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.
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
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