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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Ludgate | LSE:LEF | London | Ordinary Share | JE00B1YW3102 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 16.50 | 14.00 | 19.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMLEF
RNS Number : 3976O
Ludgate Environmental Fund Limited
09 February 2016
Ludgate Environmental Fund Limited (the "Company")
Interim Results for the six months ended 31 December 2015
and
Declaration of Dividend
The Board of the Company has declared a special dividend of 1 pence per share, which will be paid gross on 26 February 2016. The record date will be 19 February 2016 and the ex-dividend date will be 18 February 2016. In accordance with established investment policy the amount of the special dividend represents a distribution of proceeds received from the disposal of Ignis Biomass Limited.
CHAIRMAN'S STATEMENT
I am pleased to report to shareholders on the performance of Ludgate Environmental Fund Limited ("LEF") in the half year ending 31st December 2015.
Financial Review
The net asset value of LEF on 31st December 2015 was GBP24,488,092 (2014: GBP31,486,293), equivalent to 45.90 (2014: 59.0) pence per share. A net loss of GBP7,824,771 was recorded (2014: GBP4,012,922). At the end of the period the cash balance was GBP402,584 (30th June 2015: GBP867,973). The directors recommend payment of an interim dividend of 1p per share.
Strategy and Portfolio Review
LEF is fully invested. Our purpose is to maximise the achievable value of the assets within the remaining life of the Company and return the cash proceeds of sales to shareholders. Immediately after the period under review we announced the sale of Ignis to Equitix for a total consideration of GBP4 million of which GBP1.6 million is deferred. The interim dividend is an initial distribution of proceeds. We also sold our interests in Renewable Energy Generation. Rapid Action Packaging Limited continues to perform as expected and is enjoying sales growth. Similarly STX has continued to build and diversify new business. Its lower NAV in December 2015 was the result of an exceptional profit in 2014 no longer applied as a valuation factor. We wrote down the value of our interest in Micropelt to zero when the company was placed in administration. We continue to own its intellectual property in Micropatent. As we previously disclosed the value of Tamar was significantly reduced after the government announced its intention to end the applicable subsidy regime. A revised and viable business model has been established with the support of shareholders.
For further information contact:
Ludgate Environmental Fund Limited +44 (0) 1534 609034
John Shakeshaft, Chairman
Ludgate Investments Limited +44 (0) 20 3478 1000
Gijs Voskamp
Panmure Gordon (Broker, Nomad) +44 (0) 20 7886 2713
Paul Fincham
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BALANCE SHEET
AS AT 31ST DECEMBER 2015
Unaudited Audited Unaudited
interim annual interim
financial financial financial
statements statements statements
31st Dec 30th Jun 31st Dec
Notes 15 15 14
ASSETS GBP GBP GBP
Non-current assets
Financial assets at fair
value through profit or loss 7,20 23,376,158 31,183,825 29,721,488
Current assets
Derivatives at fair value
through profit or loss 7,8 478,050 387,809 264,203
Loan receivable 9 319,672 319,672 319,672
Trade and other
receivables 10 21,893 10,241 63,355
Cash and cash equivalents 11 402,584 867,973 1,188,987
1,222,199 1,585,695 1,836,217
---------------- --------------- --------------
TOTAL ASSETS 24,598,357 32,769,520 31,557,705
---------------- --------------- --------------
LIABILITIES
Current liabilities
Trade and other payables 12 110,265 456,657 71,412
TOTAL LIABILITIES 110,265 456,657 71,412
---------------- --------------- --------------
NET ASSETS ATTRIBUTABLE
TO EQUITY SHAREHOLDERS 24,488,092 32,312,863 31,486,293
---------------- --------------- --------------
SHAREHOLDERS' EQUITY
Ordinary shares 56,018,480 56,018,480 56,018,481
Reserves (deficit) ( 31,530,388) ( 23,705,617) ( 24,532,188)
24,488,092 32,312,863 31,486,293
================ =============== ==============
Net asset value per ordinary
share outstanding 0.46 0.61 0.59
These interim financial statements on pages 6 to 42 were approved
and authorised for issue by the Board of Directors on the 8(th)
day of February 2016 and were signed on its behalf by:
Director: David
R. Pirouet
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD 1ST JULY 2015 TO 31ST DECEMBER 2015
Unaudited Audited Unaudited
interim annual interim
financial financial financial
statements statements statements
1st Jul 1st Jul 1st Jul
15 14 14
to to to
31st Dec 30th Jun 31st Dec
Notes 15 15 14
INCOME: GBP GBP GBP
Deposit interest income 418 1,872 1,213
Loan note interest income 928,994 352,833 207,315
Dividend income 306,347 1,154,789 429,687
Other income - 77,703 11,132
1,235,759 1,587,197 649,347
------------- ------------- -------------
EXPENSES:
Net loss on financial
assets and derivatives
at fair value through
profit or loss 7,8 7,560,198 2,195,724 3,064,505
Net loss on foreign
exchange 2,338 16,398 3,824
Administration and accountancy
fees 108,077 217,038 115,141
Adviser fees 17 296,682 670,290 350,748
Audit fees 4 11,145 30,480 8,480
Directors' fees and
expenses 4 56,659 115,343 51,429
Legal fees 6,776 12,221 12,407
Miscellaneous fees 5,786 7,861 5,343
Professional fees 44,318 299,089 92,503
Provision for interest
receivable 928,994 968,388 942,633
Withholding tax 39,557 240,716 15,256
9,060,530 4,773,548 4,662,269
------------- ------------- -------------
TOTAL COMPREHENSIVE
LOSS ( 7,824,771) ( 3,186,351) ( 4,012,922)
============= ============= =============
Loss per ordinary share 6 ( 0.15) ( 0.06) ( 0.08)
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD 1ST JULY 2015 TO 31ST DECEMBER 2015
Total net
assets
attributable
Ordinary Reserves to equity
Notes Shares (deficit) shareholders
----------- -------------- --------------
GBP GBP GBP
FOR THE PERIOD ENDED 31ST
DECEMBER 2015
Opening balance as at
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February 09, 2016 02:00 ET (07:00 GMT)
1st July 2015 56,018,480 ( 23,705,617) 32,312,863
Total comprehensive loss - ( 7,824,771) ( 7,824,771)
Closing balance as at
31st December 2015 13 56,018,480 ( 31,530,388) 24,488,092
=========== ============== ==============
FOR THE YEAR ENDED 30TH
JUNE 2015
Opening balance as at
1st July 2014 56,018,481 ( 20,519,266) 35,499,215
Purchase of own shares 13 ( 1) - ( 1)
Total comprehensive loss - ( 3,186,351) ( 3,186,351)
Closing balance as at
30th June 2015 13 56,018,480 ( 23,705,617) 32,312,863
=========== ============== ==============
STATEMENT OF CASH FLOWS
FOR THE PERIOD 1ST JULY 2015 TO 31ST DECEMBER 2015
Unaudited Audited Unaudited
interim annual Interim
financial financial financial
statements statements Statements
1st Jul 1st Jul 1st Jul
15 14 14
to to to
31st Dec 30th Jun 31st Dec
Notes 15 15 14
GBP GBP GBP
Cash flows from operating
activities 16 ( 706,626) ( 1,276,708) ( 620,566)
----------- ------------- -------------
Cash flows from investing
activities
Purchase of investments 7 ( 604,813) ( 2,826,393) ( 1,545,938)
Sale of investments 7 542,041 783,293 -
Loan note interest and
dividends received 306,347 1,708,230 863,365
Loan finance repaid 9 - 850,000 850,000
243,575 515,130 167,427
----------- ------------- -------------
Cash flows from financing
activities
Purchase of own shares 13 - ( 1) -
Net decrease in cash and cash
equivalents ( 463,051) ( 761,579) ( 453,139)
Effects from changes in
exchange rates on cash
and cash equivalents ( 2,338) ( 16,398) ( 3,824)
Cash and cash equivalents
at beginning of the period
/ year 867,973 1,645,950 1,645,950
Cash and cash equivalents
at end of the period /
year 11 402,584 867,973 1,188,987
=========== ============= =============
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD 1ST JULY 2015 TO 31ST DECEMBER 2015
1. REPORTING ENTITY
The Company was registered as a public company on 7th June 2007 with registered number 97690 under the Companies (Jersey) Law 1991. The Company joined the Alternative Investment Market ("AIM") on 2nd August 2007. The registered office of the Company is Lime Grove House, Green Street, St Helier, Jersey, JE1 2ST.
The Company was incorporated with a life of approximately eight years from admission to AIM, expiring on 30th June 2015 (the "Proposed Wind-up Date"). On 12th August 2014, the Directors recommended to the shareholders to extend the Wind-up Date until 30th June 2018 and this was subsequently approved by the shareholders at an Extraordinary General Meeting on 1st September 2014.
2. ACCOUNTING POLICIES
a) Basis of preparation
The unaudited interim financial information included in the half-year report for the six months ended 31st December 2015, has been prepared in accordance with International Accounting Standard (IAS) 34 "Interim Financial Reporting". It does not include all of the information required for full annual financial statements. The half-year report should be read in conjunction with the annual report and audited financial statements for the year ended 30th June 2015, which have been prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by European Union ("EU"). The extra column of comparatives for the half-year ended 31st December 2014 in the balance sheet is an AIM requirement, and notes to these accounts are not required.
The more significant policies are set out below:
New Accounting Standards, amendments to existing Accounting Standards and/or interpretations of existing Accounting Standards (separately or together, "New Accounting Requirements") adopted during the period
IAS 32, "Financial instruments: Presentation - Offsetting financial assets and financial liabilities" (amendments)
These amendments clarify that rights of set-off must be legally enforceable in the normal course of business and must also be enforceable in the event of default and the event of bankruptcy or insolvency of all of the counterparties to the contract, including the reporting entity itself. The amendments also clarify that rights of set-off must not be contingent on a future event. The standard is effective for annual periods beginning on or after 1st January 2014. The amendments did not have any impact on the Company's financial position or performance.
In the opinion of the Directors, there are no other mandatory new standards, interpretations and amendments to existing standards that are effective for the first time for the financial year beginning 1st January 2014 that would be expected to have a material impact on the Company.
Non-mandatory New Accounting Requirements not yet adopted
The following applicable New Accounting Requirements have been issued. However, these New Accounting Requirements are not yet mandatory and have not yet been adopted by the Company. All other non-mandatory New Accounting Requirements are either not yet permitted to be adopted, or would have no material effect on the reported performance, financial position, or disclosures of the Company and consequently have neither been adopted, nor listed.
Non-mandatory New Accounting Requirements not yet adopted - (continued)
IFRS 9, "Financial Instruments"
IFRS 9 addresses the recognition, classification and measurement of financial assets and financial liabilities. It is the IASB's intention that IFRS 9 will replace IAS 39 in its entirety. The IASB has adopted a phased approach to completion of the overall standard. When the first phase was published in November 2009, IFRS 9 addressed only the classification and measurement of financial assets. In October 2010, requirements for the classification and measurement of financial liabilities were published. The phases covering impairment methodology and hedge accounting are scheduled for completion prior to the mandatory effective date.
IFRS 9 requires financial assets to be classified into two measurement categories: (i) those measured at fair value; and, (ii) those measured at amortised cost. The determination is made at initial recognition. The classification depends on the entity's business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to changes in an entity's own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch.
The standard is effective for accounting periods beginning on or after 1st January 2018. Early adoption is permitted, subject to EU endorsement.
Amendments to IFRS 10, IFRS 12 and IAS 28, "Investment entities: applying the consolidation exception"
These amendments confirm that the exemption from preparing consolidated financial statements continues to be available to a parent entity that is a subsidiary of an investment entity, even if the investment entity measures all its subsidiaries at fair value in accordance with IFRS 10. IAS 28 has been amended to permit an entity to retain the fair value measurement applied by an investment entity associate or joint venture to its interests in subsidiaries. Amendments to IFRS 12, "Disclosure of interests in Other Entities" states that it does not apply to an entity's separate financial statements. The amendments to IFRS 12 clarified that an investment entity that measures all its subsidiaries at fair value should provide the IFRS 12 disclosures related to investment entities.
The standard is effective for accounting periods beginning on or after 1st January 2016. Early adoption is permitted, subject to EU endorsement.
b) Basis of measurement
These financial statements have been prepared on a historical cost basis as modified by the revaluation of financial assets and liabilities held at fair value through profit or loss. The policies have been consistently applied to both periods presented.
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Financial instruments at fair value through profit or loss and derivatives at fair value though profit and loss are measured at fair value and changes therein are recognised in the statement of comprehensive income. Information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised within the financial statements are included in note 2 Section (o) 'Determination of fair values'.
c) Functional and presentation currency
These financial statements are presented in sterling, which is the Company's functional and presentation currency.
d) Use of estimates and judgements
The preparation of financial statements in accordance with IFRSs as adopted by the EU requires the Board to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. These estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
e) Foreign currencies
Transactions in foreign currencies, other than sterling, are translated at the foreign currency exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated to sterling at the foreign currency closing exchange rate ruling at the balance sheet date. Foreign currency exchange differences arising on translation and realised gains and losses on disposals or settlements of monetary assets and liabilities are recognised in the statement of comprehensive income. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to sterling at the foreign currency exchange rates ruling at the dates that the values were determined. Foreign currency differences arising on retranslation are recognised in the statement of comprehensive income.
f) Financial instruments
Financial assets and financial liabilities are initially recognised on the Company's balance sheet when the Company becomes party to the contractual provisions of a given instrument.
Purchases and sales of financial instruments are recognised on the trade date. Gains and losses are recognised from that date.
Financial assets cease to be recognised when the contractual rights to cash flows from the assets expire or the Company transfers the financial assets and substantially all of the risks and rewards of ownership have been transferred. Financial liabilities cease to be recognised when the liabilities are extinguished.
Financial instruments comprise investments in equity and debt securities, warrants, loans receivable, trade and other receivables, cash and cash equivalents, trade and other payables and performance fees retained.
Financial instruments are recognised initially at fair value. Subsequent to initial recognition financial instruments are measured as described below.
Financial assets at fair value through profit or loss
An instrument is classified at fair value through profit or loss if it is held for trading or designated as such upon initial recognition. The Company has designated its investment holdings as at fair value through profit or loss as permitted by International Accounting Standard 39 "Financial Instruments: Recognition and Measurement." These financial assets are designated on the basis that they form part of a group of financial assets which are managed and have their performance evaluated on a fair value basis. Upon initial recognition attributable transaction costs are recognised in the statement of comprehensive income when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and changes therein are recognised in the statement of comprehensive income.
Derivatives at fair value through profit or loss
The warrants held by the Company are classified as derivative financial instruments held for trading. Therefore they are recognised at fair value, with realised and unrealised gains and losses being recognised in the statement of comprehensive income. The derivatives are derecognised when the rights to receive cash flows from it have expired or the Company has transferred substantially all risks and rewards of ownership.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than:
a) those that the Company intends to sell immediately or in the short-term, which are classified as held for trading, and those that the entity upon initial recognition designates as at fair value through profit or loss;
b) those that the Company upon initial recognition designates as available for sale; or
c) those for which the holder may not recover substantially all of its initial investment, other than because of credit deterioration.
Loans and receivables are initially recognised at fair value, which is the cash consideration to originate or purchase the loan including any transaction costs and measured subsequently at amortised cost using the effective interest rate method, less provision for impairment. Impairment provisions are recognised when there is objective evidence that the Company will be unable to collect all of the amounts due under the terms of the receivable. The Company's loans and receivables comprise loans receivable, trade and other receivables and cash and cash equivalents.
Cash and cash equivalents
Cash comprises fixed deposits, cash balances and call deposits with banks. Cash equivalents are short-term highly-liquid investments that are readily convertible to known amounts of cash, are subject to an insignificant risk of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.
Financial liabilities
All liabilities are classified as other financial liabilities and are measured at amortised cost using the effective interest rate method.
Ordinary shares
Financial instruments issued by the Company are treated as equity only to the extent that they do not meet the definition of a financial liability.
The Ordinary Shares of the Company are treated as equity as they entitled the shareholder to a pro rata share of the Company's net assets in the event of the Company's liquidation.
g) Provisions
A provision is recognised if, as a result of a past event, the Company has a legal or constructive obligation that can be reliably estimated, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to that liability.
h) Revenue and expenses
Revenue is recognised to the extent that it is possible that economic benefits will flow to the Company and the revenue can be reliably measured. Expenses are accounted for on an accruals basis.
i) Finance income and expenses
Finance income comprises interest income on funds invested (including debt securities at fair value through profit or loss), interest income and loan interest income. Interest income and loan interest income are recognised as they accrue in the statement of comprehensive income, using the effective interest rate method. Dividend income is recognised in the statement of comprehensive income on the date the Company's right to receive payments is established which is usually the ex-dividend date.
Finance expenses comprise interest expense on borrowings and unwinding of discounts on provisions.
Foreign currency gains and losses are reported in the statement of comprehensive income on a net basis.
j) Earnings per share ("EPS") and net asset value ("NAV") per share
The Company presents basic EPS and NAV data for its ordinary shares. Basic EPS is calculated by dividing the comprehensive income attributable to equity shareholders from operations by the weighted average number of ordinary shares in issue during the period. (For further details see note 6). NAV per equity share is calculated by dividing net assets attributable to equity shareholders by the number of equity shares outstanding at the period end.
k) Transaction costs
Expenses incurred by the Company that are directly attributable to the offering of new shares have been taken to statement of changes in equity.
l) Taxation
Profits arising in the Company are subject to Jersey Income Tax, currently at the rate of 0%.
The Company is registered under the Reporting Fund regime Regulation 51 of The Offshore Fund (Tax) Regulations 2009 in the United Kingdom effective 1st July 2009.
m) Dividends payable
Dividends payable to ordinary shareholders are accounted for when a legal obligation arises.
Dividends payable, if any, on ordinary shares are recognised in the statement of changes in equity.
n) Offsetting
Financial assets and liabilities are offset and the net amount is reported within assets and liabilities where there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
o) Determination of fair value
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A number of the Company's accounting policies and disclosures require the determination of fair value for the financial assets and liabilities. Fair value is the price that would be received to sell an asset or paid to transfer liability in an ordinary transaction between market participants at the measurement date. Fair values have been determined for disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
Financial assets for which quoted closing prices are available from a third party in a liquid market are valued on the basis of quoted bid prices. Where there are no available quoted prices the fair values will be determined in accordance with International Private Equity and Venture Capital Valuation Guidelines ("IPEVCV" Guidelines) as amended from time to time.
The fair value of financial assets traded in active markets are based on quoted market prices at the close of trading on the balance sheet date. The Company adopted IFRS 13, "Fair value measurement", where the last traded market price for financial assets has been utilised and such last traded price falls within the bid-ask spread.
Unquoted equities and unquoted securities are valued using a variety of methods as follows:
- Rapid Action Packaging Limited Ordinary Shares have been valued based on an EBITDA multiple in line with market multiples. This metric has been discounted to reflect Rapid Action Packaging Limited's unlisted status.
- STX Services B.V. Ordinary Shares have been valued based on a multiple of profit before tax for the period / year in line with market multiples. This metric has been discounted to reflect STX Services B.V.'s unlisted status.
- Tamar Energy Limited Ordinary Shares have been valued based on an EBITDA multiple applied to forecast EBITDA.
- Ignis Biomass Limited Ordinary Shares have been valued on the estimated value of the transaction consideration from the sale of the company.
- Micropelt GmbH Ordinary Shares have been valued at zero following its shareholders' decision not to fund the company further and the company being placed into administration.
- Micropatent B.V. Ordinary Shares have been valued based on estimated realisable value which is a 50% discount to cost as the company is not cash generative as yet.
Investments are made in companies that may be subject to a high degree of operating and financial risk. The values assigned to investments are based upon available information and do not necessarily represent amounts that might ultimately be realised. Because of the inherent uncertainty of valuations, estimated carrying values may differ significantly from the values that would have been realised had a ready market for the investments existed, and these differences could be material.
The fair value of financial liabilities is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the balance sheet date.
The fair value of derivatives at fair value through profit or loss is derived using the Black Scholes Option Pricing Model.
p) Investment entity
The Directors do not believe that the Company has the power to exercise control over the investments, except for Ignis Biomass Limited, as set out in the provisions of paragraph 12 of International Accounting Standard 27 (Consolidated Financial Statements and Accounting for Investments in Subsidiaries), or under the Standard Interpretations Committee pronouncement Number 12 (SIC 12 - Consolidation: Special Purpose Entities). The Directors have arrived at this opinion because the Company in any of its investments with the exception of Ignis Biomass Limited:
- does not hold a controlling stake;
- does not have the power to govern the financial and operating policies;
- does not have the power to remove the majority of the members of the Board of Directors; and
- does not have the power to cast the majority of votes at meetings of the Board of Directors.
Ignis Biomass Limited was not consolidated in these financial statements as the Company qualified for the exemption from the requirement to prepare consolidate financial statements under the IFRS 10 investment entity exemption. The investment in this entity is accounted for at fair value through profit or loss.
q) Associates
Associates are all entities over which the Company has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights.
As the Company operates as a venture capital organisation it uses the scope exemption of IAS 28 'Investment in Associates' and designates upon initial recognition some investments that would otherwise be equity accounted as investments at fair value through profit or loss with subsequent changes in fair value recognised in the statement of comprehensive income in the period of the change.
r) Segment reporting
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses. The Directors perform regular reviews of the operating results of the Company and make decisions using financial information at the entity level only. Accordingly, the Directors believe that the Company has only one reportable operating segment.
The Directors are responsible for ensuring that the Company carries out business activities in line with the transaction documents. They may delegate some or all of the day to day management of the business, including the decisions to purchase and sell securities, to other parties both internal and external to the Company. The decisions of such parties are reviewed on a regular basis to ensure compliance with the policies and legal responsibilities of the Directors. Therefore, the Directors retain full responsibility as to the major allocation decisions of the Company.
3. PERFORMANCE FEES RETAINED AND PAYABLE
Period Period ended
ended
31st Dec 31st Dec
15 14
GBP GBP
Performance fees nil nil
payable
========= =============
Performance fees are payable to the Adviser with reference to the increase in adjusted net asset value per share over the course of each performance period. The Adviser becomes entitled to receive a performance fee if the following conditions are met:
a) The adjusted net asset value per share at the end of the performance period exceeds the Performance Hurdle. The Performance Hurdle is an amount equal to the placing price increased at a rate of 8% per annum on a compounded basis up to the end of the relevant performance period; and
b) The adjusted net asset value per share at the end of the performance period exceeds the High Watermark. The High Watermark is the highest previously recorded adjusted net asset value per share at the end of a performance period for which a performance fee was last earned.
If the above conditions are met the Adviser is entitled to receive a fee equal to 20% of the amount by which the adjusted net asset value exceeds the higher of (i) the performance hurdle and (ii) the relevant High Watermark multiplied by the time-weighted average number of shares in issue since the end of the last performance period for which a performance fee was earned.
The conditions for payment of performance fees were not met for the performance period ended 31st December 2015 and year ended 30th June 2015.
20% of any performance fees earned by the Adviser shall be retained and deposited in a Reserve Account (see note 11).
On 1st September 2014 the shareholders approved revised performance fee arrangements for the Investment Adviser, which took effect from 1st July 2014:
- the Advisory fee is calculated at 2% of the Company's Net Asset Value, payable quarterly and any future distributions will no longer be added back for the purposes of the calculation; and
- the basis of the calculation of the performance fee has been reset to 30th June 2014 and is payable to the Adviser if certain conditions are attained.
4. EXPENSES
AUDITOR'S FEES
Period ended Period ended
31st Dec 31st Dec
15 14
GBP GBP
Audit fees 11,145 8,480
Non-audit fees 4,730 3,305
15,875 11,785
============= =============
DIRECTORS' REMUNERATION AND INTERESTS
Period Period ended
ended
31st Dec 31st Dec
15 14
GBP GBP
Directors' fees 55,000 48,750
Directors' expenses 1,659 2,679
56,659 51,429
========= =============
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The details of the Directors' remuneration are as follows:
Period Period ended
ended
31st Dec 31st Dec
15 14
GBP GBP
J. Shakeshaft (Chairman) 30,000 30,000
R. Green 12,500 12,500
D. Pirouet 12,500 12,500
D. Quilty (Resigned 27th August 2014) - ( 6,250)
55,000 48,750
========= =============
As at the balance sheet date, the following Ordinary Shares of the Company were held by the Directors, the Directors of the Adviser, the Investment Adviser and the Principals of the Investment Adviser.
Ordinary
Shares
31ST DECEMBER 2015
Directors
J. Shakeshaft 115,445
Investment Adviser and related
principals
Ludgate Investments
Limited * 664,000
N. Meir 50,500
N. Pople 50,000
Ocean Capital Holding
II BV ** 5,839,798
Ordinary
Shares
30TH JUNE 2015
Directors
J. Shakeshaft 115,445
Investment Adviser and related
principals
Ludgate Investments
Limited * 664,000
J.N.B. Curtis 15,000
N. Pople 50,000
Ocean Capital Holding
II BV ** 5,839,798
Principals of Ludgate Investments Limited include Directors and senior management.
* Ocean Capital Investments BV (an entity related to Ocean Capital Holding II BV), J.N.B. Curtis, N. Pople and B. Weil have an interest in Ludgate Investments Limited.
** Ocean Capital Investments BV (an entity related to Ocean Capital Holding II BV) is a company in which G. Voskamp and J. Voskamp, both directors of Ludgate Investments Limited, have 80% and 20% shareholdings, respectively.
5. DIVIDENDS
No interim dividend or special dividend was paid during this period (for the six months ended 31st December 2014: GBPnil).
6. EARNINGS PER SHARE
The calculation of the basic and diluted loss per share is based on the following information:
Period Period
ended ended
31st Dec 31st Dec
15 14
GBP GBP
Total comprehensive loss ( 7,824,771) ( 4,012,922)
============= =============
Weighted average number of ordinary
shares for the purposes of basic earnings
per share 53,345,782 53,345,784
============= =============
GBP GBP
Basic and diluted loss per ordinary
share ( 0.15) ( 0.08)
7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Investments: Period ended Year ended
31st Dec 30th Jun
15 15
GBP GBP
Opening cost of investments 48,652,004 46,153,611
Purchases / (disposals) during the
period / year:
Additional investments
acquired 384,813 3,046,393
Investments sold ( 5,263,089) ( 548,000)
Closing cost of investments 43,773,728 48,652,004
============= ===========
Period ended Year ended
31st Dec 30th Jun
15 15
GBP GBP
Opening fair value
of investments 31,183,825 31,369,034
Purchases / (disposals) during the
period / year:
Additional investments
acquired 384,813 3,046,393
Proceeds on disposal ( 542,041) ( 783,293)
Realised (loss) /
gain on disposal ( 4,721,048) 235,293
Fair value movement ( 2,929,391) ( 2,683,602)
Closing fair value of investments 23,376,158 31,183,825
============= =============
Further details of the investments held can be found in note 20 to these financial statements.
IFRS 13 requires the Company to classify fair value measurements using a three level fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 - Inputs for the asset or liability that are not based on observable market data.
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.
The determination of what constitutes 'observable' requires significant judgement by the Company. The Company considers observable data to comprise market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.
The following tables analyse within the fair value hierarchy the Company's financial assets measured at fair value at 31st December 2015 and 30th June 2015.
31st December 2015 Level Level Level 3 Total
1 2
GBP GBP GBP GBP
Financial assets
at fair value through
profit or loss 610,273 - 22,765,885 23,376,158
======== ====== =========== ===========
Derivatives at fair
value through profit
or loss - - 478,050 478,050
======== ====== =========== ===========
30th June 2015
Financial assets
at fair value through
profit or loss 1,708,757 - 29,475,068 31,183,825
========== =========== ===========
Derivatives at fair
value through profit
or loss - - 387,809 387,809
========== =========== ===========
Financial assets whose values are based on quoted market prices in active markets, and therefore classified within Level 1, include mainly actively listed equities. The Company does not adjust the quoted market price for these.
Financial assets that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2. Level 2 includes mainly convertible bonds. As Level 2 bonds are not traded in an active market, valuations are based on an option valuation method which was carried out by an independent broker.
Financial assets classified within Level 3 have significant unobservable inputs, as they trade infrequently. Level 3 includes equities and convertible loan notes. As the observable prices are not available for these equities and convertible loan notes, the Company has used valuation methods as described in note 2 (o) 'Determination of fair values'.
Level 3 valuations are reviewed on a quarterly basis by the Company's Investment Adviser, Ludgate Investments Limited ("LIL"), who report to the Board of Directors on a quarterly basis. The Investment Adviser considers the appropriateness of the valuation model inputs, as well as the valuation result using various valuation methods and techniques generally recognised as standard within the industry. In selecting the most appropriate valuation model, the Investment Adviser performs back testing and considers which model's results have historically aligned most closely to actual market transactions.
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The Level 3 unquoted equities amounted to GBP19,420,885 (for the year ended 30th June 2015: GBP26,455,068) and the Company substantially utilises comparable trading multiples in arriving at the valuation. LIL determines comparable public companies (peers) based on industry, size, developmental stage and strategy. LIL then calculates a trading multiple for each comparable company identified. The multiple is calculated by dividing the enterprise value of the comparable company by its earnings before interest, taxes, depreciation and amortisation (EBITDA). The trading multiple is then discounted for considerations such as illiquidity and differences between the comparable companies based on company-specific facts and circumstances. The Company utilised net realisable values and discounted cash flow techniques also. On determining the discount rate, regard is given to risk rates, the specific risks of the investment and evidence of the recent transaction.
The Level 3 unquoted securities amounted to GBP3,345,000 (for the year ended 30th June 2015: GBP3,020,000) and the Company valued these instruments at cost.
31st December 2015
Reasonable
possible
Fair value Weighted shift Change in
at 31st Valuation Unobservable average +/- (absolute valuation
Description Dec 2015 technique inputs input value) +/-
============= ============= =================== ==================== ============= ============== ==============
GBP GBP
Comparable Profit before
Unquoted trading tax multiple and 8.25× 858,977/
equities 17,356,418 multiples EBITDA multiple - 9.01× 5% (858,977)
============= =================== ==================== ============= ============== ==============
Estimated
realisable
16,118 value Not applicable - 5% 806/( 806)
============= =================== ==================== ============= ============== ==============
Valuation of
existing
operational (223,730)/
2,005,230 assets EBITDA multiple 9.0× 5% 223,730
============= =================== ==================== ============= ============== ==============
43,119 Estimated Not applicable - - -
realisable
value
============= =================== ==================== ============= ============== ==============
Unquoted 3,345,000 At cost Not applicable - - -
securities
============= ============= =================== ==================== ============= ============== ==============
30th June 2015
Reasonable
Fair possible
value Weighted shift Change in
at 30th Valuation Unobservable average +/- (absolute valuation
Description Jun 2015 technique inputs input value) +/-
============= ============= ============= =================== ============= ============== =====================
GBP GBP
Comparable Profit before
Unquoted trading tax multiple and 8.25× 907,738/
equities 18,383,585 multiples EBITDA multiple - 9.01× 5% (907,738)
============= ============= =================== ============= ============== =====================
Discounted
cash (264,298)/
7,196,417 flows Cost of capital 14.6% 5% 264,298
============= ============= =================== ============= ============== =====================
875,066 Estimated Not applicable - - -
realisable
value
============= ============= =================== ============= ============== =====================
Unquoted 3,020,000 At cost Not applicable - - -
securities
============= ============= ============= =================== ============= ============== =====================
The change in valuation disclosed in the above table shows the direction an increase or decrease in the respective input variables would have on the valuation result. For unquoted equities, increases in the profit before tax multiple, EBITDA multiple, net asset value and estimated value would each lead to an increase in fair value. However, an increase in cost of capital would lead to a decrease in fair value. For unquoted securities, increases in estimated value would lead to an increase in fair value.
No interrelationships between unobservable inputs used in the Company's valuation of its Level 3 unquoted equities have been identified.
Transfers between levels of the fair value hierarchy are deemed to have occurred at the beginning of the reporting period.
The movement in Level 3 financial assets for the period ended 31st December 2015 and year ended 30th June 2015 by class of financial assets were as follows:
Unquoted Unquoted
31st December 2015 Derivatives equities securities Total
GBP GBP GBP GBP
Opening balance 387,809 26,455,068 3,020,000 29,862,877
Total gains / (losses)
(realised/unrealised)
included in the statement
of comprehensive income 90,241 ( 7,026,263) - ( 6,936,022)
Purchases and issuances - 59,813 325,000 384,813
Sales and settlements - ( 67,733) - ( 67,733)
Closing balance 478,050 19,420,885 3,345,000 23,243,935
============ ============= ============ =============
Unquoted Unquoted
30th June 2015 Derivatives equities securities Total
GBP GBP GBP GBP
Opening balance 135,224 23,980,575 4,844,656 28,960,455
Total gains / (losses)
(realised/unrealised)
included in the statement
of comprehensive income 252,585 ( 1,613,263) - ( 1,360,678)
Purchases and issuances - 2,396,393 650,000 3,046,393
Sales and settlements - ( 783,293) - ( 783,293)
Share conversion - 2,474,656 ( 2,474,656) -
Closing balance 387,809 26,455,068 3,020,000 29,862,877
============ ============= ============= =============
For unquoted equities, if the multiple used or the recent market transaction price used in the valuation had increased by 5%, this would have resulted in an increase in value of GBP638,209 (for the year ended 30th June 2015: GBP687,193). A decrease of 5% would have resulted in a decrease in value of GBP638,209 (for the year ended 30th June 2015: GBP687,193).
Title of financial assets at fair value through profit or loss is held by the following parties:
31st Dec 30th Jun
15 15
GBP GBP
Computer Share (Australia) 147,894 171,782
Panmure Gordon & Co 462,379 1,536,975
State Street (Jersey) Limited 22,765,885 29,475,068
23,376,158 31,183,825
=========== ===========
8. DERIVATIVES AT FAIR VALUE THROUGH PROFIT OR LOSS
31st Dec 30th Jun
15 15
GBP GBP
Rapid Action Packaging Limited - 3,368
warrants (30th June 2015: 3,368 warrants) 478,050 387,809
========= =========
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9. LOAN RECEIVABLE
31st Dec 30th Jun
15 15
GBP GBP
Current:
Ignis Wick Limited 319,672 319,672
========= =========
The Company entered into a Loan Agreement with Ignis Wick Limited to fund the development costs of the Wick project up to GBP779,000. The loan is unsecured, repayable on demand and bears interest at 10% per annum. The loan interest income generated during the period ended 31st December 2015 amounted to GBP143,306 (year ended 30th June 2015: GBP102,213) of which GBP143,306 (year ended 30th June 2015: GBP102,213) was provided against interest income during the year. As at 31st December 2015, GBP319,672 (year ended 30th June 2015: GBP319,672) has been drawn.
This loan was repaid on 6th January 2016 as part of the initial consideration received on the sale of Ignis Wick Limited (see note 21).
10. TRADE AND OTHER RECEIVABLES
31st Dec 30th Jun
15 15
GBP GBP
Fixed deposit interest receivable - 50
Prepayments and other receivables 21,893 10,191
21,893 10,241
========= =========
During the period, a provision against interest receivable amounting to GBP928,994 (year ended 30th June 2015: GBP968,388) was recognised in the statement of comprehensive income.
11. CASH AND CASH EQUIVALENTS
31st Dec 30th Jun
15 15
GBP GBP
Panmure Gordon & Co 20,424 20,442
Royal Bank of Scotland International -
current account (GBP) 124 78,900
State Street Bank and Trust Company 63,330 450,322
Cash held on fixed term deposit:
Fixed term deposits held with Barclays
(GBP) 318,706 318,309
402,584 867,973
========= =========
The Company has permission to borrow sums equivalent to 25% of the net asset value in accordance with its Articles of Association. At the balance sheet date, no such facility had been entered into (30th June 2015: GBPnil). The Board has taken care to minimise the credit risk associated with cash and cash equivalents.
Cash and cash equivalents are held by the following banks and brokers:
31st Dec 30th Jun
Bank/Broker 15 15
GBP GBP
State Street Bank and Trust Company 63,330 450,322
Barclays 318,706 318,309
Royal Bank of Scotland International 124 78,900
Panmure Gordon & Co 20,424 20,442
402,584 867,973
========= =========
12. TRADE AND OTHER PAYABLES
31st Dec 30th Jun
15 15
GBP GBP
Investment payable - 220,000
Professional fees
payable 35,000 150,000
Administration and accountancy fees 51,250 51,250
Audit fees payable 11,000 22,000
Directors' fees and expenses payable 12,500 12,500
Other creditors 515 907
110,265 456,657
========= =========
All expenses are payable on presentation of an invoice.
13. STATED CAPITAL ACCOUNT
31st Dec 30th Jun
15 15
AUTHORISED:
Ordinary Shares of no par value each Unlimited Unlimited
The authorised stated capital of the Company comprises an unlimited number of voting, Ordinary Shares which are neither redeemable nor convertible and which have no par value.
No. of No. of No. of
Ordinary Investor Manager
Shares Warrants Warrants
Opening balance at 1st 53,345,782 - -
July 2015
Closing balance at 31st 53,345,782 - -
December 2015
=========== ========= =========
Opening balance at 1st 55,254,784 - -
July 2014
Purchase of own shares ( 2) - -
Closing balance at 30th 53,345,782 - -
June 2015
=========== ========= =========
Two Ordinary Shares of GBP1.00 each were issued on incorporation. The initial public offering ("IPO") of Ordinary Shares on 2nd August 2007 was priced at GBP1.00 per share. Subscribers for the Ordinary Shares received one investor warrant for every four Ordinary Shares subscribed. At 31st October 2012, these warrants expired.
A second placing of shares occurred on 22nd February 2008. 2,673,509 Ordinary Shares of no par value were issued at a price of GBP1.12 per share. On 10th November 2008 a further issue of 16,557,807 Ordinary Shares were placed at a price of GBP1.09 per share. On 5th August 2010 a further issue of 10,293,365 Ordinary Shares were placed at a price of GBP0.97 per share. No warrants were attached to these shares issued subsequent to the IPO. The Ordinary Shares and investor warrants are listed and traded on AIM. The manager warrants are not listed.
The Ordinary Shares carry the right to vote at general meetings, dividends and the surplus assets of the Company on winding-up. All holders of the Ordinary Shares have the same voting rights.
During the period, the Company did not repurchase any of its shares. During the year ended 30th June 2015, it repurchased 2 ordinary shares amounting to GBP1. These shares were subsequently cancelled.
31st Dec 30th Jun
15 15
GBP GBP
Opening balance 56,018,480 56,018,481
Purchase of own shares - ( 1)
Closing balance 56,018,480 56,018,480
=========== ===========
14. SEGMENT INFORMATION
Geographical information
The Company's country of domicile is Jersey, Channel Islands. All of the Company's revenues are generated from outside the Company's country of domicile. Detailed geographical information is disclosed in note 15 under "concentration risk".
Sources of income
The Company's sources of net income were interest and dividends from financial assets and deposits. The majority of the income during the period was derived from investments in STX Services B.V., Ignis Biomass Limited and fixed term deposits.
15. FINANCIAL RISK MANAGEMENT
The Board of Directors is responsible for the establishment and oversight of the Company's risk management framework. Policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. These are reviewed regularly to reflect changes in market conditions and the Company's activities.
The Company maintains positions in a variety of financial instruments dictated by its investment management strategy. The Company's investment portfolio comprises quoted and unquoted equity investments, unquoted securities and cash which the Company intends to hold for an indefinite period (subject to the life of the Company). Asset allocation is determined by the Board who manages the distribution of the assets to achieve the investment objectives.
The nature and extent of the financial instruments outstanding at the balance sheet date and the risk management policies employed by the Company are discussed below.
Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the Company's income and or the value of its holdings in financial instruments. The Adviser is responsible for monitoring, measuring and reporting market risk.
The Company's exposure to market risk comes mainly from movements in the value of its investments.
The Company's strategy on the management of investment risk is driven by the Company's investment objective. The Company's investment objective is to deliver to investors a significant level of capital growth in the medium to long-term by building a diverse portfolio of investments in cleantech companies. The Company's market risk is managed by the Adviser in accordance with the policies and procedures in place.
The Company seeks to achieve its investment objective and minimise investment risk through the identification of appropriate technologies and companies within the cleantech sector using a rigorous review and selection process; by adding value to companies in the portfolio through active support at all stages of their growth and by focusing on maximising returns for shareholders by assisting companies in achieving an appropriate and timely exit.
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Potential investments are screened to ensure that investments comply with the investment criteria, as described in the Admission Document and described in the Investment Policy. A full review and due diligence are undertaken before a potential investment can be submitted for approval by the Screening Committee and the Adviser.
Monitoring of the portfolio is carried out on a quarterly basis by the Adviser who reviews the investments against technology developments, commercial progress, financial and trading results including management accounts, management assessment, market intelligence and anticipated planning and exit. Investment risk is also reviewed at the time of any investment proposal, the publication of the net asset values and any capital raising.
The Company's overall market positions are reviewed quarterly by the Board of Directors. Details of the Company's investment portfolio composition as at the balance sheet date are disclosed in note 20 to these financial statements.
As assets are sold in accordance with the investment policy and expected winding up date, the portfolio will become less diversified and market risks possibly increase.
Interest Rate Risk
To the extent the Company incurs indebtedness, changes in interest rates can affect the Company's net interest income, which is the difference between the interest income earned on interest-bearing assets and the interest expense incurred on interest-bearing liabilities. Changes in the level of interest rates can also affect, among other things, the Company's ability to acquire loans and investments, the value of its investments and the Company's ability to realise gains from the settlement of such assets. Interest rate risk is mitigated by a policy of holding diversified instruments with varied counterparties.
The majority of the Company's financial assets are fixed rate or non-interest bearing and all of the Company's financial liabilities are non-interest bearing. Therefore, the Directors believe that the Company's exposure to interest rate risk is minimal. Any excess cash and cash equivalents are invested in fixed term deposits with maturities of 12 months or less. Investments in debt securities are in fixed rate instruments and therefore the Company has limited exposure to prevailing interest rates. Any adverse movement in interest rates would negatively affect the return on cash deposits over time. The amount of cash held on fixed term deposits is expected to reduce over the forthcoming years in accordance with the Company's stated investment objectives.
Interest rate sensitivity
IFRS 7 Financial Instruments: Disclosures ("IFRS 7") requires a sensitivity analysis for each type of risk to which the entity is exposed at the balance sheet date, showing how the profit or loss and equity would have been affected by changes in the relevant risk variable that are reasonably possible.
The majority of the Company's financial assets and financial liabilities are non-interest bearing or fixed rate. During the period, the Company's interest income from fixed deposits was GBP418 (period ended 31st December 2014: GBP1,213) of which GBPnil (30th June 2015: GBP50) is outstanding at the end of the period. Had interest rates been 50 basis points higher throughout the period the Company would have decreased its loss by GBP2,013 (period ended 31st December 2014: GBP5,945), with a corresponding increase had interest rates been 50 basis points lower by GBP2,013 (period ended 31st December 2014: GBP5,945).
Currency Risk
The Company may invest in financial instruments and enter into transactions that are denominated in currencies other than its functional currency, sterling. Consequently the Company is exposed to risk that the exchange rate of its functional currency relative to other foreign currencies may change in a manner that has an adverse effect on the value of that portion of the Company's assets and liabilities denominated in currencies other than sterling.
The Company's policy is to accept a limited amount of currency risk within the portfolio. It does not hedge either the fair value of its foreign currency investments nor the cashflows, if any, arising from such investments. Any gain or loss, recognised as a result of the Company's investment and valuation policies is recognised in the statement of comprehensive income. When the Company has entered into a definitive contract to purchase or sell securities denominated in foreign currency it purchases forward contracts; any ineffectiveness in this hedging would also be recognised in the statement of comprehensive income. The Company's overall currency risk and exposure is monitored on a quarterly basis by the Board of Directors. The Directors intend to keep this policy under quarterly review as the portfolio becomes more fully invested. The Directors further consider that investment in currencies is a separate asset class and not as such part of the normal trading business of the Company.
As at the balance sheet date the Company had the following currency risk exposure:
31st Dec 30th Jun
15 15
Financial assets at fair value through
profit or loss GBP GBP
Unquoted equities and securities denominated
in EUR 6,940,402 9,724,523
Quoted equities denominated in AUD 159,806 185,617
7,100,208 9,910,140
========== ==========
Currency sensitivity
As at 31st December 2015 if GBP had strengthened against the EUR by 5%, with all other variables held constant, the loss for the period as per the statement of comprehensive income would have increased and the net assets of the Company would have decreased by GBP330,495 (year ended 30th June 2015: increase in loss for the year and decrease in net assets of GBP463,073). A 5% weakening of GBP against the EUR would have resulted in a decrease in the loss for the period as per the statement of comprehensive income and an increase in net assets of the Company of GBP365,284 (year ended 30th June 2015: decrease in loss for the year and increase in net assets of GBP511,817), with all other variables held constant.
As at 31st December 2015 if GBP had strengthened against the AUD by 5%, with all other variables held constant, the loss for the period as per the statement of comprehensive income would have increased and the net assets of the Company would have decreased by GBP7,610 (year ended 30th June 2015: increase in loss for the year and decrease in net assets of GBP8,839). A 5% weakening of GBP against the AUD would have resulted in a decrease in the loss for the period as per the statement of comprehensive income and an increase in the net assets of the Company of GBP8,411 (year ended 30th June 2015: decrease in loss for the year and increase in net assets of GBP9,769), with all other variables held constant.
The movement in foreign exchange, excluding foreign exchange movements on financial assets at fair value through profit or loss which are reflected in the statement of comprehensive income as part of losses or gains on financial assets at fair value through profit or loss, for the period ended 31st December 2015 was a loss of GBP2,338 (31st December 2014: GBP3,824). This movement has been largely caused by the variance in the EUR:GBP exchange rate during the period on deposits held in EUR. The EUR:GBP exchange rate moved from 1.4114 as at 1st July 2015 to 1.3568 as at 31st December 2015.
Other price risk
Market price risk is the risk that the value of an instrument will fluctuate as a result of changes in market prices (other than those arising due to currency risk or interest rate risk) whether caused by factors specific to an individual investment, its issuer or all factors affecting all instruments traded in the market. As the majority of the Company's financial instruments are held at fair value with changes in fair value being recognised in the statement of comprehensive income, all changes in market conditions will directly affect the profit for the period and the Company's net assets. Price risk is monitored and reviewed by the Directors on a quarterly basis, at any valuation event and at each investment committee meeting, whichever is the more frequent.
Risk is mitigated in a thematic portfolio diversified by securities, assets, geography and industrial sector. No single investment can account for more than 15% of ungeared NAV at the time of investment. No single investment held for short-term trading can be more than GBP750,000. The following table breaks down the investment assets held by the Company:
31st Dec 30th Jun
15 15
Percentage Percentage
Financial assets at fair value through of net of net
profit or loss assets assets
Equity investments:
Quoted 2.49% 5.29%
Unquoted 79.31% 81.87%
Debt investments:
Unquoted 13.66% 9.35%
Market price risk sensitivity
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1.93% of the Company's investment assets are listed on European stock exchanges (year ended 30th June 2015: 4.88%). 0.68% of the Company's investments are listed on the Australian stock exchange (year ended 30th June 2015: 0.59%). A 10% increase in stock prices as at 31st December 2015 would have decreased the loss for the period and would have increased the net assets of the Company by GBP61,027 (year ended 30th June 2015: decrease in loss for the year of GBP170,876). An equal change in the opposite direction would increase the loss and decrease the net assets of the Company by an equal but opposite amount.
Credit Risk
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The carrying amount of financial assets best represents the maximum exposure at the balance sheet date. At the balance sheet date the Company's financial assets exposed to credit risk amounted to the following:
31st Dec 30th Jun
15 15
GBP GBP
Unquoted securities 3,345,000 3,020,000
Loans receivable 319,672 319,672
Trade and other receivables 21,893 10,241
Cash and cash equivalents 402,584 867,973
Total financial assets exposed to credit
risk 4,089,149 4,217,886
========== ==========
The Company and its Adviser seek to mitigate credit risk by actively monitoring the underlying credit quality of the Company's investment holdings. As noted above, monitoring of the portfolio is carried out on a quarterly basis by the Adviser who will review the investments against milestones of technology developments, commercial progress, financial and trading results including management accounts, management assessment, market intelligence and anticipated planning and exit. Any indications of credit risk will be reported to the Board who will also review the portfolio and the related credit risk at least on a quarterly basis. The Company holds no hedges or insurance against counterparty risk. The Directors believe that the purchase of credit insurance would expose the Company to an unapproved asset class of derivatives.
The Company holds fixed term deposits of varying maturities with a number of banks, each with a minimum long-term credit rating from Standard and Poor's, Moody's or Fitch of "A-", through a pooled account. This service is entitled "Cash2". All transactions are in the name of State Street (Jersey) Limited Client Nominee, operated by State Street (Jersey) Limited. The Company is the beneficial owner of these deposits. There is no additional payment, liquidity, or settlement risk associated with the pooling.
The Company analyses the credit concentration based on the counterparty, industry and geographical location of the financial assets that the Company holds. The Company's financial assets exposed to credit risk were concentrated in the following industries:
31st Dec 30th Jun
15 15
Resource efficiency industries 90.15% 79.42%
Banks/financial services 9.85% 20.58%
All of the Company's financial assets exposed to credit risk which were held at the balance sheet date are European.
Concentration Risk
The Company may be exposed at any given time to a degree of concentration risk. To the extent that the Company's investments are concentrated in any one sub-sector of the cleantech sector, country or asset class downturns affecting the source of concentration may result in total or partial loss on such investments, which will reduce the Company's net asset value. The Directors consider the sector a diversified asset class and that effective hedging could be achieved by replication in purchasing differentiated securities but that the cost of these transactions would negate the value of the protection. The Company's investments are concentrated as follows:
31st Dec 30th Jun
15 15
Investment in resource efficiency industries 100.00% 100.00%
Geographical area - Netherlands 29.69% 28.52%
Geographical area - UK 69.63% 68.22%
Geographical area - Australia 0.68% 0.59%
Geographical area - Germany - 2.67%
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.
The Company may face liquidity risks. Most of the investments in which the Company invests are relatively illiquid i.e. private companies which require a long-term capital commitment. A substantial amount of the Company's funds are concentrated in a limited number of investments subject to legal and other restrictions on resale, transfer, pledge or other disposition or that are less liquid than publicly traded securities. The illiquidity of these investments may make it difficult to sell investments if the need arises or the Investment Adviser determines that such a sale would be in the Company's interests.
The Directors monitor liquidity risk at least quarterly and perform going concern tests before the semi-annual publication of the financial statements. The Company also holds sums equivalent to three months' forward operating expenses in call accounts. The Directors review this policy regularly. The Company also has permission to borrow sums equivalent to 25% of NAV in accordance with the terms of its Articles of Association.
Maturity profile
The tables below analyses the Company's financial liabilities into the relevant maturity groupings based on the remaining period at the reporting date. The amounts in the table are the contractual undiscounted cash flows.
31st Dec 15 30th Jun 15
One to One to
Within five years Within five
one year one year years
------------ -------------- ------------ ---------
GBP GBP GBP GBP
Financial liabilities:
Trade and other payables 110,265 - 456,657 -
============ ============== ============ =========
Financial instruments by category
Amounts recognised in balance sheet according
to IAS 39
Fair value
recognised
Category in accordance in Fair
with Carrying Amortised
IAS 39 amount cost profit or value
loss Fair value
-------------
GBP GBP GBP GBP
At 31st December 2015:
Loans and receivables 744,149 744,149 - 744,149
Fair value through
profit or loss 23,854,208 - 23,854,208 23,854,208
Other liabilities 110,265 110,265 - 110,265
At 30th June 2015:
Loans and receivables 1,197,886 1,197,886 - 1,197,886
Fair value through
profit or loss 31,571,634 - 31,571,634 31,571,634
Other liabilities 456,657 456,657 - 456,657
Disclosure of material income, expenses, gains and losses resulting from financial assets and financial liabilities:
Fair value Financial
Loans and through liabilities
at
receivables profit or amortised
loss cost
GBP GBP GBP
31st December 2015:
Net loss on financial
assets and
derivatives at fair value
through
profit or loss - ( 7,560,198) -
Investment income 143,724 1,092,035 -
Loss on foreign exchange ( 2,338) - -
141,386 ( 6,468,163) -
30th June 2015:
Net loss on financial
assets and
derivatives at fair value
through profit
or loss - ( 2,195,724) -
Investment income 37,427 1,472,067 -
Loss on foreign exchange ( 16,398) - -
21,029 ( 723,657) -
Assets and liabilities not carried at fair value but for which fair value is disclosed
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The following tables analyse within the fair value hierarchy the Company's assets and liabilities (by class) not measured at fair value at 31st December 2015 and 30th June 2015 but for which fair value is disclosed.
At 31st December 2015:
Level Level Level 3 Total
1 2
GBP GBP GBP GBP
Assets
Loans receivable - 319,672 - 319,672
Trade and other receivables - 21,893 - 21,893
Cash and cash equivalents 402,584 - - 402,584
402,584 341,565 - 744,149
Liabilities
Trade and other payables - 110,265 - 110,265
At 30th June 2015:
Level Level Level 3 Total
1 2
GBP GBP GBP GBP
Assets
Loans receivable - 319,672 - 319,672
Trade and other receivables - 10,241 - 10,241
Cash and cash equivalents 867,973 - - 867,973
867,973 329,913 - 1,197,886
======== ======== ======= ==========
Liabilities
Trade and other payables - 456,657 - 456,657
The assets and liabilities included in the above table are carried at amortised cost; their carrying values are a reasonable approximation of fair value.
Cash and cash equivalents include deposits held by the banks. Loans receivable include the contractual amounts for settlement of obligations due to the Company.
Trade and other receivables include the loan interest and investment income receivables. Trade and other payables represent the contractual amounts and obligations due by the Company for settlement.
Capital Management
The Company is an investment company listed on AIM in London. Capital can only be increased either by the issue of new shares at net asset value or by borrowing up to the permitted limit of 25% of NAV. Capital can only be reduced by the repurchase and cancellation of shares, which requires shareholder approval. The Company seeks to provide long-term capital return in accordance with its stated investment policy from a diversified portfolio of securities of cleantech companies. The Company does not hold or intend to hold any derivatives other than those which may be embedded in or between the assets in the portfolio.
The Company will seek to maintain sufficient liquidity to be able to meet its financial obligations as they fall due.
16. CASH GENERATED FROM OPERATIONS
Period Period ended
ended
31st Dec 31st Dec
15 14
GBP GBP
Total comprehensive loss ( 7,824,771) ( 4,012,922)
Adjustments for:
Unrealised loss on financial assets
and
derivatives at fair value through profit
or loss 2,839,150 3,064,505
Realised loss on financial assets and
derivatives at fair value
through profit or loss 4,721,048 -
Net loss on foreign exchange: cash and
cash equivalents 2,338 3,824
Loan note interest income ( 928,994) ( 207,315)
Dividend income ( 306,347) ( 429,687)
Provision for interest receivable 928,994 942,633
(Increase) / decrease in trade and other
receivables ( 11,652) 38,507
Decrease in trade and other payables ( 126,392) ( 20,111)
CASH FLOWS FROM OPERATIONS ( 706,626) ( 620,566)
17. RELATED PARTY DISCLOSURE
Directors' remuneration and expenses payable for the period ended 31st December 2015 are disclosed in notes 4 and 12.
The terms and conditions of any transactions with key management personnel and their related parties are no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-key management personnel related entities on an arm's length basis.
On 21st December 2012, the Company entered into a revised Investment Advisory Agreement with the Adviser which took effect from 1st July 2012 in which it is entitled to receive a management fee from the Company at a rate of 2% of the Company's net asset value for each quarter end plus any distributions made to shareholders since 30th June 2012 which is payable quarterly in advance. In addition the Adviser was entitled to retain any fees received from providing directors to certain portfolio companies at LEF's nomination.
Under the terms of the original Investment Advisory Agreement the Adviser is also entitled to a performance fee which is payable in arrears in respect of each annual period ending 30th June. The first calculation period began on the admission date and ended on 30th June 2008. Under the updated Investment Advisory Agreement, the basis of the calculation of the performance fee was reset to 30th June 2012 and was payable to the Advisor if certain conditions were attained. On 1st September 2014, the shareholders approved the recommendation of the Directors to amend the fee arrangements under the Investment Advisory Agreement with effect from 1st July 2014, as follows:
- the Advisory fee is calculated at 2% of the Company's Net Asset Value, payable quarterly and any future distributions will no longer be added back for the purposes of the calculation; and
- the basis of the calculation of the performance fee has been reset to 30th June 2014 and is payable to the Adviser if certain conditions are attained.
During the period the Adviser's fee was GBP296,682 (period ended 31st December 2014: GBP350,748). No accrued Adviser's fees were outstanding as at the period end (year ended 30th June 2015: GBPnil). During the period the Adviser's expenses were GBPnil (period ended 31st December 2014: GBPnil).
The performance fee is dependent on the Company's performance and amounted to GBPnil for the period ended 31st December 2015 (period ended 31st December 2014: GBPnil). Further details are disclosed in note 3.
From time to time members of the LIL group may provide corporate financial services to the Company and investee companies. The Directors ensure that such services are pre-approved, provided on an arm's length basis and at market terms and that any possible conflicts of interest are disclosed.
In the period ended 31st December 2015, LIL provided directors fee services to certain portfolio companies and these fees were retained by LIL under the terms of the revised Investment Advisory Agreement, the total paid by portfolio companies for the period ended 31st December 2015 was GBP24,140 (period ended 31st December 2014: GBP101,615).
18. IMMEDIATE HOLDING COMPANY AND ULTIMATE CONTROLLING PARTY
In the opinion of the Directors there is no single ultimate controlling party since the criteria contained within the definition of "control" in IAS 24 - Related Party Disclosures are not satisfied by any one party.
19. SHAREHOLDERS' INTERESTS
As at the balance sheet date, the registered holdings of the Company of at least 3% of the total share capital as far as the Board is aware comprised:
Ordinary Percentage
AS AT 31ST DECEMBER 2015 shares held shareholding
Vidacos Nominees Limited 8,769,271 16.44%
HSBC Global Custody Nominee (UK) Limited
(814437) 7,568,308 14.19%
HSBC Global Custody Nominee (UK) Limited
(786698) 5,839,757 10.95%
Flintshire County Council 5,791,288 10.86%
Harewood Nominees Limited (4046320) 5,220,999 9.79%
Quintain Estates and Development
PLC 4,000,000 7.50%
Chase Nominees Limited 3,777,439 7.08%
HSBC Global Custody Nominee (UK) Limited
(771096) 3,669,094 6.88%
State Street Nominees Limited (OM04) 2,159,000 4.05%
AS AT 30TH JUNE 2015
Securities Services Nominees Limited 8,819,271 16.53%
HSBC Global Custody Nominee (UK) Limited
(814437) 7,568,308 14.19%
HSBC Global Custody Nominee (UK) Limited
(786698) 5,839,757 10.95%
Flintshire County Council 5,791,288 10.86%
Harewood Nominees Limited 5,220,999 9.79%
Quintain Estates and Development PLC 4,000,000 7.50%
Chase Nominees Limited 3,777,439 7.08%
HSBC Global Custody Nominee (UK) Limited
(771096) 3,669,094 6.88%
BNY (OCS) Nominees Limited 2,159,000 4.05%
20. INVESTMENTS 31st Dec 31st Dec 30th Jun 30th Jun
15 15 15 15
Cost Fair value Cost Fair value
Quoted equity securities: GBP GBP GBP GBP
Hydrodec Group plc
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