TIDMTP7V
RNS Number : 2357G
TP70 2010 VCT PLC
04 June 2013
TP70 2010 VCT plc
Final Results
TP70 2010 VCT plc, managed by Triple Point Investment Management
LLP today announces the final results for the year ended 28
February 2013.
These results were approved by the Board of Directors on 3 June
2013.
You may view the Annual Report in on the Triple Point website
www.triplepoint.co.uk at
http://www.triplepoint.co.uk/investment-products/venture-capital-trust/tp70-range/tp70-2010-trading/.
About TP70 2010 VCT plc
TP70 2010 VCT plc ("the Company") is a Venture Capital Trust
("VCT"). The investment manager is Triple Point Investment
Management LLP. The Company was launched in October 2009 and raised
GBP8.3 million (net of expenses) through an offer for
subscription.
Details of the Fund's progress are discussed in the Chairman's
Statement and Investment Manager's Review forming part of the
extract from the Financial Statements which follows.
Venture Capital Trusts (VCTs)
VCTs were introduced in the Finance Act 1995 to provide a means
for private individuals to invest in unlisted companies in the UK.
Subsequent Finance Acts have introduced changes to VCT legislation.
The tax benefits currently available to eligible new investors in
VCTs include:
-- upfront income tax relief of 30%
-- exemption from income tax on dividends paid; and
-- exemption from capital gains tax on disposals of shares in VCTs
The Company has been approved as a VCT by HM Revenue &
Customs. In order to maintain its approval, the Company must comply
with certain requirements on a continuing basis. Above all, the
Company is required at all times to hold 70% of its investments (as
defined in the legislation) in VCT qualifying holdings, of which at
least 30% must comprise eligible ordinary shares.
Report of the Directors - Financial Summary
Year ended Year ended
28 February 29 February
2013 2012
GBP'000 GBP'000
Net assets 7,601 7,532
Net asset value per share 86.91p 86.12p
---------------------------- ------------- -------------
Net profit/(loss) before
tax 69 (545)
Profit/(loss) per share 0.79p (6.24p)
---------------------------- ------------- -------------
For a GBP1 investment per share investors, with a sufficient
income tax liability in the relevant year, will have already
received 30p tax relief which, taken together with the current NAV
of 86.91p, totals 116.91p.
TP70 2010 VCT plc ("the Company") is a Venture Capital Trust
("VCT"). The Investment Manager is Triple Point Investment
Management LLP ("TPIM"). The Company was launched in October 2009
and raised GBP8.3 million (net of expenses), through an offer for
subscription which closed on 31 May 2010.
The Directors' Report on pages 14 to 18 and the Directors'
Remuneration Report on pages 19 to 20 have each been drawn up in
accordance with the requirements of English law and liability in
respect thereof is also governed by English law. In particular, the
responsibility of the Directors for these reports is owed solely to
TP70 2010 VCT plc.
The Directors submit to the members their Annual Report and
Financial Statements for the Company for the year ended 28 February
2013. The Report of the Directors includes the Financial Summary,
Chairman's Statement, Details of Advisers, Shareholder Information,
Directors' Report, Investment Manager's Review, Directors'
Remuneration Report and the Corporate Governance Statement.
Report of the Directors - Chairman's Statement
I am writing to present the Financial Statements for TP70 2010
VCT plc ("the Company") for the year ended 28 February 2013.
Portfolio Construction
During the year the Company secured its VCT qualifying status by
satisfying the test of being 70% invested in VCT qualifying
investments, which now represent 75% of total investments. The
qualifying investment portfolio has been constructed a year ahead
of the target date outlined in its investment strategy.
In selecting its qualifying investments the Company has been
able to take advantage of a number of attractive investment
opportunities. The portfolio comprises investments in the renewable
energy sector and cinema digitisation, further details of which are
included in the Investment Manager's Review.
More information on the Company's investment portfolio is given
in the Investment Manager's Review.
Net Asset Value
During the year the Company made a profit of GBP69,000 or 0.79p
per share. This has been driven by the performance of the GAM
investments and the solar companies. As at 28 February 2013 the NAV
per share stood at 86.91p.
Risks
The Board believes that the principal risks facing the Company
are:
-- investment risk associated with exposure to GAM;
-- investment risk associated with VCT qualifying investments;
and
-- failure to maintain approval as a VCT.
The Board believes these risks are manageable and, with the
Investment Manager, continues to work to minimise both the
likelihood or potential impact of these risks, within the scope of
the Company's established investment strategy. Further details of
how these risks are managed are provided within the Directors'
Report and the notes to the Financial Statements.
Outlook
The Board is pleased that the Company has secured its VCT
qualifying status and has in place a diversified portfolio of
stable investments.
If you have any queries or comments, please do not hesitate to
telephone Triple Point Investment Management LLP on 020 7201
8989.
Charles Metcalfe
Chairman
3 June 2013
Report of the Directors - Details of Directors
Charles Metcalfestarted his career at JPMorgan, first within the
commodities area and then emerging markets corporate finance. After
nine years he moved to investment management, first at Merrill
Lynch and later Goldman Sachs, focusing on institutional clients in
Europe and the Middle East. After an entrepreneurial spell running
a start up e-commerce investment firm, he was appointed as Deputy
CEO of Hermes Investment Management and later became CEO of First
State Investments, the Emerging Market specialist house. He is
currently CEO of Nikko Asset Management Europe, an Asia focused
investment business. Charlie is a Trustee to Leukaemia &
Lymphoma Research and to the Sainsbury family Kay Kendal Leukaemia
Fund. He is also an adviser to Auden Capital, a boutique corporate
finance firm within the investment industry. He is a graduate of
Yale University.
Simon Acland has over twenty years' experience in venture
capital, primarily at Quester, where he became Managing Director.
When Quester was sold in 2007 it had GBP200m under management and
was one of the leading UK venture capital and VCT investment
managers. Simon was a director of over 20 companies within
Quester's portfolio, several of which achieved successful exits
through flotation or trade sales. Simon is also a director of
Triple Point Income VCT plc, Elektron Technology plc and various
other private companies and charities.
Professor Elroy Dimson is Emeritus Professor at London Business
School, Visiting Professor at Cambridge Judge Business School, and
Chairman of the Strategy Council for the Norwegian Government
Pension Fund. He previously served London Business School as
Professor of Finance, Faculty Governor, Chair of the Finance and of
the Accounting areas, and Dean of MBA Programmes. He has held a
variety of board and investment committee positions in listed
investment companies, pension funds, and charitable endowments.
Report of the Directors - Details of Advisers
Secretary and Registered Office
Triple Point Investment Management LLP
4-5 Grosvenor Place
London
SW1X 7HJ
Registered Number
7039066
Investment Manager and Administrator
Triple Point Investment Management LLP
4-5 Grosvenor Place
London
SW1X 7HJ
Independent Auditor
Grant Thornton UK LLP
Chartered Accountants and Statutory Auditor
3140 Rowan Place
John Smith Drive
Oxford Business Park South
Oxford
OX4 2WB
Solicitors
Howard Kennedy
19 Cavendish Square
London
W1A 2AW
Registrars
Neville Registrars Limited
Neville House
18 Laurel Lane
Halesowen
West Midlands
B63 3DA
VCT Tax Adviser
PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RN
Bankers
The Royal Bank of Scotland plc
54 Lime Street
London
EC3M 7NQ
Report of the Directors - Shareholder Information
The Company
TP70 2010 VCT plc is a Venture Capital Trust. The Investment
Manager is Triple Point Investment Management LLP ("TPIM"). The
Company was incorporated on 13 October 2009. A Prospectus offering
for subscription up to 50,000,000 Ordinary Shares of GBP1 each was
issued on 2 February 2010. The offer closed on 31 May 2010 with
GBP8.3m having been raised after initial costs.
The Company's strategy is to offer combined exposure to a GAM
managed portfolio of hedge funds and to venture capital investments
focused on companies with contractual revenues from financially
secure counterparties. By the end of the third year it was intended
that at least 70% of the fund would be committed to VCT qualifying
holdings with up to 30% remaining exposed to GAM funds.
Venture Capital Trusts
VCTs were introduced in the Finance Act 1995 to provide a means
for private individuals to invest in unquoted companies in the UK.
The Finance Act 2004 introduced changes to VCT legislation designed
to make VCTs more attractive to investors. The tax benefits
available to eligible investors in VCTs include:
-- up-front income tax relief of 30%.
-- exemption from income tax on dividends received.
-- exemption from capital gains tax on disposals of shares in VCTs.
The Company was provisionally approved as a VCT by Her Majesty's
Revenue and Customs ("HMRC"). In order to maintain its approval the
Company must comply with certain requirements on a continuing
basis. Within three years from the effective date of provisional
approval or later allotment at least 70% of the Company's
investments must comprise "qualifying holdings" of which at least
30% must be in eligible ordinary shares. This investment criterion
has now been achieved.
Financial Calendar
The Company's financial calendar is as follows:
11 July 2013 Annual General Meeting
October 2013 Interim report despatched for the six months ending 31 August 2012
June 2014 Results for the year to 28 February 2013 announced;
Annual Report and Financial
Statements published.
Share Price
The Company has a share buy-back facility, committing to buy
back shares at no more than a 10% discount to the prevailing NAV.
We will be asking shareholders at the Annual General Meeting to
extend the facility for the Company to purchase shares in the
market for cancellation.
Shareholders should note that if they sell their shares within
five years of subscription they forfeit any tax relief obtained. If
you are considering selling your shares please contact TPIM on 020
7201 8989.
Investment Manager's Review
During the year the Company was able to make further investments
into qualifying businesses, investing a net GBP2.4 million, so that
as at 28 February 2013, qualifying investments represented 75% of
net assets.
We are pleased that this programme ensured that the Company
satisfied the requirement to be 70% invested in qualifying
investments.
The portfolio of small, unquoted investments is split between 14
companies across two sectors: cinema digitisation and renewable
electricity generation from solar PV, anaerobic digestion and
landfill gas.
Each of these investments meets Triple Point's investment
criteria, with projected revenues generated by good quality
customers and the potential for steady returns. Investments in each
sector have been made with the benefit of rigorous selection
criteria, including extensive due diligence and expert technical
assessment.
Sector Analysis
The unquoted qualifying investment portfolio can be analysed as
follows:
Electricity Generation
Solar Anaerobic Landfill Total Qualifying
Industry Sector Cinema Digitisation PV Digestion Gas Investments
----------------------------- --------------------- --------- ------------ ---------- ------------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------- ------------ ---------- ------------------
Investments at 29 February
2012 - 3,300 500 - 3,800
--------------------- --------- ------------ ---------- ------------------
Investments disposed
of during the year - - (500) - (500)
--------------------- --------- ------------ ---------- ------------------
Investments made during
the year 1,000 - 725 640 2,365
--------------------- --------- ------------ ---------- ------------------
Revaluation of Investments
at 28 February 2013 - 92 - - 92
--------------------- --------- ------------ ---------- ------------------
Investments at 28 February
2013 1,000 3,392 725 640 5,757
--------------------- --------- ------------ ---------- ------------------
Qualifying Investments
% 17.37% 58.92% 12.59% 11.12% 100.00%
----------------------------- --------- ------------ ---------- ------------------
Number of Companies 1 10 1 2 14
----------------------------- --------- ------------ ---------- ------------------
VCT Sector Portfolio
Cinema Digitisation
The business in the portfolio that owns, maintains and operates
digital equipment in cinemas in the UK and Continental Europe
continues to perform in line with the objectives. Digital cinema
projection conversion is paid for under the globally recognised
Virtual Print Fee model, through which film studios pay for the
cost of the deployment over a number of years. The majority of the
revenues come from the six major investment grade Hollywood
Studios. Film booking rates are significantly ahead of base line
projections.
Solar PV
The Company's investment portfolio includes 10 holdings in
businesses generating renewable electricity from residential solar
PV panels. Each company maintains relationships with specialist
partners for technical and legal advice and operational
maintenance. The solar businesses derive their revenues from the
payment of index-linked Feed-In Tariffs (FITs), which are paid by
the utility company E.ON. The performance of each of these
businesses is closely monitored by Triple Point. We are pleased to
report that the valuation review resulted in a modest uplift for
the sector as a whole.
Anaerobic Digestion
The Company also has an investment in a renewable energy
generating venture which operates a 1 MW anaerobic digestion plant.
The plant uses agricultural feed stocks to generate electricity for
sale to a utility company. The electricity generation also attracts
the Feed-in Tariff which provide RPI linked revenues for a 20 year
period. The extraordinary high rainfall in 2012 contributed to a
series of problems. The commissioning of the plant took place
later than planned and the poor harvest has had an impact on
feed stock quality. Whilst construction was completed, the plant
has since been operating below optimum efficiency.
Landfill Gas
The Company was able to take advantage of the opportunity to
fund businesses seeking to generate renewable electricity from
landfill gas from sites owned by public bodies in Northern Ireland.
The gas is extracted from capped sites; these enterprises are at
different stages of maturity, with the first having started to
generate electricity for export to the National Grid in December
2012 These businesses give access to long term, reliable cash flows
generated from strong counterparties through Government enshrined
legislation Renewable Obligation Certificates (ROCs), the sale of
electricity to a utility company and the potential for sale of
electricity to local authorities.
Further details of the Company's ten largest unquoted
investments are given on pages 9 to 13.
GAM Review
GAM reported as follows for the period under review:
GAM Trading II GBP Open returned 3.7% in the twelve month period
29 February 2012 to 28 February 2013. Over the same period, the
fund out-performed the HFRI/HFRX Global Hedge Fund Index that was
up 2.8%.
As the first half of 2012 came to a close, the similarities with
2011 were fairly striking. Just as the early part of 2011 favoured
risk assets only to eventually be offset by concerns in Europe,
such was also the case for 2012. This broadly resulted in losses
for equities and commodities, while government bonds rallied along
with the US dollar. As a result, the fund experienced losses up
until June driven primarily by managed futures trend
strategies.
Going into the third quarter of 2012, risk assets generally
performed well following accommodative policy announcements coming
from the Fed and ECB. Equity markets closed up for the quarter,
with most of the gains occurring in August and September, as
markets turned positive in reaction to ECB President Mario Draghi's
July comments about preserving the euro, and then continued to
rally through mid-September when the Fed delivered further
quantitative easing. Fixed income yields traded within a range but
fell following the Federal Open Market Committee announcement.
Trading strategies had a strong quarter with all sub-strategies
posting positive returns. The portfolio finished the year with a
positive fourth quarter, largely on the back of moves in currencies
and, to a lesser extent, select risk assets.
As we head into 2013 we continue to believe that the outlook is
promising for GAM Trading II as a result of both an improved
opportunity set as well as changes we have made to the portfolio.
Markets are no longer solely focused upon the sustainability of US
growth or the depth of problems in Europe. While these issues
remain outstanding and should provide a source of returns for our
managers, opportunities have also surfaced in Japan, as well as the
emerging markets, neither of which have existed for quite some
time. This has been augmented by changes we have made in the
portfolio over the past two years to increase our exposure to
managers with non-directional expertise, add commodity specialists
and engage in the use of customised solutions. We believe that the
portfolio is in a better position to deliver higher returns. This
can be most easily measured by examining the amount of risk within
the portfolio, which has increased over the past two quarters to
levels we believe to be necessary to deliver upon the its return
goals.
Outlook
Having established the VCT's investment portfolio, our attention
is focussed on ensuring it continues to perform in line with
expectations. The businesses into which your Company invested are
designed to provide it with stable performance over the longer
term. This combined with GAM Trading forms the investment strategy
for the Company.
If you have any questions, please do not hesitate to call us on
020 7201 8990.
Claire Ainsworth
Managing Partner
for Triple Point Investment Management LLP
3 June 2013
Report of the Directors- Investment Portfolio
28 February 2013 29 February 2012
---------------------------------------- ----------------------------------------
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Unquoted Investments
Qualifying Holdings 5,665 73.94 5,757 75.18 3,800 49.24 3,800 50.46
Non Qualifying Holdings:
Money Market funds - - - - 900 11.67 900 11.94
GAM Exposure
GAM Trading II GBP 1.25XL 711 9.28 743 9.70 1,238 16.03 1,244 16.52
Derivative 1,230 16.06 1,104 14.42 1,230 15.93 1,032 13.71
Financial Assets at
fair value through profit
or loss 7,606 99.28 7,604 99.30 7,168 92.87 6,976 92.63
Cash and cash equivalents 52 0.72 52 0.70 554 7.13 554 7.37
7,658 100.00 7,656 100.00 7,722 100.00 7,530 100.00
========= ======== ========= ======== ========= ======== ========= ========
Unquoted Qualifying
Holdings
Cinema Digitisation
DLN Digital Ltd 1,000 13.06 1,000 13.06 - - - -
Electricity Generation
Solar
AH Power Ltd 400 5.22 385 5.03 400 5.18 400 5.31
Arraze Ltd 500 6.53 523 6.83 500 6.48 500 6.64
Bandspace Ltd 500 6.53 542 7.08 500 6.48 500 6.64
Bridge Power Ltd 250 3.26 261 3.41 250 3.24 250 3.32
Core Generation Ltd 250 3.26 261 3.41 250 3.24 250 3.32
Druman Green Ltd 250 3.26 259 3.38 250 3.24 250 3.32
Fellman Solar Ltd 250 3.26 256 3.34 250 3.24 250 3.32
Haul Power Ltd 250 3.26 264 3.45 250 3.24 250 3.32
Helioflair Ltd 400 5.22 383 5.00 400 5.18 400 5.31
Trym Power Ltd 250 3.26 258 3.37 250 3.24 250 3.32
Anaerobic Digestion
Katharos Organic Ltd 725 9.47 725 9.47 - - - -
Nanuq Power Ltd - - - - 500 6.48 500 6.64
Landfill Gas
Aeris Power Ltd 400 5.22 400 5.22 - - - -
Craigahulliar Energy
Ltd 240 3.13 240 3.13 - - - -
5,665 73.94 5,757 75.18 3,800 49.24 3,800 50.46
========= ======== ========= ======== ========= ======== ========= ========
Unquoted Non Qualifying
Holdings
Money Market Funds
Deutsche Global Liquidity
Managed Sterling Fund - - - - 300 3.89 300 3.98
Ignis Sterling Liquidity
Fund Share - - - - 300 3.89 300 3.98
Insight GBP Liquidity
Fund - - - - 300 3.89 300 3.98
- - - - 900 11.67 900 11.94
========= ======== ========= ======== ========= ======== ========= ========
Investments are measured at fair value through profit or loss.
The initial best estimate of fair value of these investments that
are either quoted or not quoted on an active market is the
transaction price (i.e. cost). The fair value of these investments
is subsequently measured by reference to the enterprise value of
the investee company, which is deemed best to reflect the fair
value. Where the Board considers the investee company's enterprise
value to remain unchanged since acquisition, investments continue
to be held at cost less any loan repayments received. Where the
Board considers the investee company's enterprise value has changed
since acquisition, investments are held at a value measured using a
discounted cash flow model.
Report of the Directors- Investment Portfolio - Additional
Information on the Ten Largest VCT Unquoted Investments
DLN Digital Ltd
Income recognised Equity
by TP70 2010 Held by Equity Held
Date of Valuation Valuation for the year TP70 2010 by TPIM managed
first investment Cost GBP GBP Method GBP'000 % funds % *
Enterprise
30-Mar-12 1,000,000 1,000,000 Value 32 19.31 98.04
Summary of Information from Investee Company Financial
Statements ending in 2012: GBP'000
Turnover 945
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 638
Profit/(loss) before
tax (287)
Net assets before
VCT loans 4,570
Net assets 853
DLN Digital Ltd owns, maintains and operates digital equipment at 29
cinemas in the UK, Ireland and Italy. It continues to perform in line
with its objectives. Digital cinema projection conversion is paid for
under the globally recognised Virtual Print Fee model, through which
film studios pay for the cost of the deployment over a number of years
with the majority of the company's revenues derived from the six major
investment grade Hollywood Studios. During the year it acquired the whole
of the share capital of a smaller company, Two For Joy Digital Ltd, all
of whose installations are in Ireland. The figures from the financial
statements reflect the position before that acquisition.
-------------------------------------------------------------------------------------------------------------------
AH Power
Ltd
Income recognised Equity
by TP70 2010 Held by Equity Held
Date of Valuation Valuation for the year TP70 2010 by TPIM managed
first investment Cost GBP GBP Method GBP'000 % funds % *
Enterprise
05-Dec-11 400,000 385,000 Value 14 19.61 98.05
Summary of Information from Investee Company Financial
Statements ending in 2012: GBP'000
Turnover 83
Earnings before interest, tax, amortisation and depreciation
(EBITDA) (3)
Profit/(loss) before
tax (74)
Net assets before
VCT loans 1,925
Net assets 525
AH Power Limited is a small venture capital funded business with an established
portfolio of roof mounted, residential solar PV panels which have been
generating electricity since 2011. Its revenues are generated from the
sale of the electricity and the receipt of the Feed-in Tariffs.
-------------------------------------------------------------------------------------------------------------------
Arraze
Ltd
Income recognised Equity
by TP70 2010 Held by Equity Held
Date of Valuation Valuation for the year TP70 2010 by TPIM managed
first investment Cost GBP GBP Method GBP'000 % funds % *
Enterprise
30-Mar-11 500,000 523,000 Value 18 15.92 98.7
Summary of Information from Investee Company Financial
Statements ending in 2012: GBP'000
Turnover 97
Earnings before interest, tax, amortisation and depreciation
(EBITDA) (46)
Profit/(loss) before
tax (136)
Net assets before
VCT loans 2,963
Net assets 1,033
Arraze Limited generates renewable electricity from its portfolio of
residential roof mounted solar PV panels, which it owns and operates
at sites across the UK. It has a reliable, long term index-linked revenue
stream supported by receipt of the Feed-in Tariffs. After its initial
purchase of panels in November 2011, the business expanded its portfolio
of solar panels in both 2012 and 2013.
------------------------------------------------------------------------------------------------------------------
Bandspace Ltd
Income recognised Equity
by TP70 2010 Held by Equity Held
Date of Valuation Valuation for the year TP70 2010 by TPIM managed
first investment Cost GBP GBP Method GBP'000 % funds % *
Enterprise
30-Mar-11 500,000 542,000 Value 17 15.43 98.75
Summary of Information from Investee Company Financial
Statements ending in 2012: GBP'000
Turnover 149
Earnings before interest, tax, amortisation and depreciation
(EBITDA) 30
Profit/(loss) before
tax (71)
Net assets before
VCT loans 3,128
Net assets 888
Bandspace Ltd is a small business that has owned a portfolio of roof
mounted solar PV panels which generate renewable electricity since 2011.
It has a reliable, long term index-linked revenue stream supported by
receipt of the Feed-in Tariffs.
------------------------------------------------------------------------------------------------------------------
Bridge Power Ltd
Income recognised Equity
by TP70 2010 Held by Equity Held
Date of Valuation Valuation for the year TP70 2010 by TPIM managed
first investment Cost GBP GBP Method GBP'000 % funds % *
Enterprise
04-Apr-11 250,000 261,000 Value 9 9.04 98.53
Summary of Information from Investee Company Financial Statements
ending in 2012: GBP'000
Turnover 100
Earnings before interest, tax, amortisation and depreciation
(EBITDA) (26)
Profit/(loss) before
tax (114)
Net assets before
VCT loans 2,611
Net assets 943
Bridge Power generates renewable electricity from its portfolio of residential
roof mounted solar PV panels, which it owns and operates at sites across
the UK. It has a reliable, long term index-linked revenue stream supported
by receipt of the Feed-in Tariffs. After its initial purchase of panels
in November 2011, the business expanded its portfolio of solar panels
in both 2012 and 2013.
------------------------------------------------------------------------------------------------------------------
Core Generation Ltd
Income recognised Equity
by TP70 2010 Held by Equity Held
Date of Valuation Valuation for the year TP70 2010 by TPIM managed
first investment Cost GBP GBP Method GBP'000 % funds % *
Enterprise
04-Apr-11 250,000 261,000 Value 9 9.47 98.46
Summary of Information from Investee Company Financial
Statements ending in 2012: GBP'000
Turnover 100
Earnings before interest, tax, amortisation and depreciation
(EBITDA) (26)
Profit/(loss) before
tax (112)
Net assets before
VCT loans 2,487
Net assets 907
Core Generation Ltd has been operating in the residential solar PV market
since 2011, when it purchased a portfolio of roof mounted panels, which
provide it with a reliable, long term index-linked revenue stream supported
by receipt of the Feed-in Tariffs. It augmented its original asset base
in both 2012 and 2013, purchasing additional panels.
------------------------------------------------------------------------------------------------------------------
Haul Power Ltd
Income recognised Equity
by TP70 2010 Held by Equity Held
Date of Valuation Valuation for the year TP70 2010 by TPIM managed
first investment Cost GBP GBP Method GBP'000 % funds % *
Enterprise
04-Apr-11 250,000 264,000 Value 9 12.25 98
Summary of Information from Investee Company Financial Statements
ending in 2012: GBP'000
Turnover 100
Earnings before interest, tax, amortisation and depreciation
(EBITDA) (26)
Profit/(loss) before
tax (90)
Net assets before VCT
loans 1,909
Net assets 509
Haul Power Ltd has been generating renewable electricity from its portfolio
of roof mounted solar PV panels since 2011. Generating electricity provides
the company with a reliable, long term index-linked revenue stream with
the support of the Feed-in Tariffs.
------------------------------------------------------------------------------------------------------------------
Helioflair
Ltd
Income recognised Equity
by TP70 2010 Held by Equity Held
Date of Valuation Valuation for the year TP70 2010 by TPIM managed
first investment Cost GBP GBP Method GBP'000 % funds % *
Enterprise
05-Dec-11 400,000 383,000 Value 14 19.61 98.04
Summary of Information from Investee Company Financial
Statements ending in 2012: GBP'000
Turnover 62
Earnings before interest, tax, amortisation and depreciation
(EBITDA) (21)
Profit/(loss) before
tax (67)
Net assets before VCT
loans 1,932
Net assets 532
Helioflair Limited generates renewable electricity from its portfolio of
residential roof mounted solar PV panels, which it owns and operates at
sites across the UK. It has a reliable, long term index-linked revenue
stream supported by receipt of the Feed-in Tariffs. Helioflair established
its network of panels in 2011, since when the business has expanded with
further purchases in both 2012 and 2013.
------------------------------------------------------------------------------------------------------------------
Katharos Organic
Ltd
Income recognised Equity
by TP70 2010 Held by Equity Held
Date of Valuation Valuation for the year TP70 2010 by TPIM managed
first investment Cost GBP GBP Method GBP'000 % funds % *
Enterprise
30-Mar-12 725,000 725,000 Value 23 19.38 98.68
Summary of Information from Investee Company Financial
Statements ending in 2012: GBP'000
Turnover -
Earnings before interest, tax, amortisation and depreciation
(EBITDA) (169)
Profit/(loss) before
tax (172)
Net assets before
VCT loans 2,348
Net assets 563
Katharos has funded the construction of a farm based 1 MW Anaerobic Digestion
plant in Essex. The plant is now operational and generating electricity,
which is sold to a major utility company. The plant uses agricultural
feed stocks which are converted to a methane rich biogas. Katharos' deriving
its revenues from the sale of the electricity supported by the Feed-in
Tariff regime which will provide the company with a 20 year RPI linked
cash flow. The Company's plant has recently operated below potential
as a result of a shortage of quality feedstock after unusually wet conditions
during the year 2012.
------------------------------------------------------------------------------------------------------------------
Aeris Power Ltd
Income recognised Equity
by TP70 2010 Held by Equity Held
Date of Valuation Valuation for the year TP70 2010 by TPIM managed
first investment Cost GBP GBP Method GBP'000 % funds % *
Enterprise
04-Apr-12 400,000 400,000 Value 1 19.64 98.19
Summary of Information from Investee Company Financial
Statements ending in 2012: GBP'000
none filed
Aeris Power Ltd was established to take advantage of the opportunity
to generate renewable electricity by extracting landfill gas at former
local authority landfill sites in Northern Ireland, with revenues supported
by ROCs.
------------------------------------------------------------------------------------------------------------------
The basis of valuation for all investments is enterprise
value.
The investments are a combination of debt and equity.
* Equity holding is equal to the voting rights
Report of the Directors - Directors' Report
The Directors present their Report and the audited Financial
Statements for the year ended 28 February 2013.
The business review below has been prepared in accordance with
the requirements of S417 of the Companies Act 2006 and forms part
of the Report of the Directors to shareholders. The Company's
independent auditor is required by law to report on whether the
information given in the Directors' Report (including the business
review) is consistent with the Financial Statements. The auditor's
opinion is given on pages 26 to 27.
Activities and Status
The Company is a Venture Capital Trust and its main activity is
investing.
The Directors are required by S417 of the Companies Act 2006 to
provide a review of the business. The business review is set out
below with which should be included the Chairman's Statement on
pages 1 to 2 and Investment Manager's Review on pages 6 to 7.
The Company has been provisionally approved as a VCT by
HMRC.
The Company has been managed with the intention of maintaining
its status as an approved Venture Capital Trust for the purposes of
S274 of the Income Tax Act 2007. The Company was not at any time up
to the date of this report a close company within the meaning of
S439 of the Corporation Tax Act 2010.
There have been no significant post balance sheet events.
Business Review and Key Performance Indicators
The Board has a number of performance measures to assess the
Company's success in meeting its objectives. These include the net
asset value, revenue and capital return, dividend per share and the
percentage of VCT qualifying investments. Further details are
provided within the Financial Summary and Chairman's Statement on
page 1 and the Investment Manager's Review on page 6. The Board is
pleased to report that the Company has now satisfied all the VCT
qualifying conditions laid down by HM Revenue & Customs.
The Board carries out a regular review of the environment in
which the Company operates. The main areas of risk identified by
the Board, along with the risks to which the Company is exposed
through its operational and investing activities, are detailed on
page 16 under the heading "Financial Risk Management Objectives and
Policies" and in note 17, "Financial Instruments and Risk
Management".
Investment Policy
To comply with VCT rules, the Company must within a three year
period have (and subsequently maintain) at least 70% by value of
its investments represented by qualifying investments. The
Company's objective was to invest at least 70% of the net proceeds
of the offers in qualifying investments, typically in investments
ranging between GBP500,000 and GBP2,000,000, in less than three
years. Prior to investment in qualifying investments, approximately
70% of the value of its investments was to be held in cash, liquid
investments and investments similar to the qualifying investments.
No single investment by the Company represents more than 15% by
value of the Company's investments at the time of the
investment.
Qualifying Investments
TPIM pursued investments in a range of businesses but those
targeted were subject to the specific investment criteria discussed
below. The objective was to build a reasonably diversified
portfolio of young, unquoted companies which are cash generative
and, therefore, capable of producing income and capital repayments
to the Company prior to their disposal by the Company.
Although invested in diverse businesses, TP70 2010's portfolio
comprises companies with certain characteristics, for example
clear, commercial and financial objectives, strong customer
relationships and where possible tangible assets with value. TPIM
focused on identifying businesses typically with contractual
revenues from financially sound counterparties or a stream of
predictable transactions with multiple clients. Businesses with
assets providing valuable security were also considered. The
objective is to reduce the risk of losses through reliability of
cash flow or quality of asset backing and to provide investors with
a potentially attractive income stream and modest but accessible
capital growth.
Non Qualifying Investments
Prior to the third anniversary after which the Company may have
no more than 30% of the net proceeds of the offers in non
qualifying investments, the Company may invest up to 49% of the Net
Asset Value in a portfolio comprising directly or indirectly, GAM
Trading 1.25xl GBP, GAM Multi-Focused Macro SP USD Open, GAM
Multi-Systematic Trading USD Open and a derivative in respect of
GAM Trading II GBP Open with 2.5 times leverage (the "Index"). The
Index, through its components, provides exposure similar to that of
GAM Trading II Inc.'s fund of hedge funds, GAM Trading II- GBP
Open, leveraged one and a half times with the objective of
providing capital appreciation with diversification of risk.
The non qualifying investments not invested in the above
portfolio consist of cash and liquid investments.
The Directors intend to return cash raised from exits promptly
to shareholders, who will be given the opportunity to vote for the
Company's discontinuation after six years.
TPIM aimed to achieve the Company's objectives (relatively low
risk of capital loss, low correlation to traditional asset classes
and a rapid exit after five years) in part by investing on the
basis of certain conservative principles in both fund of hedge
funds and venture capital investments:
Fund of hedge funds ("non-qualifying" investments under the tax
rules applying to VCTs):
-- in appointing GAM as its sub-adviser to select funds of hedge
funds, TPIM selected one of the acknowledged leaders in the fund of
hedge fund management industry.
In respect of Venture Capital Investments (which represent
qualifying investments under the tax rules applying to VCTs) TPIM
sought:
-- investments in which robust due diligence has been undertaken into target investments;
-- investments in which there is a high level of access to
regular material financial and other information;
-- investments in which the risk of capital losses is minimised
through careful analysis of the collateral available to investee
companies; and
-- investments in which there is a strong relationship with the key decision makers.
Directors
The Directors of the Company during the year were:
Charles Metcalfe (Chairman)
Simon Acland
Elroy Dimson
At 28 February 2013 Charles Metcalfe held 100,000 ordinary
shares of 1p each (2012: 100,000). There have been no changes in
the holdings of the Directors between 28 February 2013 and the date
of this report.
Simon Acland being a Director of one other TPIM advised VCT is
not considered independent. Therefore he will retire and offer
himself for re-election at the Annual General Meeting to be held on
11 July 2013. At least one other Director has to be re-elected
every three years. Therefore Charles Metcalfe will retire and offer
himself for re-election at the forthcoming Annual General
Meeting.
The Board has considered the provisions B.7.2 of the UK
Corporate Governance Code (June 2010) and believes that all the
Directors continue to be effective and demonstrate commitment to
their roles, the Board and the Company.
Directors' and Officers' Liability Insurance
The Company has, as permitted by S233 of the Companies Act 2006,
maintained insurance cover on behalf of the Directors and Company
Secretary, indemnifying them against certain liabilities which may
be incurred by them in relation to their offices with the
Company.
Management
TPIM acts as Investment Manager to the Company. Theprincipal
terms of the Company's management agreement with TPIM are set out
in note 6 to the Financial Statements.
The Board has evaluated the performance of the Investment
Manager based on the returns generated since taking on the
management of the Fund and a review of the management contract and
the services provided in accordance with its terms. As required by
the Listing Rules, the Directors confirm that in their opinion the
continuing appointment of TPIM as Investment Manager is in the best
interests of the shareholders as a whole. In reaching this
conclusion the Directors have taken into account the performance of
other VCTs managed by TPIM and the service provided by TPIM to the
Company.
Substantial Shareholdings
As at the date of this report no disclosures of major
shareholdings had been made to the Company under Disclosure and
Transparency Rule 5 (Vote Holder and Issuer Notification
Rules).
Annual General Meeting
Notice convening the 2013 Annual General Meeting of the Company
and a form of proxy in respect of that meeting can each be found at
the end of this document.
Financial Risk Management Objectives and Policies
As a Venture Capital Trust the Company's objective is to provide
shareholders with an attractive income and capital return by
investing its funds in a broad spread of unlisted UK companies
which meet the relevant criteria for investment by Venture Capital
Trusts.
The Board carries out a regular review of the environment in
which the Company operates. The main areas of risk identified by
the Board are as follows:
-- Financial instrument risk, market risk and liquidity risk as described in note 17.
-- VCT qualifying status risk: the Company is required at all
times to observe the conditions laid down in the Income Tax Act
2007 for the maintenance of approved VCT status. The loss of such
approval could lead to the Company losing its exemption from
corporation tax on capital gains, to investors being liable to pay
income tax on dividends received from the Company and, in certain
circumstances, to investors being required to repay the initial
income tax relief on their investment. The Investment Manager keeps
the Company's VCT qualifying status under continual review and
reports to the Board on a quarterly basis. The Board has also
retained PricewaterhouseCoopers LLP to undertake an independent VCT
status monitoring role.
Environmental, Social and Employee Issues
Due to the nature of the Company's activities, employee issues
do not apply to it directly and therefore no disclosures in respect
of these matters have been included in the Financial Statements.
Its investment in companies engaged in energy generation from
renewable sources means it will contribute to the reduction in
carbon emissions.
Share Capital, Rights Attaching to the Shares and Restrictions
on Voting and Transfer
The Company's share capital is GBP600,000 divided into
60,000,000 shares of 1p each, of which 8,746,340 shares were in
issue at 28 February 2013. As at that date none of the issued
shares was held by the Company as treasury shares. Subject to any
suspension or abrogation of rights pursuant to relevant law or the
Company's articles of association, the shares confer on their
holders (other than the Company in respect of any treasury shares)
the following principal rights:
a) the right to receive out of profits available for
distribution such dividends as may be agreed to be paid (in the
case of a final dividend in an amount not exceeding the amount
recommended by the Board as approved by shareholders in general
meeting or in the case of an interim dividend in an amount
determined by the Board). All dividends unclaimed for a period of
12 years after having become due for payment are forfeited
automatically and cease to remain owing by the Company;
b) the right, on a return of assets on a liquidation, reduction
of capital or otherwise, to share in the surplus assets of the
Company remaining after payment of its liabilities pari passu with
other holders of ordinary shares; and
c) the right to receive notice of and to attend and speak and
vote in person or on a poll by proxy at any general meeting of the
Company. On a show of hands every member present or represented and
voting has one vote and on a poll every member present or
represented and voting has one vote for every share of which that
member is the holder; the validly executed appointment of a proxy
must be received not less than 48 hours before the time of the
holding of the relevant meeting or adjourned meeting or, in the
case of a poll taken otherwise than at or on the same day as the
relevant meeting or adjourned meeting, be received after the poll
has been demanded and not less than 24 hours before the time
appointed for the taking of the poll.
These rights can be suspended. If a member, or any other person
appearing to be interested in shares held by that member, has
failed to comply within the time limits specified in the Company's
articles of association with a notice pursuant to S793 of the
Companies Act 2006 (notice by a Company requiring information about
interests in its shares), the Company can until the default ceases
suspend the right to attend and speak and vote at a general meeting
and if the shares represent at least 0.25% of their class the
Company can also withhold any dividend or other money payable in
respect of the shares (without any obligation to pay interest) and
refuse to accept certain transfers of the relevant shares.
Shareholders, either alone or with other shareholders, have
other rights as set out in the Company's articles of association
and in company law (principally the Companies Act 2006).
A member may choose whether his or her shares are evidenced by
share certificates (certificated shares) or held in electronic
(uncertificated) form in CREST (the UK electronic settlement
system). Any member may transfer all or any of his or her shares,
subject in the case of certificated shares to the rules set out in
the Company's articles of association or in the case of
uncertificated shares to the regulations governing the operation of
CREST (which allow the Directors to refuse to register a transfer
as therein set out); the transferor remains the holder of the
shares until the name of the transferee is entered in the register
of members. The Directors may refuse to register a share transfer
if it is in respect of a certificated share which is not fully paid
up or on which the Company has a lien provided that, where the
share transfer is in respect of any share admitted to the Official
List maintained by the UK Listing Authority, any such discretion
may not be exercised so as to prevent dealings taking place on an
open and proper basis, or if in the opinion of the Directors (and
with the concurrence of the UK Listing Authority) exceptional
circumstances so warrant, provided that the exercise of such power
will not disturb the market in those shares. Whilst there are no
squeeze-out and sell-out rules relating to the shares in the
Company's articles of association, shareholders are subject to the
compulsory acquisition provisions in S974 to S991 of the Companies
Act 2006.
Amendment of Articles of Association
The Company's articles of association may be amended by the
members of the Company by special resolution (requiring a majority
of at least 75% of the persons voting on the relevant
resolution).
Appointment and Replacement of Directors
A person may be appointed as a Director of the Company by the
shareholders in general meeting by ordinary resolution (requiring a
simple majority of the persons voting on the relevant resolution)
or by the Directors; no person, other than a Director retiring by
rotation or otherwise, shall be appointed or re-appointed a
Director at any general meeting unless he or she is recommended by
the Directors or, not less than 7 nor more than 42 clear days
before the date appointed for the meeting, notice is given to the
Company of the intention to propose that person for appointment or
re-appointment in the form and manner set out in the Company's
articles of association.
Each Director who is appointed by the Directors (and who has not
been elected as a Director of the Company by the members at a
general meeting held in the interval since his appointment as a
Director of the Company) is to be subject to election as a Director
of the Company by the members at the first Annual General Meeting
of the Company following his or her appointment. At each Annual
General Meeting of the Company one third of the Directors for the
time being, or if their number is not three or an integral multiple
of three the number nearest to but not exceeding one third, are to
be subject to re-election.
The Companies Act allows shareholders in general meeting by
ordinary resolution (requiring a simple majority of the persons
voting on the relevant resolution) to remove any Director before
the expiration of his or her period of office, but without
prejudice to any claim for damages which the director may have for
breach of any contract of service between him or her and the
Company.
A person also ceases to be a Director if he or she resigns in
writing, ceases to be a Director by virtue of any provision of the
Companies Act, becomes prohibited by law from being a Director,
becomes bankrupt or is the subject of a relevant insolvency
procedure, or becomes of unsound mind, or if the Board so decides
following at least six months' absence without leave or if he or
she becomes subject to relevant procedures under the mental health
laws, as set out in the Company's articles of association.
Powers of the Directors
Subject to the provisions of the Companies Act, the memorandum
and articles of association of the Company and any directions given
by shareholders by special resolution, the articles of association
specify that the business of the Company is to be managed by the
Directors, who may exercise all the powers of the Company, whether
relating to the management of the business or not. In particular,
the Directors may exercise on behalf of the Company its powers to
purchase its own shares to the extent permitted by
shareholders.
Auditor
Grant Thornton UK LLP offers itself for reappointment as
auditor. In accordance with S489(4) of the Companies Act 2006 a
resolution to reappoint Grant Thornton UK LLP as auditor and to
authorise the Directors to fix their remuneration at the
forthcoming Annual General Meeting.
On behalf of the Board.
Charles Metcalfe
Chairman
3 June 2013
Report of the Directors - Directors' Remuneration Report
Introduction
This report is submitted in accordance with schedule 8 of the
Large and Medium Sized Companies and Companies (Accounts and
Reports) Regulations 2008, in respect of the year ended 28 February
2013. The information included in this report is not subject to
audit except where specified. This report also meets the Financial
Services Authority's Listing Rules and describes how the Board has
applied the principles relating to Directors' remuneration set out
in the UK Corporate Governance code (June 2010).
Consideration by the Directors of Matters Relating to Directors'
Remuneration
The Board as a whole considers Directors' remuneration and has
not appointed a separate committee in this respect. The Board has
not sought advice or services from any person in respect of its
consideration of Directors' remuneration during the year.
Statement of the Company's Policy on Directors' Remuneration
The Board consists entirely of Non-Executive Directors, who meet
at least four times a year and on other occasions as necessary, to
deal with the Company's affairs. Directors are appointed with the
expectation that they will serve for the five to six year expected
life of the Company.
Each Director has a service contract. Each Director has a notice
period of three months and a Director may resign by notice in
writing to the Board at any time. None of the Directors is entitled
to compensation payable upon early termination of their contract
other than in respect of any unexpired notice period.
The information within this
table is audited:
Unexpired
term of Annual Emoluments Emoluments
contract rate of in Year ended in Year ended
Date of at 28 February Directors' 28 February 29 February
Contract 2013 fees 2013 2012
GBP GBP GBP
Charles Metcalfe,
Chairman 02-Feb-10 none 15,000 15,000 15,000
Simon Acland 02-Feb-10 none 12,500 12,500 12,500
Prof. Elroy Dimson 27-Apr-11 none 12,500 12,500 10,530
Chris Tottle 06-Sep-10 none 12,500 - 1,970
40,000 40,000
Employer's NI contributions 2,420 2,377
42,420 42,377
-------------------------------------------------------------- ------------- ----------------
The Company's policy is that the fees payable to the Directors
should reflect the time spent by the Board on the Company's affairs
and the responsibilities borne by the Directors and should be
sufficient to enable candidates of highcalibre to be recruited.
The Company's policy is for the Directors to be remunerated in
the form of fees, payable quarterly in arrears, to the Directors
personally. The fees are not specifically related to the Directors'
performance, either individually or collectively. There are no
long-term incentive schemes, share option schemes or pension
schemes in place. No other remuneration or compensation was paid or
payable by the Company during the year to any of the Directors.
Insurance cover has been provided by the Company to indemnify
the Directors against certain liabilities which may be incurred by
the Directors in relation to the Company's affairs.
Remuneration Committee
Since the Board consists solely of Non-Executive Directors, a
Remuneration Committee is not considered necessary.
Share Dealings
There have been no trades in the Company's shares to date.
Therefore, no performance graph comparing the share price of the
Company for the year ended 28 February 2013 with the total return
from a notional investment in the FTSE All-Share index for the same
year has been included.
No market maker has been appointed and therefore no current bid
and offer price is available for the Company's shares. However the
Board's policy is to buy back shares from shareholders at a 10%
discount to net asset value. The Company will produce a graph of
its share performance once there is sufficient activity to mean
that the graph would be meaningful to shareholders.
On behalf of the Board
Charles Metcalfe,
Chairman
3 June 2013
Report of the Directors - Corporate Governance
The Board of TP70 2010 VCT plc has considered the principles and
recommendations of the Association of Investment Companies Code of
Corporate Governance (AIC Code) by reference to the Association of
Investment Companies Corporate Governance Guide for Investment
Companies (AIC Guide). The AIC Code, as explained by the AIC Guide,
addresses all the principles set out in the UK Corporate Governance
Code (June 2010), as well as setting out additional principles and
recommendations on issues that are of specific relevance to the
Company. The Board considers that reporting against principles and
recommendations of the AIC Code, by reference to the AIC Guide
(which incorporates the UK Corporate Governance Code (June 2010)),
will provide better information to shareholders.
The Company is committed to maintaining high standards in
corporate governance and has complied with the recommendations of
the AIC Code and the relevant provisions of the UK Corporate
Governance Code (June 2010), except as set out at the end of this
report in the Compliance Statement.
The Corporate Governance Report forms part of the Report of the
Directors.
Board of Directors
The Company has a Board of three Non-Executive Directors. Since
all Directors are Non-Executive and day-to-day management
responsibilities are sub-contracted to the Investment Manager, the
Company does not have a Chief Executive Officer. The Directors have
a range of business and financial skills which are relevant to the
Company; these are described on page 3 of this report. Directors
are provided with key information on the Company's activities,
including regulatory and statutory requirements by the Investment
Manager. The Board has direct access to company secretarial advice
and compliance services provided by the Manager, which is
responsible for ensuring that Board procedures are followed and
applicable regulations complied with. All Directors are able to
take independent professional advice in furtherance of their
duties.
Any appointment of new Directors to the Board is conducted, and
appointments made, on merit, with due regard for the benefits of
diversity on the board, including gender. All directors are able to
allocate sufficient time to the Company to discharge their
responsibilities.
The Board meets regularly on a quarterly basis, and on other
occasions as required, to review the investment performance and
monitor compliance with the investment policy laid down by the
Board. There is a formal schedule of matters reserved for Board
decision and the agreement between the Company and the Investment
Manager has authority limits beyond which Board approval must be
sought.
The Investment Manager has authority over the management of the
investment portfolio, the organisation of custodial services,
accounting, secretarial and administrative services. In practice
the Investment Manager makes investment recommendations for the
Board's approval. In addition all investment decisions involving
other VCTs managed by the Investment Manager are taken by the Board
rather than the Investment Manager. Other matters reserved for the
Board include:
-- the consideration and approval of future developments or
changes to the investment policy, including risk and asset
allocation;
-- consideration of corporate strategy;
-- approval of the appropriate dividend and any return of
capital to be paid to the shareholders;
-- the appointment, evaluation, removal and remuneration of the Investment Manager;
-- the performance of the Company, including monitoring the net asset value per share; and
-- monitoring shareholder profiles and considering shareholder communications.
The Chairman leads the Board in the determination of its
strategy and in the achievement of its objectives. The Chairman is
responsible for organising the business of the Board, ensuring its
effectiveness and setting its agenda, and has no involvement in the
day to day business of the Company. He facilitates the effective
contribution of the Directors and ensures that they receive
accurate, timely and clear information and that they communicate
effectively with shareholders.
The Chairman does not have significant commitments conflicting
with his obligations to the Company.
The Company Secretary is responsible for advising the Board
through the Chairman on all governance matters. All of the
Directors have access to the advice and services of the Company
Secretary, which has administrative responsibility for the meetings
of the Board and its committees. Directors may also take
independent professional advice at the Company's expense where
necessary in the performance of their duties. As all of the
Directors are non-executive, it is not considered appropriate to
identify a member of the Board as the senior Non-Executive Director
of the Company.
The Company's articles of association and the schedule of
matters reserved to the Board for decision provide that the
appointment and removal of the Company Secretary is a matter for
the full Board.
The Company's articles of association require that one third of
the Directors should retire by rotation each year and seek
re-election at the Annual General Meeting, and that Directors newly
appointed by the Board should seek re-appointment at the next
Annual General Meeting. The Board complies with the requirement of
the UK Corporate Governance Code (June 2010) that all Directors are
required to submit themselves for re-election at least every three
years.
During the year covered by these Financial Statements the
following meetings were held:
Directors present 4 Full Board 2 Audit Committee
Meetings Meetings
Charles Metcalfe, Chairman 3 (of 4) 1 (of 2)
Simon Acland 4 2
Elroy Dimson 4 2
Audit Committee
The Board has appointed an Audit Committee of which Charles
Metcalfe is Chairman, which deals with matters relating to audit,
financial reporting and internal control systems. The committee
meets as required and has direct access to Grant Thornton UK LLP,
the Company's Auditor. The Audit Committee safeguards the
objectivity and independence of the auditor by reviewing the nature
and extent of non-audit services supplied by the external auditors
of the Company, seeking to balance objectivity and value for
money.
The Audit Committee's terms of reference include the following
roles and responsibilities:
-- reviewing and making recommendations to the Board in relation
to the Company's published Financial Statements and other formal
announcements relating to the Company's financial performance;
-- reviewing and making recommendations to the Board in relation
to the Company's internal control (including internal financial
control) and risk management systems;
-- periodically considering the need for an internal audit function;
-- making recommendations to the Board in relation to the
appointment, re-appointment and removal of the external auditor and
approving the remuneration and terms of engagement of the external
auditor;
-- reviewing and monitoring the external auditor's independence
and objectivity and the effectiveness of the audit process, taking
into consideration relevant UK professional regulatory
requirements;
-- monitoring the extent to which the external auditor is
engaged to supply non-audit services; and
-- ensuring that the Investment Manager has arrangements in
place for the investigation and follow-up of any concerns raised
confidentially by staff in relation to propriety of financial
reporting or other matters.
The committee reviews its terms of reference and effectiveness
annually and recommends to the Board any changes required as a
result of the review. The terms of reference are available on
request from the Company Secretary.
The Board considers that the members of the committee
collectively have the skills and experience required to discharge
their duties effectively, and that the Chairman of the committee
meets the requirements of the UK Corporate Governance Code (June
2010) as to relevant financial experience.
The Company does not have an independent internal audit function
as it is not deemed appropriate given the size of the Company and
the nature of the Company's business. However, the committee
considers annually whether there is a need for such a function and
if there were would recommend it be established.
In respect of the year ended 28 February 2013, the Audit
Committee discharged its responsibilities by:
-- reviewing and approving the external auditor's terms of engagement and remuneration;
-- reviewing the external auditor's plan for the audit of the
Financial Statements, including identification of key risks and
confirmation of auditor independence;
-- reviewing TPIM's statement of internal controls operated in
relation to the Company's business and assessing those controls in
minimising the impact of key risks;
-- reviewing periodic reports on the effectiveness of TPIM's compliance procedures; and
-- reviewing the appropriateness of the Company's accounting policies.
Internal Control
The Directors have overall responsibility for keeping under
review the effectiveness of the Company's systems of internal
controls. The purpose of these controls is to ensure that proper
accounting records are maintained, the Company's assets are
safeguarded and the financial information used within the business
and for publication is accurate and reliable; such systems can only
provide reasonable and not absolute assurance against material
misstatement or loss. The system of internal controls is designed
to manage rather than eliminate the risk of failure to achieve
business objectives. As part of this process an annual review of
the internal control systems is carried out. The review covers all
material controls including financial, operational and risk
management systems. The Directors regularly review financial
results and investment performance with the Investment Manager.
The Directors have established an ongoing process designed to
meet the particular needs of the Company in identifying, evaluating
and managing risks to which it is exposed. The process adopted is
one whereby the Directors identify all of the risks to which the
Company is exposed including, among others, market risk, VCT
qualifying investment risk and operational risks which are recorded
on a risk register. The controls employed to mitigate these risks
are identified and the residual risks are rated taking into account
the impact of the mitigating factors. The risk register is updated
on a regular basis.
TPIM is engaged to provide administrative services including
accounting and retains physical custody of the documents of title
relating to investments.
The Directors regularly review the system of internal controls,
both financial and non-financial, operated by the Company and the
Investment Manager. These include controls designed to ensure that
the Company's assets are safeguarded and that proper accounting
records are maintained.
Internal control systems include the production and review of
quarterly bank reconciliations and management accounts. The VCT is
subject to a full annual audit. The auditors are the same auditors
as employed by other VCTs managed by the Investment Manager. The
Audit Partner has access to the Directors of the VCT. The
Investment Manager's procedures are subject to internal compliance
checks.
Going Concern
After making the necessary enquiries, the Directors confirm that
they are satisfied that the Company has adequate resources to
continue in business for the foreseeable future. The Board receives
regular reports from the Manager and the Directors believe that, as
no material uncertainties leading to significant doubt about going
concern have been identified, it is appropriate to continue to
apply the going concern basis in preparing the Financial
Statements. There are no borrowings or banking facilities in place
nor are they anticipated to be required in future.
Relations with Shareholders
The Board recognises the value of maintaining regular
communications with shareholders. In addition to the formal
business of the Annual General Meeting, an opportunity is given to
all shareholders to question the Board and the Investment Manager
on matters relating to the Company's operation and performance.
Proxy voting figures for each resolution will be announced at the
Annual General Meeting. The Board and the Investment Manager will
also respond to any written queries made by shareholders during the
course of the year and both can be contacted at 4-5 Grosvenor
Place, London, SW1X 7HJ or on 020 7201 8989.
Compliance Statement
The Listing Rules require the Board to report on compliance with
the UK Corporate Governance Code (June 2010) throughout the
accounting period. With the exception of the limited items outlined
below, the Directors consider that the Company has complied
throughout the year under review with the provisions set out in UK
Corporate Governance Code (June 2010).
1. New Directors do not receive a full, formal and tailored
induction on joining the Board. Such matters are addressed on an
individual basis as they arise (B.4.1).
2. Due to the size of the Board and the nature of the Company's
business, a formal performance evaluation of the Board, its
committees, the individual Directors and the Chairman has not been
undertaken. Specific performance issues are dealt with as they
arise (B.6.1, B.6.3).
3. The Company does not have a senior Independent Director. The
Board does not consider such an appointment appropriate for the
Company (A.4.1).
4. The Company regularly conducts a formal review as to whether
there is a need for an internal audit function. The Directors do
not consider that an internal audit would be an appropriate control
for a Venture Capital Trust (C.3.5).
5. As all the Directors are Non-Executive, it is not considered
appropriate to appoint a Nomination or Remuneration Committee
(D.2.1 and B.2.1).
6. The Audit committee includes three Non-Executive Directors,
one of which is not considered independent. The Board regularly
reviews the independence of its Directors but does not consider it
appropriate to appoint an additional Director to the Audit
committee (C.3.1).
On behalf of the Board
Charles Metcalfe,
Chairman
3 June 2013
Report of the Directors - Directors' Responsibility
Statement
The Directors are responsible for preparing the Report of the
Directors, the Directors' Remuneration Report and the Financial
Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial
Statements for each financial year. Under that law the Directors
have elected to prepare the Financial Statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union. Under company law the Directors must not
approve the Financial Statements unless they are satisfied that
they give a true and fair view of the state of affairs and profit
or loss of the Company for that period. In preparing these
Financial Statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable IFRSs have been followed, subject to
any material departures disclosed and explained in the Financial
Statements; and
-- prepare the Financial Statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the Financial Statements and the Remuneration Report 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.
The Directors confirm that:
-- so far as each of the Directors is aware there is no relevant
audit information of which the Company's auditor is unaware;
and
-- the Directors have taken all steps that they ought to have
taken as Directors in order to make themselves aware of any
relevant audit information and to establish that the auditor is
aware of that information.
The Company's Financial Statements are published on the TPIM
website, www.triplepoint.co.uk. The maintenance and integrity of
this website is the responsibility of TPIM and not of the Company.
Legislation in the United Kingdom governing the preparation and
dissemination of Financial Statements may differ from legislation
in other jurisdictions.
To the best of our knowledge:
-- the Financial Statements, prepared in accordance with IFRSs
as adopted by the European Union, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
Company; and
-- the Report of the Directors includes a fair review of the
development and performance of the business and the position of the
Company, together with a description of the principal risks and
uncertainties that it faces.
On behalf of the Board
Charles Metcalfe
Chairman
3 June 2013
Independent Auditor's Report to the Members of TP70 2010 VCT
plc
We have audited the Financial Statements of TP70 2010 VCT plc
for the year ended 28 February 2013 which comprise the Statement of
Comprehensive Income, the Balance Sheet, the Statement of Changes
in Shareholders' Equity, the Statement of Cash Flows and the
related notes. The financial reporting framework that has been
applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European
Union.
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of Directors and auditor
As explained more fully in the Directors' Responsibilities
Statement set out on page 25, the Directors are responsible for the
preparation of the Financial Statements and for being satisfied
that they give a true and fair view. Our responsibility is to audit
and express an opinion on the Financial Statements in accordance
with applicable law and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the Auditing
Practices Board's (APB's) Ethical Standards for Auditors.
Scope of the audit of the Financial Statements
A description of the scope of an audit of Financial Statements
is provided on the APB's website at
www.frc.org.uk/apb/scope/private.cfm.
Opinion on Financial Statements
In our opinion the Financial Statements:
-- give a true and fair view of the state of the Company's
affairs as at 28 February 2013 and of its profit for the year then
ended;
-- have been properly prepared in accordance with IFRSs as adopted by the European Union; and
have been prepared in accordance with the requirements of the
Companies Act 2006.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion:
-- the part of the Directors' Remuneration Report to be audited
has been properly prepared in accordance with the Companies Act
2006; and
-- the information given in the Report of the Directors for the
financial year for which the Financial Statements are prepared is
consistent with the Financial Statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
-- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the Financial Statements and the part of the Directors'
Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
-- certain disclosures of Directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit
Independent Auditor's Report to the Members of TP70 2010 VCT
plc
Under the Listing Rules, we are required to review:
-- the Directors' statement, set out on page 24, in relation to going concern;
-- the part of the Corporate Governance Statement relating to
the Company's compliance with the nine provisions of the UK
Corporate Governance Code (June 2010) specified for our review;
and
-- certain elements of the report to the shareholders by the Board on Directors' remuneration.
Tracey James
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
OXFORD
3 June 2013
Statement of Comprehensive Income
For the year ended 28 February 2013
` Year ended Year ended
28 February 2013 29 February 2012
------------------------------- -------------------------------
Note Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income
Investment income 4 177 - 177 50 - 50
Loss arising on the disposal
of investments during the
year 5 - (31) (31) - (125) (125)
Gain/(loss) arising on
the revaluation of investments
at the year end 5 - 196 196 - (213) (213)
Investment return 177 165 342 50 (338) (288)
--------- --------- --------- --------- --------- ---------
Expenses
Investment management fees 6 124 41 165 39 118 157
Financial and regulatory
costs 20 - 20 20 - 20
General administration 11 - 11 10 - 10
Legal and professional
fees 7 37 - 37 30 - 30
Directors' remuneration 8 40 - 40 40 - 40
Operating expenses 232 41 273 139 118 257
--------- --------- --------- --------- --------- ---------
Operating profit/(loss)
before taxation (55) 124 69 (89) (456) (545)
Taxation 9 - - - - - -
Operating profit/(loss)
after taxation (55) 124 69 (89) (456) (545)
--------- --------- --------- --------- --------- ---------
Profit and total comprehensive
profit/(loss) for the year (55) 124 69 (89) (456) (545)
--------- --------- --------- --------- --------- ---------
Basic & diluted earnings/(loss)
per share 10 (0.62p) 1.40p 0.79p (1.04p) (5.20p) (6.24p)
--------- --------- --------- --------- --------- ---------
The total column of this statement represents the Company's
Statement of Comprehensive Income, prepared in accordance with
International Financial Reporting Standards ("IFRS"). The
supplementary revenue and capital columns are prepared in
accordance with the Association of Investment Companies Statement
of Recommended Practice (AIC SORP).
All revenue and capital items in the above statement derive from
continuing operations.
This Statement of Comprehensive Income includes all recognised
gains and losses.
The accompanying notes are an integral part of this
statement.
Balance Sheet
at 28 February 2013
28 February
2013 29 February 2012
Note GBP'000 GBP'000
Non current assets
Financial assets at fair
value through profit or
loss 11 7,604 6,976
7,604 6,976
------------- ------------------
Current assets
Receivables 12 68 56
Cash and cash equivalents 13 52 554
120 610
------------- ------------------
Total assets 7,724 7,586
------------- ------------------
Current liabilities
Payables and accrued expenses 14 123 54
123 54
------------- ------------------
Net assets 7,601 7,532
============= ==================
Equity attributable to
equity holders
Share capital 15 87 87
Special distributable
reserve 8,225 8,225
Capital reserve (445) (569)
Revenue reserve (266) (211)
Total equity 7,601 7,532
============= ==================
Net asset value per share
(pence) 18 86.91p 86.12p
============= ==================
The statements were approved by the Directors and authorised for
issue on 3 June 2013 and are signed on their behalf by:
Charles Metcalfe
Chairman
3 June 2013
Company registration number: 7039066
The accompanying notes are an integral part of this
statement.
Statement of Changes in Shareholders' Equity
For the year ended 28 February 2013
Special
Issued Share Distributable Capital Revenue
Capital Premium Reserve Reserve Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year ended 28 February
2013
Balance at 1 March
2012 87 - 8,225 (569) (211) 7,532
--------- --------- --------------- --------- --------- ---------
Profit/(loss after
tax - - - 124 (55) 69
Total comprehensive
profit/(loss) for the
year - - - 124 (55) 69
--------- --------- --------------- --------- --------- ---------
Balance at 28 February
2013 87 - 8,225 (445) (266) 7,601
========= ========= =============== ========= ========= =========
Capital Reserve consists
of:
Investment holding
losses (70)
Other realised losses (375)
(445)
---------
Issued Share Special Capital Revenue
Capital Premium Distributable Reserve Reserve Total
GBP'000 GBP'000 Reserve GBP'000 GBP'000 GBP'000
Year ended 29 February
2012 GBP'000
Balance at 1 March
2011 87 8,225 - (113) (122) 8,077
--------- --------- --------------- --------- --------- ---------
Cancellation of share
premium - (8,225) 8,225 - - -
--------- --------- --------------- --------- ---------
Transactions with owners - (8,225) 8,225 - - -
--------- --------- --------------- --------- --------- ---------
Loss after tax - - - (456) (89) (545)
Total comprehensive
loss for the year - - - (456) (89) (545)
--------- --------- --------------- --------- --------- ---------
Balance at 29 February
2012 87 - 8,225 (569) (211) 7,532
========= ========= =============== ========= ========= =========
Capital Reserve consists
of:
Investment holding
losses (266)
Other realised losses (303)
(569)
---------
The share premium represents the excess of the issue price net
of issue costs over the par value of the shares. The capital
reserve represents the proportion of Investment Management fees
charged against capital and realised or unrealised gains or losses
on investments credited/charged to capital reserve in the current
or previous year. Neither the share premium or capital reserve are
distributable. The special distributable reserve was created on
court cancellation of the share premium account. The revenue and
special distributable reserve are distributable by way of
dividend.
The accompanying notes are an integral part of these
statements.
Statement of Cash Flows
For the year ended 28 February 2013
Year ended Year ended
28 February 29 February
2013 2012
GBP'000 GBP'000
Cash flows from operating activities
Profit/(loss) before taxation 69 (545)
Loss arising on the disposal of investments
in the year 31 100
(Gain)/loss arising on the revaluation
of investments at the year end (196) 199
Cash absorbed by operations (96) (246)
(Increase) in receivables (12) (25)
Decrease in forward contracts - 17
Increase/(decrease) in creditors 69 (20)
Net cash flows from operating activities (39) (274)
------------- -------------
Cash flows from investing activities
Purchase of financial assets at fair
value through profit or loss (3,076) (4,773)
Disposal proceeds of financial assets
at fair value through profit or loss 2,613 1,493
Net cash flows from investing activities (463) (3,280)
------------- -------------
Net decrease in cash and cash equivalents (502) (3,554)
============= =============
Reconciliation of net cash flow to
movements in cash and cash equivalents
Cash and cash equivalents at 1 March
2012 554 4,108
Net decrease in cash and cash equivalents (502) (3,554)
Cash and cash equivalents at 28 February
2013 52 554
============= =============
The accompanying notes are an integral part of these
statements.
Notes to the Financial Statements
1. Corporate Information
The Financial Statements of the Company for the year ended 28
February 2013 were authorised for issue in accordance with a
resolution of the Directors on 3 June 2013.
The Company applied for listing on the London Stock Exchange on
1 April 2010.
TP70 2010 VCT plc was incorporated and is domiciled in Great
Britain. The address of TP70 2010 VCT plc's registered office,
which is also its principal place of business, is 4-5 Grosvenor
Place, London, SW1X 7HJ.
TP70 2010 VCT plc's Financial Statements are presented in Pounds
Sterling (GBP) which is also the functional currency of the
Company, rounded to the nearest thousand.
The principal activity of the Company is investment. The
Company's investment strategy is to offer combined exposure to GAM
Trading strategy and venture capital investments focused on
companies with contractual revenues from financially secure
counterparties.
2. Basis of Preparation and Accounting Policies
Basis of preparation
After making the necessary enquiries, the Directors confirm that
they are satisfied that the Company has adequate resources to
continue in business for the foreseeable future. The Board receives
regular reports from the Manager and the Directors believe that, as
no material uncertainties leading to significant doubt about going
concern have been identified, it is appropriate to continue to
apply the going concern basis in preparing the Financial
Statements. There are no borrowings or banking facilities in place
nor are they anticipated to be required in future.
The Financial Statements of the Company for the year ended 28
February 2013 have been prepared in accordance with International
Financial Reporting Standards ("IFRS") adopted for use in the
European Union. They therefore comply with the Statement of
Recommended Practice: "Financial Statements of Investment Trust
Companies and Venture Capital Trusts" (SORP) issued by the
Association of Investment Companies (AIC) in January 2009, in so
far as this does not conflict with IFRS.
The Financial Statements have been prepared on a historical cost
basis except that investments are shown at fair value through
profit or loss.
Consolidated Financial Statements are no longer prepared due to
the voluntary liquidation of the Company's subsidiary during the
year.
The preparation of Financial Statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of policies and the reported amounts of
assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and
various other factors 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 judgements. Further details are provided in the
"non-current asset investments" section below.
The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying values of assets and
liabilities relate to:
-- the valuation of unlisted financial investments held at fair
value through profit or loss, which are valued on the basis noted
below (in the section headed non-current asset investments);
-- the recognition or otherwise of accrued income on loan notes
and similar instruments granted to investee companies, which are
assessed in conjunction with the overall valuation of unlisted
financial investments as noted above.
The key judgements made by Directors are in the valuation of
non-current assets. 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 that period or in the period of revision and
future periods if the revision affects both current and future
periods. The carrying value of investments is disclosed in note
11.
These accounting policies have been applied consistently in
preparing these Financial Statements and remain unchanged from the
prior year.
Standards Issued but not yet Effective
The following new standards, amendments to standards and
interpretations are not yet effective for the year ended 28
February 2013, and have not been applied in preparing these
Financial Statements:
-- IFRS 9 Financial Instruments (effective 1 January 2015)
-- IFRS 12 Disclosure of Interests in Other Entities (effective 1 January 2013)
-- IFRS 13 Fair Value Measurement (effective 1 January 2013)
-- IAS 27 (Revised), Separate Financial Statements (effective 1 January 2013)
-- Presentation of Items of Other Comprehensive Income -
Amendments to IAS 1 (effective 1 July 2012)
-- Disclosures - Offsetting Financial Assets and Financial
Liabilities - Amendments to IFRS 7 (effective 1 January 2013)
-- Offsetting Financial Assets and Financial Liabilities -
Amendments to IAS 32 (effective 1 January 2014)
-- Mandatory Effective Date and Transition Disclosures -
Amendments to IFRS 9 and IFRS 7 (effective 1 January 2015)
-- Annual Improvements 2009-2011 Cycle (effective 1 January 2013)
-- Transition Guidance - Amendments to IFRS 10, IFRS 11 and IFRS 12 (effective 1 January 2013)
-- Investment Entities - Amendments to IFRS 10, IFRS 12 and IAS 27 (effective 1 January 2014)
All of these changes will be applied by the Company from the
effective date but none of them is expected to have a significant
impact on the Company's Financial Statements.
Presentation of the Statement of Comprehensive Income
In order better to reflect the activities of a Venture Capital
Trust, and in accordance with the guidance issued by the
Association of Investment Companies, supplementary information
which analyses the Statement of Comprehensive Income between items
of a revenue and capital nature has been presented alongside the
Income Statement. Prior to 6 April 2012 in accordance with the
Company's status as a UK Investment Company under S833 of the
Companies Act 2006, net capital returns could not be distributed by
way of dividend.
Capital Management
The Company's objectives when managing capital are:
-- to safeguard its ability to continue as a going concern, so
that it can continue to provide returns to shareholders and
benefits for other stakeholders;
-- to ensure sufficient liquid resources are available to meet
the funding requirements of its investments and to fund new
investments where identified.
The Company has no external debt; consequently all capital is
represented by the value of share capital, distributable and other
reserves. Total Shareholder Equity at 28 February 2013 was
GBP7.6million.
The Company has met its objectives in achieving the exposure to
GAM as detailed in the circular issued 14 September 2010. The funds
have now been deployed into qualifying investments and its focus is
to manage these investments.
Non-Current Asset Investments
The Company invests in financial assets with a view to profiting
from their total return through income and capital growth. These
investments are managed and their performance is evaluated on a
fair value basis in accordance with the investment policy detailed
in the Directors' Report on page 14, and information about the
portfolio is provided internally on that basis to the Company's
Board of Directors. Accordingly upon initial recognition the
investments are designated by the Company as "at fair value through
profit or loss" in accordance with IAS39 "Financial Instruments
Recognition and Measurement". They are included initially at fair
value, which is taken to be their cost (excluding expenses
incidental to the acquisition which are written off in the
Statement of Comprehensive Income and allocated to "capital" at the
time of acquisition). Subsequently the investments are valued at
"fair value", which is the amount for which an asset can be
exchanged between knowledgeable willing parties in an arm's length
transaction. This is measured as follows:
-- Unlisted investments are fair valued by the Directors in
accordance with the International Private Equity and Venture
Capital Valuation Guidelines. Fair value is established by using
measurements of value such as price of recent transactions,
earnings multiples and net assets.
-- Listed investments are fair valued at bid price on the relevant date.
Where securities are designated upon initial recognition as at
fair value through profit or loss, gains and losses arising from
changes in fair value are included in the statement of
comprehensive income for the year as capital items in accordance
with the AIC SORP. The profit or loss on disposal is calculated net
of transaction costs of disposal.
Investments are recognised as financial assets on legal
completion of the investment contract and are de-recognised on
legal completion of the sale of an investment.
The derivative, providing leveraged exposure to GAM Trading is
classified at fair value through profit or loss.
Whether gains or losses on derivative transactions fall to be
treated as capital or revenue will depend on the nature of the
transaction. Both the underlying motives for the transaction and
its circumstances are considered to be important in determining
whether changes in its value are of a capital or revenue nature. In
some circumstances gains or losses may have to be apportioned
between capital and revenue to reflect the nature of the
transaction.
Income
Investment income includes interest earned on bank balances and
money market funds in the period and includes income tax withheld
at source. Dividend income is shown net of any related tax credit
and is brought into account on the ex-dividend date.
Fixed returns on investment loans, debt and money market funds
are recognised on a time apportionment basis so as to reflect the
effective yield, provided there is no reasonable doubt that payment
will be received in due course.
Expenses
All expenses are accounted for on the accruals basis. Expenses
are charged to revenue with the exception of the investment
management fee, which this year has been charged 75% to the revenue
account and 25% to the capital account (2012: 25% revenue, 75%
capital) to reflect, in the Directors' opinion, the expected long
term split of returns in the form of income and capital gains
respectively from the investment portfolio. The impact of this
change reduces the revenue reserve and increases the capital
reserve.
Taxation
Corporation Tax payable is applied to profits chargeable to
Corporation Tax, if any, at the current rate in accordance with IAS
12 "Income Taxes". The tax effect of different items of income/gain
and expenditure/loss is allocated between capital and revenue on
the "marginal basis" as recommended by the SORP.
In accordance with IAS 12, deferred tax is recognised using the
balance sheet method providing for temporary differences between
the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. A
deferred tax asset is recognised to the extent that it is probable
that future taxable profits will be available against which a
temporary difference can be utilised. Deferred tax is measured at
the tax rates that are expected to be applied to the temporary
differences when they reverse, based on the laws that have been
enacted or substantively enacted by the reporting date. The
Directors have considered the requirements of IAS 12 and do not
believe that any provision should be made.
Financial Instruments
The Company's principal financial assets are its investments and
the policies in relation to those assets are set out above.
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the entity after deducting all
of its financial liabilities. Where the contractual terms of share
capital do not have any terms meeting the definition of a financial
liability then this is classed as an equity instrument. Dividends
and distributions relating to equity instruments are debited direct
to equity.
Issued Share Capital
Ordinary shares are classified as equity because they do not
contain an obligation to transfer cash or another financial asset.
Issue costs associated with the allotment of shares have been
deducted from the share premium account in accordance with IAS
32.
Cash and Cash Equivalents
Cash and cash equivalents represent cash available at less than
3 months' notice are classified as loans and receivables under
IAS39.
Reserves
The revenue reserve (retained earnings) and capital reserve
reflect the guidance in the AIC SORP. The share premium represents
the excess of the issue price net of issue costs over the par value
of the shares. The capital reserve represents the proportion of
Investment Management fees charged against capital and realised or
unrealised gains or losses on investments credited/charged to
capital reserve in the current or previous year. Neither the share
premium or capital reserve are distributable. The special
distributable reserve was created on court cancellation of the
share premium account. The revenue and special distributable
reserve are distributable by way of dividend.
3. Segmental Reporting
The Company only has one class of business, being investment
activity. All revenues and assets are generated and held in the
UK.
4. Investment Income
Year ended Year ended
29 February
28 February 2013 2012
------------------------------- -------------------------------
Rev. Cap. Total Rev. Cap. Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Interest receivable on
bank balances 1 - 1 7 - 7
Loan interest receivable 175 - 175 37 - 37
Dividends on money market
funds 1 - 1 6 - 6
177 - 177 50 - 50
--------- --------- --------- --------- --------- ---------
5. Gains/(Loss) on Investments
Year ended Year ended
29 February
28 February 2013 2012
-------------------------------- -------------------------------
Rev. Cap. Total Rev. Cap. Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Realised loss on forward
contract - - - - (39) (39)
Loss arising on the disposal
of investments in the
year - (31) (31) - (100) (100)
Gain/(loss) arising on
the revaluation of investments
at the year end - 196 196 - (199) (199)
- 165 165 - (338) (338)
--------------------------------------------- --------- --------- --------- --------- ---------
6. Investment Management Fees
Triple Point Investment Management LLP provides investment
management and administration services to the Company under an
Investment Management Agreement effective 2 February 2010. The
agreement provides for an administration and investment management
fee of 2.25% per annum of net assets, subject to a cap of 3.50% per
annum on overall running costs as a percentage of net assets. It is
calculated and payable quarterly in arrear and runs for a period of
5 years and may be terminated at any time thereafter by not less
than twelve months' notice given by either party. Should such
notice be given, the Investment Manager would perform its duties
under the Investment Management Agreement and receive its
contracted fee during the notice period.
7. Legal and Professional Fees
Legal and professional fees include remuneration paid to the
Company's auditor, Grant Thornton UK LLP as shown in the following
table:
Year ended Year ended
29 February
28 February 2013 2012
------------------------------- -------------------------------
Rev. Cap. Total Rev. Cap. Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fees payable to the Company's
auditor:
* for the audit of the Company accounts 19 - 19 12 - 12
* for taxation compliance services 4 - 4 - - -
23 - 23 12 - 12
--------- --------- --------- --------- --------- ---------
8. Directors' Remuneration
The only remuneration received by the Directors was their
Directors' fees. The Company has no employees other than the
Non-Executive Directors. The average number of Non-Executive
Directors in the year was three. The Directors are considered to be
the entity's key management personnel. Full disclosure of key
management personnel's remuneration is included in the Directors'
Remuneration report.
Year ended Year ended
29 February
28 February 2013 2012
------------------------------- -------------------------------
Rev. Cap. Total Rev. Cap. Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Charles Metcalfe, Chairman 15 - 15 15 - 15
Simon Acland 13 - 13 13 - 13
Prof. Elroy Dimson 12 - 12 10 - 10
Chris Tottle - - - 2 - 2
40 - 40 40 - 40
--------- --------- --------- --------- --------- ---------
9. Taxation
Year ended Year ended
29 February
28 February 2013 2012
------------------------------- -------------------------------
Rev. Cap. Total Rev. Cap. Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(Loss)/profit on ordinary
activities before tax (55) 124 69 (89) (456) (545)
--------- --------- --------- --------- --------- ---------
Corporation tax @ 20% (11) 25 14 (18) (91) (109)
Effect of:
Utilisation of tax losses
brought forward - (25) (25) - - -
Non taxable (gains)/losses - (33) (33) - 68 68
Unrelieved tax losses
arising in the year 11 33 44 18 23 41
Tax charge/credit for
the period - - - - - -
--------- --------- --------- --------- --------- ---------
Capital gains and losses are exempt from corporation tax due to
the Company's status as a Venture Capital Trust. Excess management
charges of GBP558,000 (2012: GBP447,000) have been carried forward
at 28 February 2013 and are available for offset against future
taxable income subject to arrangement with HM Revenue &
Customs.
10. Earnings/(loss) per Share
The earnings per share is based on a profit from ordinary
activities after tax of GBP69,081 (2012: loss of GBP545,372), and
on the weighted average number of shares in issue during the year
of 8,746,340 (2012: 8,746,340)
There are no potentially dilutive capital instruments in issue
and, therefore, no diluted return per share figures are included in
these Financial Statements.
11. Financial Assets at Fair Value through Profit or Loss
Investments
Fair Value Hierarchy:
Level 1: quoted prices on active markets for identical assets or
liabilities. The fair value of financial instruments traded on
active markets is based on quoted market prices at the balance
sheet date. A market is regarded as active if 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 market price used for financial assets held by
the Company is the current bid price.
Level 2: the fair value of financial instruments that are not
traded on active markets is determined by using valuation
techniques. These valuation techniques maximise the use of
observable market data where it is available and rely as little as
possible on entity specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument
is included in level 2.
Level 3: the fair value of financial instruments that are not
traded in an active market (for example, investments in unquoted
companies) is determined by using valuation techniques such as
earnings multiples and discounted cash flows. If one or more of the
significant inputs is not based on observable market data, the
instrument is included in level 3.
There have been no transfers between these classifications in
the year and the movement in Level 3 instruments is disaggregated
below. Any change in fair value is recognised through the Statement
of Comprehensive Income.
Further details of these investments are provided in the
Investment Manager's Review and Investment Portfolio.
All items held at fair value through profit or loss were
designated as such upon initial recognition.
Level 3 valuations include assumptions based on non-observable
data, such as discounts applied either to reflect impairment of
financial assets held at a price of recent investments, or to
adjust earnings multiples. This includes valuations of investments
based on their net asset values.
Movements in investments held at fair value through profit or
loss during the year ended 28 February 2013 were as follows:
Level
Level 1 2 Level 3
Quoted Unquoted
Year ended 28 February 2013 Investments Derivative Investments Total
GBP'000 GBP'000 GBP'000 GBP'000
Opening cost 900 1,230 5,111 7,241
Opening investment holding
losses - (198) (67) (265)
900 1,032 5,044 6,976
Purchases at cost 711 - 2,365 3,076
Disposal proceeds (900) - (1,713) (2,613)
Losses arising from the disposal
of investment - - (31) (31)
Investment holding gains 32 72 92 196
Closing fair value at 28
February 2013 743 1,104 5,757 7,604
============= ============ ============= =========
Closing cost 711 1,230 5,665 7,606
Closing investment holding
gains/(losses) 32 (126) 92 (2)
------------- ------------ ------------- ---------
Level
Level 1 2 Level 3
Quoted Unquoted
Year ended 29 February 2012 Investments Derivative Investments Total
GBP'000 GBP'000 GBP'000 GBP'000
Opening cost 1,520 1,230 1,311 4,061
Opening investment holding
losses (38) (14) (14) (66)
1,482 1,216 1,297 3,995
Purchases at cost 973 - 3,800 4,773
Disposal Proceeds (1,493) - - (1,493)
Losses arising from the disposal
of investment (100) - - (100)
Investment holding gains/(losses) 38 (184) (53) (199)
Closing fair value at 29
February 2012 900 1,032 5,044 6,976
============= ============ ============= =========
Closing cost 900 1,230 5,111 7,241
Closing investment holding
losses - (198) (67) (265)
------------- ------------ ------------- ---------
All investments are designated as fair value through profit or
loss at the time of acquisition and all capital gains or losses
arising on investments are so designated. Given the nature of the
Company's venture capital investments, the changes in fair values
of such investments recognised in these
Financial Statements are not considered to be readily
convertible to cash in full at the balance sheet date and
accordingly any gains or losses on these items are treated as
unrealised. Details of the nature of the investments are given in
the Investment Manager's Review on pages 6 to 7.
Money market funds are offshore funds which invest in money
markets and distribute all net income. The value of the investments
remains constantly at par and they are realisable on demand. There
were no money market funds held at the year end 29 February
2013.
The initial best estimate of fair value for the investments made
during the year is the transaction price which is cost. The
Investment Manager has considered the impact of the reasonably
possible movement in key inputs on the fair value of its
investments and the impact on Solar companies has been recognised
but on the other investment companies the impact on the value was
not material and therefore no adjustment has been made.
12. Receivables
28 February 29 February
2013 2012
GBP'000 GBP'000
Accrued income - 1
Prepaid expenses 5 9
Other debtors 63 46
68 56
------------- -------------
13. Cash and Cash Equivalents
Cash and cash equivalents comprise deposits with The Royal Bank
of Scotland plc.
14. Payables
28 February 29 February
2013 2012
GBP'000 GBP'000
Payables 1 26
Deferred income 16 -
Taxation 7 -
Accrued expenses 99 28
123 54
------------- -------------
15. Share Capital
28 February 2013 29 February 2012
--------------------------- -------------------------
Issued
Issued & & fully
Authorised fully Paid Authorised Paid
Ordinary Shares
of 1p
Number of shares 60,000,000 8,746,340 60,000,000 8,746,340
Par Value GBP'000 600 87 600 87
------------ ------------- ------------ -----------
16. Subsidiary
On 11 October 2012 the Company's subsidiary holding in Starshell
Limited was put into liquidation and its assets transferred to the
Company. After the transfer, the valuation of Starshell Limited at
28 February 2013 was therefore GBPnil (2012: GBP1,265,000)
17. Financial Instruments and Risk Management
The Company's financial instruments comprise VCT qualifying
investments, exposure to a hedge fund, money market instruments,
cash balances and liquid resources including debtors and creditors.
The Company holds financial assets in accordance with its
investment policy detailed in the Directors' Report on page 14.
The following table discloses the financial assets and
liabilities of the Company in the categories defined by IAS 39,
"Financial Instruments; Recognition & Measurement."
Financial Fair value
liabilities through
Loan and held at amortised profit
Total value receivables cost or loss
GBP'000 GBP'000 GBP'000 GBP'000
Year ended 28 February
2013
Assets:
Financial assets at
fair value through
profit or loss 7,604 - - 7,604
Receivables 63 63 - -
Cash and cash equivalents 52 52 - -
7,719 115 - 7,604
------------- -------------- -------------------- ------------
Liabilities:
Other payables 1 - 1 -
Taxation 7 - 7 -
Accrued expenses 99 - 99 -
107 - 107 -
------------- -------------- -------------------- ------------
Year ended 29 February
2012
Assets:
Financial assets at
fair value through
profit or loss 6,976 - - 6,976
Receivables 46 46 - -
Accrued income 1 1 - -
Cash and cash equivalents 554 554 - -
7,577 601 - 6,976
------------- -------------- -------------------- ------------
Liabilities:
Other payables 26 - 26 -
Accrued expenses 28 - 28 -
54 - 54 -
------------- -------------- -------------------- ------------
Fixed Asset Investments (see note 11) are valued at fair value
through profit or loss. Unquoted investments are carried at fair
value as determined by the Directors in accordance with current
venture capital industry guidelines. The fair value of all other
financial assets and liabilities is represented by their carrying
value in the balance sheet. The Directors believe that where the
investee company's enterprise value remains unchanged since
acquisition, investments continue to be held at cost less any loan
repayments received. Where they consider the investee company's
enterprise value has changed since acquisition, investments are
held at a value measured using a discounted cash flow model.
In carrying out its investment activities, the Company is
exposed to various types of risk associated with the financial
instruments and markets in which it invests. The Company's approach
to managing its risks is set out below together with a description
of the nature of the financial instruments held at the balance
sheet date:
Market Risk
The Company's VCT qualifying investments are held in small and
medium-sized unquoted investments which, by their nature, entail a
higher level of risk and lower liquidity than investments in large
quoted companies. The Directors and Investment Manager aim to limit
the risk attached to the portfolio as a whole by careful selection
and timely realisation of investments, by carrying out rigorous due
diligence procedures and by maintaining a spread of holdings in
terms of industry sector and geographical location. The Board
reviews the investment portfolio with the Investment Manager on a
regular basis. Details of the Company's investment portfolio at the
balance sheet date are set out on page 8.
The Company has an investment in a leveraged note issued by
Exane (an associate of BNP Paribas with a rating of A2) which,
after leverage delivers exposure to GAM Trading. This exposure is
subject to market fluctuations affecting the underlying hedge fund
investments. In turn the effect of such fluctuations is magnified
by the leverage in the note. Both the Board and the Investment
Manager receive regular written reports and oral briefings from
GAM.
The Company has a direct holding in GAM Trading II GBP 1.25XL
which carries equivalent risks.
An increase of 1% in the value of investments would increase the
capital profits for the period and the net asset value at 28
February 2013 by GBP76,000. A decrease of 1% would reduce the
capital profits and net asset value by the same amount. A movement
of 1% was chosen as it can be used as a multiple to demonstrate the
impact of varying changes on the capital profits and net asset
value of the Company.
At 28 February 2013 VCT qualifying investments accounted for 75%
of the Company's investments and the investment exposure in GAM
Trading accounted for 24%, and with leverage, exposure was 49%.
Interest Rate Risk
Some of the Company's financial assets are interest bearing, of
which some are at fixed rates and some at variable rates. As a
result, the Company is exposed to interest rate risk due to
fluctuations in the prevailing levels of market interest rates.
Investments made into qualifying holdings are part equity and
part loan. The loan element of investments totals GBP3,966,000
(2012: GBP2,660,000) is subject to fixed interest rates for the
five year loan terms and therefore other than the fair value risk
of the value of the investments diminishing, there is not an
interest rate risk associated with these loans.
The amounts held in variable rate investments at the balance
sheet date are as follows:
28 February 29 February
2013 2012
GBP'000 GBP'000
Cash on Deposit 52 554
Money market funds - 900
52 1,454
------------- -------------
An increase in interest rates of 1% per annum would not have a
material effect on the revenue profits for the period and the net
asset value at 28 February 2013. The Board believes that in the
current economic climate a movement of 1% per annum is a reasonable
illustration.
Credit Risk
Credit risk is the risk that a counterparty will fail to
discharge an obligation or commitment that it has entered into with
the Company. The Investment Manager and the Board carry out a
regular review of counterparty risk. The carrying value of the
financial assets represents the maximum credit risk exposure at the
balance sheet date.
28 February 29 February
2013 2012
GBP'000 GBP'000
Qualifying Investments
- loans 3,966 2,660
Cash on Deposit 52 554
Receivables 63 47
Money market funds - 900
GAM Trading II GBP
1.25XL 743 1,265
Exane Note 1,104 1,032
5,928 6,458
------------- -------------
The Company's bank accounts are maintained with the Royal Bank
of Scotland ("RBS"). Should the credit quality or financial
position of RBS deteriorate significantly, the Investment Manager
would endeavour to move the cash holdings to another bank.
Credit risk relating to listed money market funds is mitigated
by the funds themselves investing in a portfolio of investment
instruments of high credit quality.
The Company is exposed to the credit risk of Exane through the
leveraged note. Should the credit quality or financial position of
Exane deteriorate significantly the Investment Manager could
(subject to notice periods) terminate the note.
Credit risk arising on unquoted loan stock held within unlisted
investment is considered to be part of market risk as disclosed
above.
Liquidity Risk
The Company's financial assets include investments in unquoted
equity securities which are not traded on a recognised stock
exchange and which are illiquid. As a result the Company may not be
able to realise some of its investments in these instruments
quickly at an amount close to their fair value in order to meet its
liquidity requirements.
The Company's money market funds are considered to be readily
realisable as they are of high credit quality as outlined
above.
The GAM exposure may have redemption periods that result in
investments being illiquid and not readily realisable.
The Company's liquidity risk is managed on a continuing basis by
the Investment Manager in accordance with policies and procedures
laid down by the Board. The Company's overall liquidity risks are
monitored by the Board on a quarterly basis.
The Board maintains a liquidity management policy under which
sufficient investments in cash and readily realisable money market
funds will be available to pay expenses. At 28 February 2013 cash
amounted to GBP52,000 (29 February 2012: GBP1,454,000).
Foreign Currency Risk
The Company does not have exposure to material foreign currency
risks.
18. Net Asset Value per Share
The calculation of Company's net asset value per share is based
on net assets of GBP7,601,289 (2012: GBP7,532,208) divided by the
8,746,340 (2012: 8,746,340) shares in issue.
19. Commitments and Contingencies
The Company has no outstanding commitments or contingent
liabilities.
20. Relationship with Investment Manager
During the year, TPIM received GBP162,668 (2012: GBP155,498),
which has been expensed, for providing management and
administrative services to the Company. At 28 February 2013
GBP69,450 was owing to TPIM (2012: GBP5,972).
21. Related Party Transactions
There are no related party transactions, which require
disclosure.
On 11 October 2012 the investment in GAM Trading II GBP 1.25XL
was transferred from its subsidiary Starshell Limited to the
Company for GBP711,000. Starshell Limited was subsequently put into
Members Voluntary Liquidation.
22. Post Balance Sheet Events
There are no significant post balance sheet events.
Registered Office:
4-5 Grosvenor Place
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FIMLTMBJMMTJ
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