TIDMTPV2
RNS Number : 0505G
TP70 2008 (ii) VCT PLC
25 June 2012
TP70 2008 (II) VCT plc
Final Results
TP70 2008 (II) VCT plc managed by Triple Point Investment
Management LLP today announces the final results for the year ended
31 March 2012.
These results were approved by the Board of Directors on 20 June
2012.
You may view the Annual Report on the Triple Point website
www.triplepoint.co.uk at
http://www.triplepoint.co.uk/investment-products/venture-capital-trust/tp702008/.
About TP70 2008 (II VCT plc
TP70 2008 (II) VCT plc ("the Company") is a Venture Capital
Trust ("VCT"). The investment manager is Triple Point Investment
Management LLP. The Company was launched in November 2007 and
raised GBP23 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 provisionally 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.
For this purpose, a 'VCT qualifying holding' consists of up to
GBP1 million invested in any one year in new shares or securities
of a UK unquoted company (which may be quoted on AIM) which is
carrying on a qualifying trade, and whose gross assets at the time
of investment do not exceed a prescribed limit. The definition of
'qualifying trade' excludes certain activities such as property
investment and development, financial services and asset leasing.
The Company will continue to ensure its compliance with these
qualification requirements.
Report of the Directors - Financial Summary
Year ended Year ended
31 March 31 March
2012 2011
GBP'000 GBP'000
Net assets 18,595 19,193
Net asset value per
share 81.35p 83.96p
------------------------ --------- -----------
Net loss profit before
tax (216) (287)
Loss per share (1.07p) (1.32p)
------------------------ --------- -----------
For a GBP1 investment per share investors with a sufficient
income tax liability in the relevant year have already received a
30p tax credit and a first dividend of 1.76p, a second dividend of
1.23p and a third dividend of 1.54p which, taken together with the
current NAV of 81.35p, totals 115.88p.
TP70 2008 (II) 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 November 2007
and raised GBP23.0 million through an offer for subscription.
Initially 70% of the Company's net assets were to be invested in
cash and liquid assets prior to investment in VCT qualifying
holdings. The remaining 30% directly or indirectly of net assets
were to be exposed to a leveraged version of GAM Diversity, a fund
of hedge funds. The Company's qualifying investment holdings are in
businesses with predictable revenue streams from financially sound
customers and aim to generate an attractive income stream and
modest growth for shareholders.
The Directors' Report on pages 12 to 16 and the Directors'
Remuneration Report on pages 17 to 18 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 2008 (II) VCT plc.
The Directors submit to the members their Annual Report and
Financial Statements for the Company for the year ended 31 March
2012. The Report of the Directors includes the Financial Summary,
Chairman's Statement, Details of Advisers, Shareholder Information,
Directors' Report, Directors' Remuneration Report and the Corporate
Governance Statement.
Report of the Directors - Chairman's Statement
I am writing to present the audited Financial Statements for
TP70 2008(II) VCT plc ("the Company") for the year ended 31 March
2012.
Results
At 31 March 2012 the Company had in place a diversified
portfolio of VCT qualifying investments, representing 75% of the
value of its investments. Further details of the portfolio are
given in the Investment Manager's Review on page 6.
The Company's exposure to GAM Diversity 2.5XL now stands at 22%
of net assets, which with leverage represents 54% of net assets.
The performance of GAM is detailed in the Investment Manager's
Review on page 6.
Over the year the Company made a loss before taxation of
GBP216,000. This loss was partly attributable to GAM Diversity
2.5XL, which made a loss of GBP242,000, the realisations and
revaluation of some qualifying investments contributed an
additional loss of GBP105,000, offset by a profit of GBP131,000 for
investment income net of operating expenses At the period end the
Company's Net Asset Value per share stood at 81.35p.
Dividend
The Board has resolved to pay a dividend to shareholders of
GBP307,000 or 1.34p per share on 19 October 2012 to shareholders on
the register on 12 October 2012. This will bring the total
distributed by dividend to shareholders to 5.87p per share.
Risks
The Board believes that the principal risks facing the Company
are:
-- investment risk associated with exposure to GAM Diversity 2.5XL
-- investment risk associated with holding VCT qualifying investments
-- failure to maintain approval as a VCT
The Board and the Investment Manager continue to work to
minimise either the likelihood or potential impact of the second
and third risks which also follow from the Company's investment
strategy.
Outlook
With its diversified qualifying investment portfolio now well
established, the Company will continue to focus on monitoring and
managing performance.
30 April 2013 will mark the end of the Company's five year VCT
holding period. In line with the Company's investment strategy, as
the year progresses, the Investment Manager and the Company will
begin to investigate the realisation of investments to enable the
return of funds to shareholders after this date. We will keep
shareholders informed of the Company's progress over the coming
year.
If you have any queries or comments, please do not hesitate to
telephone Triple Point Investment Management LLP on 020 7201
8989.
James Chadwick Murrin
Chairman
20 June 2012
Investment Manager's Review
The Company's objective is to deploy at least 70% of its funds
into VCT qualifying investments and, with the remainder of its
funds, to offer leveraged exposure to GAM's fund of hedge funds,
Diversity, via GAM Diversity GBP 2.5XL.
VCT Qualifying Investments Portfolio
As at 31 March 2012 the Company had GBP14 million deployed in
VCT qualifying investments. Some additional investment in VCT
qualifying companies took place during the year and following the
year end in order to replace realisations and loan repayments from
other qualifying investments. The Company continues to exceed the
70% target, and VCT qualifying investments represent 78% of the
value of its investments.
The portfolio of qualifying investments is split between
seventeen companies across cinema digitisation, telecommunications,
satellite capacity trading, crematorium management and renewable
electricity generation from solar PV and anaerobic digestion. All
of these investments are HMRC approved for VCT qualifying
purposes.
Each of these investments meets Triple Point's investment
criteria, with projected revenue generated by good quality
customers and the potential for attractive returns. Investments in
each sector are subject to rigorous selection criteria, including
extensive due diligence and expert technical assessment.
Investment Programme Summary
The table below shows the changes in qualifying investments made
during the year and since the year end in the portfolio.
Local
Cinema Authority Solar Anaerobic Total Qualifying
Industry Sector Digitisation Communications Satellite and NHS PV Digestion Investments
-------------- --------------- ---------- ----------- -------- ----------- -----------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------------- --------------- ---------- ----------- -------- ----------- -----------------
Investments at
1 April 2011 8,400 871 871 1,660 1,563 1,000 14,365
------------------ -------------- --------------- ---------- ----------- -------- ----------- -----------------
Investments made
during the year 1,000 - - - - 500 1,500
--------------- ---------- ----------- --------
Investment
disposed
of during the
year - (686) (610) (336) - - (1,632)
------------------ -------------- --------------- ---------- ----------- -------- ----------- -----------------
Investments at
31 March 2012 9,400 185 261 1,324 1,563 1,500 14,233
------------------ -------------- --------------- ---------- ----------- -------- ----------- -----------------
Investments made
since 31 March
2012 - - - - 1,290 - 1,290
------------------ -------------- --------------- ---------- ----------- -------- ----------- -----------------
Investments
disposed
of since 31
March
2012 - - - (564) - (564)
------------------ -------------- --------------- ---------- ----------- -------- ----------- -----------------
Loan repayments
since 31 March
2012 - - - - (140) - (140)
------------------ -------------- --------------- ---------- ----------- -------- ----------- -----------------
Investments at
the date of this
report 9,400 185 261 760 2,713 1,500 14,819
------------------ -------------- --------------- ---------- ----------- -------- ----------- -----------------
During the year partial realisations were made from the medical
gas companies, MGS West Midlands Ltd and MGS North West Ltd and we
are pleased to report that following the year end trade sales were
completed at a small premium to carrying value. Three of the
Company's telecommunications investments successfully completed
their contracts and a fourth telecommunications business was able
to make repayments while continuing to provide services to its
customers.
Investment Portfolio Summary
Anaerobic Digestion
The Company has investments in three companies pursuing
opportunities in the generation of electricity from Anaerobic
Digestion (AD). AD is the production of biogas through the
biological treatment of organic materials using naturally occurring
organisms. The businesses in which the Company has invested are
engaged in farm-based AD, which is one of the most stable
sub-sectors. The process takes place inside sealed tanks and
principally produces methane, which is burned to generate
electricity, which is then sold to utility companies via a National
Grid connection, or to businesses located close to the generator.
Income will be derived from the production and sale of electricity
which will attract Feed-in Tariffs (FITs). The technology used in
AD is tried and tested. The equipment has been supplied by one of
Europe's leading technology suppliers, Envitech.
Cinema Digitisation
The Company has six holdings in companies that deploy, maintain
and operate digital equipment in cinemas in the UK and Continental
Europe. The digitisation of cinema projection equipment has enabled
significant industry wide print and distribution cost savings and
has enhanced box office receipts through 3D technology. 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 are paid by the six major investment grade
Hollywood Studios.
Crematorium Management
The Company has one investment in a business that provides
crematory and mercury abatement services for the crematoria of a
London Borough.
Solar PV
The Company has invested in three companies that own solar PV
panels which are installed on residential properties. These were
all installed and generating electricity before 12 December 2011,
so they are in receipt of the higher Feed-in Tariffs (FITs)
applicable to installations made before that date. These tariffs
are index-linked and have been set for 25 years, providing the
companies with a long term, predictable cash flow.
GAM review
Over the year to 30 March 2012, GAM Diversity 2.5XL lost 5.76%,
the HFRX Global Hedge Fund index lost 6.34% and the FTSE All Share
gained 1.39%.
GAM report that 2011 was a difficult year for investors.
Corporate earnings results were overshadowed by continuing fears of
a European sovereign default and a slowdown in global growth and
correlations both within asset classes and between different asset
classes increased, reflecting the extent of political and central
bank intervention in the world's economies.
Equity hedge managers found the volatile market conditions in
2011 difficult to navigate. As stock prices plummeted in July,
managers reacted as expected by reducing long positioning and
neutralising market exposures. Unfortunately, these actions were
not completely successful in curtailing losses as the decline in
long positions was not matched by gains in short investments. In
late August and mid-September, the long/short managers only
captured small fractions of the rallies and the biggest gains were
the most heavily-shorted companies. The strongest returns came from
European managers where depressed valuations offered opportunities
for stock pickers, as good earnings numbers emerged in the fourth
quarter. Trading managers found the market conditions extremely
difficult, and this was reflected in the average returns for this
strategy. GAM therefore sought discretionary managers who would be
far more short-term and tactical. There were mixed results over the
year from the event driven book, as arbitrage strategies
contributed the most, while special situations managers were
affected with higher levels of market uncertainty and volatility.
During the final quarter of 2011, event driven hedge funds were
able to recoup a portion of third-quarter losses as market
conditions gradually stabilised.
For the first quarter of 2012, GAM Diversity has returned 3.9%,
outperforming the HFRI/HFRX Global Hedge Fund Index (GAM hedged) in
sterling terms by 0.7%. Correspondingly GAM Diversity 2.5XL
returned 8.8%, beating the FTSE All share which returned 6.1% and
the HFRX Global hedge Fund Index which returned 3.1%. Equity and
credit markets were buoyed by waning macro concerns, recovering
investor sentiment and corporate confidence levels, declining
equity market volatility and improving market liquidity. GAM
believe that 2012 could be an attractive risk-adjusted year for
equity long/short, and have increased allocations in the
discretionary macro book to more specialised managers who look at
specific assets or regions. Trading allocations have been adjusted
to increase weightings to those managers GAM expect to outperform
in an uncertain environment.
Outlook
The Company continues to maintain an active and diversified
portfolio of VCT qualifying investments. Over the coming year we
will continue to manage the performance of these businesses. We
will also continue to monitor the performance of the Company's
investments with GAM.
Claire Ainsworth
Managing Partner
for Triple Point Investment Management LLP
20 June 2012
Report of the Directors - Investment Portfolio
31 March 2012 31 March 2011
------------------------------------ ------------------------------------
Cost Valuation Cost Valuation
GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Qualifying holdings 14,233 65.20 13,995 75.01 14,365 66.87 14,365 74.74
Non-qualifying holdings 3,746 17.16 2,039 10.93 3,308 15.39 2,158 11.23
Money market funds - - - - 398 1.85 398 2.07
17,979 82.36 16,034 85.94 18,071 84.11 16,921 88.04
Derivative 3,292 15.07 2,054 11.01 3,292 15.32 2,175 11.32
Fixed assets at fair value
through profit or loss 21,271 97.43 18,088 96.95 21,363 99.43 19,096 99.36
Cash and cash equivalents 567 2.57 567 3.05 125 0.57 125 0.64
21,838 100.00 18,655 100.00 21,488 100.00 19,221 100.00
======== ======= ======== ======= ======== ======= ======== =======
Unquoted Qualifying Holdings GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Provision of satellite capacity
Satellite Broadband Access
Solutions Ltd 261 1.20 - - 871 4.05 871 4.53
Telecommunications
Per Port Services Ltd 185 0.85 185 0.99 310 1.44 310 1.61
WAN Solutions Ltd - - - - 184 0.86 184 0.96
Wide Area Network Services
Ltd - - - - 231 1.08 231 1.20
Wide Area Network Solutions
Ltd - - - - 146 0.68 146 0.76
Cinema digitisation
21st Century Cinema Ltd 2,000 9.16 2,000 10.72 2,000 9.31 2,000 10.41
Big Screen Digital Services
Ltd 1,400 6.41 1,400 7.50 1,400 6.52 1,400 7.28
Cinematic Services Ltd 1,000 4.58 1,000 5.36 1,000 4.65 1,000 5.20
Digima Ltd 2,000 9.16 2,000 10.72 2,000 9.31 2,000 10.41
Digital Screen Solutions
Ltd 2,000 9.16 2,000 10.72 2,000 9.31 2,000 10.41
Two For Joy Digital Ltd 1,000 4.58 1,000 5.36 - - - -
Crematorium management
Furnace Management Services
Ltd 760 3.48 760 4.07 910 4.23 910 4.73
Medical gas supplies
MGS North West Ltd 316 1.45 328 1.76 420 1.95 420 2.19
MGS West Midlands Ltd 248 1.14 259 1.39 330 1.54 330 1.72
Electricity generation
Solar
Green Energy for Education
Ltd 500 2.29 500 2.68 500 2.33 500 2.60
Convertibox Services Ltd 500 2.29 500 2.68 500 2.33 500 2.60
Beam Carrier Ltd 563 2.58 563 3.02 563 2.62 563 2.93
Anaerobic digestion
Biomass Future Generation
Ltd 500 2.29 500 2.68 500 2.33 500 2.60
GreenTec Energy Ltd 500 2.29 500 2.68 - - - -
Katharos Organic Ltd 500 2.29 500 2.68 500 2.33 500 2.60
14,233 65.20 13,995 75.01 14,365 66.87 14,365 74.74
======== ======= ======== ======= ======== ======= ======== =======
Financial assets 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 best deemed 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.
31 March 2012 31 March 2011
---------------------------------- ----------------------------------
Cost Valuation Cost Valuation
Unquoted Non-qualifying
Holdings GBP'000 % GBP'000 % GBP'000 % GBP'000 %
Investment holding
Lorngreen Limited * 3,319 15.20 2,038 10.92 3,308 15.39 2,158 11.23
3,319 15.20 2,038 10.92 3,308 15.39 2,158 11.23
======== ====== ======== ====== ======== ====== ======== ======
Cost Valuation Cost Valuation
Unquoted Non-qualifying
Holdings (in liquidation)
** GBP'000 % GBP'000 % GBP'000 % GBP'000 %
WAN Solutions Ltd 128 0.59 - - - - - -
Wide Area Network Services
Ltd 213 0.98 1 0.01 - - - -
Wide Area Network Solutions
Ltd 86 0.39 - - - - - -
427 1.96 1 0.01 - - - -
======== ====== ======== ====== ======== ====== ======== ======
Money Market Funds
Deutsche Global Liquid Managed
Sterling Fund - - - - 284 1.32 284 1.48
Ignis Liquidity Fund - - - - 114 0.53 114 0.59
- - - - 398 1.85 398 2.07
======== ====== ======== ====== ======== ====== ======== ======
* The 50% holding in Lorngreen has not been accounted for as a
subsidiary as the Company does not have control over it, as
described on page 32. In accordance with the exception within IAS
28, "Investments in Associates", those undertakings in which the
Company holds more than 20% of the equity are not regarded as
associated undertakings. They are instead treated as portfolio
investments. Therefore these investments are measured at fair value
in accordance with IAS 39, "Financial Instruments, Recognition and
Measurement". Lorngreen holds 50% of the Company's exposure to GAM
Diversity 2.5XL GBP.
** During the period these companies made realisations and are
now in voluntary liquidation.
Report of the Directors - Investment Portfolio - Additional
Information
31 March 2012 Investee Company Financial Statements
------------------------------ ---------------------------------------------------------------------------------------------
Ending in 2011** Ending in 2010**
Equity
held
Income by Equity
recognised TP70 held
by TP70 2008 by all Net
2008(II) (II) funds Profit/loss assets
Initial VCT plc VCT managed before Profit/loss before Profit/loss
Investment for the plc by TPIM interest before VCT Net before Net
Date year ** LLP Turnover and tax tax loans assets Turnover tax assets
--------- ------------ ------------ --------- --------
GBP'000 % % GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Qualifying
Holdings
Beam Carrier
Ltd 02-Apr-09 22 28.10 78.00 1,249 260 201 983 202
Satellite
Broadband
Access
Solutions
Ltd 17-Mar-09 33 49.90 93.40 1,446 253 181 1,580 270 200 (16) 88
Per Port
Services
Ltd 17-Mar-09 7 47.50 95.00 229 17 4 471 99 229 (74) 95
WAN
Solutions
Ltd 17-Mar-09 - 47.50 95.00 476 (56) (94) 65 63 574 (12) 157
Wide Area
Network
Services
Ltd 17-Mar-09 - 49.97 49.97 319 (111) (138) 19 1 385 (47) 138
Wide Area
Network
Solutions
Ltd 17-Mar-09 - 47.50 95.00 426 59 25 78 52 513 (92) 27
21st Century
Cinema Ltd 31-Mar-09 99 24.52 98.08 297 (338) (550) 5,418 378 - (725) 328
Big Screen
Digital
Services
Ltd 31-Mar-09 67 18.77 97.91 275 (104) (310) 5,379 1,179 - (318) 888
Cinematic
Services
Ltd 31-Mar-09 49 12.26 98.08 354 (273) (483) 6,439 839 - (332) 721
Digima Ltd 31-Mar-09 98 24.52 98.08 380 (95) (331) 5,355 1,155 - (318) 888
Digital
Screen
Solutions
Ltd 31-Mar-09 98 24.52 98.08 438 (66) (303) 5,386 1,186 - (165) 888
Two For Joy
Digital Ltd 15-Feb-12 4 46.38 92.76 n/a n/a
Furnace
Management
Services
Ltd 17-Mar-09 54 24.50 49.00 284 102 (180) 1,679 182 285 149 415
MGS North
West Ltd 23-Dec-08 3 24.49 48.98 705 214 168 988 781 639 166 613
MGS West
Midlands
Ltd 30-Oct-08 2 24.50 49.00 906 -33 (121) 670 507 769 286 628
Green Energy
for
Education
Ltd 30-Mar-11 6 14.92 98.78 - (69) (66) 3,244.00 927 n/a
Biomass
Future
Generations
Ltd 30-Mar-11 4 12.52 96.44 - (51.00) (53) 1,257 547 n/a
Convertibox
Services
Ltd 30-Mar-11 21 24.76 99.51 - (77) (119) 2,837 737 n/a
Green Tec
Energy Ltd 27-Feb-12 - - 98.00 n/a n/a
Katharos
Organic Ltd 30-Mar-11 7 11.75 98.68 - (27.00) (29) 521 136 n/a
----------- ------- -------- --------- ------------ ------------ --------- -------- ---------------------------------
The basis of valuation for all investments is the transaction price. Financial assets are
measured at fair value.
* The equity held by the VCT is equal to their voting rights.
** Companies that were not incorporated until 2011 will not produce financial statements
until accounting dates ending no earlier than in 2012.
Report of the Directors - Corporate Governance
The Board of TP70 2008 (II) 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 in accordance with 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 of
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 and explained at the
end of this report in the Compliance Statement.
The Corporate Governance Report forms an integral part of the
Report of the Directors.
Board of Directors
The Company has a Board of three Non Executive Directors. The
Board regularly reviews the independence of its members and as a
result of its review a decision was taken that the TPIM appointee
should be replaced by a Director who is independent of TPIM.
Therefore Peter Hargreaves resigned as a Director and Baroness Jo
Valentine was appointed on 2 June 2011. Under the listing rules the
majority of the Board is now considered independent of TPIM.
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 Investment 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. The Board has a formal schedule of matters specifically
reserved for its decision and the agreement between the Company and
the Investment Manager has authority and 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 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, who 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.
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 and where a Director is not considered to be independent
submit themselves for re-election every year.
During the year ended 31 March 2012 the following meetings were
held:
Directors present 7 Board 2 Audit
Meetings Committee
Meetings
Chad Murrin (Chairman) 7 2
Michael Stanes (appointed 13
September 2010) 6 (of 7) 2
Peter Hargreaves (resigned 2
June 2011) 1 (of 1) 1 (of 1)
Baroness Jo Valentine (appointed
2 June 2011) 5 (of 6) 1 (of 1)
Audit Committee
The Board has appointed an Audit Committee, of which Chad Murrin
is chairman, comprising the full Board, 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 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 so would recommend this to the Board.
During the year ended 31 March 2012, 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 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;
-- 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 a system 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 Board regularly reviews 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
once a year.
TPIM is engaged to provide administrative services including
accounting services and retains physical custody of the documents
of title relating to investments.
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 used 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.
Risk Management
TPIM carries out management of liquid funds in accordance with
the policy guidelines laid down and regularly reviewed by the
Board. In general the guidelines require that un-invested cash will
be held in money market funds. The particular risks they have
identified are detailed in the Directors' Report on page 14. The
Company has entered into a derivative transaction, further details
of which are given in the Chairman's Statement and in note 11 to
the Financial Statements.
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 Directors
therefore believe that 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 will also respond to any written
queries made by shareholders during the course of the year and can
be contacted at 4-5 Grosvenor Place, London, SW1X 7HJ.
Alternatively, the Investment Manager may be contacted on 020 7201
8989.
Compliance Statement
The Listing Rules require the Board to report on compliance with
the UK Corporate Governance Code (June 2010 provisions throughout
the accounting year. With the exception of the limited items
outlined and explained 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. Whilst there is a process for briefing new Directors they 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, B.6.1).
3. The Company does not have a senior Independent Director. The
Board does not consider such an appointment appropriate for the
Company (A4.1).
4. The Company does not conduct 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 (C3 .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. A smaller company should have at least two independent
Non-Executive directors and the audit committee should consist of
at least two independent Non Executive Directors. The Board
regularly reviews the independence of its members and as a result
of their review a decision was taken that the TPIM appointee should
be replaced by a Director who is independent of TPIM. (B.1.2,
C.3.1)
On behalf of the Board
James Chadwick Murrin
Chairman
20 June 2012
Report of the Directors - Directors' Responsibility
Statement
The Directors are responsible for preparing the Report of the
Directors 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
elect 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;
-- 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 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.
In 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 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 the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company; and
-- the Directors' Report includes a fair review of the
development and performance of the business and the position of the
Company together with a description of the principal risks and
uncertainties that it faces.
On behalf of the Board
James Chadwick Murrin
Chairman
20 June 2012
Independent Auditor's Report to the Members of TP70 2008 (II)
VCT plc
We have audited the Financial Statements of TP70 2008(II) VCT
plc for the year ended 31 March 2012 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 23 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 31 March 2012 and of its loss for the year then
ended;
-- have been properly prepared in accordance with IFRS 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 2008 (II)
VCT plc
Under the Listing Rules, we are required to review:
-- the Directors' statement, set out on page 22, 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
20 June 2012
Statement of Comprehensive Income
for the year ended 31 March 2012
Year ended Year ended
31 March 2012 31 March 2011
---------------------------- ----------------------------
Note Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income 4 575 - 575 553 - 553
Gain/(loss) arising on
the disposal of investments - 559 559 - (5) (5)
(Loss) arising on the
revaluation of investments
at the year end - (795) (795) - (198) (198)
(Loss) arising on the
revaluation on derivative
transactions at the year
end - (121) (121) - (186) (186)
Investment return 575 (357) 218 553 (389) 164
-------- -------- -------- -------- -------- --------
Investment management
fees 5 82 245 327 84 252 336
Financial and regulatory
costs 25 - 25 23 - 23
General administration 9 - 9 17 - 17
Legal and professional
fees 6 33 - 33 34 - 34
Directors' remuneration 7 40 - 40 41 - 41
Operating expenses 189 245 434 199 252 451
-------- -------- -------- -------- -------- --------
Profit/(loss) before
taxation 386 (602) (216) 354 (641) (287)
Taxation charge/(credit) 8 79 (49) 30 68 (53) 15
Profit/(loss) after taxation 307 (553) (246) 286 (588) (302)
-------- -------- -------- -------- -------- --------
Profit and comprehensive
income/(loss) for the
year 307 (553) (246) 286 (588) (302)
-------- -------- -------- -------- -------- --------
Basic and diluted earnings/(loss)
per share 9 1.35p (2.42p) (1.07p) 1.25p (2.57p) (1.32p)
-------- -------- -------- -------- -------- --------
The total column of this statement is the Statement of
Comprehensive Income of the Company prepared in accordance with
International Financial Reporting Standards (IFRS). The
supplementary revenue return and capital return columns have been
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
as at 31 March 2012
31 March
Note 31 March 2012 2011
GBP'000 GBP'000
Non current assets
Financial assets at fair
value through profit or
loss 10 18,088 19,096
-------------- ---------
Current assets
Receivables 12 15 46
Cash and cash equivalents 13 567 125
582 171
-------------- ---------
Total assets 18,670 19,267
-------------- ---------
Current liabilities
Payables and accrued expenses 14 46 53
Current taxation payable 29 21
75 74
-------------- ---------
Net assets 18,595 19,193
============== =========
Equity attributable to
equity holders
Share capital 15 229 229
Capital redemption reserve 2 2
Special distributable
reserve 21,576 21,576
Capital reserve (3,454) (2,901)
Revenue reserve 242 287
Total equity 18,595 19,193
-------------- ---------
Net asset value per share 17 81.35p 83.96p
============== =========
The statements were approved by the Directors and authorised for
issue on 20 June 2012 and are signed on their behalf by:
James Chadwick Murrin
Chairman
20 June 2012
Company registration number: 6421355
The accompanying notes are an integral part of this
statement.
Statement of Changes in Shareholders' Equity
for the year ended 31 March 2012
Special
Issued Share Redemption Distributable Capital Revenue
Capital Reserve Reserve Reserve Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 March 2012
Opening balance 229 2 21,576 (2,901) 287 19,193
--------- ----------------- --------------- --------- --------- --------
Dividend paid - - - - (352) (352)
Transactions with owners - - - - (352) (352)
--------- ----------------- --------------- --------- --------- --------
(Loss)/profit for the
period - - - (553) 307 (246)
Total comprehensive
(loss)/ income for
the period - - - (553) 307 (246)
--------- ----------------- --------------- --------- --------- --------
Balance at 31 March
2012 229 2 21,576 (3,454) 242 18,595
========= ================= =============== ========= ========= ========
Capital reserve consists
of:
Investment holding
(losses) (3,183)
Other realised losses (271)
(3,454)
=========
Year ended 31 March
2011
Opening balance 229 2 21,608 (2,313) 283 19,809
--------- ----------------- --------------- --------- --------- --------
Purchase of own shares - - (32) - - (32)
Dividend paid - - - - (282) (282)
Transactions with owners - - (32) - (282) (314)
--------- ----------------- --------------- --------- --------- --------
(Loss)/profit for the
period - - - (588) 286 (302)
Total comprehensive
(loss)/ income for
the period - - - (588) 286 (302)
--------- ----------------- --------------- --------- --------- --------
Balance at 31 March
2011 229 2 21,576 (2,901) 287 19,193
========= ================= =============== ========= ========= ========
Capital reserve consists
of:
Investment holding
(losses) (2,267)
Other realised losses (634)
(2,901)
=========
The capital reserve represents the realised and unrealised
gains/(losses) on holding investments and the proportion of
Investment Management fees charged against capital. 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 this
statement.
Statement of Cash Flows
for the year ended 31 March 2012
Year ended Year ended
31 March
31 March 2012 2011
GBP'000 GBP'000
Cash flows from operating activities
Loss before taxation (216) (287)
(Gain)/loss arising on the
disposal of investments in
the year (559) 5
Loss arising on the revaluation
of investments at the year
end 916 384
Cash flow generated by operations 141 102
Decrease/(increase) in receivables 31 25
(Decrease) in payables (7) (286)
Taxation paid (22) (22)
Net cash flows from operating
activities 143 (181)
-------------- -----------
Cash flow from investing activities
Purchase of financial assets
at fair value through profit
or loss (2,011) (6,563)
Proceeds of sale of financial
assets at fair value through
profit or loss account 2,662 5,690
Net cash flows from investing
activities 651 (873)
-------------- -----------
Cash flows from financing activities
Purchase of own shares - (32)
Dividends paid (352) (282)
Net cash flows from financing
activities (352) (314)
-------------- -----------
Net Increase/(decrease) in
cash and cash equivalents 442 (1,368)
============== ===========
Reconciliation of net cash
flow to movements in cash and
cash equivalents
Opening cash and cash equivalents 125 1,493
Net Increase/(decrease) in
cash and cash equivalents 442 (1,368)
Closing cash and cash equivalents 567 125
============== ===========
The accompanying notes are an integral part of this
statement.
Notes to the Financial Statements
1. Corporate Information
The Financial Statements of the Company for the year ended 31
March 2012 were authorised for issue in accordance with a
resolution of the Directors on 20 June 2012.
The Company was admitted for listing on the London Stock
Exchange on 6 February 2008.
The Company is incorporated and domiciled in Great Britain. The
address of its registered office, which is also its principal place
of business, is 4-5 Grosvenor Place, London, SW1X 7HJ.
The Company's Financial Statements are presented in Pounds
Sterling (GBP) which is also the functional currency of the
Company.
The principal activity of the Company is investment. The
Company's investment strategy is to offer combined exposure to GAM
Diversity 2.5XL (a leveraged version of GAM's fund of hedge funds)
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 Directors
therefore believe that 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 going forward.
The Financial Statements of the Company for the year ended 31
March 2012 have been prepared in accordance with accounting
policies consistent with International Financial Reporting
Standards (IFRS) adopted for use in the European Union and
therefore comply with the articles of the EU (IAS) regulation and
with the Statement of Recommended Practice ("SORP"), "Financial
Statements of Investment Trust Companies and Venture Capital
Trusts" 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.
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 values 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
judgements about the carrying value of assets and liabilities that
are not readily apparent from other sources. Actual results may
differ from these judgements.
The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts 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 appropriateness of the allocation of management expenses
between revenue and capital, which is based on the split of the
long-term anticipated return between revenue and capital of net
income, will impact on the value of distributable reserves.
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
10.
Another key judgement made by the Board is that the Company owns
50% of the issued share capital of Lorngreen Ltd but does not have
control over the company as it does not have influence over the
Board. Therefore the Company does not consolidate the results of
Lorngreen Ltd.
These Financial Statements have been prepared in accordance with
the accounting policies set out below which are based on the
recognition and measurement principles of IFRS in issue as adopted
by the European Union (EU).
These accounting policies have been applied consistently for the
purposes of preparation of these Financial Statements.
Standards Issued but not yet Effective
The following new standards, amendments to standards and
interpretations are not yet effective for the year ended 31 March
2012, and have not been applied in preparing these Financial
Statements.
-- IFRS 9 Financial Instruments (effective 1 January 2015)
-- IFRS 13 Fair Value Measurement (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)
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
Statement of Comprehensive Income. 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. This restriction has been
removed which means that distributions can now be made from capital
returns.
Capital Management
Capital management is monitored and controlled in accordance
with the internal control procedures referred to on page 22. The
capital being managed includes equity and fixed interest VCT
qualifying investments, hedge fund exposure, cash balances and
liquid resources including debtors and creditors.
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 31 March 2012 was GBP18.6
million (2011: GBP19.2 million).
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 a documented investment
strategy detailed on page 12, and information about the portfolio
is provided internally on that basis to the Company's Board of
Directors. Accordingly upon initial recognition the investments and
loan notes are designated as "at fair value through profit or loss"
("FVTPL"). Investments 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 investments are valued at "fair value" which is
measured as follows:
-- Unlisted investments are fair valued by the Directors in
accordance with the International Private Equity and Venture
Capital Valuation Guidelines and IAS 39. 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 period as a capital item in accordance
with the AIC SORP. The profit or loss on disposal is calculated net
of transaction costs of disposal.
Money market funds are designated as non-current asset
investments at fair value through profit or loss due to the
Company's investment policy of holding a combination of VCT
qualifying holdings and monetary assets. Money market funds are
valued based on the bid price quoted on the balance sheet date.
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 50% shareholding in Lorngreen has not been accounted for as
a subsidiary as TP70 2008 (II) VCT plc does not have control over
the company. In accordance with the exception within IAS 28,
"Investments in Associates", those undertakings in which the
Company holds more than 20% of the equity are not regarded as
associated undertakings. Therefore these investments are measured
at fair value in accordance with IAS 39, "Financial Instruments,
Recognition and Measurement".
Derivatives, comprising income swaps, are 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 of
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 securities 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 interest rate, 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 has been charged 25% to the revenue account
and 75% to the capital account 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.
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
return 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 the
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.
Provisions
A provision is recognised when the Company has a legal or
constructive obligation as a result of a past event and it is
probable that an outflow of economic benefits will be required to
settle the obligation. If the effect is material, expected future
cash flows are discounted using a current pre-tax rate that
reflects, where appropriate, the risks specific to the
liability.
Where the Company expects some or all of a provision to be
reimbursed, for example under an insurance policy, the
reimbursement is recognised as a separate asset but only when
recovery is virtually certain. The expense relating to any
provision is presented in the Statement of Comprehensive Income net
of any reimbursement. Where discounting is used, the increase in
the provision due to unwinding the discount is recognised as a
finance cost.
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,
"Financial Instruments: Presentation".
Cash and Cash Equivalents
Cash and cash equivalents represent cash available at less than
three months' notice and are classified as loans and receivable
under IAS 39, "Financial Instruments: Recognition and
Measurement"
Receivables
Receivables are classified as loans and receivable under IAS 39
and are recognised at fair value on initial recognition and
subsequently at amortised cost. An impairment loss is recognised
whenever the carrying amount of an asset exceeds the receivable
amount. The recoverable amount is only determined when objective
evidence of impairment exists.
Trade and Other Payables
Trade and other payables are included at fair value on initial
recognition and subsequently at amortised cost.
Reserves
The capital reserve represents the realised and unrealised
gains/(losses) on holding investments and the proportion of
Investment Management fees charged against capital. Neither 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
31 March 2012 31 March 2011
---------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loan stock interest 574 - 574 537 - 537
Income receivable on
money market funds 1 - 1 16 - 16
Total 575 - 575 553 - 553
-------- -------- -------- -------- -------- --------
5. Investment Management Fees
TPIM provides investment management and administration services
to the Company under an Investment Management Agreement effective 6
February 2008 which runs until 6 February 2013 and may be
terminated at any time thereafter by not less than twelve months'
notice given by either party and which provides for an
administration and investment management fee of 1.75% per annum of
net assets payable quarterly in arrears. Should such notice be
given the Investment Manager would continue to perform its duties
under the investment management agreement and to receive its
management fee during the notice period.
6. Legal and professional fees
Legal and professional fees include the following remuneration
paid to the Company's auditor, Grant Thornton UK LLP:
Year ended Year ended
31 March 2012 31 March 2011
---------------------------- ----------------------------
Revenue Capital Total Revenue Capital 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 18 - 18 20 - 20
* Other services related to taxation 4 - 4 4 - 4
22 - 22 24 - 24
-------- -------- -------- -------- -------- --------
7. Directors' Remuneration
Year ended Year ended
31 March 2012 31 March 2011
---------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Chad Murrin (Chairman) 15 - 15 15 - 15
Michael Stanes 13 - 13 6 - 6
Baroness Valentine 10 - 10 - - -
Peter Hargreaves 2 - 2 6 - 6
Sir John Lucas-Tooth - - - 8 - 8
Robert Reid - - - 6 - 6
Total 40 - 40 41 - 41
-------- -------- -------- -------- -------- --------
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 3. The Directors are considered to be the
Company's key management personnel. Full disclosure of key
management personnel's remuneration is included in the Directors'
Remuneration Report.
8. Taxation
Year ended Year ended
31 March 2012 31 March 2011
---------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Profit/(loss) on ordinary
activities before tax 386 (602) (216) 354 (641) (287)
-------- -------- -------- -------- -------- --------
Corporation tax @ 20%
(2011: 21%) 77 (120) (43) 74 (135) (61)
Effect of:
Non taxable (gains) /
losses - 71 71 - 82 82
Prior year adjustment 2 - 2 (6) - (6)
Tax charge/(credit) for
the period 79 (49) 30 68 (53) 15
-------- -------- -------- -------- -------- --------
Capital gains and losses are exempt from Corporation Tax due to
the Company's status as a Venture Capital Trust.
9. Loss per share
The loss per share is based on the loss after tax of GBP246,000
(2011: GBP302,000 loss) and on the weighted average number of
shares in issue during the period of 22,858,626 (2011:
22,894,571).
There are no potentially dilutive capital instruments in issue
and, therefore, no diluted return per share figures are included in
these financial statements.
10. Financial Assets at Fair Value through Profit or Loss
The Board's assessment of the key financial instrument risks of
the Company is disclosed on page 14 of the Directors' Report.
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. 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 period and the movement in Level 3 instruments is disaggregated
below. The 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 revaluation of
the financial assets of the investee company, held at a price of
recent investments, or valuations of investments based on their net
asset values.
Movements in investments held at fair value through profit or
loss during the year to 31 March 2012 and included in profit or
loss were as follows:
Level 1 Level 2 Level 3
Money Derivative Unquoted Total
Market Funds Transaction Investments Investments
Year ended 31 March
2012 GBP'000 GBP'000 GBP'000 GBP'000
Opening cost 398 3,292 17,673 21,363
Opening investment holding
losses - (1,117) (1,150) (2,267)
Opening fair value at
1 April 2011 398 2,175 16,523 19,096
Purchases at cost - - 2,011 2,011
Disposal proceeds (398) - (2,264) (2,662)
Realised gains - - 559 559
Investment holding gains/losses - (121) (795) (916)
Closing fair value at
31 March 2012 - 2,054 16,034 18,088
============= ============ ============ ============
Closing cost - 3,292 17,979 21,271
Closing investment holding
losses - (1,238) (1,945) (3,183)
------------- ------------ ------------ ------------
Level 1 Level 2 Level 3
Money Derivative Unquoted Total
Market Funds Transaction Investments Investments
Year ended 31 March
2011 GBP'000 GBP'000 GBP'000 GBP'000
Opening cost 3,360 3,292 13,843 20,495
Opening investment holding
losses - (931) (952) (1,883)
Opening fair value at
1 April 2010 3,360 2,361 12,891 18,612
Purchases at cost 1,160 - 5,403 6,563
Disposal proceeds (4,122) - (1,568) (5,690)
Realised losses - - (5) (5)
Investment holding losses - (186) (198) (384)
Closing fair value at
31 March 2011 398 2,175 16,523 19,096
============= ============ ============ ============
Closing cost 398 3,292 17,673 21,363
Closing investment holding
losses - (1,117) (1,150) (2,267)
------------- ------------ ------------ ------------
Included in the above is an investment of GBP2,053,527 (2011:
GBP2,175,243) in the derivative transaction with Bank Julius Baer
described in note 11.
Further details of these investments are provided in the
Investment portfolio review.
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. The impact of reasonably possible
changes to inputs in valuations has been considered.
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 in Cinema Digitisation, based on another Company
managed by them realising their investment in the same companies.
The impact on the value was not material and therefore no
adjustment has been made. The Company has an investment in
Satellite Broadband Access Solutions Ltd, a company that provides
satellite capacity. During the year the Company received
realisations against its investment but it will not receive any
further funds. Therefore a full provision for GBP182,000 has been
made against the holding value of the remaining investment.
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.
11. Derivative transaction
The Company has made a payment of GBP3,292,500 to Bank Julius
Baer and in return will receive back an equivalent sum plus or
minus the performance in the intervening time of GAM Diversity GBP
2.5XL. The transaction will run for a maximum of five years but may
be terminated by the Company on three months' notice before the
period expires. The loss on this investment in the year is deemed
to be a capital item and is therefore included in the capital
column of the income statement.
The value shown for the derivative transaction represents the
amount payable to the Company if the derivative transaction were
closed on the balance sheet date.
12. Receivables
31 March 2012 31 March 2011
GBP'000 GBP'000
Receivables 1 44
Prepayments and accrued
income 14 2
Total 15 46
-------------- --------------
13. Cash and cash equivalents
Cash and cash equivalents comprise deposits with The Royal Bank
of Scotland plc.
14. Payables
31 March 2012 31 March 2011
GBP'000 GBP'000
Payables 21 35
Accrued expenses 25 18
Total 46 53
-------------- --------------
15. Share capital
31 March 2012 31 March 2011
Ordinary Shares of 1p
Authorised
No. Of Shares 50,000,000 50,000,000
Par Value GBP'000 500 500
Issued & Fully Paid
No. Of Shares 22,858,626 22,858,626
Par Value GBP'000 229 229
16. 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 12
The following table discloses the financial assets and
liabilities of the Company in the categories defined by
IAS 39, "Financial Instruments; Recognition &
Measurement."
Financial Designated
liabilities at Fair
held at value through
Held for Loan and amortised profit
Total value Trading receivables cost or loss
2012
Assets:
Financial assets
at fair value through
profit or loss 16,034 - - - 16,034
Derivative 2,054 2,054 - - -
Receivables 1 - 1 - -
Cash and cash equivalents 567 - 567 - -
18,656 2,054 568 - 16,034
------------ --------- ------------- ------------- ---------------
Liabilities:
Other payables 21 - - 21 -
Taxation payable 29 - - 29 -
Accrued expenses 25 - - 25 -
75 - - 75 -
------------ --------- ------------- ------------- ---------------
2011
Assets:
Financial assets
at fair value through
profit or loss 16,523 - - - 16,523
Derivative 2,175 2,175 - - -
Money market funds 398 - - - 398
Receivables 44 - 44 - -
Cash and cash equivalents 125 - 125 - -
19,265 2,175 169 - 16,921
------------ --------- ------------- ------------- ---------------
Liabilities:
Other payables 35 - - 35 -
Taxation payable 21 - - 21 -
Accrued expenses 18 - - 18 -
74 - - 74 -
------------ --------- ------------- ------------- ---------------
Fixed Asset Investments (see note 10) are valued at fair value.
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 the fair value of the assets at
the year end is equal to their book value.
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 9.
An increase of 1% in the value of investments would increase the
capital profits for the period and the net asset value at 29
February 2012 by GBP180,000. A decrease of 1% would reduce the
capital profits and net asset value by the same amount. A movement
of 1% is used as it is easy to use this as a multiple to
demonstrate the impact of varying changes on the capital profits
and net asset value of the Company.
The Company has an investment in a leveraged note issued by Bank
Julius Baer which, after leverage delivers exposure to GAM's fund
of hedge funds. 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 through its subsidiary holding in Lorngreen has a
direct holding in GAM Diversity 2.5XL, which carries the equivalent
risks.
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 is subject to a fixed interest rate for
five years and therefore other than fair value risk 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:
31 March 2012 31 March 2011
GBP'000 GBP'000
Cash on deposit 567 125
Money market funds - 398
567 523
-------------- --------------
An increase in interest rates of 1% would not have a material
effect on the revenue profits for the period and the net asset
value at 31 March 2012. The Board believes that in the current
economic climate a movement of 1% 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 represent the maximum credit risk exposure at the
balance sheet date.
31 March 2012 31 March 2011
GBP'000 GBP'000
Qualifying investments
- loan element 9,159 9,662
Money market funds - 398
GAM Diversity 2.5XL 2,038 2,158
Bank Julius Baer note 2,054 2,175
Cash on deposit 567 125
Receivables 1 44
13,819 14,562
-------------- --------------
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
will move the cash holdings to another bank.
The Company is exposed to GAM Diversity GBP 2.5XL through its
holding in Lorngreen Ltd.
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.
Credit risk arising on unquoted loan stock held within unlisted
investments is considered to be part of market risk as disclosed
above.
The Company is exposed to the credit risk of the Bank Julius
Baer through the leveraged note. Should the credit quality or
financial position of the Bank Julius Baer deteriorate
significantly the Investment Manager could (subject to notice
periods) terminate the note.
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 were considered to be readily
realisable as they were of high credit quality as outlined
above.
The GAM exposure may have redemption periods that result in
investments being illiquid and not readily realisable, and which
could result in the premature realisation of other investments of
such GAM fund in order for the Company to meet its liquidity
requirement.
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 capital management policy in which
sufficient investments in cash and readily realisable money market
funds will be available to pay expenses. At 29 February 2012 these
amounted to GBP567,000 (28 February 2011 GBP523,000).
17. Net asset value per share
The calculation of net asset value per share is based on Net
Assets of GBP18,595,000 (2011: GBP19,193,000) divided by the
22,858,626 (2011: 22,858,626) Ordinary Shares in issue.
18. Related party transactions
Peter Hargreaves, who was a Director of the Company, has an
equity interest in TPIM. During the year TPIM provided investment
management and administration services to the Company amounting to
GBP327,000 (2011: GBP336,000). GBP3,000 was due to TPIM at 31 March
2012 (2011: GBP7,000).
19. Contingent liabilities
The Company has no outstanding contingent liabilities at 31
March 2012 or 31 March 2011.
20. Capital commitments
The Company has no outstanding commitments other than the
additional VCT qualifying investments detailed in the Investment
Manager's Review on page 6.
21. Post balance sheet events
The additional VCT qualifying investments detailed in the
Investment Manager's Review on page 6 are the only post balance
sheet events.
22. Dividends
During the year a dividend of 1.54p per share was paid on
22,858,626 shares, which totalled GBP352,000.
The Board has resolved to pay a dividend to shareholders of
GBP307,000 or 1.34p per share on 19 October 2012 to shareholders on
the register on 12 October 2012.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FAMLTMBITMPT
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