the date of payment of the relevant dividend or distribution pursuant to which a return of 115p per C share is satisfied; and
-- 10 per cent of C Shareholder Proceeds in excess of 115p per C share, such amounts to be paid within ten business days of the date of payment of the relevant dividend or distribution,
provided in each case that C shareholders have received or been offered the C Share Interim Return of at least 70p per C share on or before 14 March 2017 and at least a further 45p per C share having being received or offered for payment on or before the 14 March 2019. In addition, performance incentive fees in respect of the C Share Fund will only be payable in respect of dividends and distributions paid or offered on or before 14 March 2019.
Continuing Appointment of the Investment Managers
The Board keeps the performance of the Investment Managers under continual review. A formal review of their performance and the terms of their engagement has been carried out and the Board are of the opinion that the continuing appointment of Calculus Capital Limited and Investec Structured Products as Investment Managers is in the interests of shareholders as a whole. The Board is satisfied with the performance of the Company to date. Performance of the Structured Products portfolio is very satisfactory, exceeding initial expectations, and the principal benefits of the Qualifying Investments will accrue in later years. The Board is confident that the VCT qualifying tests will continue to be met.
Financial Risk Management
The principal financial risks and the Company's policies for managing these risks are set out in note 16 to the Accounts.
Going Concern
In assessing the going concern basis of accounting, the directors have had regard to the guidance issued by the Financial Reporting Council. After making enquiries, and having reviewed the portfolio, balance sheet and projected income and expenditure for the next twelve months, the directors have a reasonable expectation that the Company has adequate resources to continue in operation for the foreseeable future. The Directors have therefore adopted the going concern basis in preparing the Accounts.
Long term viability
In assessing the long term viability of the company, the directors have had regard to the guidance issued by the Financial Reporting Council. The Directors have assessed the prospects of the Company for a period of three years, which was selected because the Company's strategic review covers a three-year period. The Board's three-year strategic review considers the Company's income and expenses, dividend policy, liquid investments and ability to make realisations of qualifying investments. These projections are subject to sensitivity analysis which involves flexing a number of the main assumptions underlying the forecast both individually and in unison. Where appropriate, this analysis is carried out to evaluate the potential impact of the Company's principal risks actually occurring. Based on the results of this analysis, the directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the three-year period of their assessment. The principal assumptions used are as follows: i) Calculus Capital Limited pays any expenses in excess of 3.0 per cent of the aggregate gross amounts raised under the Ordinary and C share offers and 3.4 per cent of the aggregate gross amounts raised on the D share offer, all from 14 December 2015, as set out on page 22 of the Accounts; ii) the level of dividends paid are at the discretion of the Board; iii) the Company's liquid investments which include cash, money market instruments and quoted shares can be realised as permitted by the Company's investment policy; iv) the illiquid nature of the qualifying portfolio. Based on the results of this analysis, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due.
In making this statement the Board carried out a robust assessment of the principal risks facing the Company including those that might threaten its business model, future performance, solvency or liquidity.
The full Annual Report and Accounts contains the following statement regarding responsibility for the Accounts.
Directors' Responsibilities Statement
Statement of Directors' Responsibilities in respect of the Annual Report and the Accounts
The Directors are responsible for preparing the Annual Report and the Accounts in accordance with applicable law and regulations.
Company law requires the Directors to prepare Accounts for each financial year. Under that law they have elected to prepare the Accounts in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable laws). Under company law the Directors must not approve the Accounts unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the Company for that period.
In preparing these Accounts, the Directors are required to:
-- select suitable accounting policies and then apply them consistently; -- make judgments and accounting 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 Accounts; and
-- prepare the Accounts on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Accounts comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations, and for ensuring that the Annual Report includes information required by the Listing Rules of the Financial Conduct Authority.
The Accounts are published on the www.calculuscapital.com website, which is a website maintained by one of the Company's investment managers, Calculus Capital Limited. The maintenance and integrity of the website maintained by Calculus Capital Limited is, so far as it relates to the Company, the responsibility of Calculus Capital Limited. The work carried out by the Auditor does not involve consideration of the maintenance and integrity of this website and accordingly, the Auditor accepts no responsibility for any changes that have occurred to the Accounts since they were initially presented on the website. Visitors to the website need to be aware that legislation in the United Kingdom covering the preparation and dissemination of the Accounts may differ from legislation in their jurisdiction.
We confirm that to the best of our knowledge:
-- the Accounts, prepared in accordance with UK accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
-- the Annual Report includes a fair review of the development and performance of the business and the position of the Company together with a description of the principal risks and uncertainties that it faces.
On behalf of the Board
Michael O'Higgins
Chairman
20 June 2016
NON-STATUTORY ACCOUNTS
The financial information set out below does not constitute the Company's statutory accounts for the year ended 29 February 2016 and the year ended 28 February 2015 but is derived from those accounts. Statutory accounts for 2015 have been delivered to the Registrar of Companies, and those for 2016 will be delivered in due course. The Auditor has reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report and (ii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditor's report can be found in the Company's full Annual Report and Accounts at www.calculuscapital.com.
Income Statement
for the year ended 29 February 2016
Year Ended 29 Year Ended 28
February 2016 February 2015
---------------------------- ---------------------------- ----------------------------
Revenue Capital Revenue Capital
Return Return Total Return Return Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ---- -------- -------- -------- -------- -------- --------
Ordinary Share
Fund
Losses on
investments
at fair value 9 - (572) (572) - (443) (443)
Gain on disposal
of investments 9 - 283 283 - 459 459
Income 3 54 - 54 64 - 64
Investment
management
fee 4 (7) (22) (29) (10) (32) (42)
Other expenses 5 (120) - (120) (111) - (111)
---------------------- ---- -------- -------- -------- -------- -------- --------
Deficit on
ordinary activities
before taxation (73) (311) (384) (57) (16) (73)
---------------------- ---- -------- -------- -------- -------- -------- --------
Taxation on
ordinary activities 6 - - - - - -
---------------------- ---- -------- -------- -------- -------- -------- --------
Deficit attributable
to Ordinary
shareholders (73) (311) (384) (57) (16) (73)
---------------------- ---- -------- -------- -------- -------- -------- --------
Deficit per
Ordinary share 8 (1.5)p (6.6)p (8.1)p (1.2)p (0.3)p (1.5)p
---------------------- ---- -------- -------- -------- -------- -------- --------
C Share Fund
(Losses)/gains
on investments
at fair value 9 - (87) (87) - 98 98
Loss on disposal
of investments 9 - (35) (35) - (1) (1)
Investment
income 3 22 - 22 25 - 25
Investment
management
fee 4 (4) (12) (16) (4) (13) (17)
Other expenses 5 (45) - (45) (44) - (44)
---------------------- ---- -------- -------- -------- -------- -------- --------
Deficit on
ordinary activities
before taxation (27) (134) (161) (23) 84 61
---------------------- ---- -------- -------- -------- -------- -------- --------
Taxation on
ordinary activities 6 - - - - - -
---------------------- ---- -------- -------- -------- -------- -------- --------
(Deficit)/return
attributable
to C shareholders (27) (134) (161) (23) 84 61
---------------------- ---- -------- -------- -------- -------- -------- --------
(Deficit)/return
per C share 8 (1.4)p (6.9)p (8.3)p (1.2)p 4.3p 3.1p
---------------------- ---- -------- -------- -------- -------- -------- --------
Year Ended 29 Year Ended 28
February 2016 February 2015
---------------------------- ---------------------------- ----------------------------
Revenue Capital Revenue Capital
Return Return Total Return Return Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ---- -------- -------- -------- -------- -------- --------
Total
Losses on
investments
at fair value 9 - (659) (659) - (345) (345)
Gain on disposal
of investments 9 - 248 248 - 458 458
Investment
income 3 76 - 76 89 - 89
Investment
management
fee 4 (11) (34) (45) (14) (45) (59)
Other expenses 5 (165) - (165) (155) - (155)
---------------------- ---- -------- -------- -------- -------- -------- --------
(Deficit)/return
on ordinary
activities
before taxation (100) (445) (545) (80) 68 (12)
---------------------- ---- -------- -------- -------- -------- -------- --------
Taxation on
ordinary activities 6 - - - - - -
---------------------- ---- -------- -------- -------- -------- -------- --------
(Deficit)/return
attributable
to shareholders (100) (445) (545) (80) 68 (12)
---------------------- ---- -------- -------- -------- -------- -------- --------
Deficit per
Ordinary share 8 (1.5)p (6.6)p (8.1)p (1.2)p (0.3)p (1.5)p
---------------------- ---- -------- -------- -------- -------- -------- --------
(Deficit)/return
per C share 8 (1.4)p (6.9)p (8.3)p (1.2)p 4.3p 3.1p
---------------------- ---- -------- -------- -------- -------- -------- --------
The total column of these statements on the previous page represents the Income Statement of the Ordinary share fund and C Share Fund. The total column of this statement represents the Company's Income Statement.
The revenue and capital return columns are both prepared in accordance with the AIC SORP.
All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year.
There is no other comprehensive income as there were no other gains or losses other than those passing through the Income Statement.
The notes of pages 44 to 66 form an integral part of these Accounts.
Statement of Changes in Equity
for the year ended 29 February 2016
Capital Capital
Share Special Reserve Reserve Revenue
Capital Reserve Realised Unrealised Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- --------- ----------- -------- --------
Ordinary Share Fund
For the year ended
29 February 2016
1 March 2015 47 2,438 700 293 (330) 3,148
Investment holding
losses - - - (572) - (572)
Gain on disposal
of investments - - 283 - - 283
Management fee allocated
to capital - - (22) - - (22)
Change in accrual
in IFA Commission - 4 - - - 4
Revenue return on
ordinary activities
after tax - - - - (73) (73)
Dividends paid - (1,282) - - - (1,282)
-------------------------- -------- -------- --------- ----------- -------- --------
29 February 2016 47 1,160 961 (279) (403) 1,486
-------------------------- -------- -------- --------- ----------- -------- --------
For the year ended
28 February 2015
1 March 2014 47 3,729 273 736 (273) 4,512
Investment holding
losses - - - (443) - (443)
Gain on disposal
of investments - - 459 - - 459
Management fee allocated
to capital - - (32) - - (32)
Revenue return on
ordinary activities
after tax - - - - (57) (57)
Dividends paid - (1,291) - - - (1,291)
-------------------------- -------- -------- --------- ----------- -------- --------
28 February 2015 47 2,438 700 293 (330) 3,148
-------------------------- -------- -------- --------- ----------- -------- --------
C Share Fund
For the year ended
29 February 2016
1 March 2015 19 1,541 72 235 (128) 1,739
Investment holding
losses - - - (87) - (87)
Loss on disposal
of investments - - (35) - - (35)
Management fee allocated
to capital - - (12) - - (12)
Change in accrual
in IFA Commission - 1 - - - 1
Revenue return on
ordinary activities
after tax - - - - (27) (27)
Dividends paid - (87) - - - (87)
-------------------------- -------- -------- --------- ----------- -------- --------
29 February 2016 19 1,455 25 148 (155) 1,492
-------------------------- -------- -------- --------- ----------- -------- --------
For the year ended
28 February 2015
1 March 2014 19 1,628 86 137 (105) 1,765
Investment holding
gains - - - 98 - 98
Loss on disposal
of investments - - (1) - - (1)
Management fee allocated
to capital - - (13) - - (13)
Revenue return on
ordinary activities
after tax - - - - (23) (23)
Dividends paid - (87) - - - (87)
-------------------------- -------- -------- --------- ----------- -------- --------
28 February 2015 19 1,541 72 235 (128) 1,739
-------------------------- -------- -------- --------- ----------- -------- --------
Capital Capital
Share Special Reserve Reserve Revenue
Capital Reserve Realised Unrealised Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- --------- ----------- -------- --------
Total
For the year ended
29 February 2016
1 March 2015 66 3,979 772 528 (458) 4,887
Investment holding
losses - - - (659) - (659)
Gain on disposal
of investments - - 248 - - 248
Management fee allocated
to capital - - (34) - - (34)
Change in accrual
in IFA Commission - 5 - - - 5
Revenue return on
ordinary activities
after tax - - - - (100) (100)
Dividends paid - (1,369) - - - (1,369)
-------------------------- -------- -------- --------- ----------- -------- --------
29 February 2016 66 2,615 986 (131) (558) 2,978
-------------------------- -------- -------- --------- ----------- -------- --------
For the year ended
28 February 2015
1 March 2014 66 5,357 359 873 (378) 6,277
Investment holding
losses - - - (345) - (345)
Gain on disposal
of investments - - 458 - - 458
Management fee allocated
to capital - - (45) - - (45)
Revenue return on
ordinary activities
after tax - - - - (80) (80)
Dividends paid - (1,378) - - - (1,378)
-------------------------- -------- -------- --------- ----------- -------- --------
28 February 2015 66 3,979 772 528 (458) 4,887
-------------------------- -------- -------- --------- ----------- -------- --------
The notes on pages 44 to 66 an integral part of these Accounts.
Statement of Financial Position
at 29 February 2016
29 February 28 February
2016 2015
Note GBP'000 GBP'000
----------------------------------- ---- ----------- -----------
Ordinary Shares
Fixed assets
Investments at fair value through
profit and loss 9 1,492 3,061
----------------------------------- ---- ----------- -----------
Current assets
Debtors 10 37 62
Cash at bank and on deposit 6 107
----------------------------------- ---- ----------- -----------
Creditors: amount falling due
within one year
Creditors 11 (49) (82)
----------------------------------- ---- ----------- -----------
Net current (liabilities)/assets (6) 87
----------------------------------- ---- ----------- -----------
Non-current liabilities
IFA trail commission - -
----------------------------------- ---- ----------- -----------
Net assets 1,486 3,148
----------------------------------- ---- ----------- -----------
Capital and reserves
Called-up share capital 12 47 47
Special reserve 1,160 2,438
Capital reserve - realised 961 700
Capital reserve - unrealised (279) 293
Revenue reserve (403) (330)
----------------------------------- ---- ----------- -----------
Equity shareholders' funds 1,486 3,148
----------------------------------- ---- ----------- -----------
Net asset value per ordinary
share - basic 13 31.4p 66.4p
----------------------------------- ---- ----------- -----------
29 February 28 February
2016 2015
Note GBP'000 GBP'000
----------------------------------- ---- ----------- -----------
C Shares
Fixed assets
Investments at fair value through
profit and loss 9 1,437 1,649
----------------------------------- ---- ----------- -----------
Current assets
Debtors 10 48 26
Cash at bank and on deposit 43 103
----------------------------------- ---- ----------- -----------
Creditors: amount falling due
within one year
Creditors 11 (36) (36)
----------------------------------- ---- ----------- -----------
Net current assets 55 93
----------------------------------- ---- ----------- -----------
Non-current liabilities
IFA trail commission - (3)
----------------------------------- ---- ----------- -----------
Net assets 1,492 1,739
----------------------------------- ---- ----------- -----------
Capital and reserves
Called-up share capital 12 19 19
Special reserve 1,455 1,541
Capital reserve - realised 25 72
Capital reserve - unrealised 148 235
Revenue reserve (155) (128)
----------------------------------- ---- ----------- -----------
Equity shareholders' funds 1,492 1,739
----------------------------------- ---- ----------- -----------
Net asset value per C share
- basic 13 77.3p 90.1p
----------------------------------- ---- ----------- -----------
29 February 28 February
2016 2015
Note GBP'000 GBP'000
----------------------------------- ---- ----------- -----------
Total
Fixed assets
Investments at fair value through
profit and loss 9 2,929 4,710
----------------------------------- ---- ----------- -----------
Current assets
Debtors 10 85 88
Cash at bank and on deposit 49 210
----------------------------------- ---- ----------- -----------
Creditors: amount falling due
within one year
Creditors 11 (85) (118)
----------------------------------- ---- ----------- -----------
Net current assets 49 180
----------------------------------- ---- ----------- -----------
Non-current liabilities
----------------------------------- ---- ----------- -----------
IFA trail commission - (3)
----------------------------------- ---- ----------- -----------
Net assets 2,978 4,887
----------------------------------- ---- ----------- -----------
Capital and reserves
Called-up share capital 12 66 66
Special reserve 2,615 3,979
Capital reserve - realised 986 772
Capital reserve - unrealised (131) 528
Revenue reserve (558) (458)
----------------------------------- ---- ----------- -----------
Equity shareholders' funds 2,978 4,887
----------------------------------- ---- ----------- -----------
Net asset value per ordinary
share - basic 13 31.4p 66.4p
----------------------------------- ---- ----------- -----------
Net asset value per C share
- basic 13 77.3p 90.1p
----------------------------------- ---- ----------- -----------
The notes on pages 44 to 66 form an integral part of these Accounts.
The financial statements on pages 35 to 66 were approved by the Board of directors of Calculus VCT plc and were authorised for issue on 20 June 2016 and were signed on its behalf by:
Michael O'Higgins
Chairman
Registered No. 07142153 England & Wales
Statement of Cashflows
for the year ended 29 February 2016
Ordinary Fund C Share Fund
------------------------------ ---- -------------------------- --------------------------
Year Year Year Year
Ended Ended Ended Ended
29 February 28 February 29 February 28 February
2016 2015 2016 2015
Note GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ---- ------------ ------------ ------------ ------------
Cash flows from operating
activities
Investment income
received 54 70 21 27
Investment management
fees (41) (79) (21) (22)
Other cash payments (112) (99) (63) (40)
------------------------------ ---- ------------ ------------ ------------ ------------
Net cash flow from
operating activities 14 (99) (108) (63) (35)
------------------------------ ---- ------------ ------------ ------------ ------------
Cash flow from investing
activities
Purchase of investments - (3) - -
Sale of investments 1,280 1,531 90 95
------------------------------ ---- ------------ ------------ ------------ ------------
Net cash flow from
investing activities 1,280 1,528 90 95
Cash flow from financing
activities
Equity dividend paid (1,282) (1,291) (87) (87)
------------------------------ ---- ------------ ------------ ------------ ------------
Net cash flow from
financing activities (1,282) (1,291) (87) (87)
------------------------------ ---- ------------ ------------ ------------ ------------
(Decrease)/increase
in cash and cash
equivalents (101) 129 (60) (27)
------------------------------ ---- ------------ ------------ ------------ ------------
Analysis of changes
in cash and cash
equivalents
------------------------------ ---- ------------ ------------ ------------ ------------
Cash and cash equivalents
at the beginning
of year 107 (22) 103 130
Net cash (decrease)/increase (101) 129 (60) (27)
Cash and cash equivalents
at the year end 6 107 43 103
------------------------------ ---- ------------ ------------ ------------ ------------
Total
------------------------------------- ---- --------------------------
Year Ended Year Ended
29 February 28 February
2016 2015
Note GBP'000 GBP'000
------------------------------------- ---- ------------ ------------
Cash flows from operating
activities
Investment income received 75 97
Investment management fees (62) (101)
Other cash payments (175) (139)
------------------------------------- ---- ------------ ------------
Cash flow from operating activities 14 (162) (143)
------------------------------------- ---- ------------ ------------
Cash flow from investing activities
Purchase of investments - (3)
Sale of investments 1,370 1,626
------------------------------------- ---- ------------ ------------
Net cash flow from investing
activities 1,370 1,623
Cash flow from financing activities
Equity dividend paid (1,369) (1,378)
------------------------------------- ---- ------------ ------------
Net cash flow from financing
activities (1,369) (1,378)
------------------------------------- ---- ------------ ------------
(Decrease)/increase in cash
and cash equivalents (161) 102
------------------------------------- ---- ------------ ------------
Analysis of changes in cash
and cash equivalents
------------------------------------- ---- ------------ ------------
Cash and cash equivalents
at the beginning of year 210 108
------------------------------------- ---- ------------ ------------
Net cash (decrease)/increase (161) 102
Cash and cash equivalents
at the year end 49 210
------------------------------------- ---- ------------ ------------
The notes on pages 44 to 66 form an integral part of these Accounts.
Notes to the Accounts
1. Company information
The Company is incorporated in England and Wales and operates under the Companies Act 2006 (the Act) and the regulations made under the Act as a public company limited by shares, with registered number 07142153. The registered office of the Company is 104 Park Street, London, W1K 6NF.
2. Accounting Policies
Basis of accounting
The financial statements have been prepared on a basis compliant with applicable United Kingdom accounting standards, including Financial Reporting Standard 102 - The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland ('FRS102') and with the Act. The financial statements have been prepared on the historical cost basis except for the modification to a fair value basis for certain financial Instruments as specified in the accounting policies below. The Directors have prepared the financial statements on a basis compliant with the recommendations of the Statement of Recommended Practice November 2014 ("the SORP") for Investment Trust Companies and Venture Capital Trusts produced by the Association of Investment Companies ("AIC").
This is the first year in which the financial statements have been prepared under FRS102. However there are no changes to any prior year balances.
The adoption of FRS 102 has introduced some presentational changes. The statement of cash flows now refers to cash or cash equivalents.
The financial statements are presented in Sterling (GBP).
Expenses are allocated between the Ordinary share fund and the C share fund on the basis of the ratio of the net asset value of the previous month unless the expense is attributable in full to one of the funds.
The Ordinary Share Fund and C Share Fund share bank accounts. Each funds' share of the bank accounts is based on actual receipts and payments. These cash flows are allocated according to the accounting policy for income and expenses respectively.
Going concern
After reviewing the Company's forecasts and projections, the Directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The Company therefore continues to adopt the going concern basis in preparing its financial statements.
Significant judgements and estimates
Preparations of the financial statements requires management to make significant judgements and estimates. The items in the financial statements where these judgements and estimates have been made are in the valuation of unquoted investments. The valuation methodologies used when valuing unquoted investments provide a range of possible values. Judgments are used to estimate where in the range the fair value lies. The sensitivity analysis in note 16 demonstrates the impact on the portfolio of applying alternative values in the upside and downside.
As at 29 February 2016 the value of unquoted investments included within the Company's investment portfolio was GBP1,491,739 (2015: GBP2,063,403) for the Ordinary portfolio and GBP787,981 (2015: GBP792,143) on the C share portfolio. These investments are valued in accordance with the accounting policy disclosed under note 9 investments.
Investments
The Company has adopted FRS 102 sections 11 and 12 for the recognition of financial instruments. The Company's business is investing in financial assets with a view to profiting from their total return in the form of increases in fair value. Fair value is the amount for which an asset can be exchanged between knowledgeable, willing parties in an arm's length transaction. The Company manages and evaluates the performance of these investments on a fair value basis in accordance with its investment strategy, and information about the investments is provided on this basis to the Board of directors.
Investments held at fair value through profit or loss are initially recognised at fair value, being the consideration given and excluding transaction or other dealing costs associated with the investment, which are expensed and included in the capital column of the Income Statement.
After initial recognition, investments, which are classified as at fair value through profit or loss, are measured at fair value. Gains or losses on investments classified as at fair value through profit or loss are recognised in the capital column of the Income Statement, and allocated to the capital reserve - unrealised or realised as appropriate.
Aggregate transaction and dealing costs included in disposals and additions are disclosed in note 9 to the financial statements, as recommended by the SORP. All purchases and sales of quoted investments are accounted for on the trade date basis. All purchases and sales of unquoted investments are accounted for on the date that the sale and purchase agreement becomes unconditional.
For quoted investments and money market instruments fair value is established by reference to bid, or last, market prices depending on the convention of the exchange on which the investment is quoted at the close of business on the balance sheet date.
Structured Products are valued by reference to the FTSE 100 Index, with mid prices for the Structured Products provided by the product issuers. An adjustment is made to these prices to take into account any bid/offer spreads prevalent in the market at each valuation date. These spreads are either determined by the issuer or recommended by the Structured Products Manager, Investec Structured Products (a trading name of Investec Bank plc).
Unquoted investments are valued using an appropriate valuation technique so as to establish what the transaction price would have been at the balance sheet date. Such investments are valued in accordance with the International Private Equity and Venture Capital ("IPEVC") guidelines. Primary indicators of fair value are derived from earnings or sales multiples, using discounted cash flows, recent arm's length market transactions by independent third parties, from net assets, or where appropriate, at price of recent investments.
Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents does not include liquidity fund investments as the Company does not consider the risk associated with changes in value to be insignificant.
Debtors
Short term debtors are measured at transaction price, less any impairment.
Creditors
Short term trade creditors are measured at the transaction price.
Income
Dividends receivable on equity shares are recognised as revenue on the date on which the shares or units are marked as ex-dividend. Where no ex-dividend date is available, the revenue is recognised when the Company's right to receive it has been established.
Interest receivable from fixed income securities and premiums on loan stock investments and preference shares is recognised using the effective interest rate method. Interest receivable and redemption premiums are allocated to the revenue column of the Income Statement.
Interest receivable on bank deposits is included in the financial statements on an accruals basis. Provision is made against this income where recovery is doubtful.
Other income is credited to the revenue column of the Income Statement when the Company's right to receive the income is established.
Expenses
All expenses are accounted for on an accruals basis. Expenses are charged to the Income Statement as follows:
Expenses are charged through revenue in the Income Statement except as follows:
-- costs which are incidental to the acquisition or disposal of an investment are taken to the capital column of the Income Statement.
-- expenses are charged to the capital column in the Income Statement where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect investment management fees have been allocated 75 per cent to the capital column and 25 per cent to the revenue column in the Income Statement, being in line with the Board's expected long-term split of returns, in the form of capital gains and revenue respectively, from the investment portfolio of the Company.
-- expenses associated with the issue of shares are deducted from the share premium account. Annual IFA trail commission covering a five year period since share allotment has been provided for in the Accounts as, due to the nature of the Company, it is probable that this will be payable. The commission is apportioned between current and non-current liabilities.
Expenses incurred by the Company in excess of the agreed cap, currently 3 per cent of the gross amount raised from the offer for subscription of ordinary shares and C shares respectively for the 2009/2010, 2010/2011 and 2011/2012 tax years (excluding irrecoverable VAT, annual trail commission and performance incentive fees), could be clawed back from Investec Structured Products until 14 December 2015 and Calculus Capital Limited thereafter. Any clawback is treated as a credit against the expenses of the Company. Any future expenses incurred by the D shares above the cap of 3.4% of the gross amount raised for the D share fund can be clawed back from Calculus Capital Limited.
Capital reserve
The realised capital return component of the return for the year is taken to the distributable capital reserves and the unrealised capital component of the return for the year is taken to the non-distributable capital reserves within the Statement of Changes in Equity.
Special reserve
The special reserve was created by the cancellation of the Ordinary share fund's share premium account on 20 October 2010. A further cancellation of the share premium account occurred on 23 November 2011 for both the Ordinary share fund and C share fund. The special reserve is a distributable reserve created to be used by the Company inter alia to write off losses, fund market purchases of its own ordinary and C shares, make distributions and/or for other corporate purposes.
The Company was formerly an investment company under section 833 of the Companies Act 2006. On 18 May 2011, investment company status was revoked by the Company. This was done in order to allow the Company to pay dividends to shareholders using the special reserve.
Taxation
Deferred tax must be recognised in respect of all timing differences that have originated but not reversed at the reporting date where transactions or events that result in an obligation to pay more tax in the future have occurred at the reporting date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversals of the underlying timing differences can be deducted. Timing differences are differences between the Company's taxable profits and its results as stated in the financial statements.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis.
No taxation liability arises on gains from sales of fixed asset investments by the Company by virtue of its venture capital trust status. However, the net revenue (excluding UK dividend income) accruing to the Company is liable to corporation tax at the prevailing rates.
Any tax relief obtained in respect of management fees allocated to capital is reflected in the capital reserve - realised and a corresponding amount is charged against revenue. The relief is the amount by which corporation tax payable is reduced as a result of capital expenses.
Dividends
Dividends to shareholders are accounted for in the period in which they are paid or approved in general meetings. Dividends payable to equity shareholders are recognised in the Statement of Changes in Equity when they are paid, or have been approved by shareholders in the case of a final dividend and become a liability of the Company.
Share buybacks
Where shares are purchased for cancellation, the consideration paid, including any directly attributable incremental costs, is deducted from distributable reserves. As required by the Companies Act 2006, the equivalent of the nominal value of shares cancelled is transferred to capital redemption reserve.
3. Income
Year Ended Year Ended
29 February 28 February
2016 2015
GBP'000 GBP'000
---------------------------------- ------------ ------------
Ordinary Share Fund
---------------------------------- ------------ ------------
UK dividends 2 -
---------------------------------- ------------ ------------
UK unfranked loan stock interest 52 64
---------------------------------- ------------ ------------
54 64
---------------------------------- ------------ ------------
Total income comprises:
---------------------------------- ------------ ------------
Interest 52 64
---------------------------------- ------------ ------------
Dividends 2 -
---------------------------------- ------------ ------------
Other income - -
---------------------------------- ------------ ------------
54 64
---------------------------------- ------------ ------------
C Share Fund
---------------------------------- ------------ ------------
UK dividends 1 -
---------------------------------- ------------ ------------
UK unfranked loan stock interest 21 25
---------------------------------- ------------ ------------
22 25
---------------------------------- ------------ ------------
Total income comprises:
---------------------------------- ------------ ------------
Interest 21 25
---------------------------------- ------------ ------------
Dividends 1 -
---------------------------------- ------------ ------------
Other income - -
---------------------------------- ------------ ------------
22 25
---------------------------------- ------------ ------------
Year Ended Year Ended
29 February 28 February
2016 2015
GBP'000 GBP'000
---------------------------------- ------------ ------------
Total
---------------------------------- ------------ ------------
UK dividends 3 -
---------------------------------- ------------ ------------
UK unfranked loan stock interest 73 89
---------------------------------- ------------ ------------
76 89
---------------------------------- ------------ ------------
Total income comprises:
---------------------------------- ------------ ------------
Interest 73 89
---------------------------------- ------------ ------------
Dividends 3 -
---------------------------------- ------------ ------------
Other income - -
---------------------------------- ------------ ------------
76 89
---------------------------------- ------------ ------------
All income arose in the United Kingdom.
The Board considered operating segments and considered there to be one, that of investing in financial assets.
4. Investment Management Fee
Year Ended 29 Year Ended 28
February 2016 February 2015
---------------- ---------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------- -------- -------- -------- -------- --------
Ordinary Share
Fund
Investment
management
fee 7 22 29 10 32 42
---------------- -------- -------- -------- -------- -------- --------
C Share Fund
Investment
management
fee 4 12 16 4 13 17
---------------- -------- -------- -------- -------- -------- --------
Total
Investment
management
fee 11 34 45 14 45 59
---------------- -------- -------- -------- -------- -------- --------
No performance fee was paid during the year.
For the year ended 29 February 2016, Calculus Capital Limited waived GBP9,896 (2015: GBPnil) of its fees. At 29 February 2016, there was GBP6,585 due to Calculus Capital Limited (2015: due to Calculus Capital Limited GBP27,376).
Details of the terms and conditions of the investment management agreement are set out in the Directors' Report.
5. Other expenses
Year Ended Year Ended
29 February 28 February
2016 2015
GBP'000 GBP'000
-------------------------------- ------------ ------------
Ordinary Share Fund
-------------------------------- ------------ ------------
Directors' fees 31 35
-------------------------------- ------------ ------------
Secretarial and accounting
fees 53 61
-------------------------------- ------------ ------------
Auditor's remuneration
-------------------------------- ------------ ------------
- audit services 13 14
-------------------------------- ------------ ------------
- taxation compliance services 4 4
-------------------------------- ------------ ------------
Other 44 50
-------------------------------- ------------ ------------
Clawback of expenses in excess
of 3% cap repayable from the
Manager (25) (53)
-------------------------------- ------------ ------------
120 111
-------------------------------- ------------ ------------
C Share Fund
-------------------------------- ------------ ------------
Directors' fees 19 15
-------------------------------- ------------ ------------
Secretarial and accounting
fees 33 25
-------------------------------- ------------ ------------
Auditor's remuneration
-------------------------------- ------------ ------------
- audit services 8 6
-------------------------------- ------------ ------------
- taxation compliance services 3 2
-------------------------------- ------------ ------------
Other 25 19
-------------------------------- ------------ ------------
Clawback of expenses in excess
of 3% cap repayable from the
Manager (43) (23)
-------------------------------- ------------ ------------
45 44
-------------------------------- ------------ ------------
Total
-------------------------------- ------------ ------------
Directors' fees 50 50
-------------------------------- ------------ ------------
Secretarial and accounting
fees 86 86
-------------------------------- ------------ ------------
Auditor's remuneration
-------------------------------- ------------ ------------
- audit services 21 20
-------------------------------- ------------ ------------
- taxation compliance services 7 6
-------------------------------- ------------ ------------
Other 69 69
-------------------------------- ------------ ------------
Clawback of expenses in excess
of 3% cap repayable from the
Manager (68) (76)
-------------------------------- ------------ ------------
165 155
-------------------------------- ------------ ------------
Further details of Directors' fees can be found in the Directors' Remuneration Report on page 26 to 29 of the Accounts.
6. Taxation
Year Ended 29 Year Ended 28
February 2016 February 2015
------------------------ ---------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ -------- -------- -------- -------- -------- --------
Ordinary Share
Fund
Loss on ordinary
activities
before tax (73) (311) (384) (57) (16) (73)
------------------------ -------- -------- -------- -------- -------- --------
Theoretical
tax at UK Corporation
Tax rate of
20.1% (2015:
21.2%) (15) (63) (78) (12) (3) (15)
Timing differences:
loss not recognised,
carried forward 15 4 19 12 6 18
Effects of
non-taxable
gains/(losses) - 59 59 - (3) (3)
------------------------ -------- -------- -------- -------- -------- --------
Tax charge - - - - - -
------------------------ -------- -------- -------- -------- -------- --------
C Share Fund
(Loss)/profit
on ordinary
activities
before tax (27) (134) (161) (23) 84 61
------------------------ -------- -------- -------- -------- -------- --------
Theoretical
tax at UK Corporation
Tax rate of
20.1% (2015:
21.2%) (5) (27) (32) (5) 18 13
Timing differences:
loss not recognised,
carried forward 5 2 7 5 3 8
Effects of
non-taxable
gains/(losses) - 25 25 - (21) (21)
------------------------ -------- -------- -------- -------- -------- --------
Tax charge - - - - - -
------------------------ -------- -------- -------- -------- -------- --------
Total
(Loss)/profit
on ordinary
activities
before tax (100) (445) (545) (80) 68 (12)
------------------------ -------- -------- -------- -------- -------- --------
Theoretical
tax at UK Corporation
Tax rate of
20.1% (2015:
21.2%) (20) (90) (110) (17) 15 (2)
Timing differences:
loss not recognised,
carried forward 20 6 26 17 9 26
Effects of
non-taxable
gains/(losses) - 84 84 - (24) (24)
------------------------ -------- -------- -------- -------- -------- --------
Tax charge - - - - - -
------------------------ -------- -------- -------- -------- -------- --------
On 1 April 2015, the Corporation Tax rate decreased from 21% to 20%. The rate remained at 20% for the remainder of the reporting period.
At 29 February 2016, the Company had GBP706,973 (28 February 2015: GBP568,335) of excess management expenses to carry forward against future taxable profits.
The Company's deferred tax asset of GBP127,255 (28 February 2015: GBP113,667) has not been recognised due to the fact that it is unlikely the excess management expenses will be set off in the foreseeable future.
7. Dividends
Year Ended Year Ended
29 February 28 February
2016 2015
GBP'000 GBP'000
--------------------------------- ------------ ------------
Ordinary Share Fund
--------------------------------- ------------ ------------
Declared and paid: 5.25p per
ordinary share in respect of
the year ended 28 February
2015 (2014: 5.25p) 249 249
--------------------------------- ------------ ------------
Declared and paid: 21.8p per
ordinary share in respect of
the year ended 29 February
2016 (2015: 22p) 1,033 1,042
--------------------------------- ------------ ------------
C Share Fund
--------------------------------- ------------ ------------
Declared and paid: 4.5p per
C share in respect of the year
ended 28 February 2015 (2014:
4.5p) 87 87
--------------------------------- ------------ ------------
Proposed final dividend: 4.5p
per C share in respect of the
year ended 29 February 2016
(2015: 4.5p) 87 87
--------------------------------- ------------ ------------
The proposed dividend is subject to approval by shareholders at the forthcoming Annual General Meeting and have not been included as a liability in these Accounts.
8. Return per Share
Year Ended 29 Year Ended 28
February 2016 February 2015
----------------- ------------------------ ------------------------
Revenue Capital Total Revenue Capital Total
pence pence pence pence pence pence
----------------- ------- ------- ------ ------- ------- ------
Return per
ordinary share (1.5) (6.6) (8.1) (1.2) (0.3) (1.5)
----------------- ------- ------- ------ ------- ------- ------
Return per
C share (1.4) (6.9) (8.3) (1.2) 4.3 3.1
----------------- ------- ------- ------ ------- ------- ------
Ordinary Share Fund
Revenue return per ordinary share is based on the net revenue loss on ordinary activities after taxation of GBP73,187 (28 February 2015: loss GBP57,139) and on 4,738,463 ordinary shares (28 February 2015: 4,738,463), being the weighted average number of ordinary shares in issue during the year.
Capital return per ordinary share is based on the net capital loss for the year of GBP384,093 (28 February 2015: loss GBP15,463) and on 4,738,463 ordinary shares (28 February 2015: 4,738,463), being the weighted average number of ordinary shares in issue during the year.
Total return per ordinary share is based on the total loss on ordinary activities after taxation of GBP386,916 (28 February 2015: loss GBP72,602) and on 4,738,463 ordinary shares (28 February 2015: 4,738,463), being the weighted average number of ordinary shares in issue during the year.
C Share Fund
Revenue return per C share is based on the net revenue loss on ordinary activities after taxation of GBP27,317 (28 February 2015: loss GBP22,734) and on 1,931,095 C shares (28 February 2015: 1,931,095), being the weighted average number of C shares in issue during the year.
Capital return per C share is based on the net capital loss for the year of GBP134,405 (28 February 2015: gain GBP83,457) and on 1,931,095 C shares (28 February 2015: 1,931,095), being the weighted average number of C shares in issue during the year.
Total return per C share is based on the total loss for the year of GBP161,722 (28 February 2015: gain GBP60,723) and on 1,931,095 C shares (28 February 2015: 1,931,095), being the weighted average number of C shares in issue during the year.
9. Investments
Year Ended 29 February
2016
------------------------- --------------------------------------------------
Structured VCT
Product Qualifying Other
Investments Investments Investments Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ------------ ------------ ------------ --------
Ordinary Share Fund
Opening book cost 490 2,277 1 2,768
Opening investment
holding gains/(losses) 419 (126) - 293
------------------------- ------------ ------------ ------------ --------
Opening valuation 909 2,151 1 3,061
------------------------- ------------ ------------ ------------ --------
Movements in year:
Purchases at cost - - - -
Sales proceeds (925) (355) - (1,280)
Realised gains/(losses)
on sales 435 (152) - 283
Decrease in investment
holding gains/(losses) (419) (153) - (572)
------------------------- ------------ ------------ ------------ --------
Movements in year (909) (660) - (1,569)
------------------------- ------------ ------------ ------------ --------
Closing valuation - 1,491 1 1,492
------------------------- ------------ ------------ ------------ --------
Closing book cost - 1,770 1 1,771
Closing investment
holding losses - (279) - (279)
------------------------- ------------ ------------ ------------ --------
Closing valuation - 1,491 1 1,492
------------------------- ------------ ------------ ------------ --------
C Share Fund
Opening book cost 328 1,085 11,414
Opening investment
holding gains 210 25 - 235
------------------------- ---- ----- -----
Opening valuation 538 1,110 11,649
------------------------- ---- ----- -----
Movements in year:
Purchases at cost - - - -
Sales proceeds - (90) - (90)
Realised losses on
sales - (35) - (35)
Decrease in investment
holding gains/(losses) (19) (68) - (87)
------------------------- ---- ----- -----
Movements in year (19) (193) -(212)
------------------------- ---- ----- -----
Closing valuation 519 917 11,437
------------------------- ---- ----- -----
Closing book cost 328 960 11,289
Closing investment
holding gains/(losses) 191 (43) - 148
------------------------- ---- ----- -----
Closing valuation 519 917 11,437
------------------------- ---- ----- -----
Year Ended 29 February
2016
------------------------- --------------------------------------------------
Structured VCT
Product Qualifying Other
Investments Investments Investments Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ------------ ------------ ------------ --------
Total
Opening book cost 818 3,362 2 4,182
Opening investment
holding gains/(losses) 629 (101) - 528
------------------------- ------------ ------------ ------------ --------
Opening valuation 1,447 3,261 2 4,710
------------------------- ------------ ------------ ------------ --------
Movements in year:
Purchases at cost - - - -
Sales proceeds (925) (445) - (1,370)
Realised gains on sales 435 (187) - 248
Decrease in investment
holding gains/(losses) (438) (221) - (659)
------------------------- ------------ ------------ ------------ --------
Movements in year (928) (853) - (1,781)
------------------------- ------------ ------------ ------------ --------
Closing valuation 519 2,408 2 2,929
------------------------- ------------ ------------ ------------ --------
Closing book cost 328 2,730 2 3,060
Closing investment
holding gains/(losses) 191 (322) - (131)
------------------------- ------------ ------------ ------------ --------
Closing valuation 519 2,408 2 2,929
------------------------- ------------ ------------ ------------ --------
In the year to 29 February 2016, Hembuild Group Limited was written down by GBP189,421 due to its entering administration. Brigantes Energy Limited and Corfe Energy Limited were written down by GBP161,852 and GBP106,548 respectively due to the fall in oil price.
There have not been any transaction costs in the year to 29 February 2016, nor in the year to 28 February 2015.
Note 16 to the financial statements provides a detailed analysis of investments held at fair value through profit or loss.
10. Debtors
Year Ended Year Ended
29 February 28 February
2016 2015
GBP'000 GBP'000
----------------------------------- ------------ ------------
Ordinary Share Fund
----------------------------------- ------------ ------------
Prepayments and accrued income 12 9
----------------------------------- ------------ ------------
Clawback of expenses in excess
of 3% cap payable by the Manager 25 53
----------------------------------- ------------ ------------
37 62
----------------------------------- ------------ ------------
C Share Fund
Prepayments and accrued income 5 3
Clawback of expenses in excess
of 3% cap payable by the Manager 43 23
48 26
Total
Prepayments and accrued income 17 12
Clawback of expenses in excess
of 3% cap payable by the Managers 68 76
85 88
11. Creditors
Year Ended Year Ended
29 February 28 February
2016 2015
GBP'000 GBP'000
Ordinary Share Fund
IFA trail commission - 11
Management fees 7 19
Audit fees 15 14
Directors' fees 4 6
Administration fees 2 10
Other creditors 21 22
49 82
C Share Fund
IFA trail commission 2 5
Management fees 4 8
Audit fees 10 6
Directors' fees 4 2
Administration fees 2 4
Other creditors 14 11
36 36
Total
IFA trail commission 2 16
Management fees 11 27
Audit fees 25 20
Directors' fees 8 8
Administration fees 4 14
Other creditors 35 33
85 118
12. Share Capital
29 February 2016 28 February 2015
------------------ ------------------ ------------------
Number GBP'000 Number GBP'000
------------------ --------- ------- --------- -------
Ordinary Share
Fund
Number of shares
in issue 4,738,463 47 4,738,463 47
------------------ --------- ------- --------- -------
C Share Fund
Number of shares
in issue 1,931,095 19 1,931,095 19
------------------ --------- ------- --------- -------
Total
66 66
------------------ --------- ------- --------- -------
Since the year end the Company has issued 1,812,084 D shares for a total consideration of GBP1,866,353.
Under the Articles of Association, a resolution for the continuation of the Company as a VCT will be proposed at the Annual General Meeting falling after the tenth anniversary of the last allotment (from time to time) of shares in the Company and thereafter at five-yearly intervals.
13. Net Asset Value per Share
29 February 28 February
2016 2015
------------------------------ ----------- -----------
Ordinary Share Fund
Net asset value per ordinary
share 31.4p 66.4p
------------------------------ ----------- -----------
The basic net asset value per ordinary share is based on net assets of GBP1,485,829 (28 February 2015: GBP3,147,994) and on 4,738,463 ordinary shares (28 February 2015: 4,738,463), being the number of ordinary shares in issue at the end of the year.
C Share Fund Net asset value per C share 77.3p 90.1p ----------------------------- ----- -----
The basic net asset value per C share is based on net assets of GBP1,492,097 (28 February 2015: GBP1,739,311) and on 1,931,095 C shares (28 February 2015: 1,931,095), being the number of C shares in issue at the end of the year.
14. Reconciliation of Net Loss before Tax to Cash Flow from Operating Activities
Year Ended Year Ended
29 February 28 February
2016 2015
GBP'000 GBP'000
------------------------------------- ------------ ------------
Ordinary Share Fund
------------------------------------- ------------ ------------
Loss for the year (384) (73)
------------------------------------- ------------ ------------
Losses/(gains) on investments 289 (16)
------------------------------------- ------------ ------------
Decrease in debtors 25 11
------------------------------------- ------------ ------------
Decrease in creditors (33) (30)
------------------------------------- ------------ ------------
Change in IFA commission accrual 4 -
------------------------------------- ------------ ------------
Cash flow from operating activities (99) (108)
------------------------------------- ------------ ------------
C Share Fund
Loss/(profit) for the year (161) 61
Losses/(gains) on investments 122 (97)
(Increase)/decrease in debtors (22) 3
Decrease in creditors (3) (2)
Change in IFA commission accrual 1 -
------------------------------------- ----- ----
Cash flow from operating activities (63) (35)
------------------------------------- ----- ----
Total
Loss for the year (545) (12)
Losses/(gains) on investments 411 (113)
Decrease in debtors 3 14
Decrease in creditors (36) (32)
Change in IFA commission accrual 5 -
------------------------------------- ----- -----
Cash flow from operating activities (162) (143)
------------------------------------- ----- -----
15. Financial Commitments
At 29 February 2016, the Company did not have any financial commitments which had not been accrued for.
16. Financial Instruments
The Company's financial instruments comprise securities and cash and liquid resources that arise directly from the Company's operations.
The principal risks the Company faces in its portfolio management activities are:
-- Market price risk -- Liquidity risk
The Company does not have exposure to foreign currency risk.
With many years' experience of managing the risks involved in investing in Structured Products and Venture Capital Investments respectively, both the Investec Structured Products team and the Calculus Capital Limited team, together with the Board, have designed the Company's structure and its investment strategy to reduce risk as much as possible. The policies for managing these risks are summarised below and have been applied throughout the period under review.
a) Market price risk
Structured Products
The return and valuation of the Company's investment in Structured Products is currently linked to the FTSE 100 Index by way of a fixed return that is payable as long as the Final Index Level is no lower than the Initial Index Level.
The current investment in Structured Products will either be capital protected or capital at risk on a one-to-one basis where the FTSE 100 Index falls by more than 50 per cent and the Final Index Level is below the Initial Index Level. If the FTSE 100 Index does fall by more than 50 per cent at any time during the investment period and fails to recover at maturity, the capital will be at risk on a maximum one-to-one basis (Capital at Risk ("CAR")) (e.g. if the FTSE 100 Index falls by more than 50 per cent during the investment period and on maturity is down 25 per cent, capital within that Structured Product will be reduced by 25 per cent).
The tables in the Investment Manager's Review (Structured Products) provide details of the Initial Index Level at the date of investment and the maturity date for the remaining Structured Product. On 29 February 2016, the FTSE 100 Index closed at 6,097.09.
The Final Index Level is calculated using 'averaging', meaning that the average is taken of the closing levels of the FTSE 100 on each business day over the last two to six months of the Structured Product plan term (the length of the averaging period differs for each plan).
The Investment Manager of the Structured Products portfolio and the Board review this risk on a regular basis. The use of averaging to calculate the return can reduce adverse effects of a falling market or sudden market falls shortly before maturity. Equally, it can reduce the benefits of an increasing market or sudden market rises shortly before maturity.
As at 29 February 2016, the Company's investment in Structured Products was valued at GBP519,023 (C Share Fund). A 10 per cent increase in the level of the FTSE 100 Index at 29 February 2016, given that all other variables remained constant, would have increased net assets by GBP31,089 (C Share Fund). A 10 per cent decrease would have reduced net assets by GBP55,609 (C Share Fund). If the net assets had been higher by GBP31,089 throughout the year, then the investment management fee due to Calculus Capital Limited would have been increased by GBP310; if the net assets had been lower by GBP55,609 lower throughout the year, then the investment management fee due to Calculus Capital Limited would have decreased by GBP556.
The Directors consider that an increase or decrease in the aggregate value of investments by 10 per cent or more is reasonably possible.
The failure of a counterparty to discharge its obligations under a transaction could result in the Company suffering a loss. In its role as the Investment Manager of the Structured Products portfolio and to diversify counterparty risk, Investec Structured Products only invested in Structured Products issued by approved issuers. In addition, the maximum exposure to any one counterparty (or underlying counterparty) was limited to 15 per cent of the assets of the Company at the time of investment.
Counterparty risk is the risk that the counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The Investment Manager has in place a monitoring procedure in respect of counterparty risk which is reviewed on an ongoing basis. The carrying amount of financial assets best represents the maximum credit risk exposure at the Balance Sheet date.
As at 29 February 2016, the Company's credit risk exposure, by credit rating of the Structured Product issuer, was as follows:
29 February 2016 28 February 2015
Credit Risk Rating
(Moody's unless otherwise % of % of
indicated) GBP'000 Portfolio GBP'000 Portfolio
Ordinary Share Fund
A2 - - - -
Baa3 - - 909 29.7%
- - 909 29.7%
C Share Fund
A2 519 36.1% - -
Baa3 - - 538 32.6%
519 36.1% 538 32.6%
Total
A2 519 17.7% - -
Baa3 - - 1,447 30.7%
------- --- ----- ------ ------
519 17.7% 1,447 30.7%
------- --- ----- ------ ------
Qualifying Investments
Market risk embodies the potential for losses and includes interest rate risk and price risk.
The management of market price risk is part of the investment management process. The portfolio is managed in accordance with policies in place as described in more detail in the Chairman's Statement and Investment Manager's Review (Qualifying Investments).
The Company's strategy on the management of investment risk is driven by the Company's investment objective as outlined above. Investments in unquoted companies and AIM-traded companies, by their nature, involve a higher degree of risk than investments in the main market. Some of that risk can be mitigated by diversifying the portfolio across business sectors and asset classes.
Interest is earned on cash balances and money market funds and is linked to the banks' variable deposit rates. The Board does not consider interest rate risk to be material. Interest rates arising on loan stock instruments is not considered significant as the main risk on these investments are credit risk and market price risk. The interest rate earned on the loan stock instruments is disclosed below:
Effective
interest
rate on
29 February
2016 %
-------------------------- ------------
Antech Limited 12.0
-------------------------- ------------
Human Race Group Limited 12.0
-------------------------- ------------
Solab Group Limited 8.0
-------------------------- ------------
At the year end, no loan stock interest was overdue.
An analysis of financial assets and liabilities, which identifies the risk of the Company's holding of such items, is provided. The Company's financial assets comprise equity, loan stock, cash and debtors. The interest rate profile of the Company's financial assets is given in the table below:
As at 29 February As at 28 February
2016 2015
---------------- --------------------- ---------------------
Fair Value Cash Flow Fair Value Cash Flow
Interest Interest Interest Interest
Rate Rate Rate Rate
Risk Risk Risk Risk
GBP'000 GBP'000 GBP'000 GBP'000
---------------- ---------- --------- ---------- ---------
Ordinary Share
Fund
Loan stock 350 - 687 -
Money market
funds - 1 - 1
Cash - 6 - 107
---------------- ---------- --------- ---------- ---------
350 7 687 108
---------------- ---------- --------- ---------- ---------
C Share Fund
Loan stock 200 - 200 -
Money market
funds - 1 - 1
Cash - 43 - 103
---------------- ---------- --------- ---------- ---------
200 44 200 104
---------------- ---------- --------- ---------- ---------
Total
Loan stock 550 - 887 -
Money market
funds - 2 - 2
Cash - 49 - 210
---------------- ---------- --------- ---------- ---------
550 51 887 212
---------------- ---------- --------- ---------- ---------
The variable rate is based on the banks' deposit rate, and applies to cash balances held and the money market funds. The benchmark rate which determines the interest payments received on interest bearing cash balances is the Bank of England base rate, which was 0.5 per cent as at 29 February 2016.
Any movement in interest rates is deemed to have an insignificant effect on the Structured Products.
Credit risk is considered to be part of market risk.
Where an investment is made in loan stock issued by an unquoted company, it is made as part of an overall equity and debt package. The recoverability of the debt is assessed as part of the overall investment process and is then monitored on an ongoing basis by the Investment Manager who reports to the Board on any recoverability issues.
Credit risk arising on transactions with brokers relates to transactions awaiting settlement. Risk relating to unsettled transactions is considered to be small due to the short settlement period involved and the high credit quality of the brokers used. The Board monitors the quality of service provided by the brokers used to further mitigate this risk.
All the assets of the Company which are traded on AIM are held by Investec Wealth & Investments, the Company's custodian. Bankruptcy or insolvency of the custodian may cause the Company's rights with respect to securities held by the custodian to be delayed or limited. The Board and the Investment Manager monitor the Company's risk by reviewing the custodian's internal control reports.
b) Liquidity risk
The Company's liquidity risk is managed on an ongoing basis by the Investment Managers. The Company's overall liquidity risks are monitored on a quarterly basis by the Board.
The Company maintains sufficient investments in cash and readily realisable securities to pay accounts payable and accrued expenses as they fall due.
Structured Products
If the Structured Product Is redeemed before the end of the term, the Company may get back less than the amount originally invested. The value of the Structured Product will be determined by the price at which the investment can actually be sold on the relevant dealing date. The Board does not consider this risk to be significant as the planned investment period for the Structured Product will end on 17 March 2017.
There may not be a liquid market in the Structured Product and there may never be two competitive market makers, making it difficult for the Company to realise its investment. Risk is increased further where there is a single market maker who is also the issuer. The Board sought to mitigate this risk by only investing in approved issuers of Structured Products, and by limiting exposure to any one issuer (or underlying issuer).
Qualifying Investments
The Company's financial instruments include investments in unlisted equity investments which are not traded in an organised public market and which may be illiquid. As a result, the Company may not be able to realise quickly some of its investments at an amount close to their fair value in order to meet its liquidity requirements, or to respond to specific events such as deterioration in the creditworthiness of any particular issuer.
The Board seeks to ensure that an appropriate proportion of the Company's investment portfolio is invested in cash and readily realisable assets, which are sufficient to meet any funding commitments that may arise.
Under its Articles of Association, the Company has the ability to borrow a maximum amount equal to 25 per cent of its gross assets. As at 29 February 2016, the Company had no borrowings.
c) Capital management
The capital structure of the Company consists of cash held and shareholders' equity. Capital is managed to ensure the Company has adequate resources to continue as a going concern, and to maximise the income and capital return to its shareholders, while maintaining a capital base to allow the Company to operate effectively in the market place and sustain future development of the business. To this end the Company may use gearing to achieve its objectives. The Company's assets and borrowing levels are reviewed regularly by the Board.
d) Fair value hierarchy
Investments held at fair value through profit or loss are valued in accordance with IPEV guidelines.
The valuation method used will be the most appropriate valuation methodology for an investment within its market, with regard to the financial health of the investment and the IPEV guidelines.
As required by the Standard, an analysis of financial assets and liabilities, which identifies the risk of the Company's holding of such items, is provided. The Standard requires an analysis of investments carried at fair value based on the reliability and significance of the information used to measure their fair value. In order to provide further information on the valuation techniques used to measure assets carried at fair value, we have categorised the measurement basis into a "fair value hierarchy" as follows:
- Quoted market prices in active markets - "Level 1"
Inputs to Level 1 fair values are quoted prices in active markets for identical assets. Quoted in an active market in this context means quoted prices are readily and regularly available and those prices represent actual and regularly occurring market transactions on an arm's length basis. The quoted price is usually the current bid price. The Company's investments in AIM quoted equities and money market funds are classified within this category.
- Valued using models with significant observable market parameters - "Level 2"
Inputs to Level 2 fair values are inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly. The Company's investments in Structured Products are classified within this category.
- Valued using models with significant unobservable market parameters - "Level 3"
Inputs to Level 3 fair values are unobservable inputs for the asset. Unobservable inputs may have been used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset at the measurement date (or market information for the inputs to any valuation models). As such, unobservable inputs reflect the assumptions the Company considers that market participants would use in pricing the asset. The Company's unquoted equities and loan stock are classified within this category. As explained in note 1, unquoted investments are valued in accordance with the IPEV guidelines.
The table below shows assets measured at fair value categorised into the three levels referred to above. During the year there were no transfers between Levels 1, 2 or 3.
Ordinary Share Fund
Financial Assets at Fair Value
through Profit or Loss
At 29 February 2016
--------------------- --------------------------------------
Level Level Level
1 2 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- -------- -------- --------
Structured Products - - - -
Unquoted equity - - 1,141 1,141
Quoted equity - - - -
Money market
funds 1 - - 1
Loan stock - - 350 350
--------------------- -------- -------- -------- --------
1 - 1,491 1,492
--------------------- -------- -------- -------- --------
Financial Assets at Fair Value
through Profit or Loss
At 28 February 2015
--------------------- --------------------------------------
Level Level Level
1 2 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- -------- -------- --------
Structured Products - 909 - 909
Unquoted equity - - 1,376 1,376
Quoted equity 88 - - 88
Money market
funds 1 - - 1
Loan stock - - 687 687
--------------------- -------- -------- -------- --------
89 909 2,063 3,061
--------------------- -------- -------- -------- --------
C Share Fund
Financial Assets at Fair Value
through Profit or Loss
At 29 February 2016
--------------------- --------------------------------------
Level Level Level
1 2 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- -------- -------- --------
Structured Products - 519 - 519
Unquoted equity - - 588 588
Quoted equity 129 - - 129
Money market
funds 1 - - 1
Loan stock - - 200 200
--------------------- -------- -------- -------- --------
130 519 788 1,437
--------------------- -------- -------- -------- --------
Financial Assets at Fair Value
through Profit or Loss
At 28 February 2015
--------------------- --------------------------------------
Level Level Level
1 2 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- -------- -------- --------
Structured Products - 538 - 538
Unquoted equity - - 592 592
Quoted equity 318 - - 318
Money market
funds 1 - - 1
Loan stock - - 200 200
--------------------- -------- -------- -------- --------
319 538 792 1,649
--------------------- -------- -------- -------- --------
Total
Financial Assets at Fair Value
through Profit or Loss
At 29 February 2016
--------------------- --------------------------------------
Level Level Level
1 2 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- -------- -------- --------
Structured Products - 519 - 519
Unquoted equity - - 1,729 1,729
Quoted equity 129 - - 129
Money market
funds 2 - - 2
Loan stock - - 550 550
--------------------- -------- -------- -------- --------
131 519 2,279 2,929
--------------------- -------- -------- -------- --------
Financial Assets at Fair Value
through Profit or Loss
At 28 February 2015
--------------------- --------------------------------------
Level Level Level
1 2 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- -------- -------- --------
Structured Products - 1,447 - 1,447
Unquoted equity - - 1,968 1,968
Quoted equity 406 - - 406
Money market
funds 2 - - 2
Loan stock - - 887 887
--------------------- -------- -------- -------- --------
408 1,447 2,855 4,710
--------------------- -------- -------- -------- --------
In order to maintain fair value hierarchy disclosures in line with the prior year, the Company has early adopted the changes to FRS 102 published by the FRC in March 2016.
Where the effect of changing one or more inputs to reasonably possible alternative assumptions would result in a significant change to the fair value measurement, information on this sensitivity is provided below. The information used in determination of the fair value of Level 3 investments is chosen with reference to the specific underlying circumstances and position of the investee company. The portfolio has been reviewed and both downside and upside reasonable possible alternative assumptions have been identified and applied to the valuation of the unquoted investments.
The assumptions changed for the sensitivity analysis are set out below:
Impact
on Impact
Upside on downside
Assumption GBP GBP
----------------------- ------- ------------
Discount rate 26,927 25,172
Forecast 2016 results 58,151 60,453
----------------------- ------- ------------
85,078 85,625
----------------------- ------- ------------
Applying the downside alternatives, the value of the unquoted investment portfolio for the Ordinary Share Fund would be GBP63,198 or 4.2 per cent lower (2015: GBP99,041 or 4.8 per cent lower), for the C Share Fund would be GBP22,427 or 2.9 per cent lower (2015: GBP55,017 or 7.0 per cent lower), and in total it would be GBP85,625 or 3.8 per cent lower (2015: GBP154,058 or 5.4 per cent lower). Using the upside alternatives, the value of the unquoted investment portfolio for the Ordinary Share Fund would be increased by GBP63,284 or 4.2 per cent (2015: GBP115,445 or 5.6 per cent per cent), for the C Share Fund it would be increased by GBP21,794 or 2.8 per cent (2015: GBP54,062 or 6.8 per cent), and in total it would be increased by GBP85,078 or 3.7 per cent (2015: GBP169,507 or 5.9 per cent).
17. Related Parties Transactions
Calculus Capital Limited receives an investment manager's fee from the Company. As disclosed in Note 4, for the year ended 29 February 2016, Calculus Capital Limited earned GBP29,037 in relation to the ordinary share portfolio (2015: GBP41,672) and GBP16,409 (2015: GBP17,496) in relation to the C share portfolio. Calculus Capital Limited also earned a company secretarial fee of GBP625 (2015: GBPnil) for the Ordinary share portfolio but waived its fee of GBP625 (2015: GBPnil) on the C shares.
Calculus Capital Limited has taken on the expenses cap from 15 December 2015. In the year to 29 February 2016, Calculus Capital Limited waived GBP9,896 of investment management fees.
Investec Structured Products, an Investment Manager to the Company, is entitled to a performance incentive fee. Investec Structured Products will receive an arrangement fee of 0.75 per cent of the amount invested in each Structured Product. This arrangement fee shall be paid to Investec Structured Products by the issuer of the relevant Structured Product. No arrangement fee will be paid to Investec Structured Products in respect of any decision to invest in Investec-issued Structured Products. Investec Structured Products has agreed not to earn an annual management fee from the Company.
18. Transactions with Investment Managers
John Glencross, a Director of the Company, is Chief Executive and a director of Calculus Capital Limited, one of the Company's Investment Managers. He does not receive any remuneration from the Company. He is a director of Terrain Energy Limited, and was previously a director of Hembuild Group Limited and Human Race Group Limited, companies in which the Company has invested.
Calculus Capital Limited receives a fee from certain portfolio companies. In the year the 29 February 2016, Calculus Capital Limited charged a monitoring fee to Antech Limited, Solab Group Limited, Hembuild Group Limited, Metropolitan Safe Custody Limited, MicroEnergy Generation Services Limited, Quai Administration Services Limited, Terrain Energy Limited, The One Place Capital Limited and Tollan Energy Limited.
Calculus Capital Limited charged a fee for the provision of a director to Brigantes Energy Limited, Corfe Energy Limited, Dryden Human Capital Group Limited, Solab Group Limited, Metropolitan Safe Custody Limited, Pico's Limited, Quai Administration Services Limited, Terrain Energy Limited and The One Place Capital Limited.
Calculus Capital Limited also charged Terrain Energy Limited for the provision of office support services.
The amount received by Calculus Capital Limited which relates to the Company's investment was GBP1,807 (2015: GBP1,932) from Antech Limited, GBP191 (2015: GBP751) from Brigantes Energy Limited, GBP113 (2015: GBP449) from Corfe Energy Limited, GBP56 (2015: GBP285) from Dryden Human Capital Group Limited, GBP1,832 from Solab Group Limited (2015: GBP3,009), GBP3,430 from Human Race Group Limited (2015: GBP3,530), GBP405 (2015: GBP3,612) from Hembuild Group Limited, GBP2,516 (2015: GBP2,483) from Metropolitan Safe Custody Limited, GBP1,461 (2015: GBP1,189) from MicroEnergy Generation Services Limited, GBP305 (2015: GBP397) from Pico's Limited, GBP1,438 (2015: GBP1,596) from Quai Administration Services Limited, GBP793 (2015: GBP983) from Terrain Energy Limited, GBP944 (2015: GBP1,215) from The One Place Capital Limited and GBP1,418 (2015: GBP328) from Tollan Energy Limited (all excluding VAT).
19. Post balance sheet events
Since the year end, an allotment of 876,181 D Shares in respect of the 2015/2016 tax year took place on 8 March 2016 at an average issue price of GBP1.0264 per share. A second allotment of 644,598 D shares in respect of 2015/2016 tax year took place on 4 April 2016 at an average issue price of GBP1.0333 per share. A third allotment of 291,305 D shares in respect of the 2016/2017 tax year took place on 3 May 2016 at an average issue price of GBP1.0333 per share.
National Storage Mechanism
A copy of the Annual Report and Accounts will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at: www.morningstar.co.uk/uk/NSM
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR DBLFLQQFEBBF
(END) Dow Jones Newswires
June 21, 2016 02:00 ET (06:00 GMT)
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