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